SECURITIES AND EXCHANGE COMMISSION

                             Washington, D. C. 20549


                                    FORM 10-Q

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

                    For the Quarter Ended September 30, 2002

                           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


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 / /

Shares of common stock,  par value $.10 per share,  outstanding at September 30,
2002

                                   55,175,334

<PAGE>


                                      - 2 -

                          PART I. FINANCIAL INFORMATION
                          ITEM 1. FINANCIAL STATEMENTS

                         OWENS CORNING AND SUBSIDIARIES
                     CONSOLIDATED STATEMENT OF INCOME (LOSS)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                             Quarter Ended              Nine Months Ended
                                                                             September 30,                September 30,
                                                                             -------------                -------------
                                                                           2002          2001           2002            2001
                                                                           ----          ----           ----            ----
                                                                              (In millions of dollars, except share data)

<S>                                                                         <C>            <C>            <C>           <C>
NET SALES                                                                $ 1,306        $ 1,291        $ 3,698        $ 3,597
COST OF SALES                                                              1,097          1,046          3,075          2,957
                                                                         -------        -------        -------        -------
     Gross margin                                                            209            245            623            640
                                                                         -------        -------        -------        -------
OPERATING EXPENSES
Marketing and administrative expenses                                        131            141            402            396
Science and technology expenses                                               10             10             30             30
Restructure costs (Note 4)                                                    11              8             18             24
Chapter 11 related reorganization items (Note 1)                              35             23             85             60
Owens Corning provision for asbestos litigation claims (Note 10)           1,381             (5)         1,376             (5)
Fibreboard provision for asbestos litigation claims (Note 10)                975              -            975              -
Other                                                                          8              5              6             32
                                                                         -------        -------        -------        -------
     Total operating expenses                                              2,551            182          2,892            537
                                                                         -------        -------        -------        -------
INCOME (LOSS) FROM OPERATIONS                                             (2,342)            63         (2,269)           103
OTHER
Cost of borrowed funds                                                         5              4             13             11
Other                                                                          -              4              -             (2)
                                                                         -------        -------        -------        -------
INCOME (LOSS) BEFORE PROVISION FOR INCOME
  TAXES                                                                   (2,347)            55         (2,282)            94

Provision for income taxes (Note 13)                                          10             26             40             46
                                                                         -------        -------        -------        -------
INCOME (LOSS) BEFORE MINORITY INTEREST AND
  EQUITY IN NET INCOME (LOSS) OF AFFILIATES                               (2,357)            29         (2,322)            48

Minority interest                                                             (2)            (2)            (3)            (3)
Equity in net income (loss) of affiliates                                      -              -             (4)             1
                                                                         -------        -------        -------        -------
NET INCOME (LOSS) BEFORE CUMULATIVE EFFECT
  OF CHANGE IN ACCOUNTING PRINCIPLE                                       (2,359)            27         (2,329)            46

Cumulative effect of change in accounting principle (Note 12)                  -              -            441              -
                                                                         -------        -------        -------        -------
NET INCOME (LOSS)                                                        $(2,359)       $    27        $(2,770)       $    46
                                                                         =======        =======        =======        =======
</TABLE>


         The accompanying notes are an integral part of this statement.


<PAGE>


                                      - 3 -

                         OWENS CORNING AND SUBSIDIARIES
               CONSOLIDATED STATEMENT OF INCOME (LOSS) (continued)
                                   (unaudited)
<TABLE>
<CAPTION>

                                                                              Quarter Ended               Nine Months Ended
                                                                              September 30,                 September 30,
                                                                              -------------                 -------------
                                                                            2002           2001          2002           2001
                                                                            ----           ----          ----           ----
                                                                               (In millions of dollars, except share data)

<S>                                                                      <C>             <C>          <C>             <C>
NET INCOME (LOSS) PER COMMON SHARE
Basic net income (loss) per share                                        $   (42.84)     $    .50     $  (50.31)      $    .84
                                                                         -----------     --------     ----------      --------
Diluted net income (loss) per share                                      $   (42.84)     $    .46     $  (50.31)      $    .77
                                                                         -----------     --------     ----------      --------

Weighted average number of common shares outstanding and common equivalent
  shares during the period (in millions)
Basic                                                                          55.0          55.1         55.1            55.1
Diluted                                                                        55.0          59.9         55.1            60.0
</TABLE>





         The accompanying notes are an integral part of this statement.


<PAGE>


                                      - 4 -

                         OWENS CORNING AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                                   (unaudited)

<TABLE>
<CAPTION>
                                                            September 30,       December 31,       September 30,
                                                                2002                2001               2001
                                                                ----                ----               ----
                                                                         (In millions of dollars)
ASSETS

<S>                                                           <C>                 <C>                 <C>
CURRENT
Cash and cash equivalents                                     $   686             $   764             $   551
Receivables                                                       570                 417                 597
Inventories (Note 6)                                              493                 437                 480
Deferred income taxes                                              --                   1                   5
Income tax receivable                                               2                   5                   5
Other current assets                                               21                  25                  22
                                                              -------             -------             -------

     Total current                                              1,772               1,649               1,660
                                                              -------             -------             -------

OTHER
Insurance for asbestos litigation claims (Note 10)                  4                   4                   4
Restricted cash - asbestos and insurance related
  (Note 10)                                                       165                 169                 171
Restricted cash, securities and other - Fibreboard
  (Notes 10 and 11)                                             1,335               1,284               1,285
Deferred income taxes                                           1,247               1,187               1,037
Goodwill (Note 12)                                                122                 610                 618
Investments in affiliates                                          52                  48                  50
Other noncurrent assets                                           235                 247                 359
                                                              -------             -------             -------

     Total other                                                3,160               3,549               3,524
                                                              -------             -------             -------

PLANT AND EQUIPMENT, at cost
Land                                                               68                  67                  68
Buildings and leasehold improvements                              683                 669                 666
Machinery and equipment                                         3,129               2,854               2,866
Construction in progress                                          160                 256                 172
                                                              -------             -------             -------
                                                                4,040               3,846               3,772

  Less - accumulated depreciation                              (2,140)             (2,003)             (1,984)
                                                              -------             -------             -------

     Net plant and equipment                                    1,900               1,843               1,788
                                                              -------             -------             -------

TOTAL ASSETS                                                  $ 6,832             $ 7,041             $ 6,972
                                                              =======             =======             =======
</TABLE>








         The accompanying notes are an integral part of this statement.


<PAGE>


                                      - 5 -

                         OWENS CORNING AND SUBSIDIARIES
                     CONSOLIDATED BALANCE SHEET (continued)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                 September 30,       December 31,          September 30,
                                                      2002               2001                  2001
                                                      ----               ----                  ----
LIABILITIES AND STOCKHOLDERS' EQUITY                             (In millions of dollars)
------------------------------------

<S>                                                 <C>                  <C>                  <C>
CURRENT
Accounts payable and accrued liabilities            $   724              $   740              $   678
Short-term debt                                          43                   43                   43
Long-term debt - current portion                         65                   66                   65
                                                    -------              -------              -------

     Total current                                      832                  849                  786
                                                    -------              -------              -------

LONG-TERM DEBT (Note 5)                                  68                    5                    6
                                                    -------              -------              -------

OTHER
Other employee benefits liability                       358                  331                  330
Pension plan liability                                  318                  291                   38
Other                                                   113                  141                  127
                                                    -------              -------              -------

     Total other                                        789                  763                  495
                                                    -------              -------              -------

LIABILITIES SUBJECT TO COMPROMISE (Note 1)            9,238                6,804                6,817
                                                    -------              -------              -------

COMMITMENTS AND CONTINGENCIES
  (Notes 1, 9 and 10)

COMPANY OBLIGATED SECURITIES OF ENTITIES
  HOLDING SOLELY PARENT DEBENTURES -
  SUBJECT TO COMPROMISE                                 200                  200                  200
                                                    -------              -------              -------

MINORITY INTEREST                                        48                   37                   40
                                                    -------              -------              -------

STOCKHOLDERS' EQUITY
Common stock                                            695                  697                  697
Deficit                                              (4,727)              (1,957)              (1,950)
Accumulated other comprehensive loss                   (308)                (355)                (115)
Other                                                    (3)                  (2)                  (4)
                                                    -------              -------              -------

     Total stockholders' equity                      (4,343)              (1,617)              (1,372)
                                                    -------              -------              -------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY          $ 6,832              $ 7,041              $ 6,972
                                                    =======              =======              =======
</TABLE>







         The accompanying notes are an integral part of this statement.


<PAGE>


                                      - 6 -

                         OWENS CORNING AND SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                      Nine Months Ended
                                                                        September 30,
                                                                        -------------
                                                                       2002        2001
                                                                       ----        ----
                                                                     (In millions of dollars)
<S>                                                                  <C>        <C>
NET CASH FLOW FROM OPERATIONS
Net income (loss)                                                    $(2,770)   $    46
Reconciliation of net cash provided by operating activities
     Noncash items:
       Provisions for asbestos litigation claims                       2,356          -
       Provision for depreciation and amortization                       180        161
       Provision for deferred income taxes                                 5         40
       Cumulative effect of accounting change                            441          -
       Other                                                              44         69
Increase in receivables                                                 (154)      (123)
Increase in inventories                                                  (44)       (21)
Increase (decrease) in accounts payable and accrued liabilities          (43)       125
Decrease in restricted cash and other - asbestos-related (Note 10)         5         48
Change in liabilities subject to compromise (Note 1)                      (2)       (97)
Proceeds from insurance for asbestos litigation claims,
  excluding Fibreboard                                                     5          5
Pension fund contribution                                                  -       (176)
Other                                                                     63         37
                                                                     -------    -------
     Net cash flow from operations                                   $    86    $   114
                                                                     -------    -------

NET CASH FLOW FROM INVESTING
Additions to plant and equipment                                     $  (171)   $  (133)
Investment in subsidiaries, net of cash acquired (Note 5)                (10)         -
Proceeds from the sale of affiliate or business (Note 5)                  10         20
Other                                                                     (1)        (2)
                                                                     -------    -------
     Net cash flow from investing                                    $  (172)   $  (115)
                                                                     -------    -------
</TABLE>

         The accompanying notes are an integral part of this statement.


