SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549

                                    FORM 10-K

                  Annual Report Pursuant to Section 13 or 15(d)
                     of the Securities Exchange Act of 1934

                   For the Fiscal Year Ended December 31, 2000

                           Commission File No. 1-3660

                                  Owens Corning
                            One Owens Corning Parkway
                               Toledo, Ohio 43659
                            Area Code (419) 248-8000

                             A Delaware Corporation

                  I.R.S. Employer Identification No. 34-4323452

Securities registered pursuant to Section 12(b) of the Act:

     Title of Each Class                         Name of Each Exchange on
                                                 Which Registered

     Common Stock - $.10 Par Value               New York Stock Exchange


Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  Registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes / X / No / /

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of Registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ X ]

At February 28, 2001, the aggregate market value of Registrant's  $.10 par value
common  stock   (Registrant's   voting   stock)  held  by   non-affiliates   was
$164,382,797,  assuming for purposes of this computation only that all directors
and executive officers are considered affiliates.

At February 28, 2001, there were outstanding  55,364,882  shares of Registrant's
$.10 par value common stock.


<PAGE>


                                      - 2 -

                                     PART I

ITEM 1.   BUSINESS

Owens  Corning,  a global  company  incorporated  in  Delaware  in 1938,  serves
consumers  and  industrial   customers  with  building   materials  systems  and
composites  systems.  Owens Corning's executive offices are at One Owens Corning
Parkway,  Toledo, Ohio 43659; telephone (419) 248-8000. Owens Corning's web site
provides information on our business and products,  and assists our customers in
various building  projects.  It is located at  www.owenscorning.com.  Unless the
context requires otherwise, the terms "Owens Corning", "Company", "we" and "our"
in this report refer to Owens Corning and its subsidiaries.

PROCEEDINGS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE

On October 5, 2000 (the  "Petition  Date"),  Owens  Corning and 17 of its United
States  subsidiaries,   including  Fibreboard  Corporation  (collectively,   the
"Debtors"), filed voluntary petitions for relief (the "Filing") under Chapter 11
of the  United  States  Bankruptcy  Code (the  "Bankruptcy  Code") in the United
States  Bankruptcy Court for the District of Delaware (the "Bankruptcy  Court").
The Debtors are currently operating their businesses as debtors-in-possession in
accordance with  provisions of the Bankruptcy  Code. The Chapter 11 cases of the
Debtors  (collectively,  the "Chapter 11 Cases") are being jointly  administered
under Case No. 00-3837  (JKF).  The Chapter 11 Cases do not include other United
States  subsidiaries  of  Owens  Corning  or  any of  its  foreign  subsidiaries
(collectively,  the  "Non-Debtor  Subsidiaries").   The  Chapter  11  Cases  are
discussed in greater detail in Note 1 to the Consolidated Financial Statements.

The Debtors filed for relief under Chapter 11 to address the growing  demands on
Owens  Corning's  cash flow  resulting from its  multi-billion  dollar  asbestos
liability.  This  liability  is  discussed  in greater  detail in Note 19 to the
Consolidated Financial Statements.

OVERVIEW OF OPERATIONS

Owens  Corning  operates  in  two  reportable  operating  segments  --  Building
Materials Systems and Composite Systems. In 2000, the Building Materials Systems
segment  accounted  for  approximately  80% of our total sales  while  Composite
Systems  accounted for the remainder.  The products and systems  provided by our
Building  Materials  Systems  segment  are used in  residential  remodeling  and
repair, commercial improvement, new residential and commercial construction, and
other related markets. The products and systems offered by our Composite Systems
segment are used in end-use markets such as building  construction,  automotive,
telecommunications,   marine,  aerospace,   energy,  appliance,   packaging  and
electronics.  Many of Owens  Corning's  products are marketed  under  registered
trademarks,  including  Propink(R),  Advantex(R),  Miravista(R) and/or the color
PINK.

Approximately  80% of Owens  Corning's  sales are  related to home  improvement,
non-residential  markets,  sales of composite  materials  and sales outside U.S.
markets.  Approximately  20% of our sales are  related  to new U.S.  residential
construction.

Owens Corning also has affiliate companies in a number of countries.  Generally,
affiliated  companies'  sales,  earnings  and assets are not  included in either
operating segment unless we own more than 50% of the affiliate and the ownership
is not considered temporary.


<PAGE>


                                      - 3 -

As part of our strategy to divest non-strategic  businesses,  we sold our Falcon
Foam business in the U.S. during the first quarter of 2000 and sold our Building
Materials   business  in  Europe  during  the  second  quarter  of  2000  to  an
unconsolidated  joint venture,  Alcopor Owens Corning,  in which we maintained a
40% interest.

Revenue  from  external  customers,  income  from  operations  and total  assets
attributable  to each of  Owens  Corning's  operating  segments  and  geographic
regions,  as well as  information  concerning  the  dependence  of our operating
segments on foreign operations,  for each of the years 2000, 1999, and 1998, are
contained  in  Note 2 to  Owens  Corning's  Consolidated  Financial  Statements,
entitled "Segment Data", on pages 62 through 67 hereof.

BUILDING MATERIALS SYSTEMS

Principal Products And Methods Of Distribution

Building  Materials Systems operates  primarily in North America.  It also has a
presence in Latin America and Asia Pacific.  Building  Materials Systems sells a
variety of products and systems in two major  categories:  (i) glass fiber, foam
and mineral  wool  insulation  systems and (ii)  exterior  systems for the home,
including roofing systems, vinyl and metal siding and accessories, vinyl windows
and patio doors,  rainware  (consisting  primarily  of gutters and  downspouts),
manufactured  stone  veneer and  rebranded  housewrap.  These  products are used
primarily in the home improvement,  new residential  construction,  manufactured
housing and commercial  construction  markets.  The businesses  responsible  for
these markets include:  Insulating Systems, Exterior Systems, Roofing Solutions,
Cultured Stone, Distribution and Fabricating Solutions.

Sales  of  building  insulation  systems,   roofing  shingles  and  accessories,
housewrap,  windows/patio doors, and vinyl siding are made through home centers,
lumberyards,  retailers and  distributors.  Other channels of  distribution  for
insulation systems in North America include insulation contractors, wholesalers,
specialty  distributors,   metal  building  insulation  laminators,   mechanical
insulation  distributors and fabricators,  manufactured  housing producers,  and
appliance,  office  products and automotive  manufacturers.  Foam insulation and
related   products  are  sold  to  distributors  and  retailers  who  resell  to
residential builders,  remodelers and do-it-yourself  customers;  commercial and
industrial  markets through specialty  distributors;  and, in some cases,  large
contractors, particularly in the agricultural and cold storage markets.

Owens Corning sells asphalt  products,  primarily for  industrial  and specialty
applications,  under the Trumbull brand name. There are three principal kinds of
industrial  asphalt:  Built-Up  Roofing Asphalt (BURA),  used in commercial flat
roof  systems  to  provide  waterproofing  and  adhesion;  saturants  or coating
asphalt, used to manufacture roofing mats, felts and residential  shingles;  and
industrial  specialty  asphalt,  used by  manufacturers in a variety of products
such as waterproofing systems, adhesives, coatings, dyes, and product extenders,
as well as in various  automotive  applications.  There are several  channels of
distribution for these products.  They are used internally in the manufacture of
residential  roofing products and are also sold to other shingle  manufacturers.
In addition,  asphalt is sold to roofing  contractors and  distributors for BURA
systems  and to  manufacturers  in a  variety  of  other  industries,  including
automotive,  chemical,  rubber  and  construction.  Glass  fiber  mat is used to
provide fire and mildew resistance in 95% of all asphalt roofing shingles. Owens
Corning sells glass fiber and/or mat directly to a small number of major shingle
manufacturers, including our own roofing business.

Outside North America, Owens Corning has a foam technology facility in Italy and
a joint venture foam plant in China and has licensed  others for the manufacture
of foam products at locations in Europe, the Middle East and Asia. Owens Corning
sells foam products through traditional agents and distributors.



<PAGE>


                                      - 4 -

In Latin  America,  Owens  Corning  produces and sells  building and  mechanical
insulation  primarily  through an affiliate joint venture in Mexico,  as well as
exports  from  U.S.  plants.  In  Asia  Pacific,  we sell  primarily  mechanical
insulation  through  joint  venture  businesses,  including  two majority  owned
insulation  plants and an insulation  fabrication  center in China, two minority
owned joint ventures, one in Saudi Arabia and one in Thailand, and licensees.

Seasonality

Sales in the Building  Materials  Systems  segment tend to follow  seasonal home
improvement,  remodeling and renovation, and new construction industry patterns.
Sales  levels for the  segment,  therefore,  are  typically  lower in the winter
months.

Major Customers

No customer in the Building Materials Systems segment accounted for more than 5%
of the segment's sales in 2000.

COMPOSITE SYSTEMS

Principal Products and Methods of Distribution

Composite  Systems  operates in North  America,  Europe,  Latin America and Asia
Pacific,  with  affiliates  and  licensees  around  the  world.  The  businesses
responsible for these products include:  Composites  Systems and Engineered Pipe
Systems.

Owens Corning is the world's  leading  producer of glass fiber materials used in
composites.  Composites  systems  are made up of two or more  components  (e.g.,
plastic  resin  and a  fiber,  traditionally  a glass  fiber)  used  in  various
applications  to replace  traditional  materials,  such as aluminum,  wood,  and
steel. We are  increasingly  providing  systems that are designed for a specific
end-use  application,  and entail a material,  a proprietary process and a fully
assembled  part or system.  The global  composites  industry  has  thousands  of
end-use   applications.   Owens  Corning  has  selected  strategic  markets  and
end-users,  where  we  provide  integral  solutions,  such  as  the  automotive,
telecommunications/electronics,  and  building  construction  markets.  A  large
portion  of the  business  also  serves  thousands  of  applications  within the
consumer, industrial and infrastructure markets.

Tubs,  showers and other  related  internal  building  components  used for both
remodeling  and new  construction  are  also  major  applications  of  composite
materials in the  construction  market.  These end-use  products are some of the
first  successful  material  substitution  conversions  normally  encountered in
developing   countries.   Glass  fiber  reinforcements  and  composite  material
solutions  for  these  markets  are  sold  to  direct  accounts,   and  also  to
distributors around the world, who in turn service thousands of customers.

More  than  80%  of  transportation-related  composite  solutions  are  used  in
automotive  applications.  Non-automotive  transportation  applications  include
heavy trucks, rail cars, shipping containers,  refrigerated containers, trailers
and commercial ships. Growth continues in automotive applications,  as composite
systems  create  new  applications  or  displace  other  materials  in  existing
applications.  There are hundreds of  composites  applications,  including  body
panels, door modules,  integrated front-end systems,  instrument panels, chassis
and underbody  components  and systems,  pick-up truck beds,  and heat and noise
shields.  These  composite  parts are  either  produced  by  original  equipment
manufacturers (OEMs), or are purchased by OEMs from first-tier suppliers.



<PAGE>


                                      - 5 -

Within the  telecommunications  and electronics markets,  glass fiber composites
are used to protect and reinforce  fiber optic and copper cables.  Owens Corning
also produces central  strength  members for fiber optic cables.  Other end-uses
include  connectors,  circuit breaker boxes,  computer  housings,  electricians'
safety ladders, and hundreds of various electro/mechanical  components.  Through
its  49%  interest  in  a  yarns  joint  venture,  Owens  Corning  continues  to
participate in the yarns and specialty  material  markets,  where glass fiber is
used  extensively in printed  circuit boards made for the consumer  electronics,
transportation, and telecommunications industries.

The consumer,  industrial and infrastructure  markets include sporting goods and
marine  applications.  Owens Corning sells composite  materials to OEMs and boat
builders,  both directly and through  distributors.  Owens Corning  manufactures
large  diameter   glass-reinforced  plastic  (GRP)  pipe  designed  for  use  in
underground  pressure  and  gravity  fluid  handling  systems.  The  pipe  is  a
filament-wound  structural  composite made with glass fiber and polyester resins
and is sold  to  governments  and  private  industry  for  major  infrastructure
projects,  primarily for the safe and efficient transport of water and waste. As
of March  2001,  Owens  Corning  had  divested  substantially  all of this  pipe
business.

Major Customers

No customer in the Composite  Systems segment  accounted for more than 7% of the
segment's sales in 2000.

GENERAL

Raw Materials and Patents

Owens Corning considers the sources and availability of raw materials, supplies,
equipment  and  energy  necessary  for the  conduct of  business  in each of our
operating segments to be adequate.

Owens  Corning has  numerous  U.S.  and foreign  patents  issued and applied for
relating to our products and processes in each operating segment, resulting from
research and development efforts.

We have issued  royalty-bearing  patent licenses to companies in several foreign
countries. The licenses cover technology relating to both operating segments.

Including registered  trademarks for the Owens Corning logo, the color PINK, and
FIBERGLAS,  Owens Corning has  approximately  300  trademarks  registered in the
United States and approximately 1,600 trademarks registered in other countries.

We consider  our patent and  trademark  positions to be adequate for the present
conduct of business in each of our operating segments.

Working Capital

Owens Corning's manufacturing operations in each operating segment are generally
continuous in nature and we warehouse much of our production prior to sale since
we operate primarily with short delivery cycles.

Number of Employees

Owens  Corning  averaged  approximately  20,000  employees  during  2000 and had
approximately 20,000 employees at December 31, 2000.

<PAGE>


                                      - 6 -

Research and Development

During 2000, 1999 and 1998, Owens Corning spent  approximately $52 million,  $59
million, and $57 million, respectively, for research and development activities.
Customer-sponsored  research and development was not material in any of the last
three years.

Environmental Control

Owens Corning's capital  expenditures  relating to compliance with environmental
control  requirements  were  approximately  $23  million in 2000.  We  currently
estimate that such capital  expenditures  will be  approximately  $14 million in
2001 and $14 million in 2002.

We do not consider that we have  experienced a material  adverse effect upon our
capital  expenditures  or  competitive  position  as a result  of  environmental
control  legislation and regulations.  Operating costs of environmental  control
equipment  were  approximately  $55  million in 2000.  We  continue to invest in
equipment  and process  modifications  to remain in compliance  with  applicable
environmental laws and regulations.

The  1990  Clean  Air Act  Amendments  (Act)  provide  that  the  United  States
Environmental  Protection Agency (EPA) will issue regulations on a number of air
pollutants over a period of years.  These regulations will define the monitoring
and control technology requirements for new and existing facilities to which the
specific standard applies. The Company has determined the following  regulations
will apply and may  potentially  impact its  operations.  In June 1999,  the EPA
issued  regulations  for  wool  fiberglass  and  mineral  wool  production  with
compliance  dates in 2002.  During  the first  quarter  of 2000,  the EPA issued
regulations for secondary aluminum smelting and amino/phenolic  resin production
with  compliance  dates in 2003.  During 2000, the EPA proposed  regulations for
metal coil coating and wet formed fiberglass mat production,  anticipating final
issue in 2001. The EPA's currently  announced schedule is to propose regulations
covering fiber-reinforced plastics production and asphalt roofing and processing
in 2001 and issue final  regulations in 2002 with  implementation as to existing
sources up to three  years  thereafter.  Based on  information  now known to the
Company,  including  the nature and limited  number of  regulated  materials  it
emits,  the Company does not expect the Act to have a materially  adverse effect
on the  Company's  results  of  operations,  financial  condition  or  long-term
liquidity.

Competition

Owens  Corning's  products  compete  with a broad  range of  products  made from
numerous basic, as well as high-performance, materials.

We compete with a number of  manufacturers  in the United States of glass fibers
in primary forms, not all of which produce a broad line of glass fiber products.
Approximately  one-half of these producers  compete with our Building  Materials
operating  segment in the sale of glass fibers in primary form. A similar number
compete  with  our  Composite  Systems  operating  segment.  Companies  in other
countries  export small quantities of glass fiber products to the United States.
We also  compete  outside the United  States with a number of  manufacturers  of
glass fibers in primary forms.

We also compete with many  manufacturers,  fabricators  and  distributors in the
sale of products made from glass fibers. In addition, we compete with many other
manufacturers  in the sale of roofing  materials for sloped roofing,  industrial
asphalts, vinyl siding, windows and patio doors and other products.

Methods of competition include product  performance,  price, terms,  service and
warranty.




<PAGE>


                                      - 7 -

ITEM 2.   PROPERTIES

PLANTS

Owens  Corning's  principal  plants as of December 31, 2000, are listed below by
operating  segment  and  primary  products,  and are owned  except as noted.  We
consider that these  properties are in good condition and well  maintained,  and
are suitable and adequate to carry on our  business.  The capacity of each plant
varies depending upon product mix.

Certain  of the  facilities  listed  below  are  shown as  "leased"  properties.
Pursuant to the  Bankruptcy  Code,  Owens  Corning and the other  Debtors in the
Chapter 11 Cases may elect to reject or assume  unexpired  pre-petition  leases.
The Debtors are currently reviewing the leases for which such an election exists
to determine  whether they should be accepted or rejected.  The Bankruptcy Court
has extended the time period within which the Debtors must make their  elections
through June 4, 2001, and may grant further extensions.  In the process of their
review,  the Debtors may conclude  that certain of the  arrangements  constitute
secured  financings rather than leases,  in which event the applicable  facility
will be owned rather than leased.


<PAGE>


                                      - 8 -

BUILDING MATERIALS SYSTEMS

Thermal and Acoustical Insulation
<TABLE>
<S>                                                               <C>

           Delmar, New York                                        Newark, Ohio
           Eloy, Arizona                                           Palestine, Texas
           Fairburn, Georgia                                       Phenix City, Alabama (1)
           Kansas City, Kansas                                     Salt Lake City, Utah
           Ladysmith, Wisconsin                                    Santa Clara, California
           Mount Vernon, Ohio                                      Waxahachie, Texas

           Anshan, China                                           Guangzhou, China
           Babelegi, South Africa                                  Scarborough, Canada
           Candiac, Canada                                         Shanghai, China
           Edmonton, Canada                                        Springs, South Africa

(1)      Facility is leased.

Foam Insulation

           Rockford, Illinois                                      Tallmadge, Ohio

           Valleyfield, Canada                                     Volpiano, Italy (1)

(1)  Facility is leased.

Roofing and Asphalt Processing (one of each at every location, except as noted).

           Adelanto, California (1) (3)                            Jessup, Maryland
           Atlanta, Georgia                                        Kearny, New Jersey
           Brookville, Indiana (1)                                 Medina, Ohio
           Channelview, Texas (2)                                  Memphis, Tennessee
           Compton, California                                     Minneapolis, Minnesota
           Denver, Colorado                                        Morehead City, North
           Detroit, Michigan (2)                                       Carolina (2) (3)
           Ennis, Texas (2)                                        North Bend, Ohio (2)
           Ft. Lauderdale, Florida (2)                             Oklahoma City, Oklahoma (2)
           Houston, Texas                                          Portland, Oregon (4)
           Irving, Texas                                           Savannah, Georgia (1)
           Jacksonville, Florida                                   Summit, Illinois

(1)  Roofing plant only.
(2)  Asphalt processing plant only.
(3)  Facility is leased.
(4)  Two asphalt processing plants, as well as one roofing plant.

Glass Mat/Wet Chop

           Aiken, South Carolina                                   Jackson, Tennessee (1)
           Fort Smith, Arkansas

(1)  Facility is leased.
</TABLE>

<PAGE>


                                      - 9 -

OEM Solutions Group
<TABLE>

<S>                                                                        <C>
     Angola, Indiana                                               Indianapolis, Indiana (1)
     Athens, Alabama                                               Johnson City, Tennessee (1)
     Cleveland, Tennessee (1)                                      Los Angeles, California (1)
     Columbus, Ohio (1)                                            Louisville, Kentucky (1)
     Dallas, Texas (1)                                             Montgomery, Alabama (1)
     Grand Rapids, Michigan (1)                                    Oklahoma City, Oklahoma (1)
     Hazleton, Pennsylvania (1)                                    Springfield, Tennessee (1)
     Hebron, Ohio                                                  Tiffin, Ohio (1)

     Brantford, Canada

(1)  Facility is leased.

Manufactured Housing/Recreational Vehicles/Specialty Parts

           Douglas, Georgia                                        Plant City, Florida (1)
           Goshen, Indiana                                         Waco, Texas (1)
           Nappanee, Indiana

(1)  Facility is leased.

Metal Products

           Ashville, Ohio                                          Bellwood, Virginia
           Beloit, Wisconsin (1)                                   Roxboro, North Carolina (2)

(1)  Facility is leased.
(2)  Two facilities, one of which is leased.

Cultured Stone Products

           Chester Co., South Carolina (1)                         Navarre, Ohio
           Napa, California (2)

(1)      Under construction.
(2)      Facility is leased.

Vinyl Siding

           Atlanta, Georgia (1)                                    Joplin, Missouri
           Claremont, North Carolina                               Olive Branch, Mississippi

           London, Ontario                                         Mission, British Columbia

(1) Facility is leased.
</TABLE>


<PAGE>


                                     - 10 -

Windows/Patio Doors

           Bradenton, Florida

In addition,  Owens Corning has approximately 185 Specialty Distribution Centers
in 36 states in the U.S.

COMPOSITE SYSTEMS

Textiles and Reinforcements
<TABLE>

<S>                                                                                         <C>
           Amarillo, Texas                                         Huntingdon, Pennsylvania (1)
           Anderson, South Carolina                                New Braunfels, Texas (1)
           Duncan, South Carolina (1)

           Apeldoorn, The Netherlands                              Liversedge, United Kingdom
           Battice, Belgium                                        Rio Claro, Brazil
           Birkeland, Norway                                       San Vincente deCastellet/
           Guelph, Canada                                            Barcelona, Spain
           Kimchon, Korea                                          Springs, South Africa
           L'Ardoise, France                                       Wrexham, United Kingdom

(1)  Facility is leased.

Engineered Pipe Systems

           Bagneres-De-Bigorre, France (1)                         Sandefjord, Norway (2)

(1)  Facility is leased.
(2)  Facility is partly leased.
</TABLE>

OTHER PROPERTIES

Owens Corning's principal executive offices of approximately 400,000 square feet
are located in the Owens Corning World Headquarters, Toledo, Ohio.

Owens Corning's research and development  activities are primarily  conducted at
our Science and Technology  Center,  located on approximately  500 acres of land
outside  Granville,  Ohio. It consists of more than 20 structures  totaling more
than 600,000 square feet. Owens Corning also has Application Development Centers
in Battice, Belgium; Shanghai, China; and Bangalore, India.

ITEM 3.   LEGAL PROCEEDINGS

The paragraphs in Note 19 to Owens Corning's  Consolidated Financial Statements,
entitled  "Contingent  Liabilities",   on  pages  92  through  103  hereof,  are
incorporated here by reference.

On October 5, 2000,  Owens  Corning  and 17 of its United  States  subsidiaries,
including Fibreboard Corporation (collectively,  the "Debtors"), filed voluntary
petitions  for relief  (the  "Filing")  under  Chapter  11 of the United  States
Bankruptcy Code (the "Bankruptcy Code") in the United States

<PAGE>




                                     - 11 -

Bankruptcy  Court for the District of Delaware  (the  "Bankruptcy  Court").  The
Debtors are currently  operating their  businesses as  debtors-in-possession  in
accordance with  provisions of the Bankruptcy  Code. The Chapter 11 cases of the
Debtors  (collectively,  the "Chapter 11 Cases") are being jointly  administered
under Case No. 00-3837 (JKF).  The Company  anticipates that  substantially  all
liabilities  of the Debtors as of the date of the Filing will be resolved  under
one or more  Chapter 11 plans of  reorganization  to be proposed and voted on in
the Chapter 11 Cases in accordance  with the provisions of the Bankruptcy  Code.
As a consequence of the Filing,  all pending  litigation  against the Debtors is
stayed  automatically  by section 362 of the Bankruptcy Code and, absent further
order of the  Bankruptcy  Court,  no party  may take any  action to  recover  on
pre-petition  claims against the Debtors.  Please see Note 1 to the Consolidated
Financial Statements.

Securities  and  Exchange  Commission  rules  require  us  to  describe  certain
governmental  proceedings  arising under federal,  state or local  environmental
provisions  unless we  reasonably  believe  that the  proceeding  will result in
monetary sanctions of less than $100,000.  The following  proceeding is reported
in response to this requirement. Based on the information presently available to
us, however,  we believe that the costs which may be associated with this matter
will not have a materially adverse effect on Owens Corning's  financial position
or results of operations.

         As previously reported, Owens Corning has received information that the
         Ohio   Environmental   Protection   Agency  may  be   contemplating  an
         enforcement  action  relating  to our  plant  in  Newark,  Ohio.  It is
         believed  that this matter  primarily  involves  alleged  air  emission
         violations that occurred in the early 1990's.

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Owens Corning has nothing to report under this Item.



<PAGE>


                                     - 12 -

                       Executive Officers of Owens Corning
                            (as of February 28, 2001)

The name,  age and  business  experience  during  the past  five  years of Owens
Corning's  executive officers as of February 28, 2001, are set forth below. Each
executive  officer  holds  office  until his or her  successor  is  elected  and
qualified or until his or her earlier  resignation,  retirement or removal.  All
those  listed have been  employees of Owens  Corning  during the past five years
except as indicated.
<TABLE>
<S>                                                                   <C>

Name and Age                                                       Position*

Glen H. Hiner (66)                        Chairman of the Board and Chief  Executive  Officer  since  January 1992.
                                          Director since 1992.


Rhonda L. Brooks (49)                     Vice  President and  President,  Exterior  Systems  Business  since April
                                          2000;  formerly Vice President and President,  Roofing  Systems  Business
                                          (1998),  Vice President,  Investor  Relations (1997), and Vice President,
                                          Marketing, Composites.


David T. Brown (52)                       Executive  Vice  President and Chief  Operating  Officer  since  February
                                          2001;   formerly  Vice  President  and  President,   Insulating   Systems
                                          Business (1998),  Vice President and President,  Building Materials Sales
                                          and   Distribution    (1996),   and   Vice   President   and   President,
                                          Roofing/Asphalt.


Deyonne F. Epperson (44)                  Vice  President  and  Controller  since  February  2000;   formerly  Vice
                                          President,  Corporate Audit (1997) and Director,  Corporate Treasury,  at
                                          Honeywell, Inc.


David L. Johns (42)                       Senior  Vice  President  and Chief  Technology  Officer  since  September
                                          1999;   formerly  Chief  Information   Officer  (1994),   and  Management
                                          Position, Global Resource Center, at Honeywell, Inc.


George E. Kiemle (53)                     Vice  President  and  President,   Insulating   Systems   Business  since
                                          February  2001;  formerly  Vice  President,   Manufacturing,   Insulating
                                          Systems Business.


Richard D. Lantz (49)                     Vice  President  and  President,  Roofing  Solutions  Business  since May
                                          2000;  formerly Vice President and President,  System  Thinking Sales and
                                          Distribution  Business  (1998),  Vice  President - Marketing,  Insulation
                                          Business (1997),  Vice President,  Marketing and Sales Support,  Building
                                          Materials Sales and Distribution  (1996), and Vice President,  Marketing,
                                          Roofing and Asphalt.



<PAGE>


                                     - 13 -

Name and Age                              Position*


Edward Mirra, Jr. (61)                    Senior Vice President,  Human  Resources  since July 2000;  formerly Vice
                                          President of Roofing  Operations  (1998),  and Vice  President,  Trumbull
                                          Asphalt.


Heinz-J. Otto (51)                        Vice President and President,  Composites  Systems Business since October
                                          1996;  formerly  Member of the Executive  Board and Head of Region Europe
                                          at Landis & Gyr Corp.


Maura Abeln Smith (45)                    Chief   Restructuring   Officer  since  November  2000  and  Senior  Vice
                                          President,  General Counsel and Secretary  since February 1998;  formerly
                                          Vice President and General Counsel of GE Plastics.


Michael H. Thaman (36)                    Senior  Vice  President  and Chief  Financial  Officer  since April 2000;
                                          formerly  Vice  President  and  President,   Exterior   Systems  Business
                                          (1999),  Vice President and President,  Engineered  Pipe Systems  (1997),
                                          General  Manager,  OEM  Solutions  Group  (1996),  and  Plant  Manager  -
                                          Toronto, Canada.

</TABLE>

*Information in parentheses indicates year in which service in position began.


<PAGE>


                                     - 14 -

                                     Part II

ITEM 5.   MARKET FOR OWENS CORNING'S COMMON EQUITY AND RELATED
          STOCKHOLDER MATTERS

The principal  market on which Owens Corning's common stock is traded is the New
York Stock  Exchange.  The high and low sales  prices in  dollars  per share for
Owens  Corning's  common  stock  as  reported  in the  consolidated  transaction
reporting  system  for each  quarter  during  1999 and 2000 are set forth in the
following tables.
<TABLE>

<S>                          <C>          <C>                <C>                  <C>            <C>
    1999                    High          Low                2000                 High           Low
---------------------------------------------------       ----------------------------------------------

First Quarter               37-5/8        28-11/16        First Quarter           20-3/8         13-5/8

Second Quarter              43-3/4        30-13/16        Second Quarter          20-15/16       9-15/64

Third Quarter               35-15/16      21-11/16        Third Quarter           10-1/8         2-3/4

Fourth Quarter              22-7/8        14-9/16         Fourth Quarter          2-1/4          3/4
---------------------------------------------------       ----------------------------------------------
</TABLE>

The number of stockholders of record of Owens Corning's common stock on February
28, 2001 was 6,808.

Owens Corning declared regular  dividends of $.075 per share of common stock for
each of the first three  quarters of 2000 and for each of the  quarters of 1999.
As a result of the Filing on October 5, 2000,  Owens Corning (1) did not pay the
regular  dividend  declared  for the third  quarter of 2000 and (2) will not pay
additional cash dividends for the foreseeable future.



<PAGE>


                                     - 15 -

ITEM 6.   SELECTED FINANCIAL DATA

The following is a summary of certain financial information of the Company.
<TABLE>

<S>                                                <C>            <C>         <C>             <C>            <C>
                                                   2000 (a)       1999        1998(c)         1997(d)        1996(e)
                                                   --------       ----        -------         -------        -------
                                                 (In millions of dollars, except per share data and where noted)

Net sales                                       $ 4,940      $  5,048       $   5,009       $   4,373     $   3,832
Cost of sales                                     4,014          3,815          3,933           3,482          2,840
Marketing, administrative
   and other expenses                               659            594            668             572            523
Science and technology
  expenses                                           52             61             59              69             84
Restructure costs                                    32              -            117              68             38
Provision for asbestos litigation
  claims                                            790              -          1,415               -            875
Chapter 11 related reorganization
   items                                             24              -              -               -              -
Gain on sale of assets                                -              -            359               -             37
Income (loss) from operations                      (631)           578           (824)            182           (491)
Cost of borrowed funds                              155            152            140             111             77
Other                                                 5              -              -               -              -
Income (loss) before provision
  for income taxes                                 (791)           426           (964)             71           (568)
Provision (credit) for income
  taxes                                            (312)           149           (306)              9           (283)
Net income (loss)                                  (478)           270           (705)             47           (284)
Net income (loss) per share
   Basic                                          (8.71)          4.98         (13.16)            .89          (5.54)
   Diluted                                        (8.71)          4.67         (13.16)            .88          (5.54)
Dividends per share on common
  stock
    Declared                                     0.1523       0.3000          .3000           .2750            .1250
    Paid                                         0.2277       0.3000          .3000           .2625            .0625
Weighted-average number of
  shares outstanding (in thousands)
    Basic                                        54,816         54,083         53,579          52,860         51,349
    Diluted                                      54,816         59,452         53,579          53,546         51,349
Net cash flow from operations                      (190)           (28)           124             131            335
Capital spending                                    476            244            253             227            325
Total assets                                      6,912          6,494          5,101           4,996          3,913
Long-term debt (b)                                    7          1,764          1,535           1,595            818
Liabilities subject to compromise (b)             6,935              -              -               -              -
Average number of employees
  (in thousands)                                     20             21             20              22             19
</TABLE>

(a)      During 2000, the Company recorded a pretax charge of $790 million ($486
         million  after-tax) for asbestos  litigation claims and a pretax charge
         of $229 million ($149 million  after-tax) for  restructuring  and other
         actions.


<PAGE>


                                     - 16 -

ITEM 6.   SELECTED FINANCIAL DATA (continued)

(b)      On  October  5,  2000,  Owens  Corning  and  17 of  its  United  States
         subsidiaries  filed voluntary  petitions for relief under Chapter 11 of
         the United States  Bankruptcy  Code. In accordance with AICPA Statement
         of Position  90-7  "Financial  Reporting by Entities in  Reorganization
         under the  Bankruptcy  Code,"  beginning in October  2000,  the Company
         classifies  substantially  all pre-petition  liabilities of the Debtors
         (Note 1) as  "Liabilities  Subject to Compromise"  on the  Consolidated
         Balance Sheet. Included in this item at December 31, 2000 were:
<TABLE>

<S>                                                                                               <C>
                                                                                                  2000
                                                                                                  ----
                                                                                         (amounts in millions)

  Accounts payable                                                                         $       255
  Accrued interest payable                                                                          39
  Accrued liabilities                                                                               72
  Debt                                                                                           2,832
  Income taxes payable                                                                             214
  Reserve for asbestos litigation claims - Owens Corning (Note 19)                               2,249
  Reserve for asbestos litigation claims - Fibreboard (Notes 19 and 20)                          1,274
                                                                                            ----------

         Total consolidated                                                                      6,935

         Payables to non-debtors                                                                   688
                                                                                           -----------

         Total debtor                                                                        $   7,623
                                                                                             =========
</TABLE>

(c)      During 1998,  the Company  recorded a pretax  charge of $1.415  billion
         ($906  million  after-tax)  for asbestos  litigation  claims,  a pretax
         charge of $243 million ($171 million  after-tax) for  restructuring and
         other  actions,  a pretax  net  credit of $275  million  ($165  million
         after-tax) from the sale of the Company's yarns and other businesses, a
         pretax  credit of $84 million ($52 million  after tax) from the sale of
         its  ownership  interest  in  Alpha/Owens-Corning,  LLC, a $39  million
         after-tax  extraordinary  loss from the early retirement of debt, and a
         $10 million charge for various tax adjustments.

(d)      During 1997, the Company recorded a pretax charge of $143 million ($104
         million after-tax) for restructuring and other actions as well as a $15
         million  after-tax  charge for the  cumulative  effect of the change in
         method of accounting  for business  process  reengineering  costs.  The
         incremental  sales from the 1997  acquisitions were $534 million during
         1997.

(e)      During 1996,  the Company  recorded a net pretax charge of $875 million
         ($542  million  after-tax)  for  asbestos  litigation  claims  that
         may be received after 1999 and probable  additional  insurance
         recovery;  special charges totaling $42 million ($27 million  after-
         tax)  including  valuation adjustments   associated  with  prior
         divestitures,   major  product  line productivity   initiatives   and
         a  contribution   to  the   Owens-Corning Foundation;  a pretax charge
         of $43 million  ($26 million  after-tax)  for restructuring  and other
         actions;  a $27 million  reduction of tax reserves due to favorable
         legislation; and a pretax gain of $37 million ($27 million after-tax)
         from the sale of the Company's  ownership interest in its former
         Japanese affiliate, Asahi Fiber Glass Co. Ltd.
 <PAGE>


                                     - 17 -

ITEM 7.   MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL
          CONDITION AND RESULTS OF OPERATIONS

(All per share information discussed below is on a diluted basis.)

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations contains forward-looking statements within the meaning of Section 27A
of the  Securities  Act of 1933, as amended,  and Section 21E of the  Securities
Exchange Act of 1934, as amended.  These forward-looking  statements are subject
to risks and uncertainties  that could cause actual results to differ materially
from those projected in the statements.  Some of the important  factors that may
influence  possible  differences are continued  competitive  factors and pricing
pressures,  material  costs,  construction  activity,  interest rate  movements,
issues involving implementation of new business systems, achievement of expected
cost  reductions,  development  in and the outcome of the Chapter 11 proceedings
described below, and general economic conditions.

GENERAL

Voluntary Petition for Relief Under Chapter 11

On October 5, 2000 (the "Petition Date"), Owens Corning and the 17 United States
subsidiaries  listed  below  (collectively,   the  "Debtors"),  filed  voluntary
petitions  for relief  (the  "Filing")  under  Chapter  11 of the United  States
Bankruptcy Code (the  "Bankruptcy  Code") in the United States  Bankruptcy Court
for the District of Delaware (the "Bankruptcy Court"). The Debtors are currently
operating  their   businesses  as   debtors-in-possession   in  accordance  with
provisions  of the  Bankruptcy  Code.  The  Chapter  11  cases  of  the  Debtors
(collectively, the "Chapter 11 Cases") are being jointly administered under Case
No.  00-3837  (JKF).  The Chapter 11 Cases do not include  other  United  States
subsidiaries of Owens Corning or any of its foreign subsidiaries  (collectively,
the  "Non-Debtor  Subsidiaries").  The subsidiary  Debtors that filed Chapter 11
petitions for relief are:
<TABLE>

<S>                                                  <C>
         CDC Corporation                             Integrex Testing Systems LLC
         Engineered Yarns America, Inc.              HOMExperts LLC
         Falcon Foam Corporation                     Jefferson Holdings, Inc.
         Integrex                                    Owens-Corning Fiberglas Technology Inc.
         Fibreboard Corporation                      Owens Corning HT, Inc.
         Exterior Systems, Inc.                      Owens-Corning Overseas Holdings, Inc.
         Integrex Ventures LLC                       Owens Corning Remodeling Systems, LLC
         Integrex Professional Services LLC          Soltech, Inc.
         Integrex Supply Chain Solutions LLC
</TABLE>

The Debtors filed for relief under Chapter 11 to address the growing  demands on
Owens  Corning's  cash flow  resulting from its  multi-billion  dollar  asbestos
liability.  This  liability  is  discussed  in greater  detail in Note 19 to the
Consolidated Financial Statements.