<PAGE>


                                      - 7 -

                         OWENS CORNING AND SUBSIDIARIES
                CONSOLIDATED STATEMENT OF CASH FLOWS (continued)
                                   (unaudited)

                                                      Nine Months Ended
                                                        September 30,
                                                        -------------
                                                       2002      2001
                                                       ----      ----
                                                  (In millions of dollars)
NET CASH FLOW FROM FINANCING
Other additions to long-term debt                          -       17
Other reductions to long-term debt                        (2)      (4)
Net decrease in short-term debt                            -       (7)
Subject to compromise (Note 1)                             1       (4)
Other                                                      1       (1)
                                                       -----    -----
      Net cash flow from financing                     $   -    $   1
                                                       -----    -----

Effect of exchange rate changes on cash                    8        1
                                                       -----    -----
Net increase (decrease) in cash and cash equivalents     (78)       1

Cash and cash equivalents at beginning of period         764      550
                                                       -----    -----
Cash and cash equivalents at end of period             $ 686    $ 551
                                                       =====    =====


The accompanying notes are an integral part of this statement.

<PAGE>


                                      - 8 -

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

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 "USBC").  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:

   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

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 10 to the
Consolidated Financial Statements.

In late 2001, the  asbestos-related  Chapter 11 cases pending in the District of
Delaware (the Chapter 11 Cases of Owens Corning and the cases of Armstrong World
Industries,  Inc.,  W.  R.  Grace & Co.,  Federal-Mogul  Global,  Inc.,  and USG
Corporation)  were ordered  transferred to the United States  District Court for
the District of Delaware (the "District  Court") before Judge Alfred M. Wolin to
facilitate  development and  implementation of a coordinated plan for management
(the  "Administrative  Consolidation").  The District Court has entered an order
referring  the  Chapter  11 Cases back to the USBC,  where they were  previously
pending,  subject to its ongoing right to withdraw such referral with respect to
any  proceedings or issues (the applicable  court from time to time  responsible
for any particular aspect of the Chapter 11 Cases being hereinafter  referred to
as the "Bankruptcy  Court").  Owens Corning is unable to predict what impact the
Administrative  Consolidation will have on the timing,  outcome or other aspects
of the Chapter 11 Cases.

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.


<PAGE>


                                      - 9 -

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

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

Two creditors'  committees,  one representing  asbestos  claimants and the other
representing unsecured creditors,  have been appointed as official committees in
the Chapter 11 Cases. In addition,  the Bankruptcy  Court has appointed James J.
McMonagle as legal  representative  for the class of future  asbestos  claimants
against  one or  more  of the  Debtors.  The  two  committees  and  the  futures
representative  will have the right to be heard on all matters  that come before
the  Bankruptcy  Court.  Owens  Corning  expects that these  committees  and the
futures representative 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 that
such plan or plans will be confirmed by the  Bankruptcy  Court and  consummated.
Owens Corning is unable to predict what impact the Administrative  Consolidation
will have on the timing of the confirmation of such plan or plans or its effect,
if any, on the terms thereof.

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. By subsequent  action,  the Bankruptcy  Court has
extended such exclusivity period until November 26, 2002, and similarly extended
the Debtors'  exclusive rights to solicit  acceptances of a reorganization  plan
from April 3, 2001 to January 28,  2003.  If the Debtors  fail to file a plan of
reorganization prior to the ultimate expiration of the exclusivity period, or if
such plan is not  accepted  by the  requisite  numbers  of  creditors  and other
interest  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.

In this regard, at a status conference on the Chapter 11 Cases held on September
20,  2002,  the  District  Court  requested  that the  Debtors  submit a plan of
reorganization  by October 31, 2002, or risk the shortening or  non-extension of
their exclusivity period for filing a plan of reorganization. The District Court
has  subsequently  indicated that the deadline for submission  might be extended
until the latter  part of November  2002.  As a result of the  District  Court's
request, the Debtors, the creditors' committees, the futures representative, and
other  parties in interest  have  increased  the pace of their  discussions  and
negotiations, including the exchange of information, concerning their respective
positions on the appropriate  terms of a plan of  reorganization.  Owens Corning
intends to comply with the request of the District Court by submitting a plan of
reorganization  to the District Court either in conjunction  with one or more of
the creditor  constituencies as plan proponents or, alternatively,  with no plan
proponent other than the Debtors. Because discussions and negotiations among the
various creditor  constituencies  and the Debtors are ongoing,  Owens Corning is
unable to predict  the terms of such a plan of  reorganization  or whether  such
plan will be supported by one or more of the creditor constituencies.

Owens  Corning  believes  that it is  likely  that  the  terms,  conditions  and
provisions of any plan or plans of  reorganization  initially filed or submitted
by it will be the subject of  continuing  negotiations  or litigation to resolve
differences   among  the  creditor   constituencies   as  to  their   treatment.
Accordingly,  Owens Corning is unable to predict at this time what the treatment
of creditors and equity  holders of the  respective  Debtors will  ultimately be
under any plan or plans of  reorganization  finally  confirmed.  However,  it is
likely that any plan or plans will 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. In
addition,



<PAGE>


                                     - 10 -

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

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

Owens  Corning  believes  it is  likely  that any such  plan or plans  will 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  ultimately
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
payments and other  obligations in respect thereof may be restricted or modified
by order of, or subject to review and approval  by, the  Bankruptcy  Court.  The
outcome of such challenges and other actions,  if any, may have an impact on the
treatment  of  various  claims  under  such plan or plans and on the  respective
assets,  liabilities  and  results  of  operations  of  Owens  Corning  and  its
subsidiaries.  For example, Owens Corning is unable to predict at this time what
the  treatment  will  ultimately be under any such plan or plans with respect to
(1) the  guarantees  issued by certain  of Owens  Corning's  U.S.  subsidiaries,
including  Owens-Corning  Fiberglas  Technology  Inc.  ("OCFT")  and IPM Inc., a
Non-Debtor  Subsidiary  that  holds  Owens  Corning's  ownership  interest  in a
majority of Owens Corning's foreign subsidiaries  ("IPM"), with respect to Owens
Corning's  $1.8 billion  pre-petition  bank credit  facility (the  "Pre-Petition
Credit  Facility",  which is in default) or (2) OCFT's license  agreements  with
Owens Corning and Exterior Systems, Inc., an indirect 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.  Based on information  now available to Owens Corning,  it
appears  unlikely  that there will be  sufficient  assets to satisfy  all of the
Debtors' pre-petition  liabilities.  In addition,  the pre-petition creditors of
some Debtors may be treated  differently  than those of other Debtors.  Based on
the  Debtors'  known  assets  and  known  and  currently  estimated  liabilities
(including  the  asbestos  liabilities  described  more fully in Note 10), it is
likely that pre-petition  creditors generally will receive under a plan or plans
less than 100% of the face  value of their  claims,  and that the  interests  of
Owens  Corning's  equity  security  holders  will be  substantially  diluted  or
cancelled in whole or in part. As noted above,  it is not otherwise  possible at
this time to  predict  the  outcome of the  Chapter 11 Cases,  the effect of the
Administrative  Consolidation,  the final  terms and  provisions  of any plan or
plans of reorganization, or the ultimate effect of the Chapter 11 reorganization
process on the claims of the  creditors  of the Debtors or the  interests of the
Debtors' respective 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.

<PAGE>


                                     - 11 -

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

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

Bar Dates for Filing Claims

GENERAL BAR DATE

In connection with the Chapter 11 Cases, the Bankruptcy Court set April 15, 2002
as the last date by which  holders of certain  pre-petition  claims  against the
Debtors  must file their claims (the  "General Bar Date").  The General Bar Date
does not apply to asbestos-related  personal injury claims and  asbestos-related
wrongful   death  claims  (other  than  claims  for   contribution,   indemnity,
reimbursement,  or subrogation). Any holder of a claim that was required to file
a claim by the General Bar Date and did not do so will be barred from  asserting
such  claim  against  any  of  the  Debtors  and  will  not  participate  in any
distribution in any of the Chapter 11 Cases on account of such claim.

Approximately  24,000 proofs of claim (including  late-filed  claims),  totaling
approximately  $16.0  billion,  alleging a right to payment  from a Debtor  were
filed with the  Bankruptcy  Court in response  to the  General  Bar Date.  Owens
Corning  is  investigating  these  claims  to  determine  their  validity.   The
Bankruptcy  Court  will  ultimately  determine  liability  amounts  that will be
allowed for these claims in the Chapter 11 Cases.

In its  initial  review  of the  filed  claims,  Owens  Corning  has  identified
approximately  15,000  claims,  totaling  approximately  $8.3 billion,  which it
believes should be disallowed by the Bankruptcy  Court,  primarily  because they
appear to be  duplicate  claims or claims that are not related to the  indicated
Debtor (the "Objectionable  Claims").  Owens Corning likely will file objections
to these  Objectionable  Claims.  While the  Bankruptcy  Court  will  ultimately
determine liability amounts, if any, that will be allowed as part of the Chapter
11 Cases,  Owens Corning believes that all or substantially  all of these claims
will be disallowed.