Consequence of Filing

As a consequence of the Filing,  all pending  litigation  against the Debtors is
stayed  automatically  by section 362 of the Bankruptcy Code and, absent further
order of the  Bankruptcy  Court,  no party  may take any  action to  recover  on
pre-petition claims against the Debtors. In addition, pursuant to section 365 of
the Bankruptcy Code, the Debtors may reject or assume pre-petition executory

<PAGE>


                                     - 18 -

ITEM 7.   MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL
          CONDITION AND RESULTS OF OPERATIONS (continued)

contracts  and unexpired  leases,  and other parties to contracts or leases that
are rejected may assert rejection  damages claims as permitted by the Bankruptcy
Code.

Two creditors'  committees,  one representing  asbestos  claimants and the other
representing unsecured creditors,  have been appointed as official committees in
the Chapter 11 Cases and, in accordance  with the  provisions of the  Bankruptcy
Code,  will  have the right to be heard on all  matters  that  come  before  the
Bankruptcy Court. Owens Corning expects that the appointed committees,  together
with a legal  representative of future asbestos claimants to be appointed by the
Bankruptcy  Court,  will play  important  roles in the  Chapter 11 Cases and the
negotiation of the terms of any plan or plans of reorganization.

Owens Corning  anticipates that  substantially all liabilities of the Debtors as
of the date of the Filing will be resolved under one or more Chapter 11 plans of
reorganization to be proposed and voted on in the Chapter 11 Cases in accordance
with the provisions of the Bankruptcy Code.  Although the Debtors intend to file
and seek  confirmation of such a plan or plans,  there can be no assurance as to
when the Debtors will file such a plan or plans, or that such plan or plans will
be confirmed by the Bankruptcy Court and consummated.

As provided by the  Bankruptcy  Code,  the Debtors  initially  had the exclusive
right to propose a plan of  reorganization  for 120 days  following the Petition
Date, until February 2, 2001. On January 17, 2001, the Bankruptcy Court extended
such  exclusivity  period  until  August 2, 2001,  and  similarly  extended  the
Debtors' exclusive rights to solicit  acceptances of a reorganization  plan from
April  3,  2001  to  October  3,  2001.  If the  Debtors  fail to file a plan of
reorganization  during such period or any extension thereof,  or if such plan is
not accepted by the requisite  numbers of creditors and equity holders  entitled
to vote on the plan,  other  parties in  interest in the Chapter 11 Cases may be
permitted to propose their own plan(s) of reorganization for the Debtors.

Owens  Corning is unable to predict at this time what the treatment of creditors
and equity holders of the respective  Debtors will be under any proposed plan or
plans of  reorganization.  Such plan or plans may provide,  among other  things,
that all present and future  asbestos-related  liabilities  of Owens Corning and
Fibreboard  will  be  discharged  and  assumed  and  resolved  by  one  or  more
independently  administered trusts established in compliance with Section 524(g)
of the Bankruptcy  Code. Such plan or plans may also provide for the issuance of
an  injunction  by the  Bankruptcy  Court  pursuant  to  Section  524(g)  of the
Bankruptcy Code that will enjoin actions against the reorganized Debtors for the
purpose of, directly or indirectly,  collecting, recovering or receiving payment
of,  on,  or with  respect  to any  claims  resulting  from  asbestos-containing
products  allegedly  manufactured,   sold  or  installed  by  Owens  Corning  or
Fibreboard, which claims will be paid in whole or in part by one or more Section
524(g)  trusts.  Similar  plans of  reorganization  have been  confirmed  in the
Chapter 11 cases of other  companies  involved in  asbestos-related  litigation.
Section  524(g) of the  Bankruptcy  Code  provides  that,  if certain  specified
conditions are satisfied,  a court may issue a supplemental permanent injunction
barring  the  assertion  of  asbestos-related  claims  or  demands  against  the
reorganized company and channeling those claims to an independent trust.

Owens Corning is unable to predict at this time what  treatment will be accorded
under  any such  reorganization  plan or plans  to  inter-company  indebtedness,
licenses,   transfers  of  goods  and  services  and  other   inter-company  and
intra-company arrangements, transactions and relationships that were

<PAGE>


                                     - 19 -

ITEM 7.   MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL
          CONDITION AND RESULTS OF OPERATIONS (continued)

entered into prior to the  Petition  Date.  These
arrangements,  transactions  and  relationships  may be  challenged  by  various
parties in the Chapter 11 Cases and the outcome of those challenges, if any, may
have an impact on the treatment of various claims under such plan or plans.  For
example, Owens Corning is unable to predict at this time what the treatment will
be under any such plan or plans  with  respect to (1) the  guaranties  issued by
certain of Owens Corning's U.S. subsidiaries,  including Owens-Corning Fiberglas
Technology  Inc.  ("OCFT") and IPM, Inc.  ("IPM",  a Non-Debtor  Subsidiary that
holds  Owens  Corning's  ownership  interest  in a majority  of Owens  Corning's
foreign subsidiaries), with respect to Owens Corning's $1.8 billion pre-petition
bank  credit  facility  (the  "Pre-Petition  Credit  Facility"  which  is now in
default)  or (2) OCFT's  license  agreements  with Owens  Corning  and  Exterior
Systems, Inc., a wholly-owned subsidiary of Owens Corning ("Exterior"), pursuant
to which OCFT licenses intellectual property to Owens Corning and Exterior.

The  Bankruptcy  Court may  confirm a plan of  reorganization  only upon  making
certain  findings  required by the Bankruptcy  Code, and a plan may be confirmed
over the  dissent of  non-accepting  creditors  and equity  security  holders if
certain  requirements  of the  Bankruptcy  Code are met. The payment  rights and
other  entitlements of pre-petition  creditors and Owens Corning's  shareholders
may be substantially altered by any plan or plans of reorganization confirmed in
the Chapter 11 Cases. There is no assurance that there will be sufficient assets
to satisfy the Debtors'  pre-petition  liabilities  in whole or in part, and the
pre-petition  creditors of some Debtors may be treated differently than those of
other  Debtors.  Pre-petition  creditors  may receive under a plan or plans less
than  100% of the  face  value  of  their  claims,  and the  interests  of Owens
Corning's equity security  holders may be substantially  diluted or cancelled in
whole or in part. As noted above, it is not possible at this time to predict the
outcome of the Chapter 11 Cases,  the terms and  provisions of any plan or plans
of reorganization, or the effect of the Chapter 11 reorganization process on the
claims of the  creditors  of the  Debtors or the  interests  of Owens  Corning's
equity security holders.

Pursuant to the Bankruptcy  Code,  schedules have been filed by the Debtors with
the Bankruptcy  Court setting forth the assets and liabilities of the Debtors as
of the date of the Filing.  Differences  between amounts recorded by the Debtors
and claims filed by creditors will be  investigated  and resolved as part of the
proceedings  in the Chapter 11 Cases.  No bar dates have been set for the filing
of proofs of claim  against the Debtors.  Accordingly,  the ultimate  number and
allowed amount of such claims are not presently known.

RESULTS OF OPERATIONS

Business Overview
-----------------

Owens Corning is committed to continuing to invest in our businesses and provide
quality  products  to our  customers.  In  recent  years,  we  have  focused  on
increasing  sales and earnings by (i) achieving  productivity  improvements  and
cost  reductions  in existing and acquired  businesses,  (ii)  targeting  growth
markets and (iii) forming strategic alliances and partnerships to complement our
existing businesses. Our two major initiatives, the System Thinking(TM) strategy
and Advantage 2000, have favorably  impacted sales and  productivity  across all
businesses.  We are also  committed  to  taking  full  advantage  of  e-Business
opportunities.  We are also expanding our role as a service provider by offering
complementary  services  in order to meet all of our  consumers'  needs.  In the
Composite  Systems Business,  Owens Corning has partnered with end users,  OEMs,
systems  suppliers and other players within the supply chain for  development of
substitution opportunities for composite systems.


<PAGE>


                                     - 20 -

ITEM 7.   MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL
          CONDITION AND RESULTS OF OPERATIONS (continued)

Owens  Corning's   strategy  also  includes  the  divestiture  of  non-strategic
businesses and the realignment of existing businesses. This strategy resulted in
the sale of our Falcon  Foam  business in the U.S.  during the first  quarter of
2000 and the sale of our Building Materials business in Europe during the second
quarter of 2000 to an unconsolidated  joint venture,  Alcopor Owens Corning,  in
which we  maintained a 40% ownership  interest.  Please see Notes 2 and 6 to the
Consolidated Financial Statements.

During 1999, we realized the benefits of pricing improvements applicable to many
of our products and cost reductions  resulting from  restructuring  programs and
other productivity  initiatives.  These cost reductions and pricing improvements
have continued into the first half of 2000. However, during 2000, we experienced
significant  increases in certain of our costs,  particularly  roofing and vinyl
raw material costs,  due to higher crude oil prices and tight supply  conditions
for polyvinyl chloride (PVC),  respectively.  Increased energy costs, reflecting
changes in the  availability of natural gas, also  contributed to cost increases
during  2000.  These  increases,  coupled  with a fall in  demand  for  building
materials,  associated  with a  weakening  economy,  significantly  reduced  our
margins  and income  from  operations  for the second half of the year and, as a
result, for the full year.

As a  result,  during  2000  we  implemented  the  first  phase  of a  strategic
restructuring  program. The specific objectives of this program are discussed in
"Restructuring  of  Operations  and  Other  Charges"  below and in Note 5 to the
Consolidated Financial Statements.

Years Ended December 31, 2000, 1999 and 1998
--------------------------------------------

Sales and Profitability
-----------------------

Net sales for the year ended December 31, 2000, were $4.940  billion,  a decline
from the 1999 level of $5.048  billion.  Net sales in 1998 were $5.009  billion.
Adjusted for the  disposition of the Falcon Foam and Building  Materials  Europe
businesses,  sales in 2000  reflect an  increase  of  approximately  one percent
compared to 1999.  Sales in 2000 reflect the benefits of price  increases in the
Building  Materials  business,  primarily in the U.S., as well as both price and
volume increases in the Composites  business,  particularly in Europe. The price
increases in the U.S. reflect, in part, the partial pass-through of raw material
cost increases.  Partially offsetting these increases was a decline in volume in
the U.S. Building Materials business. This downward trend appears to be industry
wide,  as the  housing  market  appears to be slowing  due to sharply  increased
interest  rates in the first six months of 2000 resulting in declines in housing
starts  and  the  remodeling  market.  Additionally,   the  impact  of  currency
translation on sales  denominated in foreign  currencies was unfavorable  during
2000 compared to 1999, reflecting a stronger U.S. dollar during 2000. Please see
Note 2 to the Consolidated Financial Statements.

Sales  outside  the U.S.  represented  16% of  total  sales  for the year  ended
December 31, 2000,  compared to 18% during 1999 and 19% during 1998. The decline
in non-U.S.  sales is due to the sale of the Building Materials Europe business.
Gross margin for 2000 was 19% of net sales,  compared to 24% and 21% in 1999 and
1998,  respectively.  The  decrease  in gross  margin  percentage  reflects  the
increase during 2000 in raw material costs of  approximately  $222 million,  the
majority of which related to asphalt and PVC resin,  and increased  energy costs
during 2000. Approximately half of the increase in raw material costs was passed
through to customers.  Lower volumes in Building Materials  negatively  impacted
both revenue and cost absorption, resulting in a decline in gross margin.


<PAGE>


                                     - 21 -

ITEM 7.   MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL
          CONDITION AND RESULTS OF OPERATIONS (continued)

For the year ended December 31, 2000,  Owens Corning reported a net loss of $478
million,  or $8.71 per share,  compared to net income of $270 million,  or $4.67
per share,  for 1999 and a net loss of $705  million,  or $13.16 per share,  for
1998.  The net loss in 2000  reflects  the decrease in gross  margin,  primarily
reflecting  the adverse  impact of increased raw material and energy  costs,  as
discussed  above.  It also reflects the following  special items: a $790 million
pretax charge ($486 million  after-tax) for asbestos  litigation  claims, a $229
million  pretax  charge ($149 million  after-tax)  for  restructuring  and other
charges, and $24 million of Chapter 11 reorganization related expenses.  Cost of
borrowed  funds  during  2000 was $155  million,  $3 million  higher  than 1999,
resulting from increased debt and higher  interest rates during 2000,  partially
offset  by the  cessation  of  interest  costs  during  the  fourth  quarter  on
pre-petition debt of Debtors (totaling approximately $52 million) as a result of
the Filing,  described above.  Marketing and  administrative  expenses were $542
million during 2000, compared to $599 million in 1999. The decrease is primarily
attributable to cost cutting measures introduced in 2000.

We reported a $631 million loss from operations.  When adjusted for the asbestos
litigation  claims cost, the cost of  restructuring  and other charges,  and the
Chapter 11 related expenditures  detailed in the prior paragraph,  Owens Corning
generated $412 million in income from operations for the year ended December 31,
2000  compared to $578  million for the same  period in 1999.  On a  comparative
basis,  the decline  from 1999  reflects the adverse  effects of  increased  raw
material and energy costs that were not fully passed through in price increases.
Additionally, lower volumes and product mix in building materials contributed to
a decline in income from operations. This, however, was partially offset through
curtailment in operating expenses and productivity initiatives.

Net income in 1999 reflects an increase in gross margin over 1998,  attributable
primarily to pricing improvements,  particularly in U.S. residential  insulation
markets,  and the incremental  benefits of the cost-saving  programs implemented
throughout  1999 and 1998.  Net  income in 1999 also  reflects  a tax  credit of
approximately  $13  million  for a special  tax  election  associated  with U.K.
operations. During 1999, cost of borrowed funds was $152 million, up $12 million
from  1998.  The  increase  was  primarily  the  result of higher  average  debt
outstanding  during 1999.  Marketing and  administrative  expenses  totaled $599
million in 1999, up slightly from the 1998 level,  resulting from growth funding
and partially offset by incremental restructuring benefits.

The net loss in 1998  included a $1.415  billion  pretax  charge  ($906  million
after-tax) for asbestos  litigation  claims,  a $243 million pretax charge ($171
million after-tax) for restructuring and other actions and a $359 million pretax
gain ($217 million after-tax) from the sale of certain businesses. Also included
were manufacturing and operating expense  reductions  resulting from a strategic
restructuring  program.  The reduction in equity in net income of affiliates for
the year ended December 31, 1998,  reflects the first quarter 1998 sale of Owens
Corning's 50 percent ownership interest in Alpha/Owens Corning,  LLC. As part of
a debt realignment  strategy,  we repurchased,  via a tender offer, certain debt
securities  during the third quarter of 1998 and recorded an extraordinary  loss
of $39 million, or $.72 per share, net of related income taxes of $25 million.

Restructuring of Operations and Other Actions
---------------------------------------------

In conjunction with softening overall economic  conditions  occurring during the
second half of the year and the Filing on October 5, the Company  reassessed its
business strategies with respect to investments in certain ventures,  facilities
and overhead expenditures. As a result of this assessment, a $229 million pretax
charge to income from  operations  for  restructuring  and other  activities was
recorded  during the year 2000;  $203  million  in the  fourth  quarter  and $26
million in the third quarter.


<PAGE>


                                     - 22 -

ITEM 7.   MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL
          CONDITION AND RESULTS OF OPERATIONS (continued)

The fourth  quarter  charges,  totaling  $203 million  pretax,  consisted of $26
million associated with the restructuring of the Company's business segments and
$177 million for other actions, the majority of which represents  impairments of
long-lived assets. In addition,  the Company recorded a $6 million pretax credit
to  minority  interest  resulting  from  charges  related  to a  majority  owned
consolidated subsidiary.

The $26 million  restructure  charge has been classified as a separate component
of operating expenses on the Company's  Consolidated Statement of Income (Loss).
The components of the  restructuring  charge  included $16 million for personnel
reductions and $10 million for the divestiture of  non-strategic  businesses and
facilities, which consisted of $6 million for non-cash asset write-downs to fair
value and $4 million for exit cost liabilities, mostly removal of equipment. The
$16 million for personnel reductions represented severance costs associated with
the  elimination  of  approximately  340  positions,  primarily  in the U.S. The
primary groups affected included manufacturing and administrative  personnel. As
of December 31, 2000, approximately $2 million has been paid and charged against
the reserve for personnel reductions.

The  $177  million  of other  charges  was  comprised  of $84  million  of asset
impairments and $93 million of charges focused on improving business operations,
and was  accounted  for as a $77  million  charge  to cost of  sales  and a $100
million charge to other operating expenses.

Weakening economic  conditions  occurring  principally in the Building Materials
Europe and South Africa  markets,  along with the  constraints  on the Company's
ability  to provide  financial  support  as a result of its  bankruptcy  filing,
required  the Company to reassess  the carrying  amounts of its  investments  in
those regions. The reassessment  resulted in $84 million of charges, as follows:
1) $54 million to write-down  the  Company's  investment  and related  assets in
Alcopor  Owens  Corning,  a building  materials  joint  venture  in  Europe,  to
estimated fair value on a held for sale basis.  The write down to estimated fair
value resulted from a number of  significant  recent  developments,  including a
material unexpected softening of the building materials markets in Europe during
the  second  half of 2000  and  continuing  into  2001  and  constraints  on the
Company's  ability to provide  financial  support as a result of its  bankruptcy
filing.  The Company's board of directors has authorized  management to sell its
remaining 40% interest in the joint venture to the majority shareholder. The $54
million  charge,  which  was  recorded  as other  operating  expenses,  reflects
management's  current and best  estimates of the fair value of  investments  and
assets based on the current status of the sales  negotiation;  2) $12 million to
write-down the Company's investment in the majority-owned,  consolidated venture
in South Africa,  on a  held-in-use  basis based upon  management's  analysis of
current and expected future  financial  results and constraints on the Company's
ability to fund significant  future capital  investments in this subsidiary as a
consequence of the bankruptcy  filing.  The charge,  which was measured using an
analysis of estimated fair value of the related assets,  consisted of $8 million
to  write-down  fixed  assets,  charged  to cost of  sales,  and $4  million  to
write-down the remaining goodwill,  charged to other operating expenses. The $12
million charge was offset by a $6 million credit to record the minority  owner's
share,  recorded in the minority interest line on the Consolidated  Statement of
Income  (Loss);  3) $8 million  write-down to fair value the  investments in its
Pipe joint  ventures  and  subsidiaries  on a  held-for-sale  basis,  based upon
current best estimates of the expected loss on  disposition,  which consisted of
$3 million of equipment  write-down  recorded as cost of sales and $5 million as
other  operating  expenses.  The  sale  of a  majority  of the  investments  and
subsidiaries  held for sale was  completed  in March  2001;  4) $10  million  to
write-down the equity investment in ImproveNet, due to a significant decrease in
market  value which  management  believes is other than  temporary,  recorded as
other operating expenses.


<PAGE>


                                     - 23 -

ITEM 7.   MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL
          CONDITION AND RESULTS OF OPERATIONS (continued)

The Company  continues  to focus on  achieving  synergies  within its  strategic
businesses.   These   efforts   include   assessments   of  market   strategies,
manufacturing  capabilities,  product line  rationalization  and  infrastructure
requirements which maximize the Advantage 2000 enterprise-wide,  global computer
investments.  As a result of these assessments and ongoing  financial  analysis,
the Company  recorded  charges of $93 million  during the fourth  quarter  which
includes:  $43 million to write-down  inventory  made obsolete by changes in the
Company's   manufacturing  and  marketing  strategies  and  to  reflect  updated
estimates  of  the  net  realizable   value  and  carrying  amounts  of  certain
inventories,  recorded as cost of sales; $19 million to write-down equipment and
receivables,  recorded  $8  million  to cost of sales and $11  million  to other
operating  expenses;  $15 million to increase  warranty  reserves due to general
changes in estimates associated with these reserves,  recorded as cost of sales;
and various  other  charges  totaling  $16 million  recorded as other  operating
expenses.

During the third  quarter of 2000,  the Company  recorded a $26  million  pretax
charge for  restructuring  and other  actions.  This charge is comprised of a $6
million  pretax  restructure  charge and a $20 million  pretax  charge for other
actions.  The $6 million restructure charge has been classified  separately as a
component  of  operating  expenses on the  consolidated  statement of income and
represents asset impairments associated with the planned closing of two lines at
our Newark, Ohio manufacturing  facility. This restructure charge represents the
first phase of the Company's plan to realign  operations at the Newark facility.
The remaining $20 million of other actions is comprised of a $14 million  pretax
charge  to  other  operating  expenses,   representing  an  $11  million  charge
associated  with  asset   impairments   within  our  Cultured  Stone  and  other
businesses,  and a $3 million charge associated with severance costs for certain
employees;  and a $6  million  pretax  charge to  marketing  and  administrative
expenses, representing a settlement loss associated with one of our U.S. pension
plans.

During 1997 and 1998,  the Company  recorded  pretax charges of $386 million for
restructuring and other actions to implement the Company's  announced program to
close manufacturing  facilities,  enhance manufacturing  productivity and reduce
overhead.  Of the total pretax charge of $386 million, $143 million was recorded
in the fourth quarter of 1997 and the remaining $243 million was recorded during
1998.

The $386 million pretax charge was comprised of a $185 million charge associated
with the  restructuring  of the Company's  business  segments and a $201 million
charge  associated  with asset  impairments,  including  investments  in certain
affiliates.  The components of the restructuring charge include $115 million for
personnel   reductions;   $68  million  for  the  divestiture  of  non-strategic
businesses  and  facilities,  of which $52 million  represented  non-cash  asset
revaluations and $16 million  represented exit cost  liabilities,  primarily for
leased  warehouse and office  facilities  that were vacated;  and $2 million for
other  actions.  The  divestiture  of  non-strategic  businesses  and facilities
included the closure of the Candiac, Quebec manufacturing  facility.  During the
second  quarter of 1999,  the Candiac  manufacturing  facility was  re-opened in
order to meet  market  demands.  As of December  31,  2000,  approximately  $102
million has been paid and charged against the reserve for personnel  reductions,
representing the elimination of approximately  2,450 employees,  the majority of
whose  severance  payments  were  made over the  course  of 1998 and  1999,  and
approximately $13 million has been charged against exit cost liabilities.

Due to timing of events,  we anticipate that additional  restructuring and other
charges will be recorded during 2001.


<PAGE>


                                     - 24 -

ITEM 7.   MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL
          CONDITION AND RESULTS OF OPERATIONS (continued)

Building Materials Systems
--------------------------

In the Building Materials Systems segment,  sales decreased 4% in 2000, compared
to 1999,  resulting  mostly  from  the  Building  Materials  Europe  and  Falcon
transactions.  Excluding the sales related to these divestitures, sales remained
constant.  Volume  decreases in insulation and vinyl siding products were offset
by price  improvements  attributable to U.S.  roofing and vinyl siding products.
The constant level of sales in Building  Materials is associated with an overall
softness  in the  industry,  reflecting  a decline  in  housing  starts  and the
remodeling market during 2000.

Income from  operations  was $353  million in 2000,  compared to $523 million in
1999.  Income from  operations  in 2000  reflects  raw  material and energy cost
increases and volume  decreases,  only partially offset by price increases.  The
roofing and vinyl markets  suffered  most from the raw material cost  increases,
with  asphalt and PVC resin  increases  of  approximately  $185  million for the
entire  year 2000.  Due to the rapid rise in crude oil prices and  significantly
increased  demand for PVC during  2000,  Owens  Corning has been unable to fully
pass  through to  customers  the rapidly  rising costs of asphalt and PVC resin.
Actions taken during the year to improve  productivity  have partially  narrowed
the gap. Please see Note 2 to the Consolidated Financial Statements.

Composite Systems
-----------------

In the Composite Systems segment, sales during 2000 were up 7% compared to 1999,
to $932 million,  due to price  improvements and significant  volume  increases.
Price increases were seen across all markets,  especially in Europe,  and volume
increases  were  significant  in Europe and the U.S. The  translation  impact of
sales denominated in foreign  currencies was a loss of approximately $40 million
during 2000,  reflecting a stronger U.S. dollar. Income from operations was $108
million in 2000,  compared to $83 million in 1999,  reflecting  price and volume
increases, most notably in Europe, partially offset by production inefficiencies
in the  U.S.  and  Canada.  Please  see  Note 2 to  the  Consolidated  Financial
Statements.

Accounting Changes
------------------

We have  assessed the impact of SFAS 133 on our  financial  statements  and will
adopt this  accounting  change  effective  January 1, 2001. We have completed an
inventory of both our freestanding  derivatives,  including  forward  contracts,
option contracts,  currency swaps and interest rate swaps, and derivatives which
are embedded in other contracts.

Under the current literature and interpretations of the pronouncements,  we have
assessed our current  derivatives  position and have determined that adoption at
January 1, 2001,  would  result in a gain of  approximately  $20  million in net
income and a deferred gain of $1 million in other comprehensive income. However,
there are  additional  interpretations  currently  under review by the Financial
Accounting  Standards  Board which could  change the  accounting  treatment  and
classification of the affected instruments  resulting in only an immaterial gain
reflected in net income.

LIQUIDITY, CAPITAL RESOURCES AND OTHER RELATED MATTERS

Cash flow  from  operations  was a  negative  $190  million  for the year  ended
December 31, 2000,  versus  negative $28 million for the year ended December 31,
1999.  The  year-over-year  decline  in cash  flow  from  operations  is  driven
primarily by the decline in earnings in 2000 compared to 1999

<PAGE>


                                     - 25 -

ITEM 7.   MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL
          CONDITION AND RESULTS OF OPERATIONS (continued)

and the increased  cash used for accounts  receivable.  The increase in accounts
receivable reflects the termination of a $125 million receivables securitization
program in the U.S.  and a $49 million  reduction  in the  European  receivables
securitization  program.  Please  see  Note  11 to  the  Consolidated  Financial
Statements. Cash outflow for asbestos litigation claims in 2000 was $685 million
($521  million  for  claims  payments  and $164  million  paid  into  escrow  as
restricted cash) and was partially offset by insurance proceeds of $380 million.
This net  amount of $305  million  paid in 2000  compares  favorably  to the net
amount  of  $680  million  paid  in  1999.  Please  see  Notes  1 and  19 to the
Consolidated Financial Statements.

Inventories at December 31, 2000,  were $469 million,  an increase of $3 million
from the December 31, 1999 level.  Receivables  at December 31, 2000,  were $488
million, a $130 million increase over the December 31, 1999 level, primarily due
to the reduction of the receivables  securitization programs, less the impact of
the Building  Materials  Europe and Falcon Foam sales.  The decrease in accounts
payable and accrued  liabilities from $839 million at December 31, 1999, to $491
million at December 31, 2000, is a result of the Filing,  which caused  payables
of Debtors to be  reclassified  as subject to compromise.  At December 31, 2000,
our net  working  capital was $955  million and we had a current  ratio of 2.57,
compared to negative $828 million and .72,  respectively,  at December 31, 1999.
The change in working  capital  and  current  ratio is the direct  result of the
Filing, which reclassified all liabilities of Debtors outstanding at the date of
the  Filing to  subject to  compromise.  Please  see Note 1 to the  Consolidated
Financial Statements. Cash and cash equivalents at December 31, 2000, reflect an
increase of $480 million compared to December 31, 1999.

At December 31, 2000, we had $2.832 billion of borrowings  subject to compromise
and $75 million of other  borrowings  (of which $64 million were in default as a
consequence of the Filing). (See Note 3). Borrowings outstanding at December 31,
1999, were $1.991 billion.

At December 31, 2000, the Company had $550 million of Cash and Cash  Equivalents
(of which  approximately  $46  million is subject  to an  administrative  freeze
pending the resolution of certain alleged set-off rights which, upon approval of
the Bankruptcy  Court,  may be exercised by certain  pre-petition  lenders).  In
addition,  in connection  with the Filing,  the Debtors  obtained a $500 million
debtor-in-possession  credit  facility  from a group of  lenders  led by Bank of
America, N.A. (the "DIP Financing"). At December 31, 2000, this facility had not
been utilized except for approximately $15 million of standby letters of credit.

As a  consequence  of the Filing and the  impact of  certain  provisions  in the
Company's DIP Financing and in a cash management order entered by the Bankruptcy
Court, the Company and its subsidiaries are now subject to certain restrictions,
including on their  ability to transfer  cash and other assets to each other and
to their affiliates.

The Company believes,  based on information presently available to it, that cash
available  from  operations  and  the  DIP  Financing  will  provide  sufficient
liquidity to allow it to continue as a going concern for the foreseeable future.
However,  the ability of the Company to continue as a going  concern  (including
its  ability  to  meet  post-petition  obligations  of the  Debtors  and to meet
obligations of the Non-Debtor Subsidiaries) and the appropriateness of using the
going concern basis for its financial statements are dependent upon, among other
things,  (i) the Company's ability to comply with the terms of the DIP Financing
and any cash management order entered by the Bankruptcy Court in connection with
the Chapter 11 Cases,  (ii) the ability of the Company to maintain adequate cash
on hand, (iii) the ability of the Company to generate cash from operations,

<PAGE>


                                     - 26 -

ITEM 7.   MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL
          CONDITION AND RESULTS OF OPERATIONS (continued)

(iv) the ability of the Non-Debtor  Subsidiaries to obtain necessary  financing,
(v) confirmation of a plan or plans of reorganization under the Bankruptcy Code,
and  (vi)  the  Company's  ability  to  achieve  profitability   following  such
confirmation.

Capital spending for property, plant and equipment,  excluding acquisitions, was
$476  million  in 2000.  This  includes  approximately  $126  million of capital
expended as a result of our  Chapter 11 filing to purchase  some assets that had
been previously  leased. We anticipate that 2001 capital spending,  exclusive of
acquisitions and investments in affiliates,  will be approximately $300 million,
the majority of which is uncommitted. The Company expects that funding for these
expenditures will be from the Company's  operations and the credit  availability
from the DIP Financing.

Environmental Matters
---------------------

The Company has been deemed by the Environmental Protection Agency (EPA) to be a
Potentially  Responsible  Party  (PRP) with  respect to certain  sites under the
Comprehensive   Environmental   Response,   Compensation   and   Liability   Act
(Superfund). The Company has also been deemed a PRP under similar state or local
laws. In other instances, other PRPs have brought suits against the Company as a
PRP for contribution  under such federal,  state or local laws. During 2000, the
Company was designated as a PRP for three additional sites, while six cases were
closed  during  this  period.  At  December  31,  2000,  a total  of 43 such PRP
designations  remained  unresolved by the Company.  The Company is also involved
with  environmental  investigation  or remediation at a number of other sites at
which it has not been designated a PRP.

The Company has established a $27 million reserve for its Superfund (and similar
state, local and private action) contingent liabilities.  Based upon information
presently  available to the Company,  and without  regard to the  application of
insurance,   the  Company  believes  that,  considered  in  the  aggregate,  the
additional  costs  associated  with such contingent  liabilities,  including any
related  litigation  costs,  will not have a  materially  adverse  effect on the
Company's results of operations, financial condition or long-term liquidity.

The 1990  Clean  Air Act  Amendments  (Act)  provide  that  the EPA  will  issue
regulations  on a  number  of air  pollutants  over a  period  of  years.  These
regulations will define the monitoring and control  technology  requirements for
new and existing facilities to which the specific standard applies.  The Company
has determined the following  regulations will apply and may potentially  impact
its operations. In June 1999, the EPA issued regulations for wool fiberglass and
mineral wool production with compliance dates in 2002.  During the first quarter
of  2000,  EPA  issued   regulations   for  secondary   aluminum   smelting  and
amino/phenolic  resin production with compliance dates in 2003. During 2000, EPA
proposed  regulations  for metal  coil  coating  and wet formed  fiberglass  mat
production,  anticipating  final issue in 2001.  The EPA's  currently  announced
schedule is to propose regulations covering fiber-reinforced plastics production
and asphalt  roofing and processing in 2001 and issue final  regulations in 2002
with  implementation as to existing sources up to three years thereafter.  Based
on information now known to the Company, including the nature and limited number
of regulated  materials it emits,  the Company does not expect the Act to have a
materially  adverse  effect on the Company's  results of  operations,  financial
condition or long-term liquidity.


<PAGE>


                                     - 27 -

ITEM 7A.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The  Company is exposed  to the impact of changes in foreign  currency  exchange
rates and interest rates in the normal course of business.  The Company  manages
such exposures  through the use of certain  financial and  derivative  financial
instruments.  The  Company's  objective  with  these  instruments  is to  reduce
exposure to fluctuations  in earnings and cash flows  associated with changes in
foreign currency exchange rates and interest rates.

The Company enters into various forward  contracts and options,  which change in
value as foreign currency exchange rates change, to preserve the carrying amount
of foreign  currency-denominated  assets, liabilities,  commitments, and certain
anticipated foreign currency transactions and earnings.

The Company also enters into certain currency and interest rate swaps to protect
the carrying amount of its investments in certain foreign subsidiaries, to hedge
the principal and interest payments of certain debt  instruments,  and to manage
its exposure to fixed versus floating interest rates.

The Company's  policy is to use foreign  currency and interest  rate  derivative
financial  instruments  only to the  extent  necessary  to manage  exposures  as
described  above.  The Company does not enter into foreign  currency or interest
rate derivative transactions for speculative purposes.

The Company uses a variance-covariance  Value at Risk (VAR) computation model to
estimate the  potential  loss in the fair value of its  interest  rate-sensitive
financial instruments and its foreign currency-sensitive  financial instruments.
The VAR model uses  historical  foreign  exchange rates and interest rates as an
estimate of the volatility and correlation of these rates in future periods.  It
estimates a loss in fair market value using statistical modeling techniques.

The amounts presented below represent the maximum potential one-day loss in fair
value that the Company  would  expect from adverse  changes in foreign  currency
exchange rates or interest rates assuming a 95% confidence level:
<TABLE>
<S>                                                         <C>                               <C>
                                                          December 31,                     December 31,
                    Risk Category                             2000                             1999
                    -------------                             ----                             ----
                                                                     (In millions of dollars)
                    Foreign currency                       $     1                          $      -
                    Interest rate                          $     8                          $      6
</TABLE>


Virtually  all of the  potential  loss  associated  with  interest  rate risk is
attributable  to fixed-rate  long-term  debt  instruments.  The potential  loss,
identified above, includes interest or debt subject to compromise.

ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Pages 42 through 109 hereof are incorporated here by reference.

ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
          FINANCIAL DISCLOSURE

Owens Corning has nothing to report under this Item.


<PAGE>


                                     - 28


                                    PART III


ITEM 10.   DIRECTORS AND EXECUTIVE OFFICERS OF OWENS CORNING

INFORMATION CONCERNING DIRECTORS

At February 28, 2001,  Owens  Corning's  Board of Directors  was composed of ten
directors, divided into three classes. Each class of directors serves for a term
expiring at the third succeeding  annual meeting of stockholders  after the year
of election of such class, and until their successors are elected and qualified.
As of February 28, 2001,  Owens Corning has not  scheduled an annual  meeting of
stockholders for 2001 or any subsequent period.

Information  concerning  each director of Owens Corning as of February 28, 2001,
is set forth below.

Class Expiring At First Succeeding Annual Meeting Of Stockholders

Gaston Caperton, 61. President and Chief Executive Officer of The College Board,
not-for-profit  educational  association,  New  York,  NY  and  Chairman  of The
Caperton Group, a business  investment and development  company,  Shepherdstown,
WV;  former  Governor of the State of West  Virginia.  Director  since  1997.  A
graduate of the University of North Carolina, Mr. Caperton began his career in a
small insurance agency,  became its principal owner and chief operating officer,
and led the firm to become the tenth largest privately-owned insurance brokerage
firm in the U.S. He also has owned a bank and mortgage banking  company.  He was
elected  Governor of West Virginia in 1988 and 1992 and,  under his  leadership,
the state  significantly  improved  its  education  system,  infrastructure  and
economy.  In 1997, Mr. Caperton taught at Harvard  University as a fellow at the
John F. Kennedy  Institute of Politics.  Prior to beginning his current position
in mid-1999, Mr. Caperton also taught at Columbia University, where he served as
Director of the Institute on Education and Government at Teachers College.

Mr.  Caperton  is  a  director  of  United  Bankshares,   Inc.  and  Energy
Corporation  of  America.  He was the 1996  Chair of the  Democratic  Governors'
Association,  and  served  on  the  National  Governors'  Association  executive
committee and as a member of the Intergovernmental  Policy Advisory Committee on
U.S.  Trade.  He also  was  Chairman  of the  Appalachian  Regional  Commission,
Southern Regional Education Board, and the Southern Growth Policy Board.

William W. Colville,  66. Retired;  former Senior Vice  President,  General
Counsel and Secretary of Owens Corning. Director since 1995.

A graduate of Yale  University  and the  Columbia  University  Law  School,  Mr.
Colville  began his career at Owens Corning in 1984 as Senior Vice President and
General Counsel.  Prior to joining Owens Corning,  he was President of the Sohio
Processed  Minerals  Group from 1982 to 1984,  and General  Counsel of Kennecott
Corporation from 1980 to 1982.

Mr. Colville is a director of Nordson Corporation.

Landon Hilliard, 61. Partner, Brown Brothers Harriman & Co., private bankers,
New York, NY. Director since 1989.


<PAGE>


                                     - 29 -

ITEM 10.   DIRECTORS AND EXECUTIVE OFFICERS OF OWENS CORNING (continued)

A graduate of the  University  of  Virginia,  Mr.  Hilliard  began his career at
Morgan Guaranty Trust Company of New York. He joined Brown Brothers  Harriman in
1974 and became a partner in 1979.

Mr.  Hilliard  is a director of Norfolk  Southern  Corporation  and Western
World  Insurance  Company.  He is also Chairman of the Board of Trustees of the
Provident  Loan Society of New York and Secretary of The Economic Club of
New York.

Glen H. Hiner, 66. Chairman of the Board and Chief Executive Officer, Owens
Corning. Director since 1992.

A  graduate  of West  Virginia  University,  Mr.  Hiner  spent  35  years of his
professional career at General Electric Company, eventually becoming Senior Vice
President and head of GE Plastics.  He was elected  Chairman and Chief Executive
Officer of Owens Corning in January 1992.

Mr. Hiner is a director of Dana Corporation, Kohler Co., and The Prudential
Insurance Company of America.

Class Expiring At Second Succeeding Annual Meeting Of Stockholders

Ann Iverson,  57. President and Chief Executive  Officer of International  Link,
an international  consulting firm, Scottsdale, AZ. Director since 1996.

Ms.  Iverson began her career in retailing and held various buying and executive
positions at retail stores in the U.S. through 1989, including Dayton Hudson, US
Shoe and  Bloomingdales.  She then  joined  British  Home  Stores as Director of
Stores Planning,  Design,  Construction and Merchandising in 1990; Mothercare as
Chief  Executive  Officer in 1992;  Kay-Bee  Toy Stores as  President  and Chief
Executive  Officer  in 1994;  and Laura  Ashley  Holdings  plc.  as Group  Chief
Executive in 1995. In 1998, she founded and became President and Chief Executive
Officer  of  International  Link.  She also  serves  on the  Boards  of  several
privately-held companies.

W. Walker Lewis, 56. Chairman,  Devon Value Advisers,  financial  consulting and
investment banking firm, Greenwich, CT and New York, NY. Director since 1993.

Previously,  Mr.  Lewis  served as Senior  Advisor to SBC Warburg  Dillon  Read,
Senior Advisor to Marakon  Associates and Managing Director,  Kidder,  Peabody &
Co., Inc.  Prior to April 1994, he was  President,  Avon U.S. and Executive Vice
President,  Avon  Products,  Inc. Prior to March 1992, Mr. Lewis was Chairman of
Mercer  Management  Consulting,  Inc.,  a  wholly-owned  subsidiary  of  Marsh &
McLennan,  which is the successor to Strategic Planning Associates, a management
consulting firm he founded in 1972. He is a graduate of Harvard  College,  where
he was President and Publisher of the Harvard Lampoon.

Mr. Lewis is Chairman of London Fog Industries,  Inc. and a director of American
Management  Systems,  Inc. and Mrs. Fields' Original Cookies,  Inc. He is also a
member of the Council on Foreign Relations,  the Washington Institute of Foreign
Affairs, and The Harvard Committee on University Resources.

Furman C.  Moseley,  Jr., 66.  Chairman of Sasquatch  Books,  Inc.,  publishing,
Seattle, WA. Director since 1983.



<PAGE>


                                     - 30 -

ITEM 10.   DIRECTORS AND EXECUTIVE OFFICERS OF OWENS CORNING (continued)

Mr.  Moseley  joined  Simpson  Paper Company in 1960 and retired in June 1995 as
Chairman of that company and President of Simpson Investment Company.

Mr. Moseley is a director of Eaton Corporation.

Class Expiring At Third Succeeding Annual Meeting Of Stockholders

Norman P. Blake,  Jr., 59.  Chairman,  President and Chief Executive  Officer of
Comdisco, Inc., global technology services, Rosemont, IL. Director since 1992.

A graduate of Purdue University, Mr. Blake became Chairman,  President and Chief
Executive Officer of Comdisco,  Inc. in February 2001. Previously,  he served as
Chief  Executive  Officer and  Secretary  General of the United  States  Olympic
Committee  beginning in 2000;  Chief  Executive  Officer and President of Promus
Hotel  Corporation  beginning in 1998;  Chairman,  Chief  Executive  Officer and
President  of USF&G  Corporation  beginning  in 1990;  and  Chairman  and  Chief
Executive Officer of Heller International Corporation of Chicago.

Mr. Blake is a director of Enron Corporation.  He is also a member of the Purdue
Research  Foundation  and Purdue  University's  President's  Council  and Dean's
Advisory Council, Krannert Graduate School of Management. He is the recipient of
the degree of Doctor of Economics honoris causa from Purdue University,  granted
jointly by the  Krannert  Graduate  School of  Management  and School of Liberal
Arts. He has also been awarded The Ellis Island Medal of Honor.

Leonard S. Coleman, Jr., 52. Senior Advisor to Major League Baseball, and former
President of The National  League of Professional  Baseball Clubs,  professional
sports, New York, NY. Director since 1996.

A graduate of Princeton and Harvard  Universities,  Mr. Coleman became President
of The National League of  Professional  Baseball Clubs in 1994 after serving as
Executive Director,  Market Development of Major League Baseball. He assumed his
current position in 1999.

Mr. Coleman is a director of H. J. Heinz Company,  the Omnicom Group, New Jersey
Resources,   Cendant  Corporation,   Radio  Unica  and  several   privately-held
companies.  He also serves as a director of The Metropolitan Opera, The Schumann
Fund, The Jackie Robinson  Foundation,  The Children's  Defense Fund, Seton Hall
University, and The National Urban League.

W. Ann  Reynolds,  63.  President of The  University  of Alabama at  Birmingham,
Birmingham, AL. Director since 1993.

A graduate of Kansas State  Teachers  College and the  University  of Iowa,  Dr.
Reynolds assumed her current position in 1997. Previously, she was Chancellor of
City University of New York for seven years and served eight years as Chancellor
of the twenty-campus California State University system.

Dr.  Reynolds  is a director of Humana,  Inc.,  Abbott  Laboratories  and Maytag
Corporation.  She  is  also  a  member  of  the  American  Association  for  the
Advancement of Science,  the American  Association  of Anatomists,  the American
Board of Medical Specialties, the Society for Gynecological  Investigation,  and
the Perinatal Research Society.


<PAGE>


                                     - 31 -

INFORMATION CONCERNING EXECUTIVE OFFICERS

Certain information concerning Owens Corning's executive officers is included on
pages 12 through 13 hereof.

As indicated in Item 1 above, Owens Corning and 17 of its domestic  subsidiaries
filed for protection  under Chapter 11 of the United States  Bankruptcy  Code on
October 5, 2000. In addition to serving as executive  officers of Owens Corning,
Mr. Hiner, Mr. Brown, Ms. Smith and Mr. Thaman also served as executive officers
of one or more of such domestic  subsidiaries  at or within two years before the
time of such filing.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 and Securities and Exchange
Commission  regulations require Owens Corning's directors,  and certain officers
and greater than ten percent stockholders,  to file reports of ownership on Form
3 and changes in  ownership  on Forms 4 or 5 with the  Securities  and  Exchange
Commission.  Owens  Corning  undertakes  to file  such  forms on  behalf  of the
reporting  directors  and  officers  pursuant  to a power of  attorney  given to
certain  attorneys-in-fact.  Such reporting officers,  directors and ten percent
stockholders  are also required by Securities and Exchange  Commission  rules to
furnish Owens Corning with copies of all Section 16(a) reports they file.

Based  solely  on its  review  of copies of such  reports  received  or  written
representations  from  such  executive  officers,   directors  and  ten  percent
stockholders,  Owens Corning believes that all Section 16(a) filing requirements
applicable to its  directors,  executive  officers and ten percent  stockholders
were complied with during fiscal year 2000.

ITEM 11.   EXECUTIVE COMPENSATION

Executive Officer Compensation

The following tables provide  information on compensation and stock-based awards
received by Owens Corning's  Chief Executive  Officer and the four other highest
paid individuals who were serving as executive  officers of Owens Corning at the
end of 2000 (these five  individuals  collectively are referred to as the "Named
Executive Officers").


<PAGE>


                                     - 32 -

ITEM 11.   EXECUTIVE COMPENSATION

                           Summary Compensation Table

The following table contains  information about  compensation  paid, and certain
awards made, by Owens Corning to the Named Executive Officers for the three-year
period ended December 31, 2000.
<TABLE>
<S>                         <C>    <C>       <C>           <C>           <C>    <C>          <C>      <C>         <C>
                                                                                 Long Term Compensation
                                                                               -------------------------

                      Annual Compensation                               Awards            Payouts
  ------------------------------------------------------------------    ------            -------
                                                                      Restricted   Securities
                                                        Other Annual    Stock      Underlying      LTIP       All Other
         Name and                 Salary     Bonus      Compensation   Award(s)     Options/     Payouts    Compensation
   Principal Position       Year    ($)       ($)         ($)(1)        ($)(2)      SARs(#)(3)     ($)           ($)
-----------------------     ----  ------     -----      ------------   ---------   -----------   -------     -----------

Glen H. Hiner.............  2000 1,000,000   2,035,600      207,341(6)         0          0                   637,451(8)
   Chairman and Chief       1999   970,833   3,029,000      224,907(6) 2,280,219    243,000                    35,688(8)
   Executive Officer        1998   950,000   1,900,000      138,360(6)   241,719     90,000      337,695       37,898(8)

David T. Brown(4).........  2000   343,750     425,000                         0          0                   245,275(8)
   Executive Vice President 1999   300,000     771,900                   348,125     36,000                    11,913(8)
   and Chief Operating      1998   271,500     595,400                    51,188     28,000       72,942        5,095(8)
   Officer

Maura Abeln Smith(4)(5)...  2000   497,917     705,000                         0          0                   345,090(8)
   Senior Vice President,   1999   450,000     950,000                   452,562     50,000                    15,896(8)
   General Counsel and      1998   356,250   1,250,000      149,771(7)   133,656     52,000                     5,333(8)
   Secretary and Chief
   Restructuring Officer

Michael H. Thaman(4)......  2000   362,500     404,500                         0          0                   261,900(8)
   Senior Vice President    1999   275,000     497,500                   348,125     36,000                    12,000(8)
   and Chief Financial
   Officer                  1998   216,875     398,000                    42,656     24,000                     5,600(8)

Domenico Cecere(4)........  2000   497,917     715,000                         0          0                   344,400(8)
   Executive Vice President 1999   450,000     995,000                   452,562     50,000                    12,000(8)
   (through January 2001)   1998   332,917   1,020,000                    56,875     34,000       54,031        4,885(8)
</TABLE>

(1)  "Other Annual  Compensation"  includes  perquisites and personal  benefits,
     where such  perquisites and personal  benefits exceed the lesser of $50,000
     or 10% of the Named  Executive  Officer's  annual  salary and bonus for the
     year, as well as certain other items of compensation. For 2000, none of the
     Named Executive  Officers received  perquisites and/or personal benefits in
     excess of the applicable threshold.

(2)  Reflects awards of restricted  stock under the  stockholder-approved  Owens
     Corning Stock  Performance  Incentive  Plan.  The values of the  restricted
     stock awards shown in the table were  calculated by multiplying  the number
     of shares awarded by the closing price of Owens Corning common stock on the
     date of  award  (as  reported  in the New  York  Stock  Exchange  Composite
     Transactions).  There were no  restricted  stock awards to any of the Named
     Executive  Officers in 2000. The 1998 award to Ms. Smith consisted of 4,700
     shares,  of which 1,500 vested on each of December 31, 1998,  and 1999, and
     the remainder vest in 3 equal annual  installments  beginning  February 13,
     2001.

     At the end of 2000,  Mr. Hiner held a total of 90,499  shares of restricted
     stock  valued  at  $73,530;  Mr.  Brown  held a total of  14,249  shares of
     restricted stock valued at $11,577; Ms. Smith held a total of 14,700 shares
     of  restricted  stock valued at $11,944;  Mr. Thaman held a total of 12,833
     shares of restricted  stock valued at $10,427;  and Mr. Cecere held a total
     of 16,700 shares of restricted stock valued at $13,569.  The value of these
     aggregate  restricted  stock  holdings was  calculated by  multiplying  the
     number of shares held by the closing price of Owens Corning common stock on
     December  31, 2000 (as  reported in the New York Stock  Exchange  Composite
     Transactions). Dividends are paid by Owens Corning on restricted stock held
     by the Named Executive Officers if paid on stock generally.


<PAGE>


                                     - 33 -

(3)  Represents shares of Owens Corning common stock underlying  options granted
     under the Stock  Performance  Incentive Plan in 1998 through 2000. For 1998
     grants, one-third of each stock option award becomes exercisable in each of
     the first  through the third  years  following  the grant.  The 1999 awards
     become  exercisable three years after date of grant if Owens Corning common
     stock achieves a  ten-consecutive-day-average-closing-price  of $55 or more
     on or before  February 4, 2002,  or, if such  average-closing-price  is not
     achieved by such date,  become  exercisable five years after date of grant.
     Vesting  may  accelerate  in the  event of death,  disability,  retirement,
     involuntary  termination  due to job  elimination,  Change of  Control  (as
     defined in the Stock  Performance  Incentive  Plan),  and in certain  other
     events at the discretion of the  Compensation  Committee.  No stock options
     were  awarded to any of the Named  Executive  Officers in 2000 and no stock
     appreciation rights (SARs) were granted in 1998 through 2000.

(4)  Prior to February 2001, Mr. Brown served as Vice President and President,
     Insulating  Systems  Business.  Ms. Smith assumed the additional  duties of
     Chief  Restructuring  Officer in November  2000.  Prior to April 2000,
     Mr. Thaman served as Vice  President  and  President,  Exterior  Systems
     Business;  prior to January 1999, he served as Vice President and
     President,  Engineered  Pipe Systems.  Prior to April 2000, Mr. Cecere
     served as Senior Vice President and President,  Building  Materials Systems
     Business;  prior to January 1999, he served as Senior Vice President and
     Chief Financial Officer.

(5)  Ms. Smith joined Owens Corning in February 1998.

(6)  Mr. Hiner's numbers reflect  contractually  required tax payments on income
     from his Pension Preservation Trust account. The Pension Preservation Trust
     is described on page 35.

(7)  Number reflects $112,213 as reimbursement of certain taxes on sign-on bonus
     and $37,558 as supplemental reimbursement of relocation expenses.

(8)  Of Mr.  Hiner's  numbers,  $23,468,  $23,965 and  $32,714  were the present
     values  (based  upon the  Applicable  Federal  Rate from date of payment to
     earliest date of repayment to Owens Corning) of split-dollar life insurance
     premiums  paid by Owens  Corning which were invested on his behalf in 2000,
     1999 and 1998, respectively.  Upon termination of employment,  Mr. Hiner is
     obligated  to  reimburse  Owens  Corning for all  premiums  invested on his
     behalf. Of Ms. Smith's numbers,  $8,690, $9,496 and $5,333 were the present
     values of split-dollar life insurance premiums paid by Owens Corning during
     2000, 1999 and 1998, respectively. Ms. Smith also is obligated to reimburse
     Owens Corning for premium payments made on her behalf.

     The numbers shown for 2000 include  amounts  payable for 2000 under the
     Owens Corning Key Employee  Retention Incentive Plan, as follows:  Mr.
     Hiner,  $600,000;  Mr. Brown,  $231,000;  Ms. Smith,  $330,000;  Mr.
     Thaman, $247,500; and Mr. Cecere, $330,000.

     Except as indicated in the preceding paragraphs, the amounts shown for each
     of the  Named  Executive  Officers  represent  contributions  made by Owens
     Corning to such officer's  account in the Owens Corning  Savings and Profit
     Sharing Plan during the year indicated.


<PAGE>


                                     - 34 -

                               Option Grant Table
                               ------------------

No stock options or stock appreciation  rights (SARs) were granted to any of the
Named Executive Officers during 2000.

                  Option/SAR Exercises and Year-End Value Table
                  ---------------------------------------------

The following  table  contains  information  about the options for Owens Corning
common stock that were exercised in 2000 by the Named  Executive  Officers,  and
the aggregate values of these officers'  unexercised options at the end of 2000.
None of the Named Executive  Officers held stock  appreciation  rights (SARs) at
December 31, 2000.

     Aggregated Option/SAR Exercises in 2000, and 12/31/00 Option/SAR Values
<TABLE>

<S>                                            <C>               <C>                <C>              <C>
                                                                                Number of
                                                                                Securities         Value of
                                                                                Underlying        Unexercised
                                                                               Unexercised       In-the-Money
                                          Shares Acquired       Value        Options/SARs at    Options/SARs at
Name                                      on Exercise (#)    Realized ($)     12/31/00 (#)      12/31/00 ($)(1)
----                                      ---------------    ------------     Exercisable/        Exercisable/
                                                                              Unexercisable       Unexercisable
                                                                             ----------------   ----------------

Glen H. Hiner                                  --0--            --0--         391,666/273,000           0/0
David T. Brown                                 --0--            --0--           78,167/45,333           0/0
Maura Abeln Smith                              --0--            --0--           34,667/67,333           0/0
Michael H. Thaman                              --0--            --0--           38,657/44,000           0/0
Domenico Cecere                                --0--            --0--           62,167/61,333           0/0
</TABLE>

(1)  No options were in-the-money at December 31, 2000.

                               Retirement Benefits
                               -------------------

Owens Corning  maintains a tax-qualified  Cash Balance Plan covering  certain of
its salaried and hourly  employees in the United  States,  including each of the
Named  Executive  Officers,   in  lieu  of  the  qualified  Salaried  Employees'
Retirement  Plan  maintained  prior  to  1996  ("Prior  Plan"),  which  provided
retirement  benefits  primarily  on the  basis  of age at  retirement,  years of
service  and  average  earnings  from the  highest  three  consecutive  years of
service. In addition,  Owens Corning has a non-qualified  Executive Supplemental
Benefit  Plan  ("ESBP")  to pay  eligible  employees  leaving  the  Company  the
difference   between  the  maximum   benefits   payable  under  Owens  Corning's
tax-qualified  retirement  plan and those benefits which would have been payable
except for  limitations  imposed by the Internal  Revenue Code.  Named Executive
Officers are eligible to participate in both the Cash Balance Plan and the ESBP.

Cash Balance Plan - Under the Cash Balance Plan, each covered  employee's earned
retirement benefit under the Prior Plan (including the ESBP) was converted to an
opening  cash  balance.  Each  year,  Owens  Corning  credits  to  each  covered
employee's  account 2% of such  employee's  covered  pay up to 50% of the Social
Security  Taxable  Wage Base and 4% of covered  pay in excess of such wage base.
For this  purpose,  covered pay  includes  base pay,  overtime  pay,  other wage
premium pay and annual  incentive  bonuses payable during the year. Cash Balance
Plan  accounts  earn monthly  interest  based on the average  interest  rate for
five-year U.S. treasury securities.  Employees may receive their account balance
as a lump sum or as a monthly payment when they leave Owens Corning.


<PAGE>


                                     - 35 -

For  employees  who were at least age 40 with 10 years of service as of December
31,  1995   ("Grandfathered   Employees"),   including  Mr.  Brown,  the  credit
percentages  applied to covered pay are increased pursuant to a formula based on
age and years of service on such date. In addition,  Grandfathered Employees are
guaranteed  that,  through the year 2000,  they will earn at least as much under
the Cash  Balance  Plan as they would have earned  under the Prior Plan (in each
case including the ESBP).

The  estimated  annual  annuity  amounts  payable  under the Cash  Balance  Plan
(including the ESBP) to the Named  Executive  Officers at age 65 are: Mr. Hiner,
$134,324; Mr. Brown,  $202,490;  Ms. Smith, $153,291; Mr. Thaman,  $215,335; and
Mr. Cecere,  $101,196.  Except for Mr. Cecere,  these  estimated  amounts assume
continued  employment  and current levels of covered pay through age 65, and are
based on estimated interest rates.

Supplemental  Executive Retirement Plan - Owens Corning maintains a Supplemental
Executive   Retirement  Plan  ("SERP")  covering  certain  executive   officers,
including Ms. Smith, who join Owens Corning in mid-career. The SERP provides for
a lump sum payment  following  termination of employment  equal to a multiple of
the covered  employee's  Cash Balance Plan balance  minus an offset equal to the
present value of  retirement  benefits  attributable  to prior  employment.  The
applicable  multiplier for each covered  employee ranges from 0 to 4 (determined
by the covered  employee's  age when first employed by Owens Corning) and is 1.7
in the case of Ms. Smith.  The estimated  annual  annuity  amount payable to Ms.
Smith to satisfy the lump sum  obligation  under this plan at age 65,  under the
assumptions  described  in  the  preceding  paragraph,  is  $260,595,  less  the
annualized offset due to her prior employment.

Other Arrangements - Mr. Hiner's Employment Agreement calls for him to receive a
pension  which will,  together with amounts  payable under his prior  employer's
pension plan, any qualified  defined  benefit plan  maintained by Owens Corning,
and Social Security, total 60% of his "average annual compensation" (the pension
he  would  have  obtained  had  he  remained  with  his  prior   employer  until
retirement).  His "average annual  compensation"  is one third of his highest 36
months of compensation from Owens Corning or his prior employer.

At the time of his  employment,  Owens  Corning  agreed to provide Mr.  Cecere a
supplemental pension benefit. At December 31, 2000, the estimated annual annuity
amount  payable to Mr.  Cecere  beginning  at age 65 to satisfy the  obligations
under this benefit is $207,462, less an offset due to his prior employment.

In 1992,  Owens  Corning  established a Pension  Preservation  Trust for amounts
payable  under the ESBP as well as under  the  individual  pension  arrangements
described above. Each year, the Compensation  Committee  determines (except with
respect  to  Mr.  Hiner,  where  payments  are  contractually   determined)  the
participants  in and  any  amounts  to be  paid  with  respect  to  the  Pension
Preservation  Trust,  which may include a portion of benefits  earned  under the
ESBP and the pension agreements described above. During 2000, pretax payments of
$61,190, $93,000, $7,357 and $209,510 were made to the Trust for the accounts of
Mr. Brown, Ms. Smith, Mr. Thaman and Mr. Cecere, respectively. Amounts paid into
the Trust and income  from the Trust  reduce the  pension  otherwise  payable at
retirement.

                       Employment and Severance Agreements
                       -----------------------------------

Mr. Hiner is employed under an amended  agreement  that continues  through April
16, 2002.  Under this agreement,  Mr. Hiner would receive a lump sum termination
payment  equal to 330% of his base salary if he were to be  terminated  by Owens
Corning without "cause," or if he should

<PAGE>


                                     - 36

terminate  his  employment  for "good  reason,"  as  defined by the terms of the
agreement.  Mr.  Hiner is entitled to an annual  salary  review,  and any salary
approved may not be  decreased  in a later year.  Mr. Hiner is also to receive a
contractual  bonus  calculated  as a percentage  of base pay based upon mutually
agreed entry, target and maximum company performance objectives. For 2000, these
performance   objectives  were  the  same  as  those  applicable  to  the  other
participants in Owens Corning's Corporate Incentive Plan.

Owens  Corning also has entered  into  severance  arrangements  with each of the
other Named Executive  Officers.  These agreements provide for the payment of an
amount equal to two times base salary plus annual incentive bonuses (based on an
average of the three previous years' annual incentive payments or the average of
the three previous years' annual incentive  targets,  whichever is greater) plus
continuation  of insurance  benefits for a period of up to two years and, in the
case of Messrs. Brown, Thaman and Cecere, a payment equal to the additional lump
sum pension  benefit  that would have  accrued had such  individuals  been three
years older,  with three additional years of service,  at the time of employment
termination. The base salaries as of December 31, 2000, of these Named Executive
Officers are: Mr. Brown, $350,000;  Ms. Smith,  $500,000; Mr. Thaman,  $425,000;
and Mr. Cecere, $500,000.

Directors' Compensation

Retainer and Meeting Fees - In 2000,  Owens  Corning paid each  director who was
not an Owens  Corning  employee  an annual  retainer  of  $25,000.  Non-employee
Committee  Chairmen  receive an  additional  retainer  of $4,000  each year.  In
addition,  Owens  Corning  paid  non-employee  directors a fee of $1,000 for (a)
attendance  at one or more  meetings of the Board of  Directors on the same day,
(b)  attendance  at one or more  meetings  of each  Committee  of the  Board  of
Directors on the same day, and (c) for each day's  attendance at other functions
in which directors were requested to participate.

During  2000,  a  director  could  elect to defer all or a portion of his or her
annual  retainer and meeting  fees under the  Directors'  Deferred  Compensation
Plan, in which case his or her account was credited with the number of shares of
common stock that such compensation could have purchased on the date of payment.
The account was also credited  with the number of shares which  dividends on the
credited  shares could have purchased on dividend  payment  dates.  Payments are
made in cash based on the value of the account,  which is determined by the then
fair market value of Owens  Corning  common  stock,  at the time the  individual
ceases to be a director.

Stock Plan for Directors - Owens Corning maintains a stockholder  approved Stock
Plan for  Directors,  applicable  to each  director who is not an Owens  Corning
employee.  The plan provides for two types of grants to each eligible  director:
(1) a one-time  non-recurring  grant of options to each new outside  director to
acquire  10,000  shares of common  stock at a per  share  exercise  price of 100
percent of the value of a share of common stock on the date of grant, and (2) an
annual grant of 500 shares of common stock on the fourth Friday in April.

Initial option grants become  exercisable in equal  installments over five years
from date of grant,  subject to acceleration  in certain  events,  and generally
expire ten years  from date of grant.  No grant may be made under the plan after
August 20, 2007,  and a director may not receive an annual grant of common stock
in the same calendar year he or she receives an initial option grant. A director
entitled  to  receive an annual  grant may elect to defer  receipt of the common
stock until he or she leaves the Board of Directors.


<PAGE>


                                     - 37 -

In 2000,  Messrs.  Blake,  Caperton,  Coleman,  Colville,  Hilliard,  Lewis, and
Moseley,  Ms. Iverson and Dr. Reynolds each received (or deferred) an annual 500
share grant valued at $9,125 on the date of grant (based on the closing price of
Owens Corning common stock as reported in the New York Stock Exchange  Composite
Transactions).

Indemnity  Agreements - Owens  Corning has entered  into an indemnity  agreement
with each member of the Board of Directors  which provides that, if the director
becomes  involved  in a claim  (as  defined  in the  agreement)  by reason of an
indemnifiable event (as defined in the agreement),  Owens Corning will indemnify
the  director to the  fullest  extent  authorized  by Owens  Corning's  by-laws,
notwithstanding any subsequent amendment, repeal or modification of the by-laws,
against any and all expenses,  judgments,  fines,  penalties and amounts paid in
settlement of the claim.

The indemnity  agreement also provides that, in the event of a potential  change
of control (as defined in the  agreement),  the  director is entitled to require
the  creation  of a trust for his or her  benefit,  the assets of which would be
subject to the claims of Owens Corning's general  creditors,  and the funding of
such trust from time to time in amounts  sufficient to satisfy  Owens  Corning's
indemnification  obligations  reasonably  anticipated at the time of the funding
request.

Charitable  Award  Program - To recognize  the interest of Owens Corning and its
directors in supporting  worthy  educational  institutions  and other charitable
organizations,  Owens Corning permits each director  (subject to certain vesting
requirements) to nominate up to two  organizations to share a contribution of $1
million to be made in ten annual  installments  after the death of the director.
Owens  Corning  expects to fully fund its  contributions  (as well as  insurance
premiums)  from the proceeds of life  insurance  policies  which it maintains on
directors.  Directors will receive no financial benefit from this program, since
the charitable deduction and insurance proceeds accrue solely to Owens Corning.

Compensation Committee Interlocks and Insider Participation

The Compensation  Committee  presently  consists of Landon Hilliard  (Chairman),
Norman P.  Blake,  Jr.,  Gaston  Caperton,  Furman C.  Moseley,  Jr.  and W. Ann
Reynolds.  Curtis H. Barnette  served on the Committee  until September 2000. No
other persons have served on the  Compensation  Committee since the beginning of
2000.

Mr. Hilliard is a partner of Brown Brothers  Harriman & Co.  ("BBH"),  a private
banking  firm.  BBH acts as one of the  investment  managers for the  Fibreboard
Settlement  Trust,  which  holds  certain  assets  that  are  available  to fund
asbestos-related  liabilities of Fibreboard  Corporation,  a subsidiary of Owens
Corning. During 2000, BBH was paid fees of approximately $510,000 from the Trust
for these services.

ITEM 12.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Major Stockholders

Based on Schedule 13G filings,  stockholders holding 5% or more of Owens Corning
common stock as of December 31, 2000 were:


<PAGE>


                                     - 38 -
<TABLE>
<S>                                                         <C>                            <C>             <C>


               NAME                                        ADDRESS                        SHARES            %
----------------------------------------        ---------------------------            ------------       ----

AXA Financial, Inc. and related entities        1290 Avenue of the Americas            5,330,217(1)        9.6
                                                New York, NY 10104
</TABLE>


(1)  Sole dispositive  power; sole voting power over 3,223,735 shares (5.8%) and
     shared voting power over 235,743 shares (less than 1%).

In  addition,  as of February  28,  2001,  Owens  Corning  employees,  including
officers,  beneficially  owned  3,264,672  shares (5.9%) of Owens Corning common
stock under  Owens  Corning  sponsored  savings  plans in the United  States and
Canada.

Stock Ownership of Management

The following table shows information  concerning  beneficial ownership of Owens
Corning common stock on February 28, 2001, by each of the directors,  by each of
the Named Executive  Officers,  and by all directors and executive officers as a
group. With the exception of the ownership of Mr. Hiner (1.1%) and all directors
and executive  officers as a group (2.4%),  each ownership shown represents less
than 1% of the shares of common stock outstanding.
<TABLE>
<S>                                                                                     <C>
                                                                                Amount And Nature
                                        Name                                Of Beneficial Ownership
            ----------------------------------------------------------      -----------------------

            Norman P. Blake, Jr.......................................            14,120(1)(3)
            David T. Brown............................................           108,132(1)(2)
            Gaston Caperton...........................................             9,532(1)(3)
            Domenico Cecere...........................................            95,837(1)(2)(4)
            Leonard S. Coleman, Jr....................................            10,052(1)(3)
            William W. Colville.......................................            15,611(1)
            Landon Hilliard...........................................             6,575(3)
            Glen H. Hiner.............................................           603,262(1)(2)
            Ann Iverson...............................................            12,032(1)(3)
            W. Walker Lewis...........................................            13,620(1)(3)
            Furman C. Moseley, Jr.....................................            45,582(3)
            W. Ann Reynolds...........................................            15,827(1)(3)(4)
            Maura Abeln Smith.........................................            68,369(1)(2)
            Michael H. Thaman.........................................            61,646(1)(2)
            All Directors and Executive Officers (including Named
               Executive Officers) (21 persons).......................         1,375,269(1)(2)(3)(4)
</TABLE>


(1)  Includes  shares  which are not owned but are  unissued  shares  subject to
exercise of options, or which will be subject to exercise of options under Owens
Corning  benefit plans within 60 days after  February 28, 2001, as follows:  Mr.
Blake, 10,000; Mr. Brown, 87,500; Mr. Caperton,  8,000; Mr. Cecere,  73,500; Mr.
Coleman, 8,000; Mr. Colville,  10,000; Mr. Hiner, 421,666; Ms. Iverson,  10,000;
Mr. Lewis, 10,000; Dr. Reynolds,  10,000; Ms. Smith, 52,000; Mr. Thaman, 46,657;
All Directors and Executive Officers (21 persons), 963,651.

(2) Includes  shares over which there is sole voting  power,  but no  investment
power, as follows: Mr. Brown, 12,516; Mr. Cecere, 15,133; Mr. Hiner, 81,999; Ms.
Smith,  14,133;  Mr. Thaman,  11,933;  All Directors and Executive  Officers (21
persons), 188,552.

<PAGE>


                                     - 39 -

(3)  Includes  deferred  shares  over  which  there is  currently  no  voting or
investment  power,  as follows:  Mr. Blake,  3,620;  Mr.  Caperton,  1,532;  Mr.
Coleman,  2,052; Mr. Hilliard,  2,575; Ms. Iverson, 1,532; Mr. Lewis, 3,620; Mr.
Moseley,  6,232; Dr. Reynolds,  3,097; All Directors and Executive  Officers (21
persons), 24,260.

(4) Does not include  shares of common stock held by family  members as to which
beneficial interest is disclaimed,  as follows: Mr. Cecere, 1,800; Dr. Reynolds,
700; All Directors and Executive Officers (21 persons), 9,560.


ITEM 13.      CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Transactions with Owens Corning

Upon his retirement as an executive  officer on December 31, 1994, Owens Corning
entered into an agreement with William W. Colville,  who  subsequently  became a
director of Owens  Corning.  Such  agreement  was amended in  September  1997 in
connection with Mr. Colville's agreement to serve in an interim officer capacity
for Owens Corning.  The amended agreement provided for Mr. Colville's  retention
as a consultant for annually renewable terms through 2000. Under this agreement,
Mr. Colville received a monthly consulting fee of $14,583, and was also eligible
for office space and related services plus reimbursement of expenses incurred in
the  performance  of  services  for Owens  Corning.  Under this  agreement,  Mr.
Colville was entitled to have his retirement  benefit recomputed to include five
years of service under the agreement as if it were  employment by Owens Corning.
Upon  expiration  of the  agreement in 2000,  Mr.  Colville  received a lump sum
payment of $164,327 in satisfaction of this obligation.

                                     PART IV

ITEM 14.      EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
              ON FORM 8-K

(a)    DOCUMENTS FILED AS PART OF THIS REPORT

 1.    See Financial Statements on page 41 hereof

 2.    See Index to Financial Statement Schedules on page 110 hereof

 3.    See Exhibit Index beginning on page 112 hereof

 Management  contracts and compensatory  plans and  arrangements  required to be
 filed as an  exhibit  pursuant  to Item  14(c) of Form 10-K are  denoted in the
 Exhibit Index by an asterisk ("*").

(b)    REPORTS ON FORM 8-K

       During the fourth  quarter of 2000,  Owens  Corning  filed the  following
       current report on Form 8-K:

          -  Dated October 5, 2000, under Item 3,   "Bankruptcy or Receivership"


<PAGE>


                                     - 40 -

                                   Signatures

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the  Registrant  has duly  caused  this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

OWENS CORNING
<TABLE>
<S>                                                               <C>

By        /s/  Glen H. Hiner                                       Date   March 30, 2001
          ------------------------------------------                   -----------------
          Glen H. Hiner, Chairman of the Board
          and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following  persons on behalf of the  Registrant and
in the capacities and on the dates indicated.