In addition to the Objectionable  Claims described above, at September 30, 2002,
the  remaining  filed  proofs  of claim  included  approximately  9,000  claims,
totaling approximately $7.7 billion, as follows:

-    Approximately 2,900 claims, totaling approximately $1.4 billion, associated
     with   asbestos-related   contribution,    indemnity,   reimbursement,   or
     subrogation  claims.   Owens  Corning  will  address  all  asbestos-related
     personal  injury  and  wrongful  death  claims in the future as part of the
     Chapter 11 Cases. Please see Note 10 for additional  information concerning
     asbestos-related liabilities.

-    Approximately 600 claims,  totaling  approximately  $0.7 billion,  alleging
     asbestos-related  property damage. Most of these claims were submitted with
     insufficient  documentation to assess their validity. Owens Corning expects
     to vigorously defend any asserted  asbestos-related  property damage claims
     in the Bankruptcy Court.  Based upon its historic  experience in respect of
     asbestos-related  property damage claims, Owens Corning does not anticipate
     significant liability from any such claims.

-    Approximately 5,500 claims,  totaling approximately $5.6 billion,  alleging
     rights  to  payment  for  financing,  environmental,  trade  debt and other
     matters  (the  "General  Claims").  The  Company  has  previously  recorded
     approximately $3.7 billion in liabilities for these claims.  Based upon the
     claims information submitted,  the General Claims with the largest variance
     from the recorded  amounts are:  claims by the United States  Department of
     Treasury,  totaling  approximately  $530 million,  in connection with taxes
     (see  discussion   under  the  heading  "Tax  Claim"  in  Note  10  to  the
     Consolidated  Financial  Statements);  a contingent claim for approximately
     $458 million by the Pension Benefit Guaranty Corporation, as described more



<PAGE>


                                     - 12 -

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

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

     fully  under  the  heading  "PBGC  Claim"  in Note  10 to the  Consolidated
     Financial   Statements;   claims   for   contract   rejections,    totaling
     approximately  $310  million,  of  which  approximately  $250  million  are
     protective  claims  covering  contracts which have not been rejected by the
     Debtors as of  September  30,  2002;  a $275  million  class  action  claim
     involving  alleged problems with a specialty  roofing product,  which claim
     Owens  Corning  does not  believe is  meritorious  based upon its  historic
     experience  with  servicing  its  warranty  program for such  product;  and
     environmental claims, totaling approximately $244 million.

Owens  Corning  has  recorded  liability  amounts  for those  claims that can be
reasonably  estimated and which it believes are probable of being allowed by the
Bankruptcy  Court.  At this time, it is  impossible  to reasonably  estimate the
value of all the claims that will ultimately be allowed by the Bankruptcy Court,
due to the  uncertainties  of the Chapter 11 process,  the in-progress  state of
Owens Corning's investigation of submitted claims, and the lack of documentation
submitted in support of many claims.  Owens Corning continues to evaluate claims
filed  in the  Chapter  11  Cases  and  will  make  such  adjustments  as may be
appropriate.   Any  such   adjustments   could  be  material  to  the  Company's
consolidated  financial  position and results of operations in any given period.
For a discussion  of liability  amounts in respect of asbestos  personal  injury
claims, see Note 10 to the Consolidated Financial Statements.

ASBESTOS BAR DATE

As  indicated  above,  the General  Bar Date does not apply to  asbestos-related
personal  injury claims and  asbestos-related  wrongful death claims (other than
claims for contribution,  indemnity,  reimbursement, or subrogation). A bar date
for filing proofs of claim against the Debtors with respect to  asbestos-related
personal injury claims and  asbestos-related  wrongful death claims has not been
set.  Despite this,  approximately  2,900 proofs of claim (in addition to claims
described above under "General Bar Date"),  totaling approximately $2.2 billion,
with respect to  asbestos-related  personal  injury or wrongful death were filed
with the Bankruptcy  Court in response to the General Bar Date. Of these claims,
Owens Corning has identified  approximately 1,100,  totaling  approximately $0.5
billion,  as  Objectionable  Claims.  Of the  remaining  claims,  Owens  Corning
believes that a substantial majority  represented  claimants that had previously
asserted asbestos-related claims against the Company. Owens Corning will address
all asbestos-related  personal injury and wrongful death claims in the future as
part of the Chapter 11 Cases.  Please see Note 10 to the Consolidated  Financial
Statements for additional information concerning asbestos-related liabilities.

Avoidance Actions

Under  the  Bankruptcy  Code,  October  4,  2002 was the  deadline  by which the
Debtors,  on behalf of the bankruptcy  estates,  could bring  adversary  actions
seeking the return of  potentially  avoidable  transfers  made by the Debtors to
certain  parties  within a prescribed  period prior to the  commencement  of the
Chapter  11  proceedings.  As part of  their  review  of  potentially  avoidable
transactions,  the Debtors (1) negotiated  tolling  agreements  with some of the
recipients  of the  preferential  transfers  in order to toll the time period in
which to bring an avoidance  action;  (2) determined not to prosecute certain of
those  potential  avoidance  actions  that  were  not  the  subject  of  tolling
agreements;  and (3) instituted,  prior to the October 4, 2002 deadline, a total
of 19 adversarial  actions,  including 3 preference  actions, 1 turnover action,
and 15 avoidance  actions,  as described  further  below.  All such actions were
commenced in the USBC.


<PAGE>


                                     - 13 -

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

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

Among  the  parties  who were  identified  by the  Debtors  as  having  received
potentially  avoidable  transfers  were (a) 12 present and former  officers that
received certain  pre-petition  incentive  payments exceeding a threshold in the
aggregate per officer;  (b) one director that  received a  pre-petition  pension
payment;  and  (c) a  joint  venture  affiliate  of the  Company  that  received
approximately  $3.8 million in the one-year period prior to the  commencement of
the Chapter 11 proceedings.

The Debtors  have  executed  tolling  agreements  with all 12 present and former
officers, the director and the affiliate of the Company, as well as with certain
other parties identified as having received potentially avoidable transfers.

The additional actions were commenced against various other defendants  seeking,
among other things, (a) avoidance of certain guarantees and certain preferential
payments made in connection with Owens Corning's  Pre-Petition  Credit Facility;
(b) the  return of up to  approximately  $515  million  paid by the  Company  to
shareholders  of  Fibreboard  in  connection  with  the  Company's  purchase  of
Fibreboard  in 1997  (the "FBD  Shareholder  Action");  (c) the  return of up to
approximately  $61.8 million paid by the Company to shareholders in dividends in
the period 1996  through  2000 (the  "Dividend  Action");  and (d) the return of
approximately  $133  million paid by the Company to Bank of America  Corp.  in
connection  with Owens  Corning's  purchase of Fibreboard in 1997.  Both the FBD
Shareholder Action and the Dividend Action are defendant class actions.

Separately, and at the request of the Debtors' Official Creditors' Committee and
the direction of the  Bankruptcy  Court,  the Debtors  either  obtained  tolling
agreements  from, or filed  actions  against,  approximately  115 law firms that
entered into NSP or non-NSP  agreements (see Note 10) with the Debtors on behalf
of  claimants  asserting  asbestos-related  personal  injury or  wrongful  death
claims. Lawsuits were brought against the 11 law firms that did not sign tolling
agreements, seeking two forms of relief: (a) first, a declaratory judgment as to
whether payments made, or obligations incurred, under NSP and non-NSP agreements
were in exchange for reasonably  equivalent  value; and (b) second, in the event
reasonably  equivalent  value was not  received,  the  recovery or  avoidance of
payments  made and  obligations  incurred  under the  relevant  NSP and  non-NSP
agreements  pursuant to applicable state and federal fraudulent  conveyance law.
The Official  Creditors'  Committee  was named as a defendant in such  lawsuits,
solely with respect to the declaratory relief sought.

By motion filed on or about October 16, 2002, the Debtors sought an order of the
Bankruptcy Court staying all of the foregoing litigation pending its disposition
in a plan of reorganization. No ruling has as yet been made on such motion.

Certain Post-petition Matters

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.

As a result of the Filing,  contractual interest expense has not been accrued or
recorded on  pre-petition  debt of the Debtors since the Petition Date. From the
Petition  Date through  September  30, 2002,  contractual  interest  expense not
accrued or recorded on  pre-petition  debt  totaled $329  million,  of which $35
million  relates to the third quarter of 2002, $106 million relates to the first
nine months of 2002, and $42 million and $134 million,  respectively,  relate to
the corresponding periods of 2001.


<PAGE>


                                     - 14 -

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

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

At September 30, 2002, the Company had $686 million of Cash and Cash Equivalents
(of which approximately $4 million was subject to administrative  freeze pending
the  resolution  of  certain  alleged  set-off  rights by  certain  pre-petition
lenders).  During the second quarter of 2002,  the  Bankruptcy  Court approved a
settlement reached with certain pre-petition lenders covering  approximately $36
million  of  funds  previously  subject  to  administrative   freeze  (of  which
approximately   $32  million  was   previously   reflected   in  cash  and  cash
equivalents). Under this settlement, approximately $18 million of the funds were
released  from  administrative  freeze and the  remainder  was  retained  by the
lenders to offset certain pre-petition indebtedness.

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"),  which currently expires November 15, 2002.
The Debtors have reached  agreement  with the lenders to renew the DIP Financing
for an additional term of two years, with a reduced maximum availability of $250
million. This renewal is subject to Bankruptcy Court approval, which is expected
prior to the current expiration.  There were no borrowings outstanding under the
DIP Financing at September 30, 2002,  however,  approximately $56 million of the
availability under this credit facility was utilized as a result of the issuance
of standby letters of credit and similar uses.