          /s/  Glen H. Hiner                                       Date    March 30, 2001
          ------------------------------------------                   ------------------
          Glen H. Hiner, Chairman of the Board,
          Chief Executive Officer and Director

          /s/  Michael H. Thaman                                   Date    March 28, 2001
          ------------------------------------------                   ------------------
          Michael H. Thaman, Senior Vice
          President and Chief Financial Officer

          /s/  Deyonne F. Epperson                                 Date    March 30, 2001
          ------------------------------------------                   ------------------
          Deyonne F. Epperson, Vice President
          and Controller

          /s/  Norman P. Blake, Jr.                                Date    March 27, 2001
          ------------------------------------------                   ------------------
          Norman P. Blake, Jr., Director

          /s/  Gaston Caperton                                     Date    March 27, 2001
          ------------------------------------------                   ------------------
          Gaston Caperton, Director

          /s/  Leonard S. Coleman, Jr.                             Date    March 28, 2001
          ------------------------------------------                   ------------------
          Leonard S. Coleman, Jr., Director

          /s/  William W. Colville                                 Date    March 28, 2001
          ------------------------------------------                   ------------------
          William W. Colville, Director

          /s/  Landon Hilliard                                     Date    March 28, 2001
          ------------------------------------------                   ------------------
          Landon Hilliard, Director

          /s/  Ann Iverson                                         Date    March 27, 2001
          ------------------------------------------                   ------------------
          Ann Iverson, Director

          /s/  W. Walker Lewis                                     Date    March 29, 2001
          ------------------------------------------                   ------------------
          W. Walker Lewis, Director

          /s/  Furman C. Moseley, Jr.                              Date    March 29, 2001
          ------------------------------------------                   ------------------
          Furman C. Moseley, Jr., Director

          /s/  W. Ann Reynolds                                     Date    March 27, 2001
          ------------------------------------------                   ------------------
          W. Ann Reynolds, Director

</TABLE>

<PAGE>


                                     - 41 -

                          INDEX TO FINANCIAL STATEMENTS
                          -----------------------------
<TABLE>
<S>                                                                                                    <C>

Item                                                                                                  Page
----                                                                                                  ----

Report of Independent Public Accountants................................................................42

Summary of Significant Accounting Policies.........................................................43 - 44

Consolidated Statement of Income (Loss) - for the
   years ended December 31, 2000, 1999 and 1998....................................................45 - 46

Consolidated Statement of Comprehensive Income (Loss) -
   for the years ended December 31, 2000, 1999 and 1998.................................................47

Consolidated Balance Sheet -  December 31, 2000 and 1999...........................................48 - 49

Consolidated Statement of Stockholders' Equity -
   for the years ended December 31, 2000, 1999 and 1998.................................................50

Consolidated Statement of Cash Flows - for the years
   ended December 31, 2000, 1999 and 1998..........................................................51 - 52

Notes to Consolidated Financial Statements
   Notes 1 through 21.............................................................................53 - 109

</TABLE>


<PAGE>


                                     - 42 -



                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
                    ----------------------------------------

To the Stockholders of Owens Corning:

We have audited the accompanying  consolidated balance sheet of OWENS CORNING (a
Delaware  corporation) and subsidiaries (the "Company") as of December 31, 2000,
and  1999,   and  the  related   consolidated   statements  of  income   (loss),
comprehensive income (loss), stockholders' equity and cash flows for each of the
three years in the period ended December 31, 2000.  These  financial  statements
are the  responsibility of the Company's  management.  Our  responsibility is to
express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable  assurance about whether the financial  statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting  the amounts and  disclosures in the financial  statements.  An audit
also includes assessing the accounting principles used and significant estimates
made by  management,  as well as  evaluating  the  overall  financial  statement
presentation.  We believe  that our audits  provide a  reasonable  basis for our
opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the financial position of Owens Corning and subsidiaries
as of December 31, 2000, and 1999, and the results of their operations and their
cash flows for each of the three years in the period ended December 31, 2000, in
conformity with accounting principles generally accepted in the United States.

The accompanying  consolidated  financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 1 to the
consolidated financial statements,  the Company voluntarily filed for Chapter 11
bankruptcy protection on October 5, 2000. This action, which was taken primarily
as a result of asbestos  litigation as discussed in Note 19 to the  consolidated
financial  statements,  raises  substantial doubt about the Company's ability to
continue as a going concern.  Management's  plans in regard to these matters are
also  described  in  Note  1.  The  financial  statements  do  not  include  any
adjustments that might result from the outcome of this uncertainty.

Our audit was made for the purpose of forming an opinion on the basic  financial
statements  taken as a whole.  The  schedule  listed in the  Index to  Financial
Statement  Schedules  is  presented  for  the  purpose  of  complying  with  the
Securities  and  Exchange  Commission's  rules  and is  not  part  of the  basic
financial  statements.   This  schedule  has  been  subjected  to  the  auditing
procedures  applied in the audit of the basic  financial  statements and, in our
opinion,  fairly states in all material  respects the financial data required to
be set forth therein in relation to the basic  financial  statements  taken as a
whole.





ARTHUR ANDERSEN LLP

February 20, 2001
Toledo, Ohio


<PAGE>


                                     - 43 -

                         OWENS CORNING AND SUBSIDIARIES
                   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

Owens  Corning  and  subsidiaries'   (the  "Company")   consolidated   financial
statements generally include the accounts of majority owned subsidiaries, unless
ownership is considered  temporary.  Intercompany  accounts and transactions are
eliminated.

Revenue Recognition

The Company  recognizes  revenue  when goods are shipped and title passes to the
customer.  Provisions for discounts and rebates to customers,  returns and other
adjustments are provided in the same period that the related sales are recorded.

Net Income per Share

Basic net income per share is  computed  using the  weighted  average  number of
common  shares  outstanding  during  the  period.  Diluted  net income per share
reflects the dilutive effect of common  equivalent  shares and increased  shares
that would result from the conversion of debt and equity securities. The effects
of anti-dilution are not presented.  Unless otherwise  indicated,  all per share
information  included in the Notes to the Consolidated  Financial  Statements is
presented on a diluted basis.

Inventory Valuation

Inventories  are stated at cost,  which is less than market  value,  and include
material, labor and manufacturing overhead. The majority of the U.S. inventories
are  valued  using the  last-in,  first-out  (LIFO)  method  and the  balance of
inventories are generally valued using the first-in, first-out (FIFO) method.

Goodwill

Goodwill is carried at cost, less accumulated amortization,  and is amortized on
a  straight-line  basis over a period of forty  years.  The Company  continually
evaluates  whether  events and  circumstances  have  occurred  that indicate the
remaining  estimated  useful life of goodwill  may warrant  revision or that the
remaining  balance may not be recoverable.  When factors  indicate that goodwill
should be evaluated for possible impairment, the Company uses an estimate of the
undiscounted  cash flows of the related  business over the remaining life of the
goodwill in assessing whether the goodwill is recoverable.

Investments in Affiliates

Investments in affiliates are accounted for using the equity method, under which
the  Company's  share of earnings of these  affiliates is reflected in income as
earned and dividends  are credited  against the  investment  in affiliates  when
received.

Capitalization of Software Developed for Internal Use

The Company  capitalizes  the direct  external  and internal  costs  incurred in
connection  with the  development,  testing and  installation  of  software  for
internal use.  Internally  developed software is included in plant and equipment
and is amortized over its estimated useful life using the straight-line method.


<PAGE>


                                     - 44 -

                         OWENS CORNING AND SUBSIDIARIES
             SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Depreciation

For assets placed in service prior to January 1, 1992,  the Company's  plant and
equipment is depreciated primarily using the double-declining balance method for
the first half of an asset's estimated useful life and the straight-line  method
is used  thereafter.  For assets placed in service after  December 31, 1991, the
Company's plant and equipment is depreciated using the straight-line method.

Derivative Financial Instruments

Gains and losses on hedges of existing assets or liabilities are included in the
carrying amount of those assets or liabilities and are ultimately  recognized in
income as part of those  carrying  amounts.  Gains  and  losses on hedges of net
investments in foreign subsidiaries are included in stockholders'  equity. Gains
and losses  related to  qualifying  hedges of firm  commitments  or  anticipated
transactions also are deferred and are recognized in income or as adjustments of
carrying amounts when the hedged transaction occurs. Gains and losses on forward
currency  exchange  contracts  that do not qualify as hedges are  recognized  as
other income or expense.

Stock Based Compensation Plans

The Company  applies  Statement  of  Financial  Accounting  Standards  No. 123,
"Accounting  for  Stock-Based  Compensation"  (SFAS 123) for disclosures of its
stock based compensation plans. The Company applies Accounting Principles Board
Opinion No. 25 and related Interpretations for expense recognition as permitted
by SFAS 123.

Reorganization Items and Other Expenses

In  accordance  with the  American  Institute of  Certified  Public  Accountants
Statement of Position 90-7,  "Financial  Reporting by Entities in Reorganization
under  the  Bankruptcy   Code"  (SOP  90-7),   revenues,   expenses   (including
professional  fees),  realized gains and losses,  and provisions for losses that
can be directly  associated with the  reorganization  and  restructuring  of the
business are reported  separately as  reorganization  items in the  Consolidated
Statement of Income (Loss).

Foreign Currency Translation

The  functional  currency  of  the  Company's   subsidiaries  is  generally  the
applicable  local currency.  Assets and liabilities of foreign  subsidiaries are
translated  into U.S.  dollars  at the  period-end  rate of  exchange  and their
statements  of income  (loss) and  statements  of cash flows are converted on an
ongoing basis at the rate of exchange  when  transactions  occur.  The resulting
translation   adjustment   is  included  in  the   Consolidated   Statement   of
Stockholders'  Equity "Accumulated other comprehensive  loss." Transaction gains
and  losses  that  arise  from  exchange  rate   fluctuations   on  transactions
denominated in a currency other than the functional currency are included in the
Consolidated Statement of Income (Loss) as incurred.

Use of Estimates

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect  the  reported  amounts  of assets  and  liabilities  and  disclosure  of
contingent  assets and  liabilities at the date of the financial  statements and
the  reported  amounts of revenues  and expenses  during the  reporting  period.
Actual results could differ from those estimates.

Reclassifications

Certain  reclassifications  have been made to 1999 and 1998 to conform  with the
classifications used in 2000.


<PAGE>


                                     - 45 -

                         OWENS CORNING AND SUBSIDIARIES
                     CONSOLIDATED STATEMENT OF INCOME (LOSS)
              FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
<TABLE>

<S>                                                                          <C>              <C>              <C>
                                                                             2000             1999             1998
                                                                             ----             ----             ----
                                                                           (In millions of dollars, except share data)

NET SALES                                                               $      4,940     $      5,048     $       5,009
COST OF SALES                                                                  4,014            3,815             3,933
                                                                        ------------     ------------     -------------

    Gross margin                                                                 926            1,233             1,076
                                                                        ------------     ------------     -------------

OPERATING EXPENSES
  Marketing and administrative expenses                                          542              599               596
  Science and technology expenses                                                 52               61                59
  Provision for asbestos litigation claims (Note 19)                             790                -             1,415
  Restructure costs (Note 5)                                                      32                -               117
  Chapter 11 related reorganization items (Note 1)                                24                -                 -
  Other                                                                          117               (5)               72
                                                                        ------------     -------------    -------------

     Total operating expenses                                                  1,557              655             2,259
                                                                        ------------     ------------     -------------

Gain on sale of assets (Note 6)                                                    -                -               359

INCOME (LOSS) FROM OPERATIONS                                                   (631)             578              (824)

OTHER
  Cost of borrowed funds (Notes 1, 3, 4 and 18)                                  155              152               140
  Other (Notes 18 and  20)                                                         5                -                 -
                                                                        ------------     ------------     -------------

INCOME (LOSS) BEFORE PROVISION (CREDIT) FOR
  INCOME TAXES                                                                  (791)             426              (964)

Provision (credit) for income taxes (Note 10)                                   (312)             149              (306)
                                                                        -------------    ------------     --------------

INCOME (LOSS) BEFORE MINORITY INTEREST AND
  EQUITY IN NET INCOME (LOSS) OF AFFILIATES                                     (479)             277              (658)

Minority interest (Note 7)                                                        (2)              (6)              (16)

Equity in net income (loss) of affiliates (Note 13)                                3               (1)                8
                                                                        ------------     -------------    -------------

INCOME (LOSS) BEFORE EXTRAORDINARY ITEM                                         (478)             270              (666)

Extraordinary loss (Note 3)                                                        -                -               (39)
                                                                        ------------     ------------     --------------

NET INCOME (LOSS)                                                       $        (478)   $        270     $        (705)
                                                                        ==============   ============     ==============


 The accompanying  summary of significant  accounting  policies and notes are an
 integral part of this statement.
</TABLE>

<PAGE>


                                     - 46 -

                         OWENS CORNING AND SUBSIDIARIES
                     CONSOLIDATED STATEMENT OF INCOME (LOSS)
        FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998 (continued)
<TABLE>

<S>                                                                          <C>              <C>              <C>
                                                                             2000             1999             1998
                                                                             ----             ----             ----
                                                                           (In millions of dollars, except share data)
NET INCOME (LOSS) PER COMMON SHARE (Note 17)

Basic:
    Income (loss) before extraordinary item                             $         (8.71)  $         4.98   $     (12.44)
    Extraordinary loss (Note 3)                                                       -                -           (.72)
                                                                        ----------------  --------------   ------------
    Net income (loss) per share                                         $          (8.71) $         4.98   $     (13.16)
                                                                        ================  ==============   ============

Diluted:
    Income (loss) before extraordinary item                             $          (8.71) $         4.67   $     (12.44)
    Extraordinary loss (Note 3)                                                        -               -           (.72)
                                                                        ----------------  --------------   ------------
    Net income (loss) per share                                         $          (8.71) $         4.67   $     (13.16)
                                                                        ================  ==============   ============

Weighted  average  number of common  shares  outstanding  and common  equivalent
  shares during the period (in millions)

Basic                                                                          54.8             54.1            53.6

Diluted                                                                        54.8             59.5            53.6

</TABLE>




 The accompanying  summary of significant  accounting  policies and notes are an
 integral part of this statement.

<PAGE>


                                     - 47 -

                         OWENS CORNING AND SUBSIDIARIES
              CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (LOSS)
              FOR THE YEARS ENDED DECEMBER 31, 2000, 1999, AND 1998
<TABLE>
<S>                                                                          <C>               <C>              <C>
                                                                             2000             1999             1998
                                                                             ----             ----             ----
                                                                                    (In millions of dollars)

Net Income (Loss)                                                       $     (478)      $      270       $     (705)

Other comprehensive income (loss), net of tax:
    Currency translation adjustment                                            (41)             (21)               6(a)
    Minimum pension liability adjustment (net of taxes
      of $2 million in 2000 and $1 million in 1999 and 1998)                    (3)               2                1
    Deferred gains (losses) on hedges                                           (2)               5               (4)
                                                                        -----------      ----------       ----------

Other comprehensive income (loss)                                              (46)             (14)               3
                                                                        -----------      ----------       ----------

Comprehensive income (loss)                                             $     (524)      $      256       $     (702)
                                                                        ===========      ==========       ==========


(a)  Includes  certain  reclassifications  to net  income  due to  the  sale  or
     disposition of certain businesses,  the impact of which was not material to
     other comprehensive income.

</TABLE>


 The accompanying  summary of significant  accounting  policies and notes are an
 integral part of this statement.

<PAGE>


                                     - 48 -

                         OWENS CORNING AND SUBSIDIARIES
             CONSOLIDATED BALANCE SHEET - DECEMBER 31, 2000 AND 1999
<TABLE>

<S>                                                                                 <C>                 <C>
                                                                                    2000                1999
                                                                                    ----                ----
ASSETS                                                                              (In millions of dollars)
------

CURRENT
Cash and cash equivalents (Note 1)                                           $        550         $        70
Restricted cash and securities - Fibreboard - current portion
  (Notes 19 and 20)                                                                    -                  900
Receivables, less allowances of $29 million in 2000 and
   $26 million in 1999 (Note 11)                                                     488                  358
Inventories (Note 12)                                                                469                  466
Insurance for asbestos litigation claims - current portion
  (Note 19)                                                                            -                   25
Deferred income taxes (Note 10)                                                        6                  185
Income tax receivable (Note 10)                                                       31                   61
Other current assets                                                                  20                   23
                                                                             -----------          -----------

  Total current                                                                    1,564                2,088
                                                                             -----------          -----------

OTHER
Insurance for asbestos litigation claims (Note 19)                                    59                  205
Restricted cash - asbestos related (Note 19)                                         164                    -
Restricted cash and securities - Fibreboard (Notes 19 and 20)                      1,274                  938
Deferred income taxes (Note 10)                                                    1,075                  547
Goodwill, less accumulated amortization of $113 million
  in 2000 and $97 million in 1999 (Notes 5 and 6)                                    636                  743
Investments in affiliates (Notes 5 and 13)                                            62                   65
Other noncurrent assets (Note 9)                                                     257                  208
                                                                             -----------          -----------

  Total other                                                                      3,527                2,706
                                                                             -----------          -----------

PLANT AND EQUIPMENT, at cost
Land                                                                                  60                   70
Buildings and leasehold improvements                                                 663                  725
Machinery and equipment                                                            2,717                2,639
Construction in progress                                                             327                  258
                                                                             -----------          -----------
                                                                                   3,767                3,692
Less:  Accumulated depreciation                                                   (1,946)              (1,992)
                                                                             ------------         ------------

  Net plant and equipment                                                          1,821                1,700
                                                                             -----------          -----------

TOTAL ASSETS                                                                 $     6,912          $     6,494
                                                                             ===========          ===========


</TABLE>

 The accompanying  summary of significant  accounting  policies and notes are an
 integral part of this statement.
<PAGE>


                                     - 49 -

                         OWENS CORNING AND SUBSIDIARIES
       CONSOLIDATED BALANCE SHEET - DECEMBER 31, 2000 AND 1999 (continued)
<TABLE>

<S>                                                                                <C>              <C>
                                                                                   2000             1999
                                                                                   ----             ----
LIABILITIES AND STOCKHOLDERS' EQUITY                                             (In millions of dollars)
------------------------------------

CURRENT
Accounts payable and accrued liabilities (Note 14)                            $        491     $       839
Reserve for asbestos litigation claims - current portion (Note 19)                      -              950
Asbestos related liabilities - Fibreboard - current portion
   (Note 20)                                                                            -              900
Short-term debt (Note 4)                                                               50               68
Long-term debt - current portion (Note 3)                                              68              159
                                                                              -----------      -----------

   Total current                                                                      609            2,916
                                                                              -----------      -----------

LONG-TERM DEBT (Note 3)                                                                 7            1,764
                                                                              -----------      -----------

OTHER
Reserve for asbestos litigation claims (Note 19)                                        -              820
Asbestos related liabilities - Fibreboard (Note 20)                                     -              938
Other employee benefits liability (Note 8)                                            322              318
Pension plan liability (Note 9)                                                        75               42
Other                                                                                 124              339
                                                                              -----------      -----------

  Total other                                                                         521            2,457
                                                                              -----------      -----------

LIABILITIES SUBJECT TO COMPROMISE (Notes 1 and 7)                                   6,935                -
                                                                              -----------      -----------

COMMITMENTS AND CONTINGENCIES (Notes 16,
  18 and 19)

COMPANY-OBLIGATED SECURITIES OF ENTITIES
  HOLDING SOLELY PARENT DEBENTURES - SUBJECT TO
  COMPROMISE (Note 7)                                                                 200              194
                                                                              -----------      -----------

MINORITY INTEREST                                                                      39               44
                                                                              -----------      -----------

STOCKHOLDERS' EQUITY
Preferred stock, no par value; authorized 8 million shares,
  none outstanding                                                                      -                -
Common stock, par value $.10 per share; authorized 100
  million shares; issued 2000 - 55.4 million and 1999 - 54.8
  million shares (Notes 6 and 17)                                                     699              695
Deficit                                                                            (1,996)          (1,510)
Accumulated other comprehensive loss                                                  (97)             (51)
Other (Note 17)                                                                        (5)             (15)
                                                                              ------------     ------------

    Total stockholders' equity                                                     (1,399)            (881)
                                                                              ------------     ------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                    $     6,912      $     6,494
                                                                              ===========      ===========
</TABLE>

 The accompanying  summary of significant  accounting  policies and notes are an
 integral part of this statement.

<PAGE>


                                     - 50 -

                         OWENS CORNING AND SUBSIDIARIES
                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
              FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
<TABLE>

<S>                                                                        <C>              <C>               <C>
                                                                           2000             1999              1998
                                                                           ----             ----              ----
COMMON STOCK                                                         (In millions of dollars)

Balance beginning of year                                            $      695        $      679      $         657
Issuance of stock for:
  Awards under stock compensation plans (Note 17)                             4                16                 22
                                                                     ----------        ----------      -------------

Balance end of year                                                         699               695                679
                                                                     ----------        ----------      -------------

DEFICIT

Balance beginning of year                                                (1,510)           (1,762)            (1,041)
Net income (loss)                                                          (478)              270               (705)
Cash dividends declared                                                      (8)              (18)               (16)
                                                                     -----------       -----------     --------------

Balance end of year                                                      (1,996)           (1,510)            (1,762)
                                                                     -----------       -----------     --------------

ACCUMULATED OTHER COMPREHENSIVE LOSS

Balance beginning of year

  Currency translation adjustment                                           (62)              (41)               (47)
  Minimum pension liability adjustment                                        -                (2)                (3)
  Deferred gains (losses) on hedges                                          11                 6                 10
                                                                     ----------        ----------      -------------

                                                                            (51)              (37)               (40)

Adjustments

  Currency translation adjustment                                           (41)              (21)                 6
  Minimum pension liability adjustment                                       (3)                2                  1
  Deferred gains (losses) on hedges                                          (2)                5                 (4)
                                                                     -----------       ----------      --------------

                                                                            (46)              (14)                 3

Balance end of year

  Currency translation adjustment                                          (103)              (62)               (41)
  Minimum pension liability adjustment                                       (3)                -                 (2)
  Deferred gains (losses) on hedges                                           9                11                  6
                                                                     ----------        ----------      -------------

Balance end of year                                                         (97)              (51)               (37)
                                                                     -----------       -----------     --------------

OTHER

Balance beginning of year                                                   (15)              (14)               (17)
Net increase (decrease)                                                      10                (1)                 3
                                                                     ----------        -----------     -------------

Balance end of year                                                          (5)              (15)               (14)
                                                                     -----------       -----------     --------------

STOCKHOLDERS' EQUITY                                                  $  (1,399)       $     (881)     $      (1,134)
                                                                     ===========       ===========     ==============


</TABLE>


 The accompanying  summary of significant  accounting  policies and notes are an
 integral part of this statement.


<PAGE>


                                     - 51 -

                         OWENS CORNING AND SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF CASH FLOWS
              FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998

<TABLE>
<S>                                                                          <C>              <C>              <C>
                                                                             2000             1999             1998
                                                                             ----             ----             ----
                                                                                    (In millions of dollars)
NET CASH FLOW FROM OPERATIONS

  Net income (loss)                                                      $     (478)     $       270      $        (705)

  Reconciliation of net cash provided by operating activities:

     Noncash items:
       Provision for asbestos litigation claims (Note 19)                       790                -              1,415
       Extraordinary loss from early retirement of debt (Note 3)                  -                -                 39
       Provision for depreciation and amortization                              203              210                197
       Provision (credit) for deferred income taxes (Note 10)                  (361)             163               (416)
       Gain on sale of assets (Note 6)                                            -                -               (359)
       Other (Note 5)                                                           126               (2)               122
  (Increase) decrease in receivables (Note 11)                                 (198)             112                (58)
  (Increase) decrease in inventories                                            (78)             (25)                16
   Increase (decrease) in accounts payable and accrued
      liabilities                                                               218             (113)               120
  (Increase) decrease in restricted cash - asbestos related
      (Note 19)                                                                (164)               -                  -
   Change in liabilities subject to compromise (Note 1)                        (100)               -                  -
   Proceeds from insurance for asbestos litigation claims,
      excluding Fibreboard (Note 19)                                            380              180                 47
   Payments for asbestos litigation claims, excluding
      Fibreboard (Note 19)                                                     (521)            (860)              (455)
   Other                                                                         (7)              37                161
                                                                        ------------     -----------      -------------

Net cash flow from operations                                                  (190)             (28)               124
                                                                        ------------     ------------     -------------

NET CASH FLOW FROM INVESTING

  Additions to plant and equipment                                             (476)            (244)              (253)
  Investment in subsidiaries, net of cash acquired                               (4)              (1)                 -
  Proceeds from the sale of affiliate or business (Note 6)                      193                -                668
  Other                                                                         (45)              20                (33)
                                                                        ------------     -----------      --------------

Net cash flow from investing                                            $       (332)    $      (225)     $         382
                                                                        -------------    ------------     -------------

</TABLE>

 The accompanying  summary of significant  accounting  policies and notes are an
 integral part of this statement.


<PAGE>


                                     - 52 -

                         OWENS CORNING AND SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF CASH FLOWS
        FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998 (continued)
<TABLE>

<S>                                                                          <C>              <C>              <C>
                                                                             2000             1999             1998
                                                                             ----             ----             ----

NET CASH FLOW FROM FINANCING (Notes 3 and 4)

  Net additions (reductions) to long-term credit facilities              $    1,073      $        91      $     (635)
  Other additions to long-term debt                                              29              253             971
  Other reductions to long-term debt                                            (91)             (38)           (494)
  Net increase (decrease) in short-term debt                                      7              (24)             41
  Repurchase of trust preferred hybrid securities                                 -                -            (309)
  Premiums paid for early retirement of debt                                      -                -             (62)
  Dividends paid                                                                (12)             (16)            (16)
  Other                                                                          (4)               2              (4)
                                                                        ------------     -----------      -----------

    Net cash flow from financing                                              1,002              268            (508)
                                                                        -----------      -----------      -----------

Effect of exchange rate changes on cash                                           -                1              (2)
                                                                        -----------      -----------      -----------

Net increase (decrease) in cash and cash equivalents                            480               16              (4)

Cash and cash equivalents at beginning of year                                   70               54              58
                                                                        -----------      -----------      ----------

Cash and cash equivalents at end of year                                $        550     $        70      $       54
                                                                        ============     ===========      ==========

</TABLE>

 The accompanying  summary of significant  accounting  policies and notes are an
 integral part of this statement.

<PAGE>




                                     - 53 -

                         OWENS CORNING AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.     VOLUNTARY PETITION FOR RELIEF UNDER CHAPTER 11

On October 5, 2000 (the "Petition Date"), Owens Corning and the 17 United States
subsidiaries  listed  below  (collectively,   the  "Debtors"),  filed  voluntary
petitions  for relief  (the  "Filing")  under  Chapter  11 of the United  States
Bankruptcy Code (the  "Bankruptcy  Code") in the United States  Bankruptcy Court
for the District of Delaware (the "Bankruptcy Court"). The Debtors are currently
operating  their   businesses  as   debtors-in-possession   in  accordance  with
provisions  of the  Bankruptcy  Code.  The  Chapter  11  cases  of  the  Debtors
(collectively, the "Chapter 11 Cases") are being jointly administered under Case
No.  00-3837  (JKF).  The Chapter 11 Cases do not include  other  United  States
subsidiaries of Owens Corning or any of its foreign subsidiaries  (collectively,
the  "Non-Debtor  Subsidiaries").  The subsidiary  Debtors that filed Chapter 11
petitions for relief are:
<TABLE>
<S>                                                  <C>
         CDC Corporation                             Integrex Testing Systems LLC
         Engineered Yarns America, Inc.              HOMExperts LLC
         Falcon Foam Corporation                     Jefferson Holdings, Inc.
         Integrex                                    Owens-Corning Fiberglas Technology Inc.
         Fibreboard Corporation                      Owens Corning HT, Inc.
         Exterior Systems, Inc.                      Owens-Corning Overseas Holdings, Inc.
         Integrex Ventures LLC                       Owens Corning Remodeling Systems, LLC
         Integrex Professional Services LLC          Soltech, Inc.
         Integrex Supply Chain Solutions LLC
</TABLE>

The Debtors filed for relief under Chapter 11 to address the growing  demands on
Owens  Corning's  cash flow  resulting from its  multi-billion  dollar  asbestos
liability.  This  liability  is  discussed  in greater  detail in Note 19 to the
Consolidated Financial Statements.

Consequence of Filing
---------------------

As a consequence of the Filing,  all pending  litigation  against the Debtors is
stayed  automatically  by section 362 of the Bankruptcy Code and, absent further
order of the  Bankruptcy  Court,  no party  may take any  action to  recover  on
pre-petition claims against the Debtors. In addition, pursuant to section 365 of
the  Bankruptcy  Code, the Debtors may reject or assume  pre-petition  executory
contracts  and unexpired  leases,  and other parties to contracts or leases that
are rejected may assert rejection  damages claims as permitted by the Bankruptcy
Code.

Two creditors'  committees,  one representing  asbestos  claimants and the other
representing unsecured creditors,  have been appointed as official committees in
the Chapter 11 Cases and, in accordance  with the  provisions of the  Bankruptcy
Code,  will  have the right to be heard on all  matters  that  come  before  the
Bankruptcy Court. Owens Corning expects that the appointed committees,  together
with a legal  representative of future asbestos claimants to be appointed by the
Bankruptcy  Court,  will play  important  roles in the  Chapter 11 Cases and the
negotiation of the terms of any plan or plans of reorganization.

Owens Corning  anticipates that  substantially all liabilities of the Debtors as
of the date of the Filing will be resolved under one or more Chapter 11 plans of
reorganization to be proposed and voted on in the Chapter 11 Cases in accordance
with the provisions of the Bankruptcy Code.  Although the Debtors intend to file
and seek confirmation of such a plan or plans, there can be no assurance as to

<PAGE>


                                     - 54 -

                         OWENS CORNING AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

1.       VOLUNTARY PETITION FOR RELIEF UNDER CHAPTER 11 (continued)

when the Debtors will file such a plan or plans, or that such plan or plans will
be confirmed by the Bankruptcy Court and consummated.

As provided by the  Bankruptcy  Code,  the Debtors  initially  had the exclusive
right to propose a plan of  reorganization  for 120 days  following the Petition
Date, until February 2, 2001. On January 17, 2001, the Bankruptcy Court extended
such  exclusivity  period  until  August 2, 2001,  and  similarly  extended  the
Debtors' exclusive rights to solicit  acceptances of a reorganization  plan from
April  3,  2001  to  October  3,  2001.  If the  Debtors  fail to file a plan of
reorganization  during such period or any extension thereof,  or if such plan is
not accepted by the requisite  numbers of creditors and equity holders  entitled
to vote on the plan,  other  parties in  interest in the Chapter 11 Cases may be
permitted to propose their own plan(s) of reorganization for the Debtors.

Owens  Corning is unable to predict at this time what the treatment of creditors
and equity holders of the respective  Debtors will be under any proposed plan or
plans of  reorganization.  Such plan or plans may provide,  among other  things,
that all present and future  asbestos-related  liabilities  of Owens Corning and
Fibreboard  will  be  discharged  and  assumed  and  resolved  by  one  or  more
independently  administered trusts established in compliance with Section 524(g)
of the Bankruptcy  Code. Such plan or plans may also provide for the issuance of
an  injunction  by the  Bankruptcy  Court  pursuant  to  Section  524(g)  of the
Bankruptcy Code that will enjoin actions against the reorganized Debtors for the
purpose of, directly or indirectly,  collecting, recovering or receiving payment
of,  on,  or with  respect  to any  claims  resulting  from  asbestos-containing
products  allegedly  manufactured,   sold  or  installed  by  Owens  Corning  or
Fibreboard, which claims will be paid in whole or in part by one or more Section
524(g)  trusts.  Similar  plans of  reorganization  have been  confirmed  in the
Chapter 11 cases of other  companies  involved in  asbestos-related  litigation.
Section  524(g) of the  Bankruptcy  Code  provides  that,  if certain  specified
conditions are satisfied,  a court may issue a supplemental permanent injunction
barring  the  assertion  of  asbestos-related  claims  or  demands  against  the
reorganized company and channeling those claims to an independent trust.

Owens Corning is unable to predict at this time what  treatment will be accorded
under  any such  reorganization  plan or plans  to  inter-company  indebtedness,
licenses,   transfers  of  goods  and  services  and  other   inter-company  and
intra-company  arrangements,  transactions and  relationships  that were entered
into  prior  to  the  Petition  Date.  These   arrangements,   transactions  and
relationships  may be challenged by various  parties in the Chapter 11 Cases and
the outcome of those challenges,  if any, may have an impact on the treatment of
various claims under such plan or plans. For example, Owens Corning is unable to
predict  at this  time what the  treatment  will be under any such plan or plans
with respect to (1) the  guaranties  issued by certain of Owens  Corning's  U.S.
subsidiaries,  including  Owens-Corning  Fiberglas  Technology Inc. ("OCFT") and
IPM, Inc. ("IPM", a Non-Debtor  Subsidiary that holds Owens Corning's  ownership
interest in a majority of Owens Corning's foreign subsidiaries), with respect to
Owens   Corning's   $1.8  billion   pre-petition   bank  credit   facility  (the
"Pre-Petition  Credit  Facility"  which is now in default) or (2) OCFT's license
agreements  with Owens  Corning  and  Exterior  Systems,  Inc.,  a  wholly-owned
subsidiary  of Owens  Corning  ("Exterior"),  pursuant  to which  OCFT  licenses
intellectual property to Owens Corning and Exterior.

The  Bankruptcy  Court may  confirm a plan of  reorganization  only upon  making
certain  findings  required by the Bankruptcy  Code, and a plan may be confirmed
over the  dissent of  non-accepting  creditors  and equity  security  holders if
certain  requirements  of the  Bankruptcy  Code are met. The payment  rights and
other entitlements of pre-petition creditors and Owens Corning's shareholders

<PAGE>


                                     - 55 -

                         OWENS CORNING AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

1.       VOLUNTARY PETITION FOR RELIEF UNDER CHAPTER 11 (continued)

may be substantially altered by any plan or plans of reorganization confirmed in
the Chapter 11 Cases. There is no assurance that there will be sufficient assets
to satisfy the Debtors'  pre-petition  liabilities  in whole or in part, and the
pre-petition  creditors of some Debtors may be treated differently than those of
other  Debtors.  Pre-petition  creditors  may receive under a plan or plans less
than  100% of the  face  value  of  their  claims,  and the  interests  of Owens
Corning's equity security  holders may be substantially  diluted or cancelled in
whole or in part. As noted above, it is not possible at this time to predict the
outcome of the Chapter 11 Cases,  the terms and  provisions of any plan or plans
of reorganization, or the effect of the Chapter 11 reorganization process on the
claims of the  creditors  of the  Debtors or the  interests  of Owens  Corning's
equity security holders.

Financial Statement Presentation
--------------------------------

The  accompanying  Consolidated  Financial  Statements  have  been  prepared  in
accordance  with AICPA  Statement  of  Position  90-7 ("SOP  90-7"),  "Financial
Reporting by Entities in  Reorganization  Under the  Bankruptcy  Code," and on a
going concern basis, which contemplates continuity of operations, realization of
assets and  liquidation  of  liabilities  in the  ordinary  course of  business.
However,  as a result of the Filing,  such realization of assets and liquidation
of   liabilities    are   subject   to    uncertainty.    While   operating   as
debtors-in-possession under the protection of Chapter 11 of the Bankruptcy Code,
and subject to  Bankruptcy  Court  approval or  otherwise  as  permitted  in the
ordinary course of business, the Debtors, or some of them, may sell or otherwise
dispose of assets and  liquidate or settle  liabilities  for amounts  other than
those reflected in the Consolidated  Financial  Statements.  Further,  a plan of
reorganization could materially change the amounts and classifications  reported
in the consolidated historical financial statements.

Substantially  all of the Company's  pre-petition  debt is now in default due to
the  Filing.  As  described  below,  the  accompanying   Consolidated  Financial
Statements present the Debtors' pre-petition debt under the caption "LIABILITIES
SUBJECT  TO  COMPROMISE."  This  includes  debt  under the  Pre-Petition  Credit
Facility and  approximately  $1.4 billion of other outstanding debt. As required
by SOP 90-7, the Company,  beginning in the fourth quarter of 2000, recorded the
Debtors'  pre-petition debt instruments at the allowed amount, as defined by SOP
90-7. Accordingly,  the Company accelerated the amortization of its debt-related
costs attributable to the Debtors and recorded a pretax expense of approximately
$30 million  during  October  2000,  which is  classified  as Chapter 11 Related
Reorganization Items.

As reflected in the Consolidated  Financial Statements,  "liabilities subject to
compromise" refer to Debtors'  liabilities incurred prior to the commencement of
the Chapter 11 Cases. The amounts of the various liabilities that are subject to
compromise  are set forth below  following  the  Debtor-In-Possession  financial
statements.  These  amounts  represent  Owens  Corning's  estimate  of  known or
potential  pre-petition  claims to be resolved in connection with the Chapter 11
Cases. Such claims remain subject to future adjustments.  Adjustments may result
from  (1)  negotiations;  (2)  actions  of the  Bankruptcy  Court;  (3)  further
developments  with  respect to  disputed  claims;  (4)  rejection  of  executory
contracts and unexpired  leases;  (5) the  determination  as to the value of any
collateral  securing claims;  (6) proofs of claim; or (7) other events.  Payment
terms for these amounts will be  established  in connection  with the Chapter 11
Cases.

<PAGE>


                                     - 56 -

                         OWENS CORNING AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

1.   VOLUNTARY PETITION FOR RELIEF UNDER CHAPTER 11 (continued)

Pursuant to the Bankruptcy  Code,  schedules have been filed by the Debtors with
the Bankruptcy  Court setting forth the assets and liabilities of the Debtors as
of the date of the Filing.  Differences  between amounts recorded by the Debtors
and claims filed by creditors will be  investigated  and resolved as part of the
proceedings  in the Chapter 11 Cases.  No bar dates have been set for the filing
of proofs of claim  against the Debtors.  Accordingly,  the ultimate  number and
allowed amount of such claims are not presently known.

The Debtors have received approval from the Bankruptcy Court to pay or otherwise
honor  certain of their  pre-petition  obligations,  including  employee  wages,
salaries,  benefits  and  other  employee  obligations,  pre-petition  claims of
critical  vendors,  and certain  other  pre-petition  claims  including  certain
customer program and warranty claims.

Contractual  interest  expense  not accrued or  recorded  on  pre-petition  debt
totaled $52 million for 2000.

At December 31, 2000, the Company had $550 million of Cash and Cash  Equivalents
(of which  approximately  $46  million is subject  to an  administrative  freeze
pending the resolution of certain alleged set-off rights which, upon approval of
the Bankruptcy  Court,  may be exercised by certain  pre-petition  lenders).  In
addition,  in connection  with the Filing,  the Debtors  obtained a $500 million
debtor-in-possession  credit  facility  from a group of  lenders  led by Bank of
America, N.A. (the "DIP Financing").

The Company believes,  based on information presently available to it, that cash
available  from  operations  and  the  DIP  Financing  will  provide  sufficient
liquidity to allow it to continue as a going concern for the foreseeable future.
However,  the ability of the Company to continue as a going  concern  (including
its  ability  to  meet  post-petition  obligations  of the  Debtors  and to meet
obligations of the Non-Debtor Subsidiaries) and the appropriateness of using the
going concern basis for its financial statements are dependent upon, among other
things,  (i) the Company's ability to comply with the terms of the DIP Financing
and any cash management order entered by the Bankruptcy Court in connection with
the Chapter 11 Cases,  (ii) the ability of the Company to maintain adequate cash
on hand, (iii) the ability of the Company to generate cash from operations, (iv)
the ability of the Non-Debtor  Subsidiaries to obtain necessary  financing,  (v)
confirmation of a plan or plans of reorganization under the Bankruptcy Code, and
(vi) the Company's ability to achieve profitability following such confirmation.

Debtor-In-Possession Financial Statements
-----------------------------------------

The condensed financial statements of the Debtors are presented as follows:





<PAGE>


                                     - 57 -

                         OWENS CORNING AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

1.   VOLUNTARY PETITION FOR RELIEF UNDER CHAPTER 11 (continued)

                         Owens Corning and Subsidiaries
                    Debtor-in-Possession Statement of Income
                      for the year ended December 31, 2000
<TABLE>


<S>                                                                                                    <C>
                                                                                                       2000
                                                                                                       ----
                                                                                             (In millions of dollars)

NET SALES                                                                                            $   4,218
COST OF SALES                                                                                            3,509
                                                                                                     ---------
     Gross margin                                                                                          709
                                                                                                     ---------

OPERATING EXPENSES
     Marketing and administrative expenses                                                                 460
     Science and technology expenses                                                                        47
     Provision for asbestos litigation claims (Note 19)                                                    790
     Restructure costs (Note 5)                                                                             26
     Chapter 11 reorganization items (Note 1)                                                               24
     Other (Including interest income from non-Debtors $82 million)                                        (94)
                                                                                                     ---------

        Total operating expenses                                                                         1,253
                                                                                                     ---------

LOSS FROM OPERATIONS                                                                                      (544)

OTHER
     Cost of borrowed funds (Notes 3, 4 and 18)                                                            174
     Other (Notes 18 and 20)                                                                                 5
                                                                                                     ---------

LOSS BEFORE CREDIT FOR INCOME TAXES                                                                       (723)

Credit for income taxes (Note 10)                                                                         (340)
                                                                                                     ---------

LOSS BEFORE EQUITY IN NET LOSS OF AFFILIATES                                                              (383)

Equity in net loss of affiliates                                                                            (2)
                                                                                                     ---------

NET LOSS                                                                                             $    (385)
                                                                                                     =========
</TABLE>





         The accompanying notes are an integral part of this statement.

<PAGE>


                                     - 58 -

                         OWENS CORNING AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

1.   VOLUNTARY PETITION FOR RELIEF UNDER CHAPTER 11 (continued)

                                      Owens Corning and Subsidiaries
                                    Debtor-in-Possession Balance Sheet
                                            December 31, 2000

<TABLE>
<S>                                                                                       <C>
                                                                                          2000
                                                                                          ----
                                                                                (In millions of dollars)
ASSETS

CURRENT
     Cash and cash equivalents                                                         $      461
     Receivables, net                                                                         338
     Receivables - non-debtors                                                                672
     Inventories                                                                              347
     Deferred income taxes                                                                      4
     Income tax receivable                                                                     31
     Other current assets                                                                      18
                                                                                       ----------

           Total current                                                                    1,871
                                                                                       ----------

OTHER
     Insurance for asbestos litigation claims (Note 19)                                        59
     Restricted cash - asbestos related (Note 19)                                             164
     Restricted cash and securities - Fibreboard (Notes 19 and 20)                          1,274
     Deferred income taxes                                                                  1,058
     Goodwill, net                                                                            530
     Investments in affiliates                                                                 38
     Investments in non-debtor subsidiaries                                                   745
     Other noncurrent assets                                                                  209
                                                                                       ----------

           Total other                                                                      4,077
                                                                                       ----------

PLANT AND EQUIPMENT, at cost
     Land                                                                                      34
     Buildings and leasehold improvements                                                     522
     Machinery and equipment                                                                2,078
     Construction in progress                                                                 259
                                                                                       ----------
                                                                                            2,893

  Less:  Accumulated depreciation                                                          (1,502)
                                                                                       -----------

      Net plant and equipment                                                               1,391
                                                                                       ----------

TOTAL ASSETS                                                                           $    7,339
                                                                                       ==========

</TABLE>



        The accompanying notes are an integral part of this statement.

<PAGE>


                                     - 59 -

                         OWENS CORNING AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

1.   VOLUNTARY PETITION FOR RELIEF UNDER CHAPTER 11 (continued)

                         Owens Corning and Subsidiaries
                       Debtor-in-Possession Balance Sheet
                                December 31, 2000

<TABLE>
<S>                                                                                                  <C>
                                                                                                     2000
                                                                                                     ----
LIABILITIES AND STOCKHOLDERS' EQUITY                                                       (In millions of dollars)
------------------------------------

CURRENT
     Accounts payable and accrued liabilities                                                     $      320
     Accounts payable and accrued liabilities - non-debtors                                               46
     Long-term debt - current portion                                                                      1
                                                                                                ------------

        Total current                                                                                    367
                                                                                                  ----------

OTHER
  Other employee benefits liability                                                                      308
  Pension plan liability                                                                                  68
  Other                                                                                                   96
                                                                                                 -----------

        Total other                                                                                      472
                                                                                                  ----------

LIABILITIES SUBJECT TO COMPROMISE                                                                      7,623

STOCKHOLDERS' EQUITY
  Common stock                                                                                           699
  Deficit                                                                                             (1,807)
  Accumulated other comprehensive loss                                                                   (12)
  Other                                                                                                   (3)
                                                                                                -------------

        Total stockholders' equity                                                                    (1,123)
                                                                                                   ----------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                                         $   7,339
                                                                                                   =========

</TABLE>



        The accompanying notes are an integral part of this statement.

<PAGE>


                                     - 60 -

                         OWENS CORNING AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

1.   VOLUNTARY PETITION FOR RELIEF UNDER CHAPTER 11 (continued)

                         Owens Corning and Subsidiaries
                  Debtor-in-Possession Statement of Cash Flows
                      for the year ended December 31, 2000
<TABLE>

<S>                                                                                                <C>
                                                                                                   2000
                                                                                                   ----
                                                                                         (In millions of dollars)

NET CASH FLOW FROM OPERATIONS

Net loss                                                                                       $    (385)
  Reconciliation of net cash provided by operating activities
        Noncash items:
          Provision for asbestos litigation claims                                                   790
          Provision for depreciation and amortization                                                142
          Credit for deferred income taxes                                                          (345)
          Other                                                                                      116
        Increase in receivables                                                                     (154)
        Increase in inventories                                                                      (70)
        Increase in accounts payable and accrued liabilities                                         452
        Increase in restricted cash - asbestos related                                              (164)
        Change in liabilities subject to compromise                                                 (100)
        Proceeds from insurance for asbestos litigation claims, excluding
          Fibreboard (Note 19)                                                                       380
        Payments for asbestos litigation claims, excluding Fibreboard
          (Note 19)                                                                                 (521)
        Other                                                                                       (167)
                                                                                               ----------

            Net cash flow from operations                                                            (26)
                                                                                               ----------

NET CASH FLOW FROM INVESTING

        Additions to plant and equipment                                                            (422)
        Investment in non-debtor subsidiaries, net of cash acquired                                   (5)
        Proceeds for liquid of non-debtors subsidiary                                                 83
        Investment in non-debtor subsidiaries                                                       (146)
        Proceeds from the sale of  affiliate or business (Note 6)                                     50
        Other                                                                                         (7)
                                                                                               ----------

            Net cash flow from investing                                                       $    (447)
                                                                                               ----------
</TABLE>



      The accompanying notes are an integral part of this statement.


<PAGE>


                                     - 61 -

                         OWENS CORNING AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

1.   VOLUNTARY PETITION FOR RELIEF UNDER CHAPTER 11 (continued)

                         Owens Corning and Subsidiaries
                  Debtor-in-Possession Statement of Cash Flows
                      for the year ended December 31, 2000
<TABLE>

<S>                                                                                               <C>
                                                                                                  2000
                                                                                                  ----
                                                                                        (In millions of dollars)

NET CASH FLOW FROM FINANCING

  Net additions to long-term credit facilities                                              $    1,088
  Other additions to long-term debt                                                                  7
  Other reductions to long-term debt                                                               (61)
  Net decrease in short-term debt                                                                  (21)
  Dividends paid                                                                                   (12)
  Other                                                                                            (79)
                                                                                            ----------

      Net cash flow from financing                                                                 922
                                                                                            ----------

Net increase in cash and cash equivalents                                                          449

Cash and cash equivalents at beginning of period                                                    12
                                                                                            ----------

Cash and cash equivalents at end of period                                                  $      461
                                                                                            ==========
</TABLE>

The amounts subject to compromise in the Consolidated  and  Debtor-in-Possession
Balance Sheets consist of the following items at December 31:
<TABLE>

<S>                                                                                              <C>
                                                                                                 2000
                                                                                                 ----
                                                                                         (amounts in millions)

  Accounts payable                                                                           $      255
  Accrued interest payable                                                                           39
  Accrued liabilities                                                                                74
  Debt (Notes 3 and 4)                                                                            2,832
  Income taxes payable                                                                              212
  Reserve for asbestos litigation claims - Owens Corning (Note 19)                                2,249
  Reserve for asbestos litigation claims - Fibreboard (Notes 19 and 20)                           1,274
                                                                                             ----------

         Total consolidated                                                                       6,935

         Payables to non-debtors                                                                    688
                                                                                             ----------

         Total debtor                                                                        $    7,623
                                                                                             ==========
</TABLE>

The   amounts   for    reorganizational    items   in   the   Consolidated   and
Debtor-in-Possession  Income  Statements  consist of the  following for the year
ended December 31:
<TABLE>

<S>                                                                                        <C>
                                                                                           2000
                                                                                           ----
                                                                                (amounts in millions)

Accelerated amortization of debt issuance costs                                         $      30
Interest income                                                                                (5)
Other expenses net of liability settlements                                                    (1)
                                                                                        ---------

     Total                                                                              $      24
                                                                                        =========
</TABLE>



<PAGE>


                                     - 62 -

                         OWENS CORNING AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

2.   Segment Data

The Company has identified two  reportable  operating  segments and has reported
financial and  descriptive  information  about each of those segments below on a
basis that is used  internally for evaluating  segment  performance and deciding
how to allocate resources to those segments.

The Company's two reportable operating segments are defined as follows:

Building Materials Systems
--------------------------

     Production and sale of glass wool fibers formed into thermal and acoustical
     insulation  and  air  ducts;  extruded  polystyrene   insulation;   roofing
     shingles,  glass fiber mat and asphalt materials;  windows and doors; vinyl
     and metal siding and  accessories;  cast stone building  products;  and the
     branded sale of housewrap.

Composite Systems
-----------------

     Production and sale of glass fiber rovings and veils; long-fibre reinforced
     thermoplastic compounds,  glass reinforced plastic pipe; tailored composite
     solutions for the automotive, buildings and telecommunications markets, and
     composite manufacturing services.

Income (loss) from  operations by operating  segment  consists of net sales less
related  costs and expenses and is presented on a basis that is used  internally
for evaluating segment performance.  Certain categories of expenses such as cost
of borrowed funds,  general corporate expenses or income, and certain expense or
income items are excluded from the internal  evaluation of segment  performance.
Accordingly,  these items are not reflected in income (loss) from operations for
the Company's reportable operating segments.  Please refer to the reconciliation
of reportable  operating  segment income from operations to consolidated  income
before income taxes below for additional information about such items.

Total assets by reportable  operating  segment are those assets that are used in
the Company's  operations in each operating  segment and do not include  general
corporate  assets.  General  corporate assets consist primarily of cash and cash
equivalents,  deferred  taxes,  asbestos  assets,  and  corporate  property  and
equipment.  Please refer to the  reconciliation of reportable  operating segment
assets to consolidated total assets below for additional  information about such
items.

External  customer  sales by  geographic  region are  attributed  based upon the
location  from which the product is  shipped.  Long-lived  assets by  geographic
region are attributed based upon the location of the assets.



<PAGE>


                                     - 63 -

                         OWENS CORNING AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

2.       Segment Data (continued)

During 2000, the Company realigned its internal  operating  segments.  Following
this realignment,  the Company reviewed its segments in accordance with SFAS 131
and concluded that the aggregation of its operating segments into two reportable
segments was still  appropriate.  As a result of this realignment,  intersegment
transactions no longer exist between reportable  segments.  Net sales and income
from  operations  have been  restated for all periods  presented to reflect this
change.
<TABLE>


<S>                                                                          <C>              <C>              <C>
NET SALES                                                                    2000             1999             1998
                                                                             ----             ----             ----
                                                                                    (In millions of dollars)
Reportable Operating Segments
-----------------------------

  Building Materials Systems
     United States                                                      $     3,728      $     3,757      $       3,470
     Europe                                                                      90              234                271
     Canada and other                                                           190              188                170
                                                                        -----------      -----------      -------------

        Total Building Materials Systems                                $     4,008            4,179              3,911
                                                                        -----------      -----------      -------------

  Composite Systems
     United States                                                              410              374                576
     Europe                                                                     340              338                372
     Canada and other                                                           182              157                150
                                                                        -----------      -----------      -------------

        Total Composite Systems                                                 932              869              1,098
                                                                        -----------      -----------      -------------

        Total Reportable Operating Segments                             $     4,940      $     5,048      $       5,009
                                                                        ===========      ===========      =============

External Customer Sales by Geographic Region
--------------------------------------------

  United States                                                         $     4,138      $     4,131      $       4,046
  Europe                                                                        430              572                643
  Canada and other                                                              372              345                320
                                                                        -----------      -----------      -------------

     Net Sales                                                          $     4,940      $     5,048      $       5,009
                                                                        ===========      ===========      =============

</TABLE>

<PAGE>


                                     - 64 -

                         OWENS CORNING AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

2.    Segment Data (continued)
<TABLE>


<S>                                                                          <C>              <C>              <C>
INCOME (LOSS) FROM OPERATIONS                                                2000             1999             1998
                                                                             ----             ----             ----
                                                                                    (In millions of dollars)
Reportable Operating Segments
-----------------------------

  Building Materials Systems
     United States                                                      $       318      $       480      $         279
     Europe                                                                       2               10                 14
     Canada and other                                                            33               33                  6
                                                                        -------------    -----------      -------------

        Total Building Materials Systems                                        353              523                299
                                                                        -----------      -----------      -------------

  Composite Systems
     United States                                                               73               68                169
     Europe                                                                      15                -                 28
     Canada and other                                                            20               15                 14
                                                                        -----------      -----------      -------------

        Total Composite Systems                                                 108               83                211
                                                                        -----------      -----------      -------------

        Total Reportable Operating Segments                             $       461      $       606      $         510
                                                                        ============     ===========      =============

Geographic Regions
------------------

  United States                                                         $       391      $       548      $         448
  Europe                                                                         17               10                 42
  Canada and other                                                               53               48                 20
                                                                        -----------      -----------      -------------

     Total Reportable Operating Segments                                $       461      $       606      $         510
                                                                        ============     ===========      =============

Reconciliation to Consolidated Income (Loss) Before
---------------------------------------------------
  Provision (Credit) for Income Taxes
  -----------------------------------

  Restructuring and other charges (Note 5)                                     (229)               -               (243)
  Chapter 11 related reorganization items                                       (24)               -                  -
  Asbestos litigation claims (Note 20)                                         (790)               -             (1,415)
  Gain on sale of affiliate or business (Note 6)                                  -                -                359
  General corporate expense                                                     (49)             (28)               (35)
  Cost of borrowed funds                                                       (155)            (152)              (140)
  Other                                                                          (5)               -                  -
                                                                        ------------     -----------      -------------

Consolidated Income (Loss) Before Provision (Credit)
  for Income Taxes                                                      $       (791)    $       426      $        (964)
                                                                        =============    ===========      ==============

</TABLE>

<PAGE>


                                     - 65 -

                         OWENS CORNING AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

2.  Segment Data (continued)
<TABLE>

<S>                                                                         <C>                <C>                <C>
                                                                                           December 31,
TOTAL ASSETS                                                                2000               1999               1998
                                                                            ----               ----               ----
                                                                                     (In millions of dollars)
Reportable Operating Segments
-----------------------------

  Building Materials Systems
     United States                                                    $      2,094       $      2,020       $       1,938
     Europe                                                                      6                226                 280
     Canada and other                                                          184                193                 190
                                                                      ------------       ------------       -------------

        Total Building Materials Systems                                     2,284              2,439               2,408
                                                                      ------------       ------------       -------------

  Composite Systems
     United States                                                             492                282                 299
     Europe                                                                    294                201                 244
     Canada and other                                                          283                317                 180
                                                                      ------------       ------------       -------------

        Total Composite Systems                                              1,069                800                 723
                                                                      ------------       ------------       -------------

        Total Reportable Operating Segments                           $      3,353       $      3,239       $       3,131
                                                                      ============       ============       =============

Reconciliation to Consolidated Total Assets
-------------------------------------------

  Restricted cash - asbestos related                                           164                  -                   -
  Insurance for asbestos litigation claims                                      59                230                 484
  Deferred income taxes                                                      1,081                732                 901
  Income tax receivable                                                         31                 61                 117
  Cash and cash equivalents                                                    550                 70                  54
  Restricted cash and securities - Fibreboard                                1,274              1,838                   -
  Investments in affiliates                                                     62                 65                  45
  LIFO inventory valuation adjustment                                          (93)               (66)                (56)
  Other general corporate assets                                               431                325                 425
                                                                      ------------       ------------       -------------

     Consolidated Total Assets                                        $      6,912       $      6,494       $       5,101
                                                                      ============       ============       =============

LONG-LIVED ASSETS BY GEOGRAPHIC REGION
--------------------------------------

  United States                                                       $      1,939       $      1,711       $       1,702
  Europe                                                                       160                339                 371
  Canada and other                                                             358                393                 307
                                                                      ------------       ------------       -------------

     Total Long-Lived Assets                                          $      2,457       $      2,443       $       2,380
                                                                      ============       ============       =============
</TABLE>




<PAGE>


                                     - 66 -

                         OWENS CORNING AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

2.   Segment Data (continued)
<TABLE>

<S>                                                                         <C>               <C>               <C>
PROVISION FOR DEPRECIATION AND
  AMORTIZATION                                                              2000              1999             1998
                                                                            ----              ----             ----
                                                                                   (In millions of dollars)
Reportable Operating Segments
-----------------------------

  Building Materials Systems
     United States                                                    $          92      $          95    $        96
     Europe                                                                      17                 20             20
     Canada and other                                                            10                 13             12
                                                                      -------------      -------------    -----------

        Total Building Materials Systems                                        119                128            128
                                                                      -------------      -------------    -----------

  Composite Systems
     United States                                                               16                 16             19
     Europe                                                                      20                 19             18
     Canada and other                                                             9                 18             11
                                                                      -------------      -------------    -----------

        Total Composite Systems                                                  45                 53             48
                                                                      -------------      -------------    -----------

        Total Reportable Operating Segments                           $          164     $         181    $       176
                                                                      ==============     =============    ===========

Geographic Regions
------------------

  United States                                                       $          108     $        111     $      115
  Europe                                                                          37               39             38
  Canada and other                                                                19               31             23
                                                                      ---------------    -------------    -----------

       Total Reportable Operating Segments                            $          164     $        181     $      176
                                                                      ==============     =============    ===========

Reconciliation to Consolidated Provision for
--------------------------------------------
  Depreciation and Amortization
  -----------------------------

  General Corporate Depreciation and Amortization                                 39               29             21
                                                                      --------------     -------------    -----------

     Consolidated Provision for Depreciation and
          Amortization                                                $          203     $        210     $       197
                                                                      ==============     =============    ===========
</TABLE>



<PAGE>


                                     - 67 -

                         OWENS CORNING AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

2.   Segment Data (continued)

<TABLE>
<S>                                                                         <C>                <C>              <C>

ADDITIONS TO LONG-LIVED ASSETS
------------------------------

ADDITIONS TO PLANT AND EQUIPMENT
                                                                            2000              1999             1998
                                                                            ----              ----             ----
                                                                                   (In millions of dollars)
Reportable Operating Segments
-----------------------------

  Building Materials Systems
     United States                                                     $        180      $         127    $       117
     Europe                                                                       5                 17             15
     Canada and other                                                             5                  9             17
                                                                       ------------      -------------    -----------

        Total Building Materials Systems                                        190                153            149
                                                                       ------------      -------------    -----------

  Composite Systems
     United States                                                              135                 12             32
     Europe                                                                      66                 18             35
     Canada and other                                                            59                 25              4
                                                                       ------------      -------------    -----------

        Total Composite Systems                                                 260                 55             71
                                                                       ------------      -------------    -----------

        Total Reportable Operating Segments                            $        450      $         208    $       220
                                                                       ============      =============    ===========

Geographic Regions
------------------

  United States                                                        $        315      $         139    $       149
  Europe                                                                         71                 35             50
  Canada and other                                                               64                 34             21
                                                                       ------------      -------------    -----------

       Total Reportable Operating Segments                             $        450      $         208    $       220
                                                                       ============      =============    ===========

ADDITIONS TO GOODWILL (1)                                              $         12      $           -    $         -
                                                                       ============      =============    ===========

Total additions to long-lived assets of reportable operating
  segments                                                             $        462      $         208    $       220
                                                                       ============      =============    ===========

</TABLE>


(1)    During 2000,  the Company made certain  acquisitions  which included cash
       expenditures  for goodwill of $12  million,  all of which was in Building
       Materials Systems in the U.S.




<PAGE>


                                     - 68 -

                         OWENS CORNING AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

3.   Long-Term Debt
<TABLE>
<S>                                                                                    <C>              <C>
                                                                                       2000             1999
                                                                                       ----             ----
                                                                                      (In millions of dollars)
Long-Term Debt:
--------------
Asian credit facility due in 2003, variable                                       $        22      $        23
Guaranteed debentures due in 2001, 10%                                                     42               42
Eurobonds due through 2001, 9.814%                                                          -               25
U.S. medium term notes due in 2000, 7.0%                                                    -               60
Other long-term debt due through 2004, at rates from 7.24% to 11.45%                       11               32
                                                                                  -----------      -----------
                                                                                           75              182
Less:   current portion                                                                   (68)             (99)
                                                                                  ------------     -----------
     Total long-term debt                                                         $         7      $        83
                                                                                  ===========      ===========

Long-Term Debt Subject to Compromise:
------------------------------------
U.S. credit facility due in 2002, variable                                        $     1,443      $       366
Debentures due in 2005, 7.5%                                                              300              300
Debentures due in 2008, 7.7%                                                              250              250
Debentures due in 2009, 7.0%                                                              250              250
Debentures due in 2018, 7.5%                                                              400              400
Debentures due in 2002, 8.875%                                                             40               40
Debentures due in 2012, 9.375%                                                              7                7
Bonds due in 2000, 7.25%, payable in Deutsche marks (Note 18)                              63               50
Other long-term debt due through 2012, at rates from 6.25% to 13.80%                       70               78
                                                                                  -----------      -----------
    Total long-term debt subject to compromise                                    $     2,823      $     1,741
                                                                                  ===========      ===========
</TABLE>

Due to the Filing (see Note 1),  pre-petition  long-term debt of the Debtors has
been reclassified to the caption Subject to Compromise in the above table and on
the  Consolidated  Balance Sheet.  At December 31, 2000, the amounts shown under
the caption  "Long-Term  Debt" in the table above  represents  long-term debt of
non-Debtor  subsidiaries.  Amounts  listed in 1999  "Long-Term  Debt  Subject to
Compromise"  were  reclassified  from their  current and long term status in the
prior year for comparison purposes in the above table. These instruments did not
become subject to compromise until the Filing.

In   connection   with  the  Filing,   the  Company   obtained  a  $500  million
debtor-in-possession  credit facility from Bank of America,  N.A., which expires
in 2002.  The interest  rate  applicable  is a floating rate varying from .75% -
2.00%,  based upon the  average  daily  outstanding  balance,  plus  LIBOR.  The
facility had a commitment fee on unused  portions of .375% at December 31, 2000.
The Company had no  outstanding  amounts on the  facility at year end,  however,
approximately  $15  million of this  facility  was used for  standby  letters of
credit. This facility has super priority in the bankruptcy proceeding.

The Asian credit facility is payable in U.S.  dollars and had a rate of interest
at  December  31,  2000,  of 7.24%.  As a result of the  Filing,  this  facility
violated a non-financial  covenant and is considered  callable at the discretion
of the  financial  institution.  The  liability  has been  moved to  current  at
December 31, 2000.

After the  Filing,  the Company  discontinued  debt  payments to its  non-Debtor
subsidiary responsible for the $42 million in guaranteed debentures due 2001. As
this subsidiary has no assets other than this  intercompany  receivable,  it was
unable to make required  payments and is in default.  At December 31, 2000, this
instrument was classified as a current liability.



<PAGE>


                                     - 69 -

                         OWENS CORNING AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

3.       Long-Term Debt (continued)

As is  typical  for bank  credit  facilities,  the  agreements  relating  to the
facilities described above contain restrictive covenants, including requirements
for a minimum  EBITDA and  limitations  on  additional  borrowings,  among other
restrictions. The agreements include a provision that would result in all of the
unpaid principal and accrued interest of the facilities becoming due immediately
upon a change of control in ownership of the Company.  A material adverse change
in the Company's business, assets,  liabilities,  financial condition or results
of operations constitutes default under the agreements.

During  1998,  $361  million of debt  securities  were retired by the Company in
response to cash tender  offers.  In  connection  with this early  retirement of
debt, the Company paid premiums of approximately $62 million,  incurred non-cash
costs of  approximately  $2  million,  and  recorded  an  extraordinary  loss of
approximately $39 million, or $.72 per share, net of related income taxes of $25
million.

The  aggregate  maturities  for all  long-term  debt issues for each of the five
years following December 31, 2000 are:
<TABLE>
<S>                                    <C>                          <C>

                                       Year             (In millions of dollars)
                                       ----

                                       2001                             $68
                                       2002                               2
                                       2003                               1
                                       2004                               4
                                       2005                               -
</TABLE>


4.   Short-Term Debt
<TABLE>

<S>                                                                          <C>                <C>
                                                                             2000               1999
                                                                             ----               ----
  Short-Term Debt:                                                           (In millions of dollars)
  ---------------

  Balance outstanding at December 31                                      $     50           $    68

  Weighted average interest rates on short-term debt
     outstanding at December 31                                                7.5%              6.7%
</TABLE>

<TABLE>

<S>                                                                          <C>                <C>
                                                                             2000               1999
                                                                             ----               ----
  Short-Term Debt Subject to Compromise:                                     (In millions of dollars)
  -------------------------------------

  Balance outstanding at December 31                                         $   9              $  -

</TABLE>

The Company had unused  short-term  lines of credit totaling $7 million and $174
million at December 31, 2000, and 1999, respectively.  As a result of the Filing
(see Note 1), the Company's lines of credit have been significantly reduced.

After the  Filing,  the Company  discontinued  debt  payments to its  non-Debtor
European  subsidiary  responsible  for $30 million in  short-term  debt. As this
subsidiary has no assets other than this intercompany receivable,  it was unable
to make required payments and is in default.


<PAGE>


                                     - 70 -

                         OWENS CORNING AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

5.    Restructuring of Operations and Other Charges

In conjunction with softening overall economic  conditions  occurring during the
second half of the year and the Filing on October 5, the Company  reassessed its
business strategies with respect to investments in certain ventures,  facilities
and overhead expenditures. As a result of this assessment, a $229 million pretax
charge to income from  operations  for  restructuring  and other  activities was
recorded  during the year 2000;  $203  million  in the  fourth  quarter  and $26
million in the third quarter.

The fourth  quarter  charges,  totaling  $203 million  pretax,  consisted of $26
million associated with the restructuring of the Company's business segments and
$177 million for other actions, the majority of which represents  impairments of
long-lived assets. In addition,  the Company recorded a $6 million pretax credit
to  minority  interest  resulting  from  charges  related  to  a  majority-owned
consolidated subsidiary.

The $26 million  restructure  charge has been classified as a separate component
of operating expenses on the Company's  Consolidated Statement of Income (Loss).
The components of the  restructuring  charge  included $16 million for personnel
reductions and $10 million for the divestiture of  non-strategic  businesses and
facilities, which consisted of $6 million for non-cash asset write-downs to fair
value and $4 million for exit cost liabilities, mostly removal of equipment. The
$16 million for personnel reductions represented severance costs associated with
the  elimination  of  approximately  340  positions,  primarily  in the U.S. The
primary groups affected included manufacturing and administrative  personnel. As
of December 31, 2000, approximately $2 million has been paid and charged against
the reserve for personnel reductions.

The  $177  million  of other  charges  was  comprised  of $84  million  of asset
impairments and $93 million of charges focused on improving business operations,
and was  accounted  for as a $77  million  charge  to cost of  sales  and a $100
million charge to other operating expenses.

Weakening economic  conditions  occurring  principally in the Building Materials
Europe and South Africa  markets,  along with the  constraints  on the Company's
ability  to provide  financial  support  as a result of its  bankruptcy  filing,
required  the Company to reassess  the carrying  amounts of its  investments  in
those regions. The reassessment  resulted in $84 million of charges, as follows:
1) $54 million to write-down  the  Company's  investment  and related  assets in
Alcopor  Owens  Corning,  a building  materials  joint  venture  in  Europe,  to
estimated fair value on a held for sale basis.  The write down to estimated fair
value resulted from a number of  significant  recent  developments,  including a
material unexpected softening of the building materials markets in Europe during
the  second  half of 2000  and  continuing  into  2001  and  constraints  on the
Company's  ability to provide  financial  support as a result of its  bankruptcy
filing.  The Company's board of directors has authorized  management to sell its
remaining 40% interest in the joint venture to the majority shareholder. The $54
million  charge,  which  was  recorded  as  other  operating  expenses  reflects
management's  current and best  estimates of the fair value of  investments  and
assets based on the current status of the sales  negotiation;  2) $12 million to
write-down the Company's investment in the majority owned,  consolidated venture
in South Africa,  on a  held-in-use  basis based upon  management's  analysis of
current and expected future  financial  results and constraints on the Company's
ability to fund future significant  capital  investments in this subsidiary as a
consequence of the bankruptcy  filing.  The charge,  which was measured using an
analysis of estimated fair value of the related  assets  consisted of $8 million
to  write-down  fixed  assets,  charged  to cost of  sales,  and $4  million  to
write-down the remaining goodwill,  charged to other operating expenses. The $12
million charge was offset by a $6 million credit to record the minority  owner's
share,  recorded in the minority interest line on the Consolidated  Statement of
Income  (Loss);  3) $8 million  write-down to fair value the  investments in its
Pipe joint ventures and subsidiaries on a held for sale basis,

<PAGE>


                                     - 71 -

                         OWENS CORNING AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

5.    Restructuring of Operations and Other Charges (continued)

based upon current best  estimates of the expected  loss on  disposition,  which
consisted of $3 million of equipment write-down recorded as cost of sales and $5
million as other operating  expenses.  The sale of a majority of the investments
and  subsidiaries  held for sale was  completed in March 2001; 4) $10 million to
write-down the equity investment in ImproveNet, due to a significant decrease in
market  value which  management  believes is other than  temporary,  recorded as
other operating expenses.

The Company  continues  to focus on  achieving  synergies  within its  strategic
businesses.   These   efforts   include   assessments   of  market   strategies,
manufacturing  capabilities,  product line  rationalization  and  infrastructure
requirements which maximize the Advantage 2000 investments. As a result of these
assessments and ongoing financial analysis,  the Company recorded charges of $93
million  during the fourth  quarter  which  includes:  $43 million to write-down
inventory made obsolete by changes in the Company's  manufacturing and marketing
strategies  and to reflect  updated  estimates of the net  realizable  value and
carrying amounts of certain inventories,  recorded as cost of sales; $19 million
to write-down  equipment and  receivables,  recorded $8 million to cost of sales
and $11 million to other operating  expenses;  $15 million to increase  warranty
reserves due to general  changes in estimates  associated  with these  reserves,
recorded  as cost of sales;  and  various  other  charges  totaling  $16 million
recorded as other operating expenses.

During the third  quarter of 2000,  the Company  recorded a $26  million  pretax
charge for  restructuring  and other  actions.  This charge is comprised of a $6
million  pretax  restructure  charge and a $20 million  pretax  charge for other
actions.  The $6 million restructure charge has been classified  separately as a
component  of  operating  expenses on the  consolidated  statement of income and
represents asset impairments associated with the planned closing of two lines at
our Newark, Ohio manufacturing  facility. This restructure charge represents the
first phase of the Company's plan to realign  operations at the Newark facility.
The remaining $20 million of other actions is comprised of a $14 million  pretax
charge  to  other  operating  expenses,   representing  an  $11  million  charge
associated  with  asset   impairments   within  our  Cultured  Stone  and  other
businesses,  and a $3 million charge associated with severance costs for certain
employees;  and a $6  million  pretax  charge to  marketing  and  administrative
expenses, representing a settlement loss associated with one of our U.S. pension
plans.

During 1997 and 1998,  the Company  recorded  pretax charges of $386 million for
restructuring and other actions to implement the Company's  announced program to
close manufacturing  facilities,  enhance manufacturing  productivity and reduce
overhead.  Of the total pretax charge of $386 million, $143 million was recorded
in the fourth quarter of 1997 and the remaining $243 million was recorded during
1998.

The $386 million pretax charge was comprised of a $185 million charge associated
with the  restructuring  of the Company's  business  segments and a $201 million
charge  associated  with asset  impairments,  including  investments  in certain
affiliates.  The components of the restructuring charge include $115 million for
personnel   reductions;   $68  million  for  the  divestiture  of  non-strategic
businesses  and  facilities,  of which $52 million  represented  non-cash  asset
revaluations and $16 million  represented exit cost  liabilities,  primarily for
leased  warehouse and office  facilities  that were vacated;  and $2 million for
other  actions.  The  divestiture  of  non-strategic  businesses  and facilities
included the closure of the Candiac, Quebec manufacturing  facility.  During the
second  quarter of 1999,  the Candiac  manufacturing  facility was  re-opened in
order to meet  market  demands.  As of December  31,  2000,  approximately  $102
million has been


<PAGE>


                                     - 72 -

                         OWENS CORNING AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

5.    Restructuring of Operations and Other Charges (continued)

paid and charged against the reserve for personnel reductions,  representing the
elimination of approximately  2,450  employees,  the majority of whose severance
payments  were made over the  course of 1998 and  1999,  and  approximately  $13
million has been charged against exit cost liabilities.

The following table summarizes the status of the liabilities from the 1997, 1998
and 2000 restructure program described above,  including cumulative spending and
adjustments and the remaining balance as of December 31, 2000:
<TABLE>

<S>                                               <C>                 <C>               <C>

                                                                                    Liability at
                                                 Original            Total          December 31,
(In millions of dollars)                       Liability           Payments             2000
                                               ---------           --------             ----

Personnel Costs                                 $   131           $   (104)          $      27
Facility and Business Exit Costs                     20                (14)                  6
Other                                                 2                 (2)                  -
                                                -------           ---------          ---------

Total                                           $   153           $   (120)          $      33
                                                =======           =========          =========
</TABLE>


The Company continually evaluates whether events and circumstances have occurred
that  indicate  that  the  carrying  amount  of  certain  long-lived  assets  is
recoverable.  When factors  indicate that a long-lived asset should be evaluated
for  possible  impairment,   the  Company  uses  an  estimate  of  the  expected
undiscounted  cash flows to be generated  by the asset to determine  whether the
carrying amount is recoverable or if an impairment exists. When it is determined
that an impairment  exists, the Company uses the fair market value of the asset,
usually  measured by the discounted  cash flows to be generated by the asset, to
determine  the  amount  of  the  impairment  to be  recorded  in  the  financial
statements.