As a  consequence  of the Filing and the  impact of  certain  provisions  of 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 pay  dividends  and to  transfer  cash and other
assets to each other and to their affiliates.

The Company believes,  based on information  presently available to it, that its
cash and cash equivalents, 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 from time to time in connection with the Chapter 11 Cases, and
to renew the DIP Financing as described  above,  (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 maintain  profitability
following such confirmation.


<PAGE>


                                     - 15 -

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

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

Financial Statement Presentation

The Company's 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, at the Petition Date the Company recorded the Debtors' pre-petition
debt instruments at the allowed amount, as defined by SOP 90-7.

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.

In this  respect,  the  Company's  Consolidated  Financial  Statements,  and the
condensed  financial  statements  presented below,  reflect charges to income of
$1.381  billion for Owens  Corning and $975  million for  Fibreboard  during the
quarterly  period ended September 30, 2002, in connection with  asbestos-related
liabilities. Please see Note 10 to the Consolidated Financial Statements.

Debtor-In-Possession Financial Statements

The condensed  financial  statements of the Debtors are presented  below.  These
statements  reflect the  financial  position  and results of  operations  of the
combined  Debtor  entities,  including  certain  amounts and activities  between
Debtors and  non-debtor  entities of Owens  Corning that are  eliminated  in the
Consolidated Financial Statements.  Certain  reclassifications to 2001 have been
made between Debtor and non-debtor  entities to conform with the classifications
used in 2002.


<PAGE>


                                     - 16 -

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

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

                         OWENS CORNING AND SUBSIDIARIES
                 DEBTOR-IN-POSSESSION STATEMENT OF INCOME (LOSS)

<TABLE>
<CAPTION>
                                                                Quarter Ended       Nine Months Ended
                                                                September 30,         September 30,
                                                                -------------         -------------
                                                               2002        2001      2002        2001
                                                               ----        ----      ----        ----

<S>                                                           <C>        <C>        <C>        <C>
NET SALES                                                     $ 1,161    $ 1,143    $ 3,271    $ 3,139
COST OF SALES                                                   1,005        953      2,800      2,663
                                                              -------    -------    -------    -------
     Gross margin                                                 156        190        471        476
                                                              -------    -------    -------    -------

OPERATING EXPENSES
Marketing and administrative expenses                             120        129        368        356
Science and technology expenses                                     9          9         26         27
Restructure costs                                                  11          5         16         14
Chapter 11 related reorganization items                            35         23         85         60
Owens Corning provision for asbestos litigation claims
  (Note 10)                                                     1,381         (5)     1,376         (5)
Fibreboard provision for asbestos litigation claims
  (Note 10)                                                       975          -        975          -
Other (Including interest income from non-debtors of $14
  million in the third quarter and $42 million for the nine
  months ended 2002 and 2001)                                     (22)       (31)       (71)       (71)
                                                              -------    -------    -------    -------

     Total operating expenses                                   2,509        130      2,775        381
                                                              -------    -------    -------    -------

INCOME (LOSS) FROM OPERATIONS                                  (2,353)        60     (2,304)        95

OTHER
Cost of borrowed funds                                              1          1          4         (1)
Other                                                               -          4          -         (2)
                                                              -------    -------    -------    -------

INCOME (LOSS) BEFORE PROVISION FOR
  INCOME TAXES                                                 (2,354)        55     (2,308)        98

Provision for income taxes                                          4         25         27         46
                                                              -------    -------    -------    -------

INCOME (LOSS) BEFORE EQUITY IN NET INCOME
  (LOSS) OF AFFILIATES                                         (2,358)        30     (2,335)        52

Equity in net income (loss) of affiliates                           3         (1)        (2)        (1)
                                                              -------    -------    -------    -------

NET INCOME (LOSS) BEFORE CUMULATIVE
  EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE                     (2,355)        29     (2,337)        51
                                                              -------    -------    -------    -------

Cumulative effect of change in accounting principle                 -          -        409          -
                                                              -------    -------    -------    -------
NET INCOME (LOSS)                                             $(2,355)   $    29    $(2,746)   $    51
                                                              =======    =======    =======    =======
</TABLE>


<PAGE>


                                     - 17 -

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

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

                         OWENS CORNING AND SUBSIDIARIES
                       DEBTOR-IN-POSSESSION BALANCE SHEET

<TABLE>
<CAPTION>
                                                  September 30, December 31, September 30,
                                                       2002         2001         2001
                                                       ----         ----         ----
                                                         (In millions of dollars)
<S>                                                  <C>          <C>          <C>
ASSETS
------

CURRENT
Cash and cash equivalents                            $   486      $   605      $   431
Receivables                                              475          315          439
Receivables - non-debtors                                879          849          744
Inventories                                              373          311          349
Deferred income taxes                                      4            4            4
Income tax receivable                                      2            4            4
Other current assets                                      20           25           20
                                                     -------      -------      -------

     Total current                                     2,239        2,113        1,991
                                                     -------      -------      -------

OTHER
Insurance for asbestos litigation claims                   4            4            4
Restricted cash and other - asbestos and insurance       165          169          171
  related
Restricted cash, securities and other - Fibreboard     1,335        1,284        1,285
Deferred income taxes                                  1,180        1,143        1,001
Goodwill, net                                             54          513          520
Investments in affiliates                                 17           34           33
Investments in non-debtor subsidiaries                   757          758          736
Other noncurrent assets                                  123          138          309
                                                     -------      -------      -------

     Total other                                       3,635        4,043        4,059
                                                     -------      -------      -------

PLANT AND EQUIPMENT, at cost
Land                                                      41           41           41
Buildings and leasehold improvements                     523          533          526
Machinery and equipment                                2,383        2,194        2,196
Construction in progress                                  91          217          153
                                                     -------      -------      -------
                                                       3,038        2,985        2,916

  Less - accumulated depreciation                     (1,642)      (1,548)      (1,527)
                                                     -------      -------      -------

     Net plant and equipment                           1,396        1,437        1,389
                                                     -------      -------      -------

TOTAL ASSETS                                         $ 7,270      $ 7,593      $ 7,439
                                                     =======      =======      =======
</TABLE>


<PAGE>


                                     - 18 -

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

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

                         OWENS CORNING AND SUBSIDIARIES
                 DEBTOR-IN-POSSESSION BALANCE SHEET (continued)

<TABLE>
<CAPTION>
                                                        September 30,      December 31,      September 30,
                                                            2002               2001               2001
                                                            ----               ----               ----
                                                                 (In millions of dollars)
<S>                                                       <C>                <C>                <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------

CURRENT
Accounts payable and accrued liabilities                  $   583            $   589            $   509
Accounts payable and accrued liabilities - non-debtors         17                 12                  7
Long-term debt - current portion                               --                  1                 --
                                                          -------            -------            -------

     Total current                                            600                602                516
                                                          -------            -------            -------

OTHER
Other employee benefits liability                             345                318                316
Pension plan liability                                        280                264                 32
Other                                                          89                110                103
                                                          -------            -------            -------

     Total other                                              714                692                451
                                                          -------            -------            -------

LIABILITIES SUBJECT TO COMPROMISE                           9,964              7,565              7,532

STOCKHOLDERS' EQUITY
Common stock                                                  695                697                697
Deficit                                                    (4,488)            (1,742)            (1,744)
Accumulated other comprehensive loss                         (212)              (219)               (11)
Other                                                          (3)                (2)                (2)
                                                          -------            -------            -------

     Total stockholders' equity                            (4,008)            (1,266)            (1,060)
                                                          -------            -------            -------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                $ 7,270            $ 7,593            $ 7,439
                                                          =======            =======            =======
</TABLE>


<PAGE>


                                     - 19 -

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

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

                         OWENS CORNING AND SUBSIDIARIES
                  DEBTOR-IN-POSSESSION STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                            Nine Months Ended
                                                                              September 30,
                                                                              -------------
                                                                         2002              2001
                                                                         ----              ----
                                                                         (In millions of dollars)
<S>                                                                     <C>                <C>
NET CASH FLOW FROM OPERATIONS

Net income (loss)                                                       $(2,746)           $    52
Reconciliation of net cash provided by (used in) operating activities
     Noncash items:
       Provision for asbestos litigation claims                           2,356                  -
       Provision for depreciation and amortization                          139                115
       Provision for deferred income taxes                                   14                 61
       Cumulative effect of accounting change                               409                  -
       Other                                                                 39                 71
Increase in receivables                                                    (198)              (186)
Increase in inventories                                                     (63)                (4)
Increase (decrease) in accounts payable and accrued liabilities             (58)               100
Decrease in restricted cash and other - asbestos-related                      5                 48
Change in liabilities subject to compromise                                  (2)               (97)
Proceeds from insurance for asbestos litigation claims,
  excluding Fibreboard                                                        5                  -
Pension fund contribution                                                     -               (176)
Other                                                                        89                 88
                                                                        -------            -------

     Net cash flow from operations                                      $   (11)           $    72
                                                                        -------            -------

NET CASH FLOW FROM INVESTING

Additions to plant and equipment                                        $  (119)           $  (113)
Investment in subsidiaries, net of cash acquired                             (1)                 -
Proceeds from sale of business                                               10                  -
Other                                                                         -                 (1)
                                                                        -------            -------

     Net cash flow from investing                                       $  (110)           $  (114)
                                                                        -------            -------
</TABLE>