6.   Acquisitions and Divestitures of Business

Acquisitions
------------

In connection  with a proposal  received from its Korean joint venture  partner,
the Company infused approximately $29 million of cash into this venture in March
1999. As a result of this investment,  along with additional  investments by the
other  partner,  the Company  increased its ownership  interest in Owens Corning
Korea to 70%.  The Company  accounted  for this  transaction  under the purchase
method of  accounting  whereby  the assets  acquired  and  liabilities  assumed,
including  $84 million in debt,  have been recorded at their fair values and the
results of  operations  have been  consolidated  since the date of  acquisition.
Prior to that date,  the  Company  accounted  for this joint  venture  under the
equity method.  The pro forma effect of this acquisition was not material to the
financial statements.

Divestitures
------------

During  the  second  quarter  of 2000,  the  Company  completed  the sale of its
European Building Materials business to an unconsolidated joint venture, Alcopor
Owens Corning, in which the Company has a 40% interest.  Proceeds from the sale,
net of the Company's $34 million cash infusion into the joint venture, were

<PAGE>


                                     - 73 -

                         OWENS CORNING AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

6.       Acquisitions and Divestitures of Business (continued)

$177 million. In connection with this transaction, the joint venture assumed $62
million  of  debt  from  Owens   Corning  and  the  Company   incurred  fees  of
approximately $6 million,  resulting in net cash proceeds of approximately  $109
million.  A pretax gain of  approximately  $5  million,  including a $54 million
write-off of goodwill,  was realized from the sale. During the fourth quarter of
2000,  the Company  reduced its investment in Alcopor Owens Corning to estimated
net realizable value. See Note 5 to the Consolidated Financial Statements.

The results of  operations  of the  European  Building  Materials  business  are
reflected in the Company's  Consolidated  Statement of Income (Loss) through the
period ending May 31, 2000. For the five months ended May 31, 2000, and the year
ended  December 31, 1999, the European  Building  Materials  business  generated
sales of approximately  $79 million and $234 million,  respectively,  and income
from  operations  of  approximately  $3 million and $12  million,  respectively.
Effective  May 31,  2000,  the Company  accounts for its  ownership  interest in
Alcopor Owens Corning under the equity method.

During the first quarter of 2000,  the Company  completed the sale of the assets
of Falcon Foam, a producer of foam  insulation in Michigan and  California.  Net
proceeds  from the sale  were  $50  million  and  resulted  in a pretax  loss of
approximately $5 million, including a $32 million write-off of goodwill.

Late in the first quarter of 1998,  the Company sold its 50% ownership  interest
in Alpha/Owens  Corning,  LLC. With cash proceeds of approximately $103 million,
the Company recorded a pretax gain of approximately $84 million.

During the third  quarter of 1998,  the Company  formed a joint  venture for its
yarns and  specialty  materials  business  (the  "yarns  business")  to which it
contributed two  manufacturing  plants and certain  proprietary  technology.  On
September 30, 1998, the Company  completed the sale of 51% of the yarns business
to a U.S. subsidiary of Groupe Porcher Industries of Badinieres, France for $340
million.  The Company  continues to have a 49%  ownership  interest in the joint
venture.  Upon closing, the Company also received a distribution of $193 million
from the joint  venture.  As a result of the sale of 51%  interest  in the yarns
business and the receipt of the distribution from the joint venture, the Company
recorded a net pretax gain of $295 million.

The results of operations  of the yarns  business are reflected in the Company's
consolidated  statement of income through the period ending  September 30, 1998.
For the nine months ended  September 30, 1998,  and the year ended  December 31,
1997, the yarns business  recorded sales of approximately  $205 million and $277
million,  respectively,  and income from operations of approximately $57 million
and $80  million,  respectively.  Effective  September  30,  1998,  the  Company
accounts  for its  ownership  interest  in the yarns  business  under the equity
method.

Additionally,  during the third  quarter of 1998,  the Company  sold its Kitsons
distribution business in the U.K. and its windows manufacturing  business in the
U.S. and recorded a pretax loss of approximately $20 million.

<PAGE>


                                     - 74 -

                         OWENS CORNING AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

7.   Convertible Monthly Income Preferred Securities (MIPS)

In 1995, Owens Corning Capital, LLC ("OC Capital"), a Delaware limited liability
company,  all of the common  limited  liability  company  interests in which are
owned indirectly by Owens Corning (the "Common Securities"), completed a private
offering of 4 million  shares of 6-1/2%  Convertible  Monthly  Income  Preferred
Securities  ("Preferred  Securities").  The  aggregate  purchase  price  for the
offering was $200 million.

The only asset of OC Capital is $253 million of 6-1/2% Convertible  Subordinated
Debentures  due 2025 of Owens Corning (the  "Debentures"),  which were issued in
exchange for the proceeds of the Preferred Securities and the Common Securities.

As a result  of the  Filing  (see Note 1),  Owens  Corning  is no longer  making
interest  payments to OC Capital on the Debentures.  As a result,  OC Capital no
longer has funds available to pay distributions on the Preferred  Securities and
stopped paying such distributions in October, 2000.

Distributions of $10 million ($6 million after-tax) for 2000 and $13 million ($8
million  after-tax)  for each of 1999 and 1998 have been  recorded net of tax as
minority interest on the Company's consolidated statement of income

8.   Postemployment and Postretirement Benefits Other Than Pensions

The Company and its subsidiaries maintain health care and life insurance benefit
plans for certain retired employees and their dependents.  The health care plans
in the U.S.  are  unfunded  and pay  either 1)  stated  percentages  of  covered
medically  necessary expenses,  after subtracting  payments by Medicare or other
providers  and after stated  deductibles  have been met, or, 2) fixed amounts of
medical expense reimbursement.

Employees  become  eligible  to  participate  in  the  health  care  plans  upon
retirement  under the Company's  pension plans if they have accumulated 10 years
of service after age 45. Some of the plans are  contributory,  with some retiree
contributions adjusted annually. The Company has reserved the right to change or
eliminate  these benefit  plans  subject to the terms of  collective  bargaining
agreements.

In  accordance  with  Statement  of  Financial  Accounting  Standards  No.  132,
"Employers'  Disclosures about Pensions and Other Postretirement  Benefits," the
following  tables  provide a  reconciliation  of the changes in the  accumulated
postretirement  benefits  obligation and the accrued  benefits cost liability at
October 31, 2000,  and 1999, as reflected on the  Consolidated  Balance Sheet at
December 31, 2000, and 1999:


<PAGE>


                                     - 75 -

                         OWENS CORNING AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

 8.   Postemployment and Postretirement Benefits Other Than Pensions
      (continued)
<TABLE>
<S>                                                                                 <C>                <C>
                                                                                    2000               1999
                                                                                    ----               ----
                                                                                   (In millions of dollars)

Change in Accumulated Postretirement Benefit Obligation
-------------------------------------------------------
Benefits obligation at beginning of period                                   $         319       $        343
Service cost                                                                            7                   8
Interest cost                                                                          24                  24
Amendments                                                                              -                   1
Actuarial (gain) loss                                                                  50                 (35)
Currency (gain) loss                                                                   (1)                  1
Benefits paid                                                                         (25)                (23)
                                                                             -------------       ------------
Benefits obligation at end of period                                         $        374       $         319
                                                                             =============       ============

Funded status                                                                $       (374)      $        (319)
Unrecognized net actuarial loss                                                        52                   2
Benefit payments subsequent to valuation date                                           5                   4
                                                                             ------------        ------------
Accrued benefit cost (includes current liabilities of $25 million
   in 2000 and 1999)                                                         $       (317)      $        (313)
                                                                             =============      =============


Weighted-average assumptions as of December 31                                      2000               1999
----------------------------------------------                                      ----               ----
Discount rate                                                                        8.0%              8.0%

The following table presents the components of net periodic benefits cost during
2000, 1999 and 1998:


Components of net periodic benefit cost                                   2000         1999         1998
---------------------------------------                                 ---------    ---------    ---------
                                                                            (In millions of dollars)
Service cost                                                            $    7       $      8     $      9
Interest cost                                                               24             24           23
Amortization of prior service cost                                           -             (9)         (20)
Curtailment gain                                                             -              -           (3)
                                                                        ------       --------     ---------
Net periodic benefit cost                                               $   31       $     23     $      9
                                                                        ======       ========     ========
</TABLE>

For  measurement  purposes,  a 9 - 17% annual rate of increase in the per capita
cost of covered health care claims was assumed for 2001,  varying by plan.  This
rate will  ultimately  decrease to 4.5 - 6% by 2006.  The health care cost trend
rate assumption has a significant effect on the amounts reported. To illustrate,
a  one-percentage  point change in the assumed health care cost trend rate would
have the following effects as of October 31, 2000, and 1999:
<TABLE>
<S>                                             <C>                  <C>             <C>                <C>

                                                          2000                                  1999
                                                          ----                                  ----
                                                   1-Percentage Point                    1-Percentage Point
                                               Increase           Decrease          Increase          Decrease
                                               --------           --------          --------          --------
                                                                   (In millions of dollars)
Effect on total of service and
  interest cost components                     $      4          $     (3)          $       4         $    (3)

Effect on accumulated
  postretirement benefit obligation                  37               (31)                 29             (23)
</TABLE>


<PAGE>


                                     - 76 -

                         OWENS CORNING AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

 8.   Postemployment and Postretirement Benefits Other Than Pensions
      (continued)

The Company also  recognizes  the  obligation  to provide  benefits to former or
inactive   employees  after  employment  but  before  retirement  under  certain
conditions. These benefits include, but are not limited to, salary continuation,
supplemental  unemployment  benefits,  severance  benefits,   disability-related
benefits (including  workers'  compensation),  job training and counseling,  and
continuation  of benefits such as health care and life insurance  coverage.  The
accrued postemployment benefits cost liability at October 31, 2000, and 1999, as
reflected on the balance  sheet at December 31, 2000,  and 1999 was $34 million,
including   current   liabilities  of  $4  million  for  both  years.   The  net
postemployment  benefits  expense  was  approximately  $4 million in 2000 and $2
million in 1999 and 1998.

9.     Pension Plans

The Company has several  defined  benefit pension plans covering most employees.
Under the plans,  pension  benefits are generally based on an employee's pay and
number of years of service.  Company  contributions  to these  pension plans are
based on the  calculations  of  independent  actuaries  using the projected unit
credit  method.  Plan assets  consist  primarily of equity  securities  with the
balance  in fixed  income  investments.  The  unrecognized  cost of  retroactive
amendments and actuarial  gains and losses are amortized over the average future
service period of plan participants expected to receive benefits.

In  accordance  with  Statement  of  Financial  Accounting  Standards  No.  132,
"Employers'  Disclosures about Pensions and Other Postretirement  Benefits," the
following  tables  provide a  reconciliation  of the  changes  in the  projected
pension benefits obligation, the changes in the pension plan assets, and the net
pension   liability  at  October  31,  2000,  and  1999,  as  reflected  on  the
consolidated balance sheet at December 31, 2000, and 1999:
<TABLE>
<S>                                                                       <C>                     <C>
                                                                          2000                   1999
                                                                          ----                   ----
                                                                               (In millions of dollars)
Change in Projected Pension Benefit Obligation
----------------------------------------------

Benefits obligation at beginning of period                             $        865          $       975
Service cost                                                                     18                   19
Interest cost                                                                    64                   65
Amendments                                                                       55                    2
Impact of curtailment                                                             3                   (4)
Impact of foreign currency translation                                          (24)                   -
Actuarial (gain) loss                                                           117                  (57)
Employee contributions                                                            2                    2
Benefits paid                                                                  (121)                (137)
                                                                        ------------         ------------
Benefits obligation at end of period                                    $        979         $       865
                                                                        ============         ===========

</TABLE>

Benefits paid during 2000 and 1999 include payments resulting from the Company's
restructuring program and the sale of certain businesses. (Notes 5 and 6).



<PAGE>


                                     - 77 -

                         OWENS CORNING AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

9.       Pension Plans (continued)
<TABLE>
<S>                                                                               <C>              <C>

Change in Pension Plan Assets                                                     2000             1999
-----------------------------                                                     ----             ----
                                                                                (In millions of dollars)

Fair value of plan assets at beginning of period                            $       977       $       961
Actual return on plan assets                                                         91               154
Impact of foreign currency translation                                              (23)                2
Employer contributions                                                                3                 2
Employee contributions                                                                2                 3
Settlement                                                                            -               (16)
Benefits paid                                                                      (114)             (129)
                                                                            ------------      -----------
Fair value of plan assets at end of period                                  $       936       $       977
                                                                            ============      ===========

Funded status                                                               $       (43)      $       112
Unrecognized net transition asset                                                   (17)              (22)
Unrecognized net actuarial (gain) loss                                               37               (53)
Unrecognized prior service cost                                                      30               (25)
                                                                            ------------      -----------
Prepaid (accrued) benefit cost                                              $         7       $        12
                                                                            ============      ===========
</TABLE>

<TABLE>
<S>                                                                                <C>             <C>

Amounts Recognized in the Consolidated Balance Sheet                              2000             1999
----------------------------------------------------                              ----             ----
                                                                                (In millions of dollars)

Prepaid benefit cost                                                        $        56       $        51
Accrued benefit liability (includes current liabilities of  $5
  million and less than $1 million in 2000 and 1999, respectively)                  (80)              (39)
Intangible asset                                                                     26                 -
Accumulated other comprehensive income                                                3                 -
Deferred tax asset                                                                    2                 -
                                                                            -----------       -----------

Net amount recognized                                                       $         7       $        12
                                                                            ===========       ===========
</TABLE>

<TABLE>
<S>                                                                                <C>              <C>

Weighted-average assumptions as of  December 31                                   2000             1999
-----------------------------------------------                                   ----             ----

Discount rate                                                                     8.00%             8.00%
Expected return on plan assets                                                    9.00%             9.00%
Rate of compensation increase                                                     5.50%             5.50%
</TABLE>


<PAGE>


                                     - 78 -

                         OWENS CORNING AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

9.   Pension Plans (continued)

The following table presents the components of net periodic  pension cost during
2000, 1999 and 1998:
<TABLE>
<S>                                                                <C>           <C>             <C>

  Components of Net Periodic Pension Cost                         2000           1999            1998
  ---------------------------------------                         ----           ----            ----
                                                                       (In millions in dollars)

  Service cost                                               $      18       $      19      $      19
  Interest cost                                                     64              65             69
  Expected return on plan assets                                   (73)            (75)           (83)
  Amortization of transition amount                                 (5)             (5)            (5)
  Amortization of prior service cost                                (2)             (4)            (7)
  Amortization of net actuarial loss                                 1               5              4
  Curtailment/Settlement (gain) loss                                 9              (6)             1
                                                             ---------       ----------     ---------
  Net periodic benefit cost                                  $      12       $      (1)     $      (2)
                                                             =========       ==========     ==========
</TABLE>

Certain of the Company's  pension plans have an accumulated  benefit  obligation
(ABO) in excess of the fair value of plan assets. The ABO and fair value of plan
assets  for such  plans are $742  million  and $669  million,  respectively,  at
October 31, 2000,  and $9 million and $4 million,  respectively,  at October 31,
1999.

Certain of the Company's  pension  plans are unfunded.  The portion of the total
projected benefit obligation  attributable to unfunded plans is approximately $9
million and $3 million at October 31, 2000, and 1999, respectively.

The Company also sponsors defined  contribution plans available to substantially
all U.S. employees.  Company contributions for the plans are based on matching a
percentage  of employee  savings up to a maximum  savings  level.  The Company's
contributions were $17 million in 2000 and $14 million in 1999 and 1998.

10.   Income Taxes
<TABLE>
<S>                                                                       <C>             <C>            <C>
                                                                         2000            1999            1998
                                                                         ----            ----            ----
                                                                               (In millions in dollars)
  Income (loss) before provision (credit) for income taxes:

    U.S.                                                            $     (849)        $    374     $    (897)
    Foreign                                                                 58               52           (67)
                                                                    ----------         --------     ----------

       Total                                                        $     (791)        $    426     $    (964)
                                                                    ===========        ========     ==========
</TABLE>



<PAGE>


                                     - 79 -

                         OWENS CORNING AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

10.   Income Taxes (continued)
<TABLE>

<S>                                                                      <C>             <C>             <C>
                                                                         2000            1999            1998
                                                                         ----            ----            ----
                                                                               (In millions in dollars)
  Provision (credit) for income taxes:

    Current
    U.S.                                                             $       7         $    (56)    $     (86)
    State and local                                                         (1)              (2)            -
    Foreign                                                                 31               16             5
                                                                    ----------          -------     ---------

       Total current                                                        37              (42)          (81)
                                                                    ----------          -------     ----------

    Deferred
    U.S.                                                                  (330)             158          (203)
    State and local                                                        (23)              25           (20)
    Foreign                                                                  4                8            (2)
                                                                    ----------          -------     ----------

       Total deferred                                                     (349)             191          (225)
                                                                    -----------         -------     ----------

       Total provision (credit) for income taxes                    $     (312)         $   149     $    (306)
                                                                    ===========         =======     ==========
</TABLE>

The reconciliation between the U.S. federal statutory rate and the Company's
effective income tax rate is:
<TABLE>

<S>                                                               <C>            <C>             <C>
                                                                  2000           1999            1998
                                                                  ----           ----            ----
  U.S. federal statutory rate                                       (35)%            35%          (35)%
  State and local income taxes                                       (4)              4            (1)
  Operating losses of foreign subsidiaries                            1               2             3
  Other, net                                                         (2)             (6)            1
                                                             -----------     -----------    ---------

  Effective tax rate                                                (40)%            35%          (32)%
                                                             ============    ===========    ===========
</TABLE>

As of December 31, 2000,  the Company has not provided for  withholding  or U.S.
federal income taxes on approximately $340 million of accumulated  undistributed
earnings of its foreign  subsidiaries as they are considered by management to be
permanently  reinvested.  If these undistributed earnings were not considered to
be permanently  reinvested,  approximately  $37 million of deferred income taxes
would have been provided.

At December 31,  2000,  the Company had net  operating  loss  carryforwards  for
certain of its foreign  subsidiaries and certain of its state tax jurisdictions,
the tax benefit of which is  approximately  $290  million.  Tax benefits of $230
million  expire over the period from 2001 through  2021,  and the  remaining $60
million have an indefinite carryforward.

The cumulative temporary  differences giving rise to the deferred tax assets and
liabilities at December 31, 2000, and 1999 are as follows:



<PAGE>


                                     - 80 -

                         OWENS CORNING AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

10.   Income Taxes (continued)
<TABLE>

<S>                                                     <C>                             <C>
                                                        2000                            1999
                                                        ----                            ----

                                                             Deferred                       Deferred
                                              Deferred          Tax         Deferred           Tax
                                            Tax Assets      Liabilities   Tax Assets       Liabilities
                                            ----------      -----------   ----------       -----------
                                                               (In millions of dollars)

  Asbestos litigation claims                $     847       $       -       $     618      $       -
  Other employee benefits                         146               -             140              -
  Pension plans                                    15              21              20             17
  Depreciation                                      -             303               -            254
  Operating loss carryforwards                    290               -             275              -
  State and local taxes                             -              52               -             58
  Other                                           492             252             283            214
                                            ---------       ---------       ---------      ---------
    Subtotal                                    1,790             628           1,336            543
  Valuation allowances                            (81)              -           (61)               -
                                            ----------      -----------     ---------      ---------
  Total deferred taxes                      $   1,709       $     628       $   1,275      $     543
                                            =========       =========       =========      =========
</TABLE>

Management  fully expects to realize its net deferred tax assets  through income
from future operations.

11.   Accounts Receivable Securitization

Prior to its expiration in October 2000,  Owens Corning,  through its subsidiary
Owens  Corning  Funding  Corporation,  had  an  agreement  allowing  sale,  on a
revolving  basis, of accounts  receivable,  up to a maximum of $125 million.  At
December 31, 1999, $125 million had been sold under this agreement, and the sale
was   reflected  as  a  reduction  of  accounts   receivable  in  the  Company's
Consolidated Balance Sheet.

In 2000,  1999 and 1998,  the Company also sold certain  accounts  receivable of
certain European operations.  At December 31, 2000 and 1999, $21 million and $70
million had been sold,  respectively,  and the sale was reflected as a reduction
of accounts receivable in the Company's Consolidated Balance Sheet.

The Company maintains an allowance for doubtful accounts based upon the expected
collectibility  of  all  consolidated  trade  accounts   receivable,   including
receivables  sold by OC Funding and the  European  operations.  Discounts  of $8
million,  $9 million  and $9 million on the  receivables  sold were  recorded as
other expenses on the Company's  Consolidated Statement of Income (Loss) for the
years ended December 31, 2000, 1999 and 1998, respectively.


<PAGE>


                                     - 81 -

                         OWENS CORNING AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

12.   Inventories

Inventories are summarized as follows:
<TABLE>
<S>                                                                      <C>                  <C>
                                                                         2000                 1999
                                                                         ----                 ----
                                                                          (In millions of dollars)
  Finished goods                                                     $      397           $   374
  Materials and supplies                                                    165               158
                                                                    -----------           -------
  FIFO inventory                                                            562               532
  Less:  reduction to LIFO basis                                            (93)              (66)
                                                                    ------------          -------
    Total inventory                                                  $      469           $   466
                                                                     ==========           =======
</TABLE>

Approximately  $300  million and $269 million of total  inventories  were valued
using the LIFO method at December 31, 2000 and 1999, respectively.

13.   Investments in Affiliates

At December 31, 2000 and 1999,  the Company's  affiliates,  which  generally are
engaged  in the  manufacture  of  fibrous  glass and  related  products  for the
insulation, construction, reinforcements, and textile markets, include:
<TABLE>

                                                                                           Percent Ownership
<S>                                                                                      <C>            <C>
                                                                                         2000           1999
                                                                                         ----           ----

      Advanced Glassfiber Yarns, LLC (U. S.)                                               49%            49%
      Alcopor Owens Corning Holding AG                                                     40%             -
      Amiantit Fiberglass Industries, Ltd. (Saudi Arabia)                                  30%            30%
      Arabian Fiberglass Insulation Company, Ltd. (Saudi Arabia)                           49%            49%
      Fiberteq LLC (U. S.)                                                                 50%            50%
      Flowtite Andercol S.A. (Colombia)                                                     -             50%
(a)   Flowtite Argentina  (Argentina)                                                     100%           100%
      Flowtite (Botswana) (Proprietary) Limited (Botswana)                                 49%            49%
(a)   Flowtite Iberica, S.A. (Spain)                                                      100%           100%
      Owens Corning Energy LLC (U. S.)                                                     50%            50%
      Owens Corning (India) Limited (India)                                                49%            49%
      Owens Corning (Nanjing) (China)                                                      50%            50%
      Owens Corning Yapi Merkezi Boru Sanayi VeTicaret A.S. (Turkey)                       50%            50%
(a)   Owens-Corning Eternit Rohre GmbH (Germany)                                          100%            50%
      Siam Fiberglass Co., Ltd. (Thailand)                                                 17%            17%
      Stamax LLC (Netherlands)                                                             50%            50%
      Stamax NA LLC (U. S.)                                                                50%            50%
      Vitro-Fibras, S.A. (Mexico)                                                          40%            40%

</TABLE>


(a)  Although the Company owns 100% of Flowtite Argentina,  Flowtite Iberica and
     Owens-Corning  Eternit  Rohre  GmbH,  it  considers  its  ownership  to  be
     temporary  and  therefore  accounts  for these  entities as  unconsolidated
     affiliates under the equity method.




<PAGE>


                                     - 82 -

                         OWENS CORNING AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

13.   Investments in Affiliates (continued)

The following table provides summarized financial information on a combined 100%
basis for the Company's affiliates accounted for under the equity method:
<TABLE>
<S>                                                                <C>                <C>               <C>
                                                                   2000               1999              1998
                                                                   ----               ----              ----
                                                                             (In millions of dollars)
At December 31:

  Current assets                                                   $266              $239               $245
  Noncurrent assets                                                 827               623                684
  Current liabilities                                               188               171                143
  Noncurrent liabilities                                            706               514                585

For the year ended December 31:

  Net sales                                                         699               477                540
  Gross margin                                                      172               138                159
  Net income                                                         22                 7                 30

</TABLE>

The Company's equity in  undistributed  net losses of affiliates was $13 million
at December 31, 2000.

Net sales,  gross margin,  and net income for the year ended  December 31, 2000,
have been  presented on a full year basis for Alcopor Owens Corning  Holding AG.
The Company's  former European  building  materials  business is included in the
consolidated  financial  statements through the period ending May 31, 2000 (Note
5).

Net sales,  gross margin,  and net income for the year ended  December 31, 1998,
have been  presented on a full year basis for  Advanced  Glassfiber  Yarns,  LLC
(AGY).  The  Company's  former  specialty  yarns  business  is  included  in the
Company's  consolidated financial statements through the period ending September
30, 1998 (Note 5).

14.   Accounts Payable and Accrued Liabilities
<TABLE>
<S>                                                                                   <C>               <C>
                                                                                      2000              1999
                                                                                 --------------    -------------
                                                                                     (In millions of dollars)

     Accounts payable                                                            $     235         $      456
     Payroll and vacation pay                                                           27                 26
     Payroll, property, and miscellaneous taxes                                         30                 32
     Other employee benefits liability (Note 8)                                         29                 29
     Restructure costs (Note 5)                                                         24                 17
Other                                                                                  146                279
                                                                                 ---------         ----------
          Total                                                                  $     491         $      839
                                                                                 =========         ==========
</TABLE>


<PAGE>


                                     - 83 -

                         OWENS CORNING AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

15.   Consolidated Statement of Cash Flows

Cash  payments  (refunds)  for  income  taxes  and cost of  borrowed  funds  are
summarized as follows:
<TABLE>

<S>                                                               <C>               <C>                <C>
                                                                  2000              1999               1998
                                                             -----------         ---------         ----------
                                                                          (In millions of dollars)

     Income taxes                                            $      (26)         $    (77)         $     (80)
     Cost of borrowed funds (Note 3)                                154               154                151

</TABLE>

The Company  considers  all highly  liquid  debt  instruments  purchased  with a
maturity of three months or less to be cash equivalents.

During the years ended  December 31,  2000,  1999 and 1998,  gross  payments for
asbestos  litigation  claims filed against  Fibreboard were  approximately  $820
million,  $136  million  and  $129  million,  respectively,  all of  which  were
paid/reimbursed by Fibreboard's insurers or the Fibreboard Settlement Trust.

16.   Leases

The Company  leases  certain  manufacturing  equipment  and office and warehouse
facilities  under  operating  leases,  some of  which  include  cost  escalation
clauses, expiring on various dates through 2015. Total rental expense charged to
operations  was $185 million in 2000,  $143 million in 1999, and $130 million in
1998.  At  December  31,  2000,  the minimum  future  rental  commitments  under
noncancellable leases with initial maturities greater than one year payable over
the remaining lives of the leases are:
<TABLE>
<S>                                                                 <C>
                                                                Minimum Future
                                Period                       Rental Commitments
                                                             ------------------
                                                           (In millions of dollars)

                                 2001                              $       66
                                 2002                                      66
                                 2003                                      52
                                 2004                                      50
                                 2005                                      30
                           2006 through 2015                              159
                                                                   ----------
                                                                    $     423
</TABLE>

Pursuant to the  Bankruptcy  Code,  Owens  Corning and the other  Debtors in the
Chapter 11 Cases may elect to reject or assume  unexpired  pre-petition  leases.
The Debtors are currently reviewing the leases for which such an election exists
to determine  whether they should be accepted or rejected.  The Bankruptcy Court
has extended the time period within which the Debtors must make their  elections
as to  leases of real  property  through  June 4,  2001,  and may grant  further
extensions.


<PAGE>


                                     - 84 -

                         OWENS CORNING AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

17.   Stock Compensation Plans

The Company  currently has three stock-based  compensation  plans. The Company's
Stock  Performance  Incentive  Plan ("SPIP")  grants stock  options,  restricted
stock,  performance  restricted stock and phantom  performance  units. The Owens
Corning 1995 Stock Plan ("95 Stock Plan") grants options,  restricted  stock and
performance  stock  awards.  The SPIP and the 95 Stock Plan  (collectively,  the
"Plans"), permit up to 2 percent and 1 percent,  respectively,  of common shares
outstanding  at the  beginning  of each  calendar  year to be  awarded  as stock
options and restricted  stock (with 25% of this amount as the maximum  permitted
number of restricted stock awards). The Company may carry forward, independently
for each plan,  unused  shares  from  prior  years and may  increase  the shares
available for awards in any calendar year through an advance of up to 25% of the
subsequent  year's  allocation  (determined  by using 25% of the current  year's
allocation). These shares are also subject to the 25% limit for restricted stock
awards.  During 2000, the maximum number of shares available under the Plans for
stock awards was 2,100,425 shares.  The following are descriptions of the awards
granted under the Plans:

Stock Options
-------------

    Under the Plans,  the exercise  prices of each option equal the market price
    of the Company's  common stock on the date of grant and an option's  maximum
    term is 10 years. Shares issued from the exercise of options are recorded in
    the common  stock  accounts  at the  option  price.  The awards and  vesting
    periods of such awards are determined at the discretion of the  compensation
    committee  of  the  Board  of  Directors.   During  2000,   1999  and  1998,
    respectively,  1,531,244, 1,930,292 and 1,747,472 stock options were awarded
    under the Plans.

Restricted Stock Awards
-----------------------

    Under the Plans,  compensation expense is measured based on the market price
    of the stock at date of grant and is  recognized  on a  straight-line  basis
    over the vesting  period.  Stock  restrictions  lapse,  subject to alternate
    vesting  plans  for  death,   disability,   approved  early  retirement  and
    involuntary  termination,  over various  periods ending in 2006. At December
    31, 2000,  the Company had 286,629 shares of restricted  stock  outstanding.
    During 2000, 1999 and 1998, 11,000,  284,500 and 64,550 shares of restricted
    stock were granted, respectively. The weighted-average grant-date fair value
    for shares granted was $15.38,  $34.81,  and $30.36 for 2000,  1999 and 1998
    respectively.

Performance Restricted Stock Awards
-----------------------------------

    Under  the  Plans,   certain  officers  are  awarded   performance   shares.
    Performance  shares  represent  the  opportunity  to earn up to a  specified
    number of shares of the  Company's  common  stock,  if the Company  achieves
    specified  performance goals during the designated  performance  period. Any
    portion of the award not earned during the  performance  period is forfeited
    by the officer at the end of such period.  Compensation  expense is measured
    based on market price of the Company's  common stock and is recognized  over
    the  performance  period,  which is generally  three years.  At December 31,
    2000, the Company had 27,330 units  outstanding and none were granted during
    2000 and 1999. During 1998, 46,600 performance shares were granted.


<PAGE>


                                     - 85 -

                         OWENS CORNING AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

17.   Stock Compensation Plans (continued)

Phantom Performance Units
-------------------------

    Under the Plans,  certain  officers are awarded phantom  performance  units.
    Each unit provides the holder the  opportunity to earn a cash award equal to
    the fair market value of the Company's  common stock upon the  attainment of
    certain  performance  goals.  Any portion of the award not earned during the
    performance  period is  forfeited  by the officer at the end of such period.
    Compensation  expense is  measured  based on market  price of the  Company's
    common  stock  and is  recognized  over  the  performance  period,  which is
    generally  three years. At December 31, 2000, the Company had 48,313 phantom
    performance  units  outstanding  and none were granted during 2000 and 1999.
    During 1998, 65,750 units were awarded.

Performance Stock Awards
------------------------

    Under the Plans, certain employees are awarded unrestricted stock based upon
    achievement  of  certain  goals  within  a  designated  performance  period.
    Compensation  cost for these awards is accrued over the  performance  period
    based upon a base  compensation  level and the  performance  level achieved.
    Stock awards are issued in the year  subsequent to the  performance  period.
    The number of shares  issued is based upon the market  price of the stock on
    date of issuance and the level of  compensation  earned.  In 2000,  1999 and
    1998,  respectively,  638,541,  267,711  and 74,854  shares  were  issued to
    employees.

The  Company  also has a plan to award stock and stock  options to  non-employee
directors.  The receipt of the stock awards may be deferred at the discretion of
the directors.  Approximately  343,500 shares were available  under this plan at
December  31,  2000.  As of  December  31,  2000,  24,259  deferred  awards were
outstanding.  In 2000, there were no options issued, however, 5,000 stock awards
were  granted,  1,000 of which were issued.  In 1999,  10,000  options and 5,000
stock awards were  granted,  500 of which were issued.  In 1998,  no options and
5,500 stock awards were granted,  500 of which were issued. The weighted-average
grant-date fair value for shares granted was $17.97, $36.53 and $40.72 for 2000,
1999 and 1998, respectively.

The Company applies Financial Accounting Standards Board Statement No. 123 (SFAS
123) for disclosures of its stock based compensation  plans. The Company applies
Accounting  Principles  Board  Opinion  No. 25 and related  Interpretations  for
expense  recognition  as permitted by SFAS 123. All stock options  issued by the
Company  are  exercisable  at a price  equal to the market  price at the date of
grant.  Accordingly,  no  compensation  cost has been  recognized for any of the
options granted under the Plans.  The  compensation  cost that has been recorded
for awards other than options was $1 million in 2000 and $21 million in 1999 and
1998.


<PAGE>


                                     - 86 -

                         OWENS CORNING AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

17.   Stock Compensation Plans (continued)

A summary of the status of the Company's plans that issue options as of December
31, 2000,  1999,  and 1998 and changes during the years ending on those dates is
presented below:
<TABLE>

<S>                                         <C>                       <C>                          <C>
                                            2000                      1999                         1998
                                            ----                      ----                         ----

                                           Weighted-                   Weighted-                    Weighted-
                             Number        Average      Number         Average       Number         Average
                             of            Exercise     of             Exercise      of             Exercise
                             Shares        Price        Shares         Price         Shares         Price
                             ------        ---------    ------         ---------     ------         ---------

Beginning of Year            7,720,367     $   36.29    6,095,968      $   36.72      5,126,158     $   38.15

Options granted              1,531,244     $   15.37    1,940,292      $   34.81      1,747,472     $   32.17

Options exercised                 (183)    $   15.37      (79,850)     $   28.66       (495,797)    $   32.74

Options canceled            (1,120,899)    $   31.68     (236,043)     $   38.02       (281,865)    $   41.62
                            ------------               ------------                    ---------


End of year                    8,130,529   $   32.98    7,720,367      $   36.29       6,095,968    $   36.72
                             ===========                =========                      =========


Exercisable                    4,903,779   $   37.42    4,426,982      $   37.22       3,568,291    $    36.60

Weighted-average
fair-value of options
granted during the
year                                       $     7.03                  $   12.14                    $    10.96

</TABLE>

The following table summarizes information about options outstanding at December
31, 2000:
<TABLE>
<S>                        <C>                   <C>                               <C>          <C>
                                        Options Outstanding                             Options Exercisable
                        -------------------------------------------------        -------------------------------
                           Number                 Weighted-Average                 Number        Weighted-
    Range of             Outstanding          Remaining          Exercise        Exercisable      Average
Exercise Prices          at 12/31/00      Contractual Life         Price         at 12/31/00     Exercise Price
---------------          -----------      ----------------    -----------        -----------     --------------

$ 14.187 - $26.750          1,567,055            7.85          $16.393               236,103       $22.142
$ 28.437 - $34.625          1,643,371            4.31          $29.950             1,265,290       $30.397
$ 34.812 - $37.500          2,207,529            6.69          $35.612               857,720       $36.846
$ 37.812 - $44.250          1,677,668            4.68          $40.624             1,509,760       $40.898
$ 44.750 - $47.000          1,034,906            4.98          $44.910             1,034,906       $44.910
</TABLE>


<PAGE>


                                     - 87 -

                         OWENS CORNING AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

17.   Stock Compensation Plans (continued)

The fair value of each option  grant is estimated on the date of grant using the
Black-Scholes   option-pricing   model  with  the  following   weighted  average
assumptions by year:
<TABLE>

<S>                                                 <C>                <C>              <C>

               Assumptions                          2000              1999             1998
         ----------------------                     ------------------------------------------

         Risk-free interest rate                     6.50%              4.79%          5.46%
         Expected life (in years)                       5                  5              5
         Expected volatility                        40.72%             32.44%         29.89%
         Expected dividends                           .00%               .61%           .69%
</TABLE>


Had  compensation  cost for the Plans been determined based on the fair value at
the grant  dates  for  awards  under  those  plans  consistent  with the  method
described in SFAS 123, the Company's net income (loss) and net income (loss) per
share would have been reduced to the pro forma amounts indicated below:
<TABLE>


<S>                                                              <C>          <C>          <C>
                                                                 2000         1999         1998
                                                               ---------    ---------   --------
                                                           (In millions of dollars, except share data)

    Net income (loss)                    As reported          $   (478)     $    270    $     (705)
                                         Pro forma            $   (487)     $    260    $     (714)

    Basic net income                     As reported          $  (8.71)     $   4.98    $    (13.16)
       (loss) per share                  Pro forma            $  (8.88)     $   4.80    $    (13.33)

    Diluted net income                   As reported          $  (8.71)     $   4.67    $    (13.16)
        (loss) per share                 Pro forma            $  (8.88)     $   4.50    $    (13.33)

</TABLE>

The following table reconciles the net income (loss) and weighted average number
of shares used in the basic  earnings  per share  calculation  to the net income
(loss) and weighted  average number of shares used to compute  diluted  earnings
per share.