<PAGE>


                                     - 20 -

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

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

                         OWENS CORNING AND SUBSIDIARIES
            DEBTOR-IN-POSSESSION STATEMENT OF CASH FLOWS (continued)

                                                      Nine Months Ended
                                                        September 30,
                                                        -------------
                                                      2002          2001
                                                      ----          ----
                                                   (In millions of dollars)
NET CASH FLOW FROM FINANCING

Net additions to long-term credit facilities             -            17
Subject to compromise                                    1            (4)
Other reductions to long-term debt                       -             -
Other                                                    1            (1)
                                                     -----         -----

     Net cash flow from financing                    $   2         $  12
                                                     -----         -----

Net decrease in cash and cash equivalents             (119)          (30)

Cash and cash equivalents at beginning of period       605           461
                                                     -----         -----

Cash and cash equivalents at end of period           $ 486         $ 431
                                                     =====         =====


<PAGE>


                                     - 21 -

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

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

The amounts subject to compromise in the Consolidated  and  Debtor-in-Possession
Balance Sheets consist of the following items:

<TABLE>
<CAPTION>
                                                     September 30,    December 31,       September 30,
                                                         2002             2001               2001
                                                         ----             ----               ----
                                                                 (In millions of dollars)

<S>                                                    <C>               <C>               <C>
Accounts payable                                       $  196            $  195            $  193
Accrued interest payable                                   40                40                40
Accrued liabilities                                        39                36                47
Debt                                                    2,854             2,843             2,843
Income taxes payable                                      235               209               209
Reserve for asbestos litigation claims - Owens Corning  3,564             2,197             2,200
Reserve for asbestos-related claims - Fibreboard        2,310             1,284             1,285
                                                       ------            ------            ------

     Total consolidated                                 9,238             6,804             6,817

     Payables to non-debtors                              726               761               715
                                                       ------            ------            ------

     Total debtor                                      $9,964            $7,565            $7,532
                                                       ======            ======            ======
</TABLE>

The amounts for Chapter 11 related  reorganization items in the Consolidated and
Debtor-in-Possession Statements of Income (Loss) consist of the following:

                               Quarter Ended                 Nine Months Ended
                               September 30,                   September 30,
                               -------------                   -------------
                             2002          2001             2002           2001
                             ----          ----             ----           ----
                                           (In millions of dollars)

Professional fees            $ 17          $ 15             $ 52           $ 49
Payroll and compensation        6             9               18             21
Interest income                (3)           (5)              (7)           (15)
Other, net                     15             4               22              5
                             ----          ----             ----           ----

     Total                   $ 35          $ 23             $ 85           $ 60
                             ====          ====             ====           ====


<PAGE>


                                     - 22 -

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

2.    SEGMENT DATA

During 2002, the Company realigned its internal  operating  segments.  Following
this realignment,  the Company reviewed its segments in accordance with SFAS No.
131 and  concluded  that the  aggregation  of its  operating  segments  into two
reportable  segments was still appropriate,  however,  certain components within
the  segments  have  changed.  Net sales and income  from  operations  have been
restated for all periods presented to reflect this change.

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

                                                Quarter Ended  Nine Months Ended
                                                 September 30,    September 30,
                                                 ------------     -------------
NET SALES                                       2002      2001    2002     2001
                                                ----      ----    ----     ----
                                                      (In millions of dollars)
Reportable Segments

Building Materials Systems
     United States                             $  909   $  893   $2,560   $2,424
     Europe                                         -        1        2        4
     Canada and other                              54       49      137      131
                                               ------   ------   ------   ------

        Total Building Materials Systems          963      943    2,699    2,559
                                               ------   ------   ------   ------

Composite Solutions
     United States                                225      228      642      639
     Europe                                        77       76      236      266
     Canada and other                              41       44      121      133
                                               ------   ------   ------   ------

        Total Composite Solutions                 343      348      999    1,038
                                               ------   ------   ------   ------

        Total reportable segments              $1,306   $1,291   $3,698   $3,597
                                               ======   ======   ======   ======

External Customer Sales by Geographic Region

United States                                  $1,134   $1,121   $3,202   $3,063
Europe                                             77       77      238      270
Canada and other                                   95       93      258      264
                                               ------   ------   ------   ------

     Net sales                                 $1,306   $1,291   $3,698   $3,597
                                               ======   ======   ======   ======


<PAGE>


                                     - 23 -

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

2.    SEGMENT DATA (continued)

<TABLE>
<CAPTION>
                                                                Quarter Ended                 Nine Months Ended
                                                                September 30,                   September 30,
                                                                -------------                   -------------
INCOME FROM OPERATIONS                                       2002            2001            2002            2001
                                                             ----            ----            ----            ----
                                                                           (In millions of dollars)
<S>                                                       <C>              <C>              <C>              <C>
Reportable Segments

Building Materials Systems
     United States                                        $    77          $    78          $   190          $   150
     Europe                                                     1                -                1                -
     Canada and other                                           8                5               17                9
                                                          -------          -------          -------          -------

        Total Building Materials Systems                       86               83              208              159
                                                          -------          -------          -------          -------

Composite Solutions
     United States                                              9               36               23               94
     Europe                                                     6                7               22               31
     Canada and other                                           6                4               17               16
                                                          -------          -------          -------          -------

        Total Composite Solutions                              21               47               62              141
                                                          -------          -------          -------          -------

        Total reportable segments                         $   107          $   130          $   270          $   300
                                                          =======          =======          =======          =======

Geographic Regions

United States                                             $    86          $   114          $   213          $   244
Europe                                                          7                7               23               31
Canada and other                                               14                9               34               25
                                                          -------          -------          -------          -------

     Total reportable segments                            $   107          $   130          $   270          $   300
                                                          =======          =======          =======          =======

Reconciliation to Consolidated Income Before
  Provision for Income Taxes

Restructuring and other charges                               (44)             (35)             (53)             (94)
Chapter 11 related reorganization items                       (35)             (23)             (85)             (60)
Provision for asbestos litigation claims                   (2,356)               5           (2,351)               5
General corporate expense                                     (14)             (14)             (50)             (48)
Cost of borrowed funds                                         (5)              (4)             (13)             (11)
Other                                                           -               (4)               -                2
                                                          -------          -------          -------          -------

Consolidated income (loss) before provision for
  income taxes                                            $(2,347)         $    55          $(2,282)         $    94
                                                          =======          =======          =======          =======
</TABLE>


<PAGE>


                                     - 24 -

                         OWENS CORNING AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
                                   (unaudited)
3.    GENERAL

The financial  statements  included in this Report are condensed and  unaudited,
pursuant  to  certain  Rules and  Regulations  of the  Securities  and  Exchange
Commission,  but include, in the opinion of the Company,  adjustments  necessary
for a fair statement of the results for the periods indicated,  which,  however,
are not  necessarily  indicative  of results  which may be expected for the full
year.

In connection with the condensed financial statements and notes included in this
Report,  reference  is  made  to the  financial  statements  and  notes  thereto
contained in the  Company's  2001 Annual  Report on Form 10-K, as filed with the
Securities and Exchange Commission.

4.       RESTRUCTURING OF OPERATIONS AND OTHER CHARGES

Third Quarter 2002

In the  third  quarter  of  2002,  certain  previously  announced  restructuring
programs continued throughout the period. In addition, a strategic review of the
Company's businesses resulted in additional  restructuring  charges. The Company
recorded  approximately  $44 million in pretax  charges in the third  quarter of
2002.  These pretax  charges were  comprised of an $11 million  pretax charge to
restructure costs (classified as a separate  component of operating  expenses in
the Consolidated Statement of Income (Loss)) and a charge of $33 million to cost
of sales. The $11 million restructure charge represents $3 million for severance
costs associated with the elimination of approximately 215 positions,  primarily
impacting  manufacturing  and  administrative  personnel  in the  US,  of  which
approximately  57  were  actually  terminated  as of  September  30,  2002.  The
remaining  $8  million  represents  charges  for the  closing  of  non-strategic
businesses and associated  facilities,  which consisted mainly of non-cash asset
write-downs to fair values and exit cost liabilities.

The $33 million charge to cost of sales mainly  includes a charge of $30 million
to write down a group of assets within the Company's  Building Materials Systems
segment to estimated  realizable  value.  The assets are being marketed for sale
and accordingly a valuation of the future cash flows of the assets was completed
using  assumptions  consistent  with current  market  conditions.  The Company's
ultimate  decisions and actions  regarding these assets require  approval by the
Bankruptcy Court and, due to  uncertainties  in the valuations  performed around
future market conditions and bankruptcy court  proceedings,  it is possible that
the  estimate of fair value may  materially  change in the future.  In addition,
various parties-in-interest may perform their own valuations of these assets and
such  valuations may differ  significantly  from the Company's  estimate of fair
value. The remaining $3 million charge  represents  charges  associated with the
Company's plan to realign its Newark,  Ohio  manufacturing  facility and various
costs.  The realignment  plan for the Newark facility was announced in the third
quarter of 2000 and is anticipated to be complete in the fourth quarter of 2002.

Second Quarter 2002

During the second quarter of 2002, certain restructuring programs put into place
during 2000 and 2001  continued  due to the timing of events in these  programs.
The  combination of these  continued  restructuring  programs led to the Company
recording  approximately  $3 million in a pretax credit in the second quarter of
2002.  This pretax credit was  comprised of a $5 million  pretax credit to other
operating  expense,  a $1 million pretax credit to restructure costs (classified
as a separate component of operating  expenses in the Consolidated  Statement of
Income (Loss)),  and a $3 million pretax charge to cost of sales.  The credit to
other  operating  expense  included a credit for the settlement of certain funds
subject  to an  administrative  freeze  that  were  previously  estimated  to be
unrealizable (See Note 1). The rights to these funds were originally transferred
to the  Company as part of the sale of the  Company's  40%  interest  in Alcopor
Owens

<PAGE>


                                     - 25 -

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

4.       RESTRUCTURING OF OPERATIONS AND OTHER CHARGES (continued)

Corning (See Note 5). The credit to restructure costs included adjustments for a
reduction in the number of positions to be eliminated as part of the restructure
charge  taken  during  2001 (see  below).  The charge to cost of sales  included
charges associated with the Company's  previously  announced plan to realign its
Newark,  Ohio  manufacturing  facility and a write down to  inventory  mainly to
reflect updated estimates of the net realizable value.

First Quarter 2002

In response to the slowed economy and to the declining margins in the composites
business,  the Company continued to assess cost structures of certain businesses
and  facilities  as well as overhead  expenditures  for the entire  company.  In
addition,  certain  restructuring  programs  put into place during 2000 and 2001
continued  in the  first  quarter  of 2002 due to the  timing of events in these
programs.  The  combination of these  continued  restructuring  programs and the
continued   assessment  of  the   businesses   led  to  the  Company   recording
approximately  $12 million in pretax charges in the first quarter of 2002. These
pretax charges were comprised of an $8 million pretax  restructure charge and $4
million of pretax other charges.  The restructure  charge  represents  severance
costs associated with the elimination of approximately 230 positions,  primarily
in the U.S.,  which  was  adjusted  to 218 in the  second  quarter  of 2002 (see
above), of which  approximately 210 were actually terminated as of September 30,
2002. The primary  groups  impacted  include  manufacturing  and  administrative
personnel. As of September 30, 2002,  approximately $5 million has been paid and
charged  against the reserve.  The  restructure  charge has been classified as a
separate component of operating expenses on the Company's Consolidated Statement
of Income (Loss).

The $4 million in pretax other charges included $2 million in charges associated
with  the  Company's  previously  announced  realignment  at  its  Newark,  Ohio
manufacturing  facility  and various  other  charges  totaling  $2 million.  The
realignment  plan for the Newark  facility was announced in the third quarter of
2000 and is  anticipated  to be complete in the fourth  quarter of 2002. As work
progresses  on the  facility,  costs are recorded as they are  incurred.  The $4
million  pretax charge was accounted for as a $5 million charge to cost of sales
and a $1 million credit to other operating expenses.

2001 Charges

The Company spent a significant  amount of time reviewing its cost structures in
2001 as a response to the impact of the weaker  economy.  This review led to the
Company  recording  approximately  $140 million in pretax  charges  during 2001,
comprised of a $26 million pretax  restructure charge and $114 million of pretax
other  charges.  The $114 million of pretax other charges was accounted for as a
$79 million  pretax  charge to cost of sales and a $35 million  pretax charge to
other operating expense. The Company recorded $46 million in the fourth quarter,
$35  million in the third  quarter,  $17  million in the second  quarter and $42
million in the first quarter.

The $26 million  charge for  restructuring  included  $21 million for  severance
costs associated with the elimination of approximately 460 positions,  primarily
impacting manufacturing and administrative personnel in the U.S., Canada and the
U.K., of which  approximately  450 were actually  terminated as of September 30,
2002.  The  remaining $5 million  represented  a charge for the  divestiture  of
non-strategic  businesses and  facilities,  which  consisted  mainly of non-cash
asset write-downs to fair value and exit cost  liabilities.  As of September 30,
2002, approximately $19 million has been paid and charged against this reserve.


<PAGE>


                                     - 26 -

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

4.    RESTRUCTURING OF OPERATIONS AND OTHER CHARGES (continued)

The $114 million of other  charges  included $29 million in costs related to the
realignment  of  the  Newark  manufacturing   facility;  $39  million  of  asset
impairments mainly associated with the building materials business,  principally
to  write-down  assets to net  estimated  fair value on a held and used basis in
certain manufacturing  facilities due to changes in the Company's  manufacturing
and marketing  strategies;  $6 million to write down inventory mainly to reflect
updated  estimates of the net  realizable  value;  $4 million to write-down  the
Company's  investment and related assets in Alcopor Owens Corning, a producer of
insulation  products in Europe and the United Kingdom,  to net realizable  value
(the sale of the Company's investment in this joint venture was completed in the
fourth  quarter of 2001);  a $2 million  pretax  loss from  assets held for sale
which represented the results of operations for the Company's investments in its
Pipe joint  ventures and  subsidiaries  on a  held-for-sale  basis (the sale was
completed in February 2001); and various other charges totaling $34 million.

The following table summarizes the status of the liabilities from the 2000, 2001
and 2002 restructure programs described above, including cumulative spending and
adjustments and the remaining balance as of September 30, 2002:

                                                         Total     Liability at
                                          Original     Payments/   September 30,
(In millions of dollars)                  Liability   Adjustments      2002
                                          ---------   -----------      ----

Personnel Costs                               $ 49       $(39)         $ 10
Facility and Business Exit Costs                 6         (4)            2
                                              ----       ----          ----

Total                                         $ 55       $(43)         $ 12
                                              ----       ----          ----

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 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.


<PAGE>


                                     - 27 -

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

5.    ACQUISITIONS AND DIVESTITURES OF BUSINESSES

Acquisitions

On June 25, 2002, the Company  received  Bankruptcy Court approval to consummate
the restructuring of the Company's Indian joint venture,  Owens-Corning  (India)
Limited   ("OCIL"),   a  producer  of  composite   material.   As  part  of  the
restructuring,  the  Company,  through its  wholly-owned  subsidiary,  IPM Inc.,
contributed approximately $3 million of cash into OCIL and the Company agreed to
allow a  guarantee  claim in the  amount of  approximately  $19  million  in its
Chapter 11  proceedings  in respect of OCIL's junior debt.  In addition,  OCIL's
senior debt  maturities  were  extended,  and its junior debt was  converted  to
approximately  $7 million of redeemable  convertible  debentures.  Through these
restructuring  efforts the Company's  ownership  interest in OCIL increased from
approximately 50% to approximately 60%. The Company consolidated OCIL on July 1,
2002  when  the  restructuring  was  consummated  by all of the  parties  to the
restructuring and approved by the Indian  Government,  at which time the allowed
claim of  approximately  $19 million was added to amounts Subject to Compromise.
The  Company  accounted  for this  transaction  under  the  purchase  method  of
accounting,  whereby the assets  acquired  and  liabilities  assumed,  including
approximately  $58  million of senior  debt  (consisting  of  approximately  $34
million of debentures due in 2009 at a variable  interest rate and approximately
$24  million  of  debentures  due in 2009 at a fixed  interest  rate of 10%) and
approximately $7 million of redeemable convertible debentures,  were recorded at
their fair  values and the results of  operations  were  consolidated  from that
date. The $19 million  allowed claim was recorded at its estimated fair value of
approximately $6 million as an additional  investment in OCIL and the difference
of  approximately  $13 million was  recorded  as  reorganization  expense in the
Company's  consolidated  statement of income (loss).  Prior to July 1, 2002, the
Company  accounted for this joint venture under the equity method.  The proforma
effect of this acquisition on revenues and earnings was not material.

Divestitures

During the first quarter of 2001, the Company completed the sale of the majority
of its Engineered  Pipe Business,  a producer of  glass-reinforced  plastic pipe
with operations  mostly in Europe.  Net proceeds from the sale were $22 million,
of  which  $20  million  was  received  in the  first  quarter  of  2001,  which
approximated book value.

During the fourth  quarter of 2001,  the Company sold its remaining 40% interest
in Alcopor Owens Corning, an unconsolidated joint venture. Net proceeds from the
divestiture were  approximately $23 million,  of which  approximately $9 million
remained in escrow at December  31, 2001 and was  received in January  2002.  In
addition,  during the second  quarter of 2002,  the Company  recognized a pretax
gain of  approximately  $4 million  related to the  settlement  of certain funds
subject  to an  administrative  freeze  that were  previously  determined  to be
unrealizable.  The rights to these  funds  were  originally  transferred  to the
Company as part of the sale (see Note 4).


<PAGE>


                                     - 28 -

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

6.    INVENTORIES

Inventories are summarized as follows:

                                                     September 30,  December 31,
                                                          2002           2001
                                                          ----           ----
                                                       (In millions of dollars)
Finished goods                                           $ 406          $ 378
Materials and supplies                                     183            150
                                                         -----          -----
FIFO inventory                                             589            528
Less:  reduction to LIFO basis                             (96)           (91)
                                                         -----          -----
  Total inventory                                        $ 493          $ 437
                                                         =====          =====

Approximately  $152  million and $120 million of total  inventories  were valued
using the LIFO method at September 30, 2002 and December 31, 2001, respectively.

7.    COMPREHENSIVE INCOME

The Company's comprehensive income for the quarters ended September 30, 2002 and
2001 was a loss of $2.347 billion and income of $34 million,  respectively.  The
Company's other comprehensive  income includes net income,  currency translation
adjustments,  minimum  pension  liability  adjustments,  and deferred  gains and
losses on certain hedging transactions to record at fair value.

8.    EARNINGS PER SHARE

The following table reconciles the weighted average number of shares used in the
basic earnings per share calculation to the weighted average number of shares
used to compute diluted earnings per share.