<PAGE>


                                     - 88 -

                         OWENS CORNING AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

17.   Stock Compensation Plans (continued)
<TABLE>
<S>                                                                             <C>             <C>           <C>
                                                                                2000            1999          1998
                                                                            -----------     ------------  ------------
                                                                          (In millions of dollars, except share data)

Net income (loss) used for basic earnings per share                         $    (478)      $    270      $     (705)

Net income effect of assumed conversion of
   preferred securities                                                             -              8               -
                                                                            ---------       --------      ----------

Net income (loss) used for diluted earnings per share                       $    (478)      $    278      $     (705)
                                                                            ==========      ========      ===========
Weighted average number of shares outstanding
   used for basic earnings per share (thousands)                               54,816         54,083          53,579

     Deferred awards and stock options                                              -            803               -

     Shares from assumed conversion of
        preferred securities                                                        -          4,566               -
                                                                            ---------       --------      ----------

Weighted average number of shares outstanding and
   common equivalent shares used for diluted earnings
   per share (thousands)                                                       54,816         59,452          53,579
                                                                             ========       ========       =========
</TABLE>

During 2000 and 1998,  diluted  shares  outstanding  exclude  approximately  4.6
million  common  shares  from the  potential  conversion  of  certain  preferred
securities of a subsidiary (Note 7) due to their  anti-dilutive  effect. For the
years ended  December 31, 2000,  and  December  31,  1998,  diluted  shares also
exclude approximately 500 thousand and 700 thousand shares respectively,  due to
their anti-dilutive effect.

18.      Derivative Financial Instruments and Fair Value of Financial
         Instruments

The Company is a party to financial instruments with  off-balance-sheet  risk in
the  normal  course  of  business  to help  meet  financing  needs and to reduce
exposure to fluctuating  foreign currency exchange rates and interest rates. The
Company is exposed to credit  loss in the event of  nonperformance  by the other
parties to the financial  instruments described below. However, the Company does
not anticipate  nonperformance by the other parties. The Company does not engage
in trading  activities with these  financial  instruments and does not generally
require collateral or other security to support these financial instruments. The
amounts of derivatives summarized in the foreign exchange risk and interest rate
risk management  section below do not generally  represent the amounts exchanged
by the  parties  and,  thus,  are not a measure of the  exposure  of the Company
through its use of  derivatives.  The amounts  exchanged were  calculated on the
basis of the  notional  amounts  and the other terms of the  derivatives,  which
relate to interest rates,  exchange rates,  securities  prices,  or financial or
other indexes.

Foreign Exchange Risk and Interest Rate Risk Management
-------------------------------------------------------

The Company  enters into various types of derivative  financial  instruments  to
manage its foreign  exchange  risk and interest  rate risk,  as indicated in the
following table.


<PAGE>


                                     - 89 -

                         OWENS CORNING AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

18.        Derivative Financial Instruments and Fair Value of Financial
           Instruments (continued)


<TABLE>
<S>                                                        <C>                     <C>
                                                     Notional Amount         Notional Amount
                                                    December 31, 2000       December 31, 1999
                                                    -----------------       -----------------
                                                            (In millions of dollars)
     Forward currency exchange contracts                 $     9                $    203
     Combined interest rate currency swaps                     -                     140
     Options purchased                                         -                       1
     Currency swaps                                            -                     190
     Interest rate swaps                                      18                     151
</TABLE>

The Company  enters  into  forward  currency  exchange  contracts  to manage its
exposure against foreign currency fluctuations on certain assets and liabilities
denominated  in foreign  currencies.  As of December 31, 2000, the Company has 3
forward currency exchange  contracts maturing in 2001 which exchange less than 1
million  Euro,  approximately  1 million  U.S.  dollars  and less than 1 million
British  pounds.  As of December 31, 1999,  the Company had 26 forward  currency
exchange  contracts  which  matured in 2000 that  exchanged 89 million  Euro, 32
million U.S.  dollars,  23 million British pounds,  255 million Norwegian krone,
and various other currencies.  Gains and losses on these foreign currency hedges
are included in the carrying amount of the related assets and liabilities.

During 2000 and 1999, the Company also entered into a foreign currency  exchange
contract  to reduce its  exposure  to certain  U.S.  dollar -  denominated  debt
instruments in China.  The 2000 contract,  which matures in 2001,  will exchange
approximately 66 million Chinese  renminbi against  approximately 8 million U.S.
dollars. The 1999 contract,  which matured in 2000,  exchanged  approximately 67
million Chinese renminbi against approximately 8 million U.S. dollars.

Cross currency interest rate swaps
----------------------------------

During  2000,  the Company  invested  excess cash in South  America in Brazilian
certificates of deposit,  treasury bonds and debentures.  At the same time these
investments are made, the Brazilian real are swapped into U.S. dollars at a U.S.
dollar  interest rate with perfectly  matching  investment  amounts and maturity
dates.  At December 31, 2000,  there were 17 such  cross-currency  interest rate
swaps outstanding at a notional amount of $18 million U.S. dollars.

During 1998, the Company  entered into forward  currency  exchange  contracts to
reduce its exposure to currency  fluctuations on the anticipated  1999 net sales
to certain Japanese  companies.  The four forward currency  exchange  contracts,
which  matured in 1999,  exchanged  approximately  1.356  billion  Japanese  yen
against  approximately 10 million U.S. dollars.  For the year ended December 31,
1999, the Company recorded losses on these forward currency  exchange  contracts
of approximately $2 million.

The Company  enters into  combined  interest  rate  currency  swaps to hedge its
equity  investments  in certain  foreign  subsidiaries  to manage  its  exposure
against  fluctuations  in foreign  currency  rates. As of December 31, 1998, the
Company had three combined interest rate currency swaps which matured in 1999 to
manage this exposure.  These contracts  exchanged 921 million Belgian francs, 50
million French francs, 17 million Dutch guilders and 50 million U.S. dollars. At
December  31,  2000,  and 1999,  deferred  gains of $9 million and $11  million,
respectively, are included as a component of stockholders' equity.



<PAGE>


                                     - 90 -

                         OWENS CORNING AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

18.        Derivative Financial Instruments and Fair Value of Financial
           Instruments (continued)

The Company had a  cross-currency  swap converting from Deutsche marks into U.S.
dollars to hedge the interest and principal  payments of its 7.25% Deutsche mark
bonds,  due in 2000.  The agreement  establishes a fixed interest rate of 11.1%.
This instrument was canceled during 2000 prior to the Filing.

During 1999, the Company  entered into an interest rate swap to convert one half
of the principal payments on its $250 million debt issuance from a fixed rate of
7.0% to a floating  LIBOR  rate.  This  instrument  was  canceled in 2000 by the
financial institution as a result of the Filing.

During 1997, the Company entered into interest rate swaps to manage its interest
rate risk. As of December 31, 1997, the Company had seven ordinary interest rate
swaps that effectively  converted an aggregate  principal amount of $350 million
of variable rate  long-term  debt into fixed rate  borrowings.  These swaps were
terminated during 1998,  resulting in the deferral of a loss of approximately $8
million which is being  amortized  through 2002. For the year ended December 31,
1998,  a loss of  approximately  $1  million  related  to these  swaps  has been
recorded as a component of cost of borrowed funds.

During  1997,  the Company  entered  into three  interest  rate swaps as a hedge
against  interest rate  fluctuation on an  anticipated  refinancing of the Trust
Preferred  Hybrid  Securities.  These swaps were intended to lock in an interest
rate of 6.3% on a notional  amount of $150  million.  During  1998,  the Company
terminated these swaps and incurred an $8 million loss on the transaction.  This
loss was  recorded as other  operating  expenses on the  Company's  consolidated
statement of income (loss) for the year ended December 31, 1998.

Other Financial Instruments with Off-Balance-Sheet Risk
-------------------------------------------------------

As of  December  31,  2000 and 1999,  the  Company  is  contingently  liable for
guarantees  of  indebtedness  owed by certain  unconsolidated  affiliates of $35
million and $125 million,  respectively.  As of December 31, 2000, approximately
$20 million of such indebtedness was alleged to be in default as a result of the
Filing.  The affected  affiliate is in negotiations with its lenders  concerning
the status of this  indebtedness.  While the Company  believes that the affected
affiliate  should be able to restructure its  indebtedness,  if the negotiations
are  unsuccessful,  it is possible  that the lender will  attempt to enforce the
related guarantee against Owens Corning. Subject to the foregoing uncertainties,
the Company is of the opinion that its unconsolidated affiliates will be able to
perform under their  respective  payment  obligations  in  connection  with such
guaranteed indebtedness and that no payments will be required and no losses will
be incurred by the Company under such guarantees.

Concentrations of Credit Risk
-----------------------------

As of  December  31,  2000,  and 1999,  the  Company  has no  significant  group
concentrations of credit risk.

Fair Value of Financial Instruments
-----------------------------------

The following  methods and  assumptions  were used to estimate the fair value of
each category of financial instruments:

        Cash and Short-term Financial Instruments
        -----------------------------------------
        The carrying amount approximates fair value due to the short maturity of
        these instruments.


<PAGE>


                                     - 91 -

                         OWENS CORNING AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

18.      Derivative Financial Instruments and Fair Value of Financial
         Instruments (continued)

        Restricted Cash and Marketable Securities - Fibreboard
        ------------------------------------------------------

        The fair  values of cash and  marketable  securities  in the  Fibreboard
        Settlement  Trust  have been  estimated  by traded  market  values or by
        obtaining quotes from brokers.

        Long-term Notes Receivable
        --------------------------

        The fair value has been estimated  using the expected  future cash flows
        discounted at market interest rates.

        Long-term Debt
        --------------

        The fair value of the Company's  long-term  debt which is not subject to
        compromise has been estimated based on quoted market prices for the same
        or similar  issues,  or on the current  rates offered to the Company for
        debt of the same remaining maturities. The Company is unable to estimate
        the fair  value of  long-term  debt of the  Debtors  which is subject to
        compromise  at December 31, 2000,  due to the  uncertainties  associated
        with the Filing.

        Foreign Currency Swaps and Interest Rate Swaps
        ----------------------------------------------

        The fair values of foreign  currency  swaps and interest rate swaps have
        been  estimated  by traded  market  values or by  obtaining  quotes from
        brokers.

Forward currency exchange contracts, option contracts, and financial guarantees
-------------------------------------------------------------------------------

The fair values of forward currency exchange  contracts,  option contracts,  and
financial  guarantees are based on fees currently charged for similar agreements
or on the estimated cost to terminate these  agreements or otherwise  settle the
obligations with the counter parties at the reporting date.

The estimated fair values of the Company's financial  instruments as of December
31,  2000,  and 1999,  which have fair  values  different  than  their  carrying
amounts, are as follows:
<TABLE>

<S>                                                               <C>                     <C>
                                                                  2000                    1999
                                                                  ----                    ----
                                                        Carrying         Fair         Carrying         Fair
                                                         Amount          Value        Amount           Value
                                                         ------          ------       -------          -----
                                                                        (In millions of dollars)
Assets
------

  Long-term notes receivable                           $       24       $      24     $       15    $      13

Liabilities
-----------

  Long-term debt                                                7               7          1,764        1,654

Off-Balance-Sheet Financial
---------------------------
  Instruments - Unrealized gains (losses)
  --------------------------------------

   Currency swaps                                               -               -              -           19
   Interest rate swaps                                          -               1              -           (1)
   Combined interest rate currency swaps                        -               -              -            4
   Forward currency exchange contracts                          -               -              -           (1)

</TABLE>


<PAGE>


                                     - 92 -

                         OWENS CORNING AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

18.   Derivative Financial Instruments and Fair Value of Financial
      Instruments (continued)

As of  December  31,  2000 and 1999,  the  Company  is  contingently  liable for
guarantees of indebtedness owed by certain unconsolidated  affiliates.  There is
no market for these  guarantees  and they were  issued  without  explicit  cost.
Therefore, it is not practicable to establish their fair value.

Accounting Changes
------------------

We have  assessed the impact of SFAS 133 on our  financial  statements  and will
adopt this  accounting  change  effective  January 1, 2001. We have completed an
inventory of both our freestanding  derivatives,  including  forward  contracts,
option contracts,  currency swaps and interest rate swaps, and derivatives which
are embedded in other contracts.

Under the current literature and interpretations of the pronouncements,  we have
assessed our current  derivatives  position and have determined that adoption at
January 1, 2001,  would  result in a gain of  approximately  $20  million in net
income and will result in a deferred  gain of $1 million in other  comprehensive
income. However, there are additional  interpretations currently under review by
the  Financial  Accounting  Standards  Board which could  change the  accounting
treatment and  classification of the affected  instruments  resulting in only an
immaterial gain reflected in net income.

19.      Contingent Liabilities

Asbestos Liabilities
--------------------

ITEM A. - OWENS CORNING (EXCLUDING FIBREBOARD)

Numerous  claims have been  asserted  against Owens  Corning  alleging  personal
injuries  arising from  inhalation  of asbestos  fibers.  Virtually all of these
claims  arise  out  of  Owens  Corning's  manufacture,   distribution,  sale  or
installation  of  an  asbestos-containing  calcium  silicate,  high  temperature
insulation  product,  the manufacture and distribution of which was discontinued
in 1972. Owens Corning received  approximately  18,000 asbestos  personal injury
claims   during  2000,   approximately   32,000  such  claims  during  1999  and
approximately 69,000 such claims during 1998.

Prior to October 5, 2000,  when the Debtors,  including  Fibreboard  (see Item B
below),  filed  voluntary  petitions  for relief under  Chapter 11 of the United
States  Bankruptcy Code, the vast majority of asserted  asbestos personal injury
claims were in the process of being  resolved  through the  National  Settlement
Program  described below. As a result of the Filing,  all pre-petition  asbestos
claims and pending litigation against the Debtors,  including without limitation
claims arising under the National Settlement Program,  were automatically stayed
(see Note 1). Owens Corning  expects that all pending and future asbestos claims
against  Owens  Corning and  Fibreboard  will be resolved  pursuant to a plan or
plans of  reorganization.  Owens  Corning  is unable to  determine  at this time
whether  asbestos-related  claims asserted against Fibreboard will be treated in
the same  manner as those  asserted  against  Owens  Corning in any such plan or
plans.

National Settlement Program
---------------------------

Beginning in late 1998, Owens Corning  implemented a National Settlement Program
("NSP") to resolve personal injury asbestos claims through settlement agreements
with individual plaintiffs' law firms. The NSP was intended to better manage the
asbestos liabilities of Owens Corning and Fibreboard (see Item B

<PAGE>


                                     - 93 -

                         OWENS CORNING AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

19.      Contingent Liabilities (continued)

below),  and to help  Owens  Corning  better  predict  the  timing and amount of
indemnity payments for both pending and future asbestos claims.

The number of law firms  participating in the NSP expanded from approximately 50
when the NSP was established to approximately  120 as of the Petition Date. Each
of these  participating  law firms  agreed to a long-term  settlement  agreement
which  varied by firm ("NSP  Agreement")  extending  through at least 2008 which
provided for the resolution of their existing asbestos claims, including unfiled
claims  pending with the  participating  law firm at the time it entered into an
NSP Agreement ("Initial Claims"). The NSP agreements also established procedures
and fixed payments for resolving without  litigation claims against either Owens
Corning or Fibreboard,  or both, arising after a participating firm entered into
an NSP Agreement ("Future Claims").

Terms and Conditions of NSP Agreements
--------------------------------------

Settlement  amounts for both Initial  Claims and Future  Claims were  negotiated
with each firm  participating  in the NSP, and each firm was to communicate with
its respective clients to obtain authority to settle individual claims. Payments
to individual claimants were to vary based on a number of factors, including the
type and severity of disease, age and occupation. All such payments were subject
to delivery of  satisfactory  evidence of a  qualifying  medical  condition  and
exposure to Owens Corning's and/or Fibreboard's products,  delivery of customary
releases by each claimant,  and other  conditions.  Certain  claimants  settling
non-malignancy  claims with Owens Corning and/or  Fibreboard were entitled to an
agreed pre-determined amount of additional  compensation if they later developed
a more severe asbestos-related medical condition.

As to  Future  Claims,  each  participating  NSP firm  agreed  (consistent  with
applicable  legal  requirements)  to recommend to its future  clients,  based on
appropriately   exercised  professional  judgment,  to  resolve  their  asbestos
personal  injury  claims  against  Owens Corning  and/or  Fibreboard  through an
administrative  processing arrangement,  rather than litigation.  In the case of
Future  Claims  involving  non-malignancy,  claimants  were  required to present
medical  evidence of  functional  impairment,  as well as the  product  exposure
criteria and other requirements set forth above, to be entitled to compensation.

Owens  Corning  and  Fibreboard  (see Item B below) each  retained  the right to
terminate  any  individual  NSP  Agreement  if in any year more than a specified
number of plaintiffs  represented by the plaintiffs'  firm in question  rejected
and ultimately opted out of such agreement. Opt out procedures were specified in
the settlement  agreements,  and provided for mediation and further  negotiation
before a claimant could pursue his or her case in the court system.  Through the
Petition  Date,  fewer than 300  claimants  had  elected to reject the  original
settlement proposal, and to mediate under the terms of the NSP Agreement.

As of the Petition Date, the NSP covered  approximately  240,000 Initial Claims,
approximately 147,000 of which had satisfied all conditions to final settlement,
including  receipt of executed  releases,  or other  resolution  (the "Final NSP
Settlements")  at an average cost per claim of approximately  $9,000.  As of the
Petition Date,  approximately 83,000 of such Final NSP Settlements had been paid
in full or otherwise resolved,  and approximately 64,000 were unpaid in whole or
in part. As of such date, the remaining  balance payable under NSP Agreements in
connection  with these  unpaid  Final NSP  Settlements  was  approximately  $560
million.  Through the Petition  Date,  Owens Corning had received  approximately
3,800 Future Claims under the NSP.





<PAGE>


                                     - 94 -

                         OWENS CORNING AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

19.   Contingent Liabilities (continued)

At this time,  Owens  Corning  is unable to predict  the manner in which the NSP
Agreements  and the  resolution of claims  thereunder  will be treated under the
terms of any plan or plans of reorganization.

Non-NSP Claims
--------------

As of the Petition Date,  approximately  36,000 asbestos  personal injury claims
were  pending   against  Owens  Corning   outside  the  NSP.  This  compares  to
approximately  25,300 such claims pending on December 31, 1999. The  information
needed for a critical  evaluation  of pending  claims,  including the nature and
severity of disease and definitive identifying information concerning claimants,
typically becomes available only through the discovery process or as a result of
settlement  negotiations,  which often occur years after  particular  claims are
filed.  As a result,  Owens Corning has limited  information  about many of such
claims,  and the  actual  number of  pending  claims  may vary from the  numbers
indicated.

Owens  Corning  resolved  (by  settlement  or  otherwise)  approximately  10,200
asbestos  personal injury claims outside the NSP during 1998,  4,800 such claims
during 1999 and 3,100 such claims  during 2000 prior to the Petition  Date.  The
average  cost of  resolution  was  approximately  $35,900  per claim for  claims
resolved  during 1998,  $34,600 per claim for claims  resolved  during 1999, and
$44,800 per claim for claims resolved during 2000 prior to the Petition Date. As
a rule,  these claims were settled as they were  scheduled  for trial,  and they
typically  involved  more serious  injuries  and  diseases.  Accordingly,  Owens
Corning   does  not  believe  that  such  average   costs  of   resolution   are
representative  of the value of the  non-NSP  claims  then  pending  against the
Company.

During  the  implementation  of the  NSP,  Owens  Corning  attempted  to  settle
individual non-NSP claims for amounts generally  consistent with payments to NSP
claimants.  Such settlements were preferable to trials, provided that the agreed
settlement  was fair in relation to similarly  situated NSP  claimants,  because
both the timing and amount of such payments were more predictable.  Beginning in
late 1999,  Owens Corning  received a number of settlement  demands from non-NSP
plaintiffs'  counsel which exceeded  historical  settlement averages for similar
cases and were higher than the  settlement  values of such cases within the NSP.
In  addition,  during  the third  quarter  of 2000  Owens  Corning  began to see
evidence that a higher than anticipated number of new  asbestos-related  claims,
particularly  claims alleging  serious medical  impairment,  were being filed by
non-NSP firms,  including firms without  significant  prior asbestos  litigation
experience against Owens Corning.

At this time,  Owens  Corning is unable to predict  the manner in which  non-NSP
claims will be treated under the terms of any plan or plans of reorganization.

Asbestos-Related Payments
-------------------------

During 1999 and 2000 (prior to the  Petition  Date),  Owens  Corning  (excluding
Fibreboard) made asbestos-related payments falling within four major categories:
(1) Settlements in respect of verdicts  incurred or claims resolved prior to the
implementation  of the NSP ("Pre-NSP  Settlements");  (2) NSP  settlements;  (3)
Non-NSP  settlements  covering  cases not  resolved by the NSP; and (4) Defense,
claims processing and administrative expenses, as follows:


<PAGE>


                                     - 95 -

                         OWENS CORNING AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

19.   Contingent Liabilities (continued)
<TABLE>
                                                                                (In millions of dollars)
<S>                                                                    <C>                              <C>
                                                                                                    2000 (through
                                                                      1999                         October 4, 2000)
                                                                      ----                         ----------------

Pre-NSP Settlements                                                  $   170                             $    51
NSP Settlements                                                          570                                 538
Non-NSP Settlements                                                       30                                  42
Defense, Claims Processing and
  Administrative Expenses                                                 90                                  54
                                                                     -------                             -------
                                                                     $   860                             $   685
                                                                     =======                             =======
</TABLE>


Prior to the Petition Date,  Owens Corning  deposited  certain amounts in escrow
accounts  to  facilitate  claims  processing  under  the  NSP   ("Administrative
Deposits").  Amounts deposited into escrow in  Administrative  Deposits during a
reporting  period are included in the payments shown for NSP Settlements  during
the period. At December 31, 2000,  approximately  $164 million of Administrative
Deposits  previously  made by Owens Corning had not been finally  distributed to
claimants  ("Undistributed   Administrative  Deposits")  and,  accordingly,  are
reflected in Owens  Corning's  consolidated  balance sheet as restricted  assets
(under  the  caption  "Restricted  cash - asbestos  related")  and have not been
subtracted  from Owens  Corning's  reserve for asbestos  personal  injury claims
(discussed  below).  At this time,  Owens  Corning is unable to predict what the
treatment of funds held in Undistributed  Administrative  Deposits will be under
the terms of any plan or plans of reorganization.

All  amounts  discussed  above  are  before  tax and  application  of  insurance
recoveries.

Tax Legislation
---------------

In the spring of 2000,  the United  States House of  Representatives  introduced
proposed  legislation  (HR  4543)  to  exempt  investment  income  earned  by an
asbestos-related trust from federal income tax, and to allow asbestos defendants
to carry-back net operating losses ("NOLs") created by asbestos  payments to the
years in which the products  containing  asbestos were  produced or  distributed
(and to each  subsequent  year) in order to  obtain a refund of  federal  income
taxes paid in those periods.  In the case of Owens  Corning,  this would entitle
the  Company  to  carry-back  its NOLs to the  early  1950s.  The  exemption  of
investment  income would  benefit the  Fibreboard  Settlement  Trust  (described
below) by  having  the  effect  of  enlarging  the  corpus of the trust  through
tax-free  interest  accumulation.  While HR 4543 did not pass  during  the 106th
Congress,  the  bill  received  strong  bipartisan  support  in the  form  of 92
cosponsors,  including  25 members of the House  Ways and Means  Committee.  Key
members of the House Ways and Means  Committee have recently sent written notice
to their  colleagues  advising of their  intent to  introduce  the  Asbestos Tax
Fairness Bill  (previously HR 4543) during the current 107th Congress.  However,
there can be no assurance  that any such  legislation  will be introduced or, if
introduced,  ultimately enacted.  Moreover,  as a result of the Filing, there is
uncertainty regarding the impact of the proposed tax legislation on the Debtors'
respective estates.

Other Asbestos-Related Litigation
---------------------------------

As  previously  reported,  the Company  believes  that it has spent  significant
amounts to resolve  claims of asbestos  claimants  whose injuries were caused or
exacerbated  by cigarette  smoking.  Owens Corning and  Fibreboard  are pursuing
litigation against tobacco companies (discussed below) to obtain payment of

<PAGE>


                                     - 96 -

                         OWENS CORNING AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

19.   Contingent Liabilities (continued)

monetary damages (including punitive damages) for payments made by Owens Corning
and Fibreboard to asbestos claimants who developed smoking related diseases.

In October 1998,  the Circuit Court for Jefferson  County,  Mississippi  granted
leave to file an amended  complaint in an existing action to add claims by Owens
Corning  against  seven tobacco  companies  and several  other tobacco  industry
defendants.  The court has set a mid-June  2001 trial date for this  action.  In
addition to the Mississippi lawsuit, a lawsuit brought in December 1997 by Owens
Corning and  Fibreboard  is pending in the  Superior  Court for Alameda  County,
California against the same tobacco companies. The court has set a mid-July 2001
trial date for this action.  There can be no assurance  that either case will be
successful.

Insurance
---------

As of December  31,  2000,  Owens  Corning's  financial  statements  reflect $59
million in unexhausted  insurance  coverage (net of deductibles and self-insured
retentions)  under its  liability  insurance  policies  applicable  to  asbestos
personal injury claims.  Most of this amount  represents  unconfirmed  potential
non-products  coverage with excess level insurance  carriers,  as to which Owens
Corning  has  estimated  its  probable  recoveries.  Owens  Corning  also  has a
significant  amount of other unconfirmed  potential  non-products  coverage with
excess level carriers. Owens Corning is actively pursuing non-products insurance
recoveries under these policies. The amount and timing of recoveries from excess
level policies will depend on subsequent negotiations and/or proceedings.

During  the second  quarter  of 2000,  Owens  Corning  received  a $335  million
settlement  payment  from a  group  of  excess  insurers,  resolving  a  dispute
concerning  coverage  from  such  insurers  for  non-products   asbestos-related
personal injury claims. Of this amount, $125 million had been reflected on Owens
Corning's financial statements as a probable insurance recovery.  The balance of
$210 million was recorded as pre-tax income in the second quarter.

Reserve
-------

Owens  Corning  estimates  a  reserve  in  accordance  with  generally  accepted
accounting  principles to reflect  asbestos-related  liabilities  that have been
asserted or are probable of  assertion,  in which  liabilities  are probable and
reasonably estimable. This reserve was established initially through a charge to
income in 1991, with additional  charges to income of $1.1 billion in 1996, $1.4
billion in 1998,  and $1.0 billion  during the second  quarter of 2000. The $1.0
billion  increase  in the  reserve in the  second  quarter of 2000 was made as a
result of Owens Corning's review during the second quarter of the sufficiency of
its provision  for  asbestos-related  liabilities  in light of recent trends and
developments  in the  administration  of the  NSP  and  in  asbestos  litigation
generally.

As of December 31, 2000, a reserve of  approximately  $2.2 billion in respect of
Owens  Corning's  asbestos-related  liabilities was one of the items included in
Owens  Corning's  consolidated  balance  sheet under the  category  "LIABILITIES
SUBJECT TO COMPROMISE." For prior periods,  these  liabilities were reflected as
current  or other  liabilities  (depending  on the period in which  payment  was
expected) under the category "Reserve for asbestos litigation claims."

The  approximate  balances of the components of the reserve at December 31, 1999
and at September 30, 2000 were:


<PAGE>


                                     - 97 -

                         OWENS CORNING AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

19.   Contingent Liabilities (continued)
<TABLE>

<S>                                                                      <C>                             <C>
                                                                December 31, 1999                 September 30, 2000
                                                                -----------------                 ------------------
                                                                           (In billions of dollars)

NSP backlog                                                           $    1.10                          $     1.10
Non-NSP backlog                                                            0.20                                0.30
Future Claims                                                              0.30                                0.70
Defense, Claims Processing and
  Administrative Expenses                                                  0.20                                0.10
</TABLE>

In connection with this asbestos reserve, Owens Corning notes that:

-      The "NSP backlog" component  represented the remaining  estimated cost of
       resolving Initial Claims under the NSP.

-      The  "Non-NSP  backlog"  component  represented  the  estimated  cost  of
       resolving  asbestos  personal injury claims pending against Owens Corning
       outside the NSP.

-      The "Future claims" component represented the estimated cost of resolving
       (i) Future  Claims  under the NSP and (ii)  non-NSP  claims  subsequently
       made.

As Owens Corning has discussed in previous public  filings,  any estimate of its
liabilities  for  pending  and  expected  future  asbestos  claims is subject to
considerable  uncertainty  because such  liabilities  are influenced by numerous
variables that are inherently  difficult to predict. As discussed further below,
such uncertainties  significantly increased as a result of the Chapter 11 Cases.
Prior to the Petition Date, such variables  included,  among others, the cost of
resolving  pending  non-NSP  claims;  the disease mix and severity of disease of
pending NSP claims; the number,  severity of disease, and jurisdiction of claims
filed in the future  (especially  the number of mesothelioma  claims);  how many
future claimants were covered by an NSP Agreement;  the extent, if any, to which
individual  claimants  exercised a right to opt out of an NSP  Agreement  and/or
engage  counsel  not  participating  in the NSP;  the  extent,  if any, to which
counsel not bound by an NSP Agreement  undertook the  representation of asbestos
personal injury plaintiffs  against Owens Corning;  the extent, if any, to which
Owens Corning exercised its right to terminate one or more of the NSP Agreements
due to excessive  opt-outs or for other reasons;  and Owens Corning's success in
controlling the costs of resolving future non-NSP claims.

The  Chapter 11 Cases  significantly  increase  the  inherent  difficulties  and
uncertainties  involved  in  estimating  the  number and cost of  resolution  of
present and future  asbestos-related  claims  against Owens Corning and may have
the effect of  increasing  the number and ultimate  cost of  resolution  of such
claims, perhaps substantially.  In particular,  the status of the NSP Agreements
and the  treatment of pending and future  claims  thereunder  will depend on the
outcome of negotiations among the various constituencies in the Chapter 11 Cases
and  determinations  by the Bankruptcy Court as to the issues involved,  none of
which can be  predicted  at this time.  The  uncertainties  associated  with the
status of the NSP Agreements and the treatment of claims thereunder  include the
following:

-        It is possible that one or more  constituencies in the Chapter 11 Cases
         may seek to set aside the NSP  Agreements  on various  grounds.  In any
         event, it is highly uncertain how any plan or plans of

<PAGE>


                                     - 98 -

                         OWENS CORNING AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

19.   Contingent Liabilities (continued)

         reorganization  will treat the various  types of NSP claims,  including
         without  limitation  claims  with no evidence  of  significant  medical
         impairment,  or  whether  such  unimpaired  claims  will be  treated as
         allowed claims thereunder.

-        The settlement values for specified  categories of disease set forth in
         the NSP Agreements were  established by arms-length  negotiations  with
         the participating law firms in circumstances  very different from those
         prevailing in the Chapter 11 Cases. The settlement  values available to
         individual  claimants under the arrangements to be included in any plan
         or  plans  of  reorganization   may  vary   substantially   from  those
         contemplated by the NSP Agreements. Because Owens Corning's estimate of
         liabilities in respect of non-NSP claims assumed  payment of settlement
         values similar to those contained in the NSP Agreements,  such estimate
         is subject to similar uncertainty.

Additional uncertainties raised by the Chapter 11 Cases include the following:

-        As a result of the Filing, all of the holders of pre-petition  asbestos
         claims  against Owens Corning or Fibreboard  will be required to comply
         with formal proof of claim  requirements  in order to have their claims
         taken into account as allowed claims.  Moreover, the Filing,  including
         the  significant  publicity  associated  with the  Chapter 11 Cases and
         notices required by the Bankruptcy Code that must be given to creditors
         and other parties in interest, has significantly increased the inherent
         difficulties  and  uncertainties  involved in estimating the number and
         cost of resolution of not only pre-petition  claims but also additional
         claims  that may be  asserted  in the  course of the  Chapter 11 Cases.
         Among other things, it is not possible to predict at this time how many
         proofs of claim  will be timely  filed,  how many  proofs of claim will
         represent  allowed  claims,  or the  aggregate  value  of such  allowed
         claims.

-        Owens Corning anticipates that the number and estimated aggregate value
         of allowed future claims will be determined as a result of negotiations
         involving  a legal  representative  for the  class of  future  asbestos
         claimants and the other interested constituencies,  or if necessary, by
         the Bankruptcy Court. It is not possible to predict the outcome of such
         negotiations at this time.

Ultimately,  Owens  Corning's (and  Fibreboard's)  total  liability for asbestos
claims  will be  determined  after a lengthy  period  of  negotiations  and,  if
necessary,  by the  Bankruptcy  Court  following the bar date for  submission of
proofs of claim,  taking  into  account  numerous  factors  not present in Owens
Corning's pre-petition environment. Such factors include the claims of competing
creditor groups as to the  appropriate  treatment of their allowed claims in the
plan or plans of reorganization,  the size of the total asbestos liability,  the
total number of present  asbestos  claims allowed and the total amount of future
asbestos claims allowed.

At December 31, 2000, as a result of the Filing and the  uncertainties  referred
to  above,  the  approximate  balances  of the  components  of  Owens  Corning's
asbestos-related reserve were:
<TABLE>
<S>                                                                                  <C>
                                                                                   Balance
                                                                                   -------
                                                                          (In billions of dollars)
Unpaid Final Settlements (NSP and other)                                           $ 0.70
Other Pending and Future Claims                                                      1.50
</TABLE>



<PAGE>


                                     - 99 -

                         OWENS CORNING AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

19.   Contingent Liabilities (continued)

In connection with this asbestos reserve, Owens Corning notes that:

-        The "Unpaid  Final  Settlements"  component  represented  the remaining
         estimated cost for all asbestos  personal injury claims pending against
         Owens Corning  which were subject to final  settlement  agreements  for
         which releases from claimants were obtained,  and under which all other
         conditions to settlement had been satisfied, as of the Petition Date.

-        The  "Other  Pending  and  Future  Claims"  component  represented  the
         estimated cost of resolving (i) asbestos personal injury claims pending
         against  Owens  Corning  which  were  subject to  resolution  under NSP
         Agreements  but for which  releases  were not obtained  from  claimants
         prior to the Petition  Date;  (ii) all other asbestos  personal  injury
         claims  pending  against  Owens  Corning  which were not subject to any
         settlement agreement;  and (iii) future asbestos personal injury claims
         against Owens Corning made after the Petition Date.

Owens Corning will continue to review its asbestos  reserve on a periodic  basis
and make such  adjustments as may be appropriate.  However,  it is possible that
Owens  Corning  will not be in a position  to  conclude  that a revision  to the
reserve is appropriate until significant developments occur during the course of
the Chapter 11 Cases, including resolution of the uncertainties described above.
Any such revision  could,  however,  be material to the  Company's  consolidated
financial position and results of operations in any given period.

ITEM B. - FIBREBOARD (EXCLUDING OWENS CORNING)

Prior to 1972, Fibreboard  manufactured insulation products containing asbestos.
Fibreboard  has since been named as  defendant  in many  thousands  of  personal
injury claims for injuries  allegedly  caused by asbestos  exposure.  Fibreboard
received approximately 21,600 asbestos personal injury claims during 2000. Prior
to the Petition Date, the vast majority of Fibreboard  asbestos  personal injury
claims were in the  process of being  resolved  through  the NSP,  as  described
below. As a result of the Filing,  all pre-petition  asbestos claims and pending
litigation  against the Debtors  were  automatically  stayed (see Note 1). Owens
Corning  expects  that all  pending and future  asbestos  claims  against  Owens
Corning  and  Fibreboard  will  be  resolved  pursuant  to a plan  or  plans  of
reorganization.  Owens  Corning  is unable  to  determine  at this time  whether
asbestos-related  claims asserted against Fibreboard will be treated in the same
manner as those asserted against Owens Corning in any such plan or plans.

National Settlement Program
---------------------------

Fibreboard  is a  participant  in the NSP and is a party  to the NSP  Agreements
discussed in Item A. The NSP Agreements became effective as to Fibreboard in the
fourth quarter of 1999, when the Insurance  Settlement  (discussed below) became
effective.  The NSP Agreements  settled asbestos personal injury claims that had
been filed against Fibreboard by participating  plaintiffs' law firms and claims
that could have been  filed  against  Fibreboard  by such  firms  following  the
lifting,  in the third quarter of 1999,  of an  injunction  which had barred the
filing of asbestos personal injury claims against Fibreboard.