<TABLE>
<CAPTION>
                                                 Quarter Ended      Nine Months Ended
                                                 September 30,         September 30,
                                                 -------------         -------------
                                               2002       2001       2002        2001
                                               ----       ----       ----        ----
                                               (In millions of dollars, except share data)

<S>                                         <C>         <C>        <C>         <C>
Net income (loss) used for basic and diluted
  earnings per share                        $ (2,359)   $     27   $ (2,770)   $     46
                                            ========    ========   ========    ========

Weighted average number of shares
  outstanding used for basic earnings per
  share (thousands)                           55,047      55,079     55,055      55,064
                                            --------    --------   --------    --------

Deferred awards (thousands)                        -         290          -         323
                                            --------    --------   --------    --------

Shares from assumed conversion of
  preferred securities (thousands)                 -       4,566          -       4,566
                                            --------    --------   --------    --------

Weighted average number of shares
  outstanding and common equivalent
  shares used for diluted earnings per
  share (thousands)                           55,047      59,935     55,055      59,953
                                            ========    ========   ========    ========
</TABLE>


<PAGE>


                                     - 29 -

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

8.    EARNINGS PER SHARE (continued)

For the quarter and nine months ended  September 30, 2002,  the number of shares
used in the  calculation  of  diluted  earnings  per  share did not  include  24
thousand common  equivalent  shares of deferred awards and 4,566 thousand common
equivalent shares from assumed  conversion of preferred  securities due to their
anti-dilutive effect.

9.    DERIVATIVE FINANCIAL INSTRUMENTS

The Company is a party to financial instruments in the normal course of business
to reduce exposure to fluctuating  foreign  currency  exchange  rates,  interest
rates, and commodity prices.  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  currency  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 indices.

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

<TABLE>
<CAPTION>
                                            Notional Amount             Notional Amount
                                          September 30, 2002           December 31, 2001
                                          ------------------           -----------------
                                                     (In millions of dollars)

<S>                                              <C>                         <C>
Forward currency exchange contracts              $   56                      $   30
Interest rate swaps                                  30                          19
Commodity future contracts              350,000 MMBTU per month     540,000 MMBTU per month
                                          for two months              for nine months
</TABLE>

Foreign Currency Exchange Risk and Interest Rate Risk Management

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.  In the third quarter of 2002,  the Company
entered into 4 contracts that exchanged  approximately  8 million British pounds
sterling to euros,  50 million  Norwegian krone to U.S.  dollars,  and 1 million
U.S.  dollars to euros.  As of  September  30,  2002 the  Company  had 5 forward
currency  exchange  contracts that  exchanged  approximately  8 million  British
pounds  sterling to euros, 50 million  Norwegian  krone to euros,  and 3 million
U.S.  dollars to euros.  As of  December  31,  2001,  the  Company had 2 forward
currency  exchange  contracts that exchanged 75 million Norwegian krone to euros
and  approximately  4  million  U.S.  dollars  to  euros.  These  contracts  are
considered  highly  effective  hedges,  as the gains or losses on the  contracts
substantially  offset the gain or loss from  currency  value  fluctuations.  The
Company  accounts for the contracts as fair value hedges and changes in the fair
value are recorded in the Consolidated Statement of Income (Loss), the effect of
which was not material during any period.


<PAGE>


                                     - 30 -

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

9.    DERIVATIVE FINANCIAL INSTRUMENTS (continued)

In the  second  quarter of 2002,  the  Company  entered  into  forward  exchange
contracts  to manage its  exposure  against  foreign  currency  fluctuations  on
certain  purchases of inventories in foreign  currencies.  The contracts entered
into  consisted  of  35  forward  currency  exchange  contracts  that  exchanged
approximately  17  million  U.S.  dollars  to euros,  6 million  British  pounds
sterling to euros,  35 million  Swedish  krone to euros,  126 million  Norwegian
krone to euros, and 14 million U.S. dollars to Canadian dollars. As of September
30, 2002 the Company had 15 forward currency  exchange  contracts that exchanged
approximately 7 million U.S. dollars to euros, 3 million British pounds sterling
to euros,  15 million  Swedish  krone to euros,  54 million  Norwegian  krone to
euros,  and 6 million U.S.  dollars to Canadian  dollars.  These  contracts  are
considered  highly  effective  hedges,  as the gains or losses on the  contracts
substantially  offset the gain or loss from  currency  value  fluctuations.  The
Company  accounts for the  contracts as cash flow hedges and changes in the fair
market value are recorded in other  comprehensive  income (loss),  except to the
extent of ineffectiveness, which is recorded as other income in the Consolidated
Statement  of  Income  (Loss).  As of  September  30,  2002,  accumulated  other
comprehensive   income  (loss)  related  to  these   contracts  was  a  loss  of
approximately  $1 million,  and the  ineffectiveness  recorded  as other  income
(loss) was not material.

During 2001, 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 2001 contract,  which matured in the first quarter of 2002, exchanged
approximately 83 million Chinese renminbi against  approximately 10 million U.S.
dollars.  During  the  first  quarter  of 2002 the  Company  entered  into a new
contract that exchanged 83 million Chinese  renminbi  against  approximately  10
million U.S.  dollars.  During the third quarter the Company  entered into a new
contract that exchanged  approximately  83 million  renminbi  against 10 million
U.S. Dollars,  which remained outstanding at September 30, 2002. These contracts
effectively  extended the hedge of U.S. dollar  denominated debt entered into in
2001. These contracts are considered  highly effective  hedges,  as the gains or
losses on the  contracts  substantially  offset  the gain or loss from  currency
value fluctuations.  The Company accounts for the contracts as fair value hedges
and changes in the fair value are  recorded  in the  Consolidated  Statement  of
Income (Loss), the effect of which was not material during any period.

During 2001 and the first three  quarters of 2002, the Company  invested  excess
cash in South America in Brazilian  certificates of deposit,  treasury bonds and
debentures.  At the same time these  investments were made, an equivalent amount
of Brazilian real was swapped into U.S.  dollars at a U.S.  dollar interest rate
with matching  investment  amounts and maturity dates. The purpose of these swap
contracts  is to reduce the impact of  changes  in the  Brazilian  real and U.S.
dollar exchange rates. At September 30, 2002, there were 31 such  cross-currency
interest rate swap  contracts  outstanding  at a notional  amount of $30 million
U.S. dollars. At December 31, 2001, there were 18 such  cross-currency  interest
rate  swap  contracts  outstanding  at a  notional  amount of $19  million  U.S.
dollars.


<PAGE>


                                     - 31 -

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

9.    DERIVATIVE FINANCIAL INSTRUMENTS (continued)

Commodity Risk Management

During 2001, the Company  entered into a swap contract for 4,860,000  MMBTU's of
natural gas to hedge its exposure to fluctuating  commodity prices. The contract
expired  during the third  quarter of 2002.  At December 31,  2001,  accumulated
other  comprehensive  income  (loss)  related  to the  contract  was a  loss  of
approximately $2 million and the ineffectiveness recorded as other income (loss)
was not material.  During the second quarter of 2002 the Company entered into an
additional swap agreement for 2,100,000 MMBTU's of natural gas. This contract is
accounted  for as a cash flow  hedge and  changes in the fair  market  value are
recorded  in  other  comprehensive  income  (loss),  except  to  the  extent  of
ineffectiveness which is recorded as other income in the Consolidated  Statement
of Income (Loss).  At September 30, 2002, the  accumulated  other  comprehensive
income   related  to  the  contract  was   approximately   $1  million  and  the
ineffectiveness recorded as other income (loss) was not material.

Other Financial Instruments with Off-Balance-Sheet Risk

As of September  30, 2002 and December  31, 2001,  the Company was  contingently
liable for guarantees of indebtedness owed by certain unconsolidated  affiliates
of approximately $7 million and $38 million,  respectively.  As of September 30,
2002,  and  December  31,  2001,  approximately  $5  million  and  $34  million,
respectively,  of such  indebtedness was alleged to be in default as a result of
the  Filing.  Included  in  such  indebtedness  as  of  December  31,  2001  was
approximately  $19 million  owed by  Owens-Corning  (India)  Limited,  which was
consolidated  during  the third  quarter  of 2002 (see Note 5).  Subject  to the
foregoing, 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.

There is no market for the guarantees of  indebtedness  discussed above and they
were issued without explicit cost. Therefore, it is not practicable to establish
their fair value.

10.   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.

During the second  quarter of 2002,  Owens  Corning  completed  a  comprehensive
reconciliation  of personal injury  asbestos claims against it (and  Fibreboard,
see Item B below) in light of currently available  information.  As a result, it
was able to update  certain  information  below  concerning  settled and pending
claims. Owens Corning cautions,  however,  that it has limited information about
many of such claims, and the actual numbers remain subject to adjustment.


<PAGE>


                                     - 32 -

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

10.   CONTINGENT LIABILITIES (continued)

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.

As discussed more fully below under the heading "Reserve",  Owens Corning's (and
Fibreboard's)  total liability for asbestos claims will ultimately be determined
after a lengthy  period of  negotiations  and, if necessary,  by the  Bankruptcy
Court,  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,  the total amount of future asbestos
claims allowed, and the impact of the Administrative Consolidation.

National Settlement Program Claims

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 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").

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.



<PAGE>


                                     - 33 -

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

10.   CONTINGENT LIABILITIES (continued)

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.

As of the Petition Date, the NSP covered  approximately  239,000 Initial Claims,
approximately 150,000 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  $9,300.  As of the
Petition Date,  approximately 89,000 of such Final NSP Settlements had been paid
in full or otherwise resolved,  and approximately 61,000 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  $510
million.  Through the Petition  Date,  Owens Corning had received  approximately
6,000 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 claims  thereunder  will  ultimately be treated
under the terms of any plan or plans of reorganization.