As of the Petition Date, the NSP covered  approximately  212,000  Initial Claims
against Fibreboard,  approximately 115,000 of which had satisfied all conditions
to final settlement, including receipt of executed releases, or other resolution
as Final NSP Settlements at an average cost per claim of  approximately  $7,500.
As of the Petition Date, approximately 55,000 of such Final NSP Settlements had

<PAGE>


                                     - 100 -

                         OWENS CORNING AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

19.   Contingent Liabilities (continued)

been paid in full or otherwise resolved and approximately  60,000 were unpaid in
whole or in part.  As of such date,  the  remaining  balance  payable  under NSP
Agreements  in  connection   with  these  unpaid  Final  NSP   Settlements   was
approximately $380 million.  The NSP Agreements also provided for the resolution
of Future  Claims  against  Fibreboard  through  the  administrative  processing
arrangement  described  in Item A.  Through the Petition  Date,  Fibreboard  had
received approximately 3,800 Future Claims under the NSP.

At this time,  Owens  Corning  is unable to predict  the manner in which the NSP
Agreements and the resolution of Fibreboard  claims  thereunder  will be treated
under the terms of any plan or plans of reorganization.

Non-NSP Claims
--------------

As of the Petition Date,  approximately  15,000 asbestos  personal injury claims
were pending against  Fibreboard outside the NSP. This compares to approximately
1,000  such  claims  pending on  December  31,  1999.  Fibreboard  resolved  (by
settlement or otherwise)  approximately  2,300 asbestos  personal  injury claims
outside the NSP during  2000 prior to the  Petition  Date at an average  cost of
resolution  of  approximately  $45,000 per claim.  Generally,  these claims were
settled as they were  scheduled  for trial,  and they  typically  involved  more
serious injuries and diseases.  Accordingly, Owens Corning does not believe that
such average costs of resolution are  representative of the value of the non-NSP
claims then pending against Fibreboard.

At this time,  Owens Corning is unable to predict the manner in which Fibreboard
non-NSP  claims  will be  treated  under  the  terms  of any  plan or  plans  of
reorganization.

Insurance Settlement
--------------------

In  1993,  Fibreboard  and two of its  insurers,  Continental  Casualty  Company
("Continental")  and Pacific  Indemnity  Company  ("Pacific"),  entered into the
Insurance  Settlement.  The Insurance  Settlement became effective in the fourth
quarter of 1999, is final and is not subject to appeal.

Since 1993,  Continental and Pacific paid,  either directly or through an escrow
account funded by them, for  substantially  all  settlements of asbestos  claims
reached  prior to the  initiation of the NSP.  Under the  Insurance  Settlement,
Continental  and Pacific  provided  $1,873  million during the fourth quarter of
1999 to fund costs of  resolving  pending and future  asbestos  claims,  whether
under the NSP, in the tort system, or otherwise.

As of  December  31,  2000,  the  Insurance  Settlement  funds  were held in and
invested by the Fibreboard  Settlement  Trust.  As of that date,  $1,104 million
(net of outstanding  payables) was held in the Fibreboard  Settlement  Trust and
$170  million was held in  Undistributed  Administrative  Deposits in respect of
Fibreboard  claims.  On an  ongoing  basis,  the  funds  held in the  Fibreboard
Settlement  Trust  will be  subject to  investment  earnings/losses  and will be
reduced if and as applied to  satisfy  asbestos-related  liabilities.  Under the
terms of the Fibreboard Settlement Trust, any of such assets that ultimately are
not used to fund Fibreboard's  asbestos-related  liabilities must be distributed
to  charity.  It will not be known  whether  any such  assets  will  remain  for
distribution until the conclusion of the Chapter 11 Cases.


<PAGE>


                                     - 101 -

                         OWENS CORNING AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

19.   Contingent Liabilities (continued)

Funds held in the Fibreboard  Settlement  Trust and  Fibreboard's  Undistributed
Administrative  Deposits are reflected on Owens Corning's  consolidated  balance
sheet as restricted assets. At December 31, 2000, these assets were reflected as
current assets,  denoted "Restricted cash and securities - Fibreboard." See Note
20 for additional information concerning the Fibreboard Settlement Trust.

At this time,  Owens  Corning is unable to predict  what the  treatment of funds
held in the  Fibreboard  Settlement  Trust and in  Undistributed  Administrative
Deposits in respect of Fibreboard  claims will be under the terms of any plan or
plans of reorganization.

Asbestos-Related Payments
-------------------------

During 2000 (prior to the Petition  Date),  gross payments for  asbestos-related
claims against Fibreboard,  all of which were  paid/reimbursed by the Fibreboard
Settlement Trust, fell within four major categories, as follows:
<TABLE>
<S>                                                                                         <C>
                                                                                  (In millions of dollars)

                                                                                        2000 (through
                                                                                      October 4, 2000)
                                                                                      ----------------

     Pre-NSP Settlements                                                                    $    29
     NSP Settlements                                                                            705
     Non-NSP Settlements                                                                         41
     Defense, Claims Processing and  Administrative Expenses                                     45
                                                                                            -------
                                                                                            $   820
</TABLE>


The payments for NSP  Settlements  include  Administrative  Deposits  during the
quarter in respect of  Fibreboard  claims.  At  December  31,  2000,  there were
approximately  $170 million of  Undistributed  Administrative  Deposits  made in
respect  of  Fibreboard   claims.  As  described  above,   these   Undistributed
Administrative  Deposits are included as  restricted  assets  (under the caption
"Restricted  cash and securities - Fibreboard") on Owens Corning's  consolidated
balance sheet.

Reserve
-------

Owens Corning  estimates a reserve for  Fibreboard in accordance  with generally
accepted accounting principles to reflect  asbestos-related  liabilities.  As of
December 31, 2000, a reserve of approximately  $1.25 billion in respect of these
liabilities  was one of the  items  included  in  Owens  Corning's  consolidated
balance sheet under the category  "LIABILITIES SUBJECT TO COMPROMISE." For prior
periods,  they were reflected as current or other liabilities  (depending on the
period in which  payment  was  expected)  under the  category  "Asbestos-related
liabilities -  Fibreboard."  These  liabilities  (including  any reserve for the
charitable  remainder)  are  always  at  least  equal to the  funds  held in the
Fibreboard  Settlement  Trust  and  Fibreboard's  Undistributed   Administrative
Deposits since,  under the terms of the Trust,  the funds held in the Trust must
be expended either in connection with Fibreboard's asbestos-related liabilities,
or to satisfy  the  obligation  under the Trust to  distribute  to  charity  the
assets,  if  any,  remaining  in  the  Trust  after  satisfaction  of  all  such
liabilities (see Note 20).


<PAGE>


                                     - 102 -

                         OWENS CORNING AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

19.   Contingent Liabilities (continued)

The  approximate  balances of the components of the Fibreboard  asbestos-related
reserve at December 31, 1999 and at September 30, 2000 were:
<TABLE>

<S>                                                                      <C>                             <C>
                                                                December 31, 1999                 September 30, 2000
                                                                -----------------                 ------------------
                                                                           (In billions of dollars)

NSP backlog                                                           $    1.00                          $     0.80
Non-NSP backlog                                                            0.10                                0.10
Future Claims                                                              0.45                                0.30
Defense, Claims Processing and
  Administrative Expenses                                                  0.20                                0.05

</TABLE>

In connection with this asbestos reserve, Owens Corning notes that:

-        The "NSP backlog" component represented the remaining estimated cost of
         resolving Initial Claims against Fibreboard under the NSP.

-        The "Non-NSP  backlog"  component  represented  the  estimated  cost of
         resolving  asbestos  personal injury claims pending against  Fibreboard
         outside the NSP.

-        The  "Future  claims"  component  represented  the  estimated  cost  of
         resolving (i) Future Claims against  Fibreboard  under the NSP and (ii)
         non-NSP claims subsequently made against Fibreboard.

As noted  in Item A above as to Owens  Corning,  the  estimate  of  Fibreboard's
liabilities  for  pending  and  expected  future  asbestos  claims is subject to
considerable  uncertainty  because such  liabilities  are influenced by numerous
variables  that are  inherently  difficult  to predict,  and such  uncertainties
significantly  increased as a result of the Filing  including those set forth in
Item A above. In addition,  as noted above, at this time Owens Corning is unable
to predict what the treatment of funds held in the Fibreboard  Settlement  Trust
and in  Undistributed  Administrative  Deposits in respect of Fibreboard  claims
will be under the terms of any plan or plans of reorganization.

At December 31, 2000, as a result of the Filing and the  uncertainties  referred
to  above,  the  approximate  balances  of  the  components  of  the  Fibreboard
asbestos-related reserve were:
<TABLE>

<S>                                                                                  <C>
                                                                                   Balance
                                                                                   -------
                                                                          (In billions of dollars)
Unpaid Final Settlements (NSP and other)                                           $ 0.40
Other Pending and Future Claims                                                      0.85
</TABLE>


In connection with this asbestos reserve, Owens Corning notes that:

-        The "Unpaid  Final  Settlements"  component  represented  the remaining
         estimated cost for all asbestos  personal injury claims pending against
         Fibreboard which were subject to final settlement  agreements for which
         releases  from  claimants  were  obtained,  and  under  which all other
         conditions to settlement had been satisfied, as of the Petition Date.
-

<PAGE>


                                     - 103 -

                         OWENS CORNING AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

19.   Contingent Liabilities (continued)

-        The  "Other  Pending  and  Future  Claims"  component  represented  the
         estimated cost of resolving (i) asbestos personal injury claims pending
         against   Fibreboard   which  were  subject  to  resolution  under  NSP
         Agreements  but for which  releases  were not obtained  from  claimants
         prior to the Petition  Date;  (ii) all other asbestos  personal  injury
         claims  pending  against  Fibreboard  which  were  not  subject  to any
         settlement agreement;  and (iii) future asbestos personal injury claims
         against Fibreboard made after the Petition Date.

Owens  Corning  will  continue  to review  Fibreboard's  asbestos  reserve  on a
periodic basis and make such adjustments as may be appropriate.  However,  it is
possible  that  Owens  Corning  will not be in a  position  to  conclude  that a
revision to the reserve is  appropriate  until  significant  developments  occur
during  the  course  of  the  Chapter  11  Cases,  including  resolution  of the
uncertainties  described above. Any such revision could, however, be material to
the Company's  consolidated  financial position and results of operations in any
given period.

20.   FIBREBOARD SETTLEMENT TRUST

Under  the  Insurance  Settlement  described  in Note  19,  two of  Fibreboard's
insurers  provided  $1.873 billion during the fourth quarter of 1999 to fund the
costs of resolving  pending and future asbestos claims. As of December 31, 2000,
the  Insurance  Settlement  funds were held in and  invested  by the  Fibreboard
Settlement Trust (the "Trust"). On an ongoing basis, the funds held in the Trust
will be  subject  to  investment  earnings/losses  and will be reduced if and as
applied to satisfy Fibreboard asbestos-related  liabilities.  Under the terms of
the Trust,  any Trust assets that  ultimately are not used to fund  Fibreboard's
asbestos-related liabilities must be distributed to charity.

The Trust is a qualified settlement fund for federal income tax purposes, and is
taxed  separately from Owens Corning on its net taxable income,  after deduction
for related  administrative  expenses.  While there can be no assurance that the
proposed  Asbestos  Tax  Fairness  Bill  discussed  in Item A will be enacted by
Congress,  such  legislation  would benefit the Trust during the pendency of the
Chapter 11  proceedings  by eliminating  the tax on investment  income,  thereby
enlarging the corpus of the Trust through tax-free interest accumulation.

At this  time,  Owens  Corning is unable to predict  what the  treatment  of the
Fibreboard  Settlement  Trust  will be under  the  terms of any plan or plans of
reorganization.

General Accounting Treatment
----------------------------

The  assets  of the  Trust  are  comprised  of cash  and  marketable  securities
(collectively,   the  "Trust  Assets")  and,  with  Fibreboard's   Undistributed
Administrative  Deposits,  are reflected on Owens Corning's consolidated balance
sheet as restricted assets. At December 31, 2000, these assets were reflected as
current assets,  denoted  "Restricted  cash and securities - Fibreboard".  Owens
Corning estimates a reserve for Fibreboard in accordance with generally accepted
accounting principles to reflect asbestos-related liabilities (see Note 19, Part
B). As of December 31, 2000, these liabilities were one of the items included in
Owens  Corning's  consolidated  balance  sheet under the  category  "LIABILITIES
SUBJECT TO  COMPROMISE."  For prior  periods,  they were reflected as current or
other liabilities  (depending on the period in which payment was expected) under
the category  "Asbestos-related  liabilities -  Fibreboard."  These  liabilities
(including any reserve for the  charitable  remainder) are always at least equal
to the funds

<PAGE>


                                     - 104 -

                         OWENS CORNING AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

20.   Fibreboard Settlement Trust (continued)

held in the Trust and Fibreboard's Undistributed  Administrative Deposits since,
under  the terms of the  Trust,  the funds  held in the Trust  must be  expended
either in  connection  with  Fibreboard's  asbestos-related  liabilities,  or to
satisfy the obligation  under the Trust to distribute to charity the assets,  if
any, remaining in the Trust after satisfaction of all such liabilities.  It will
not be known  whether any such assets  will  remain for  distribution  until the
conclusion  of the Chapter 11 Cases.  At December  31,  2000,  the  Consolidated
Financial Statements reflect Fibreboard's  asbestos-related liabilities at $1.25
billion, with a residual obligation to charity of $24 million.

For accounting  purposes,  the Trust Assets are classified  from time to time as
"available for sale" or "held to maturity" and are reported in the  Consolidated
Financial  Statements in accordance  with SFAS No. 115,  "Accounting for Certain
Investments in Debt and Equity Securities."  Accordingly,  marketable securities
classified  as  available  for  sale  are  recorded  at fair  market  value  and
marketable  securities  designated as held to maturity are recorded at amortized
cost.

Any unrealized  increase/decrease  in fair market value is reflected as a change
in the carrying amount of the asset on the consolidated balance sheet as well as
an increase/decrease to other comprehensive income within stockholders'  equity,
net of tax.  The  residual  liability  that  may be paid to  charity  will  also
increase/decrease,  with a  related  decrease/increase  to  other  comprehensive
income within stockholders' equity, net of tax.

Any earnings and realized  gains/losses  on the Trust Assets are reflected as an
increase/decrease  in the  carrying  amount of such  assets on the  consolidated
balance sheet as well as other  income/expense on the consolidated  statement of
income.

The residual liability that may be paid to charity will also  increase/decrease,
with related other expense/ income on the consolidated statement of income. Cost
for purposes of computing realized gains/losses is determined using the specific
identification method.

Results for the Period Ending December 31, 2000 and 1999
--------------------------------------------------------

During 2000 and 1999  respectively,  Trust  Assets  generated  interest/dividend
earnings of approximately $71 million and $17 million,  which have been recorded
as an  increase  in  the  carrying  amount  of the  assets  on  Owens  Corning's
consolidated balance sheet and as other income on the consolidated  statement of
income.  This  income,  however,  has been  offset  by an equal  charge to other
expense, which represents the increase in the residual liability to charity.

Payments  for  asbestos  litigation  claims from the Trust during 2000 and 1999,
respectively,  were  approximately  $820 million and $51 million.  Such payments
were  funded  by  existing  cash in the  Trust  or  proceeds  from  the  sale of
securities.  The sale of securities  during 2000 and 1999 resulted in a realized
gain of $2 million and less than $1  million,  respectively.  Realized  gains or
losses from the sale of  securities  are  reflected on the  Company's  financial
statements  in the same  manner as actual  returns  on Trust  Assets,  described
above.

At December  31, 2000,  and 1999,  the fair market  value  adjustment  for those
securities  designated as available  for sale resulted in an unrealized  gain of
approximately  $1 million and an unrealized  loss of  approximately  $1 million,
respectively.  These amounts have been  reflected in the Company's  consolidated
balance  sheet as a change  to the  carrying  amount  of the  asset and to other
comprehensive  income. These amounts have also been reflected as a change to the
liability to charity, with a corresponding effect to other comprehensive income.

<PAGE>


                                     - 105 -

                         OWENS CORNING AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

20.   Fibreboard Settlement Trust (continued)

At December 31, 2000, the fair value of Trust Assets was $1.274  billion,  which
was comprised of $1.092 billion of marketable  securities,  $30 million of cash,
$18 million of outstanding  payables and $170 million of restricted  cash, which
represents  undistributed  administrative  deposits. These marketable securities
have been classified as noncurrent assets.

The amortized cost, gross unrealized  holding gains and losses and fair value of
the  investment  securities  available  for sale at December  31,  2000,  are as
follows:
<TABLE>

<S>                                         <C>             <C>                <C>              <C>
                                                            Gross             Gross
                                         Amortized       Unrealized        Unrealized
                                           Cost             Gain              Loss           Fair Value
                                           ----             ----              ----           ----------
                                                            (In millions of dollars)

Corporate Bonds                          $    148       $       -           $      -         $    148
Corporate Notes                               449               1                  -              450
Municipal Bonds                               284               -                  -              284
Mutual Funds                                  116               -                  -              116
Time Deposits                                  37               -                  -               37
US Government Bonds                            57               -                  -               57
                                       ----------      ----------          ---------       ----------

Total                                     $ 1,091       $       1           $      -          $ 1,092
                                          =======       =========           ========          =======
</TABLE>

The amortized cost, gross unrealized  holding gains and losses and fair value of
the  investment  securities  available  for sale at December  31,  1999,  are as
follows:
<TABLE>

<S>                                         <C>              <C>               <C>              <C>
                                                            Gross             Gross
                                         Amortized       Unrealized        Unrealized
                                           Cost             Gain              Loss           Fair Value
                                           ----             ----              ----           ----------
                                                            (In millions of dollars)

Corporate Bonds                         $      85        $      -         $        -        $      85
Corporate Notes                             1,334               -                 (1)           1,333
Municipal Bonds                               199               -                  -              199
US Government Bonds                           221               -                  -              221
                                        ---------       ---------       ------------        ---------

Total                                     $ 1,839        $      -         $       (1)         $ 1,838
                                          =======        ========         ===========         =======
</TABLE>

Maturities  of  investment  securities  classified  as  available  for  sale  by
contractual  maturity  are shown  below.  Expected  maturities  will differ from
contractual  maturities because borrowers may have the right to recall or prepay
obligations with or without call or prepayment penalties.


<PAGE>


                                     - 106 -

                         OWENS CORNING AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

20.   Fibreboard Settlement Trust (continued)
<TABLE>

<S>                                                       <C>                                <C>
                                                          2000                               1999
                                                          ----                               ----
                                               Amortized                           Amortized
                                                  Cost           Fair Value          Cost          Fair Value
                                                  ----           ----------          ----          ----------

Due within one year                              $     656         $    656         $  1,152        $   1,152
Due after one year through five years                    2                2               72               72
Due after five years through ten years                  51               51               87               87
Due after ten years                                    382              383              528              527
                                                 ---------         --------         --------        ---------

Total                                            $   1,091         $  1,092         $  1,839        $  1,838
                                                 =========         ========         ========        =========
</TABLE>



<PAGE>


                                     - 107 -

                         OWENS CORNING AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

20.   FIBREBOARD SETTLEMENT TRUST (continued)

The table below summarizes Trust and  Administrative  Deposits  activity for the
year ended December 31, 2000:
<TABLE>

<S>                        <C>      <C>          <C>        <C>           <C>            <C>          <C>       <C>           <C>
                                  Interest   Unrealized  Net Sales      Realized
                         Balance    and         Gain/       of            Gain/                                             Balance
                         12/31/99 Dividends    (Loss)   Securities       (Loss)     Adjustments     Other     Payments      12/31/00
                         -------- ---------    ------    ----------      ------     -----------     -----     --------      --------
Assets
------
Cash (Note 20)          $     -   $     -     $      -    $     832     $      -     $      -      $      -   $  (820)      $    12
Restricted Cash
  (Note 20)                   -         -            -            -            -            -           170         -           170
Marketable Securities:
  Available for Sale      1,838        71            1         (832)           2            -            12         -         1,092
                        --------- --------    --------    ---------     --------     --------      --------   --------      --------

Total Assets            $ 1,838   $    71     $      1    $       -     $      2     $      -      $    182    $  (820)      $1,274
                        ========= ========    ========    ==========    ========     ========      ========   =========     ========

Liabilities
-----------
Asbestos Litigation
  Claims (Note 20)      $ 1,750   $      -    $      -     $      -     $      -     $   150        $   170    $  (820)      $1,250
Charity                      88         71           1            -            2        (150)            12          -           24
                        --------- --------    --------     --------     --------     ---------      --------   --------     --------

Total Liabilities       $ 1,838   $    71     $      1     $      -     $      2     $     -        $   182    $  (820)      $1,274
                        ========= ========    ========     =========    ========     ========       ========   =========    ========
</TABLE>



<PAGE>


                                     - 108 -

                         OWENS CORNING AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

20.   FIBREBOARD SETTLEMENT TRUST (continued)

The table below summarizes Trust activity from inception to December 31, 1999:
<TABLE>
<S>                        <C>            <C>             <C>               <C>            <C>             <C>            <C>
                                       Interest       Unrealized        Net Sales       Realized
                         Balance          and            Gain/             of             Gain/                          Balance
                         12/8/99       Dividends        (Loss)         Securities        (Loss)          Payments        12/31/99
                         -------       ---------        ------         ----------        ------          -------         --------
                                                                                        (In millions of dollars)
Assets
------
Cash                   $        -     $         -    $          -      $        51     $         -      $      (51)     $         -
Marketable Securities:
  Available for Sale   $    1,873     $        17    $         (1)     $       (51)              -               -      $     1,838
                        ----------    -----------    -------------     ------------    -----------      ----------      -----------

Total Assets           $    1,873     $        17    $         (1)     $         -     $         -     $      (51)     $     1,838
                        ==========    ===========    =============     ===========     ===========     ===========      ===========

Liabilities
-----------
Asbestos Litigation
  Claims               $    1,801    $         -     $          -      $         -     $         -      $      (51)     $     1,750
Charity                $       72    $        17     $         (1)               -               -               -      $        88
                       ----------    -----------     -------------     -----------     -----------      ----------      -----------

Total Liabilities      $    1,873    $        17     $         (1)     $         -     $         -      $      (51)     $     1,838
                       ==========    ===========     =============     ===========     ===========      ===========     ===========

</TABLE>

<PAGE>


                                     - 109 -

                         OWENS CORNING AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

21.   quarterly financial information (unaudited)
<TABLE>
<S>                                                    <C>                <C>               <C>              <C>

                                                                                  Quarter
                                                   ---------------------------------------------------------------
                                                        First            Second            Third            Fourth
                                                        -----            ------            -----            ------
                                                                (In millions of dollars, except share data)
2000
----

Net sales                                          $    1,257        $   1,295         $    1,281        $   1,107

Cost of sales                                             972              996              1,036            1,010
                                                   ----------        ---------         ----------        ---------

Gross margin                                       $      285        $     299         $      245        $      97
                                                   ==========        =========         ==========        =========

Net income (loss)                                  $       48        $    (425)        $       14        $    (115)
                                                   ==========        ==========        ==========        ==========

Net income (loss) per share:

       Basic net income per share                  $      .88        $   (7.76)        $      .25        $  (2.08)
                                                   ==========        ==========        ==========        =========
         Diluted net income per share              $      .84        $   (7.76)        $      .25        $  (2.08)
                                                   ==========        ==========        ==========        =========
</TABLE>



<TABLE>
<S>                                                    <C>                <C>               <C>              <C>
                                                                                  Quarter
                                                   ---------------------------------------------------------------
                                                        First            Second            Third            Fourth
                                                        -----            ------            -----            ------
                                                                     (In millions of dollars, except share data)
1999
----

Net sales                                          $    1,130        $   1,310         $    1,333        $   1,275

Cost of sales                                             869              985                984              977
                                                   ----------        ---------         ----------        ---------

Gross margin                                       $      261        $     325         $      349        $     298
                                                   ==========        =========         ==========        =========

Net income                                         $       44        $      76         $       89        $      61
                                                   ==========        =========         ==========        =========

Net income per share:

       Basic net income per share                  $      .81        $    1.41         $     1.64        $   1.11
                                                   ==========        =========         ==========        ========
         Diluted net income per share              $      .77        $    1.31         $     1.53        $   1.05
                                                   ==========        =========         ==========        ========

</TABLE>

<PAGE>




                                     - 110 -

                     INDEX TO FINANCIAL STATEMENT SCHEDULES
                     --------------------------------------
<TABLE>

<S>                   <C>                                                                     <C>

Number            Description                                                                Page
------            -----------                                                                ----
II                Valuation and Qualifying Accounts and Reserves -
                    for the years ended December 31, 2000, 1999,
                    and 1998..................................................................111
</TABLE>






<PAGE>


                                     - 111 -

                         OWENS CORNING AND SUBSIDIARIES
          SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
              FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
<TABLE>

<S>                                   <C>                      <C>                       <C>             <C>

Column A                           Column B                  Column C                 Column D        Column E

                                                           Additions
                                                           ---------
                                                       (1)              (2)
                                  Balance at        Charged to        Charged to                       Balance
                                  Beginning        Costs and          Other                            at End
Classification                    of Period         Expenses          Accounts         Deductions     of Period
--------------                   -----------      ------------      ------------       ----------     ---------
                                                           (In millions of dollars)

FOR THE YEAR ENDED
   DECEMBER 31, 2000:
   Allowance deducted from
     asset to which it applies -
       Doubtful Accounts              $   26            $    5            $    -        $    2(A)        $   29
   Reserve to which it applies -
       Restructure Costs                  21                23                 -            11(B)            33(E)


FOR THE YEAR ENDED
   DECEMBER 31, 1999:
   Allowance deducted from
     asset to which it applies -
       Doubtful Accounts              $   23            $    5            $    -        $    2(A)        $   26
   Reserve to which it applies -
       Restructure Costs                  49                 -                 -            28(B)            21(D)

FOR THE YEAR ENDED
   DECEMBER 31, 1998:
   Allowance deducted from
     asset to which it applies -
       Doubtful Accounts              $   20            $    9            $    -        $    6(A)        $   23
   Reserve to which it applies -
       Restructure Costs                  44                93                 -            88(B)            49(C)


</TABLE>

Notes:

(A)      Uncollectible accounts written off, net of recoveries.

(B)      Cash payments.

(C)      Includes non-current liabilities of $14 million.

(D)      Includes non-current liabilities of $4 million.

(E)      Includes non-current liabilities of $7 million.


<PAGE>


                                     - 112 -

                                  EXHIBIT INDEX
                                  -------------

Exhibit
Number                        Document Description
-------                       --------------------
<TABLE>
<S>             <C>

(3)           Articles of Incorporation and By-Laws.

              (i)  Certificate of  Incorporation  of Owens  Corning,  as amended
                   (incorporated  herein by  reference  to Exhibit  (3) to Owens
                   Corning's quarterly report on Form 10-Q (File No. 1-3660) for
                   the quarter ended March 31, 1997).

             (ii)  By-Laws of Owens Corning, as amended  (incorporated herein by
                   reference to Exhibit (3) to Owens Corning's  annual report on
                   Form 10-K (File No. 1-3660) for the year 1999).

(4)           Instruments Defining the Rights of Security Holders, Including Indentures.

              Post-Petition  Credit  Agreement,  dated as of  December  8, 2000,
              among Owens  Corning and the  subsidiaries  of Owens Corning named
              therein,  the financial  institutions  named therein,  and Bank of
              America, N.A., as Agent (filed herewith).

              License  Agreement,  made as of  October 1,  1991,  between  Owens
              Corning and Owens-Corning  Fiberglas Technology Inc. and Amendment
              thereto, dated as of December 8, 1993, (filed herewith).

              Standstill Agreement,  dated as of January 30, 2001, between Owens
              Corning  and  Owens-Corning   Fiberglas   Technology  Inc.  (filed
              herewith).

              License Agreement,  made as of April 27, 1999, between  Owens-
              Corning  Fiberglas  Technology Inc. and AmeriMark Building
              Products, Inc. (now Exterior Systems, Inc.) (filed herewith).

              Standstill   Agreement,   dated  as  of  January  30,  2001,
              between  Exterior  Systems,   Inc.  and Owens-Corning Fiberglas
              Technology Inc. (filed herewith).

              Indenture,  dated as of May 5, 1997, between Owens Corning and The
              Bank of New York, as Trustee  (incorporated herein by reference to
              Exhibit 4.5.1 to Owens Corning's  current report on Form 8-K (File
              No. 1-3660), filed May 14, 1997).

              Credit Agreement,  dated as of June 26, 1997, among Owens Corning,
              other  Borrowers  and  Guarantors,  the  Banks  listed  on Annex A
              thereto,  and Credit Suisse First Boston,  as Agent  (incorporated
              herein by  reference to Exhibit (4) to Owens  Corning's  quarterly
              report on Form 10-Q (File No.  1-3660) for the quarter  ended June
              30,  1997),  as amended by Amendment  No. 1 thereto  (incorporated
              herein by  reference  to  Exhibit  (4) to Owens  Corning's  annual
              report on Form 10-K (File No.  1-3660) for the year ended December
              31,  1997) and  Amendment  No. 2 thereto  (incorporated  herein by
              reference to Exhibit (4) to Owens Corning's  annual report on Form
              10-K (File No. 1-3660) for the year ended December 31, 1998).

              Owens  Corning  agrees to furnish to the  Securities  and Exchange
              Commission,  upon request,  copies of all instruments defining the
              rights of holders of  long-term  debt of Owens  Corning  where the
              total amount of  securities  authorized  under each issue does not
              exceed ten percent of Owens Corning's total assets.

</TABLE>

<PAGE>


                                     - 113 -

                                  EXHIBIT INDEX
                                  -------------

Exhibit
Number                        Document Description
-------                       --------------------
<TABLE>
<S>             <C>

(10)          Material Contracts.

              Post-Petition  Credit  Agreement,  dated as of  December  8, 2000,
              among Owens  Corning and the  subsidiaries  of Owens Corning named
              therein,  the financial  institutions  named therein,  and Bank of
              America,  N.A.,  as Agent  (filed as  Exhibit  (4) to this  annual
              report on Form 10-K and incorporated herein by reference).

              License  Agreement,  made as of  October 1,  1991,  between  Owens
              Corning and Owens-Corning  Fiberglas Technology Inc. and Amendment
              thereto,  dated as of December  8, 1993,  (filed as Exhibit (4) to
              this  annual  report  on Form  10-K  and  incorporated  herein  by
              reference).

              Standstill Agreement,  dated as of January 30, 2001, between Owens
              Corning and  Owens-Corning  Fiberglas  Technology  Inc.  (filed as
              Exhibit  (4) to this annual  report on Form 10-K and  incorporated
              herein by reference).

              License Agreement,  made as of April 27, 1999, between  Owens-
              Corning  Fiberglas  Technology Inc. and AmeriMark Building
              Products,  Inc. (now Exterior Systems,  Inc.) (filed as Exhibit
              (4) to this annual report on Form 10-K and incorporated herein by
              reference).

              Standstill   Agreement,   dated  as  of  January  30,  2001,
              between  Exterior  Systems,   Inc.  and Owens-Corning  Fiberglas
              Technology  Inc.  (filed as Exhibit (4) to this annual  report on
              Form 10-K and incorporated herein by reference).

              Credit Agreement,  dated as of June 26, 1997, among Owens Corning,
              other  Borrowers  and  Guarantors,  the  Banks  listed  on Annex A
              thereto,  and Credit Suisse First Boston,  as Agent  (incorporated
              herein by  reference to Exhibit (4) to Owens  Corning's  quarterly
              report on Form 10-Q (File No.  1-3660) for the quarter  ended June
              30,  1997),  as amended by Amendment  No. 1 thereto  (incorporated
              herein by  reference  to  Exhibit  (4) to Owens  Corning's  annual
              report on Form 10-K (File No.  1-3660) for the year ended December
              31,  1997) and  Amendment  No. 2 thereto  (incorporated  herein by
              reference to Exhibit (4) to Owens Corning's  annual report on Form
              10-K (File No. 1-3660) for the year ended December 31, 1998).

          *   Key Management Severance Agreement with Michael H. Thaman (filed
              herewith).

          *   Owens Corning Key Employee Retention  Incentive Plan (incorporated
              herein by reference to Exhibit (10) to Owens  Corning's  quarterly
              report on Form 10-Q (File No.  1-3660) for the quarter  ended June
              30, 2000).

              The following  documents are  incorporated  herein by reference to
              Exhibit (10) to Owens  Corning's  annual report on Form 10-K (File
              No. 1-3660) for the year ended December 31, 1999:

          * - Director's Charitable Award Program, as amended.

          * - Key Management Severance Agreement with David T. Brown.
</TABLE>

<PAGE>



                                     - 114 -

                                  EXHIBIT INDEX
                                  -------------


          *    Corporate  Incentive Plan Terms Applicable to Key Employees Other
               Than Certain Executive Officers (incorporated herein by reference
               to Exhibit (10) to Owens Corning's  quarterly report on Form 10-Q
               (File No. 1-3660) for the quarter ended June 30, 1999).

               The following  documents are incorporated  herein by reference to
               Exhibit  (10) to Owens  Corning's  quarterly  report on Form 10-Q
               (File No. 1-3660) for the quarter ended March 31, 1999:

          *    -   Owens Corning Deferred Compensation Plan.

          *    -   Corporate Incentive Plan Terms Applicable to Certain
                   Executive Officers.

               The following  documents are incorporated  herein by reference to
               Exhibit (10) to Owens Corning's  annual report on Form 10-K (File
               No. 1-3660) for the year ended December 31, 1998:

          *    -   Stock Performance Incentive Plan, as amended.

          *    -   Key Management Severance Agreement with Maura Abeln Smith.

          *    -   Key Management Severance Agreement with Domenico Cecere.

          *    -   Letter to Maura Abeln Smith.

          *    Owens Corning  Supplemental  Executive Retirement Plan, effective
               as of January  1,  1998,  (incorporated  herein by  reference  to
               Exhibit  (10) to Owens  Corning's  quarterly  report on Form 10-Q
               (File No. 1-3660) for the quarter ended June 30, 1998).

               The following  documents are incorporated  herein by reference to
               Exhibit (10) to Owens Corning's  annual report on Form 10-K (File
               No. 1-3660) for the year ended December 31, 1997:

          *    -  Renewal Agreement, effective as of July 31, 1999, with Glen H.
                  Hiner.

          *    -  Agreement with Domenico Cecere.

          *    1987 Stock Plan for Directors, as amended (incorporated herein by
               reference to Exhibit (10) to Owens Corning's  quarterly report on
               Form 10-Q (File No. 1-3660) for the quarter ended June 30, 1997).

               The following  documents are incorporated  herein by reference to
               Exhibit  (10) to Owens  Corning's  quarterly  report on Form 10-Q
               (File No. 1-3660) for the quarter ended June 30, 1996:

          *     - Long-Term  Performance  Incentive Plan Terms Applicable to
                  Certain Executive Officers.

          *     - Long-Term  Performance  Incentive Plan Terms  Applicable to
                  Officers Other Than Certain Executive Officers.


<PAGE>


                                     - 115 -

                                  EXHIBIT INDEX
                                  -------------


          *    Agreement,  dated as of January 1, 1995, with William W. Colville
               (incorporated  herein  by  reference  to  Exhibit  (10) to  Owens
               Corning's  annual  report on Form 10-K (File No.  1-3660) for the
               year ended December 31, 1994) and amendment  dated  September 29,
               1997,  (incorporated herein by reference to Exhibit (10) to Owens
               Corning's  annual  report on Form 10-K (File No.  1-3660) for the
               year ended December 31, 1997).

          *    Executive  Supplemental  Benefit Plan,  as amended  (incorporated
               herein by reference to Exhibit (10) to Owens Corning's  quarterly
               report on Form 10-Q (File No. 1-3660) for the quarter ended March
               31, 1993).

          *    Employment Agreement, dated as of December 15, 1991, with Glen H.
               Hiner (incorporated  herein by reference to Exhibit (10) to Owens
               Corning's  annual  report on Form 10-K (File No.  1-3660) for the
               year ended  December  31,  1991),  as  amended by First  Amending
               Agreement  made as of  April  1,  1992  (incorporated  herein  by
               reference to Exhibit (19), to Owens Corning's quarterly report on
               Form 10-Q (File No. 1-3660) for the quarter ended June 30, 1992).

         *     Form of Directors' Indemnification Agreement (incorporated herein
               by reference to Exhibit (10) to Owens Corning's  annual report on
               Form 10-K  (File No.  1-3660)  for the year  ended  December  31,
               1989).

         *     Deferred   Compensation   Plan   for   Directors,    as   amended
               (incorporated  herein  by  reference  to  Exhibit  (10) to  Owens
               Corning's  annual  report on Form 10-K (File No.  1-3660) for the
               year ended December 31, 1987).

(11)           Statement re Computation of Per Share Earnings (filed herewith).

(21)           Subsidiaries of Owens Corning (filed herewith).

(23)           Consent of Arthur Andersen LLP (filed herewith).


*      Denotes management contract or compensatory plan or arrangement  required
       to be filed as an exhibit pursuant to Item 14(c) of Form 10-K.