Non-NSP Claims

As of the Petition Date,  approximately  29,000 asbestos  personal injury claims
were  pending   against   Owens-Corning   outside  the  NSP.  This  compares  to
approximately  25,000 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.

Owens  Corning  resolved  (by  settlement  or  otherwise)  approximately  10,000
asbestos  personal injury claims outside the NSP during 1998,  5,000 such claims
during 1999 and 3,000 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.

At this time,  Owens  Corning is unable to predict  the manner in which  non-NSP
claims  will  ultimately  be  treated  under  the  terms of any plan or plans of
reorganization.


<PAGE>


                                     - 34 -

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

10.   CONTINGENT LIABILITIES (continued)

Asbestos-Related Payments

As a result  of the  Filing,  Owens  Corning  has not made any  asbestos-related
payments  since the Petition Date except for  approximately  $20 million paid on
its  behalf by third  parties  pursuant  to  appeal  bonds  issued  prior to the
Petition Date. 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:

                                                                  2000 (through
                                                         1999   October 4, 2000)
                                                         ----   ----------------
                                                       (In millions of dollars)

Pre-NSP Settlements                                      $170         $ 51
NSP Settlements                                           570          538
Non-NSP Settlements                                        30           42
Defense, Claims Processing and Administrative Expenses     90           54
                                                         ----         ----
                                                         $860         $685
                                                         ====         ====

All amounts discussed above are before tax and application of insurance
recoveries.

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 September 30, 2002,  approximately $106 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 and insurance 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 ultimately be under the terms
of any  plan or  plans of  reorganization.  However,  in  2001,  the  holder  of
approximately  $49 million of  Undistributed  Administrative  Deposits for Owens
Corning (and approximately $28 million of similar  Undistributed  Administrative
Deposits for Fibreboard)  filed a motion with the Bankruptcy Court requesting an
order authorizing  distribution of the deposits it holds ("Subject Deposits") to
the escrow beneficiaries. As the result of hearings held on June 20 and July 22,
2002, the Bankruptcy Court has ruled that escrow beneficiaries that had received
both  written  notice of approval  for payment and an initial  payment  from the
Subject  Deposits  prior to the Petition Date would be entitled to receive their
remaining  payments (plus  post-judgment  interest after June 20, 2002) from the
principal of the Subject Deposits,  with the balance of the Subject Deposits, if
any,  plus any other  investment  proceeds to be  returned to Owens  Corning (or
Fibreboard,  as  appropriate)  as  contributor  of the deposits.  The creditors'
committee  representing unsecured creditors and the representative for the class
of future asbestos claimants have each filed a notice of appeal from the order.


<PAGE>


                                     - 35 -

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

10.   CONTINGENT LIABILITIES (continued)

Tax Legislation

On April 4, 2001, the United States House of Representatives introduced proposed
legislation  (HR 1412,  also known as the Asbestos  Tax Fairness  Act) to exempt
income  earned  by  qualifying   asbestos-related  settlement  funds,  including
qualifying trusts  established under Section 524(g) of the Bankruptcy Code, from
federal  income tax. The exemption  from income tax would benefit the Fibreboard
Settlement Trust (described  below) by having the effect of enlarging the corpus
of the trust through tax-free income accumulation.  In addition, the legislation
would 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 bill has strong  bipartisan  support in the form of 72 original
cosponsors,  including  a  majority  of the  members of the House Ways and Means
Committee.

On June 14, 2001, a companion  bill  identical to HR 1412 was  introduced in the
United States Senate (S 1048). This bill also has strong bipartisan support.

Despite the strong bipartisan  support for both bills,  there has been no action
on these  bills  during  2002.  If  Congressional  action  on such  bills is not
completed prior to the adjournment of the current Congress  (expected  shortly),
the bills will lapse and  similar  legislation  will be  considered  in the next
Congress only if newly introduced.  Consequently, there can be no assurance that
any such legislation  ultimately will be enacted.  Moreover,  as a result of the
Filing,  there  is  uncertainty   regarding  the  impact  of  the  proposed  tax
legislation on the Debtors'  respective  estates even if such  legislation  were
enacted.

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
monetary damages (including punitive damages) for payments made by Owens Corning
and Fibreboard to asbestos  claimants who developed  smoking  related  diseases.
There  can be no  assurance  that  any  such  litigation  will go to trial or be
successful.

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.  On June 17, 2001, the Jefferson  court entered an order  dismissing
Owens Corning's case in response to the defendants'  motion for summary judgment
on the basis that Owens  Corning's  injuries  were  indirect and thus too remote
under Mississippi law to allow recovery. The Company has appealed such dismissal
to the Supreme Court of Mississippi.

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.  In August  2001,  the
defendants filed motions to dismiss Owens Corning's and  Fibreboard's  claims on
the basis of the decision in the Mississippi  lawsuit as well as California law.
As the result of a hearing on these motions on November 20, 2001, the California
court  denied  the  motion to  dismiss  Fibreboard's  claims on the basis of the
decision in the Mississippi  lawsuit and otherwise stayed the proceeding pending
the outcome of the Mississippi suit.


<PAGE>


                                     - 36 -

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

10.   CONTINGENT LIABILITIES (continued)

Insurance

As of September  30,  2002,  Owens  Corning's  financial  statements  reflect $4
million in unexhausted  insurance  coverage (net of deductibles and self-insured
retentions)  under its  liability  insurance  policies  applicable  to  asbestos
personal  injury  claims.   This  amount   represented   unconfirmed   potential
non-products  coverage with excess level insurance  carriers,  as to which Owens
Corning had estimated its probable recoveries.

Owens Corning also has other unconfirmed  potential  non-products  coverage with
excess level carriers. Owens Corning is actively pursuing non-products insurance
recoveries under these policies. In October, 2001, Owens Corning filed a lawsuit
in Lucas County,  Ohio, against ten excess level carriers for declaratory relief
and  damages  for  failure to make  payments  under its  non-products  insurance
coverage.  The amount and timing of recoveries  from excess level  policies will
depend on the outcome of litigation or other proceedings,  possible  settlements
of those proceedings, or other negotiations.

As  previously  reported,  late in the  second  quarter of 2001,  Owens  Corning
entered into a settlement  agreement with one of its excess insurance  carriers,
resolving a dispute  concerning  coverage  from such  insurer  for  non-products
asbestos-related  personal injury claims. As a result,  during the third quarter
of 2001, the carrier funded $55 million into an escrow account to be released in
conjunction  with  implementation  of an approved  plan of  reorganization.  The
escrowed  funds plus  earnings  are  reflected on Owens  Corning's  consolidated
balance  sheet as  restricted  assets,  under the  category  "Restricted  cash -
asbestos and insurance related."

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 in 2000.

As of June 30, 2002, 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 periods prior to the Petition  Date,  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 September 30, 2000
(the ending date of the last reporting period preceding the Petition Date) were:

                                                            September 30, 2000
                                                            ------------------
                                                        (In billions of dollars)

NSP backlog                                                      $  1.10
Non-NSP backlog                                                     0.30
Future claims                                                       0.70
Defense, Claims Processing and Administrative Expenses              0.10



<PAGE>


                                     - 37 -

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

10.   CONTINGENT LIABILITIES (continued)

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.

As one  example of the  difficulties  inherent  in  estimating  future  asbestos
claims,  Owens Corning notes that the Manville Personal Injury Settlement Trust,
a  trust   established  to  settle   asbestos   claims  against  Johns  Manville
Corporation,  announced in June 2001 that it was reducing its initial settlement
distributions  by fifty  percent on the basis of the  continued  record  pace of
asbestos  claim  filings and the  prediction of its  consultants  that the trust
might receive 1.5 to 2.5 million additional claims.

The Chapter 11 Cases have significantly  increased 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 will likely
have the effect of increasing the number and ultimate cost of resolution of such
claims  substantially.  In particular,  the status of the NSP Agreements and the
ultimate  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 reorganization will ultimately
     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.



<PAGE>


                                     - 38 -

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

10.   CONTINGENT LIABILITIES (continued)

-    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:

-    The  impact,  if any,  the  Administrative  Consolidation  will have on the
     timing, outcome or other aspects of the Chapter 11 Cases.

-    As a result of the  Filing,  all of the  holders of  pre-petition  asbestos
     claims against Owens Corning or Fibreboard  will be required to file proofs
     of claim in the form and manner  prescribed by the  Bankruptcy  Court.  The
     filing of a proof of claim will be a precondition to any pre-petition claim
     being  considered  for payment as an allowed claim.  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  ultimately be determined  either as a result of
     negotiations  involving  the 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,  or Bankruptcy Court  determination,  at this
     time.

In  connection  with the  negotiation  of a plan or plans of  reorganization,  a
number  of  interested  constituencies,  including  the  representatives  of the
pre-petition  and future asbestos  claimants and other  pre-petition  creditors,
have developed or will develop  analyses of liability for both  pre-petition and
future asbestos claims. Owens Corning and Fibreboard will also utilize their own
analyses  in the  negotiation  process.  Such  analyses by the Debtors and other
interested   constituencies  will  also  be  required  in  connection  with  the
establishment, as part of the plan of reorganization,  of a Section 524(g) trust
for the benefit of asbestos  claimants.  Based on facts  currently  known to it,
including   positions  that  have  been   articulated   by  various   interested
constituencies,  Owens Corning  believes that the estimates  included in most or
all such analyses will vary  substantially  from the amounts of Owens  Corning's
and Fibreboard's  respective  asbestos reserves in prior periods,  and will also
vary substantially from one another, for a number of reasons.

First,  such  analyses  will not  involve  the same type of  estimation  process
required in  connection  with the  preparation  of  financial  statements  under
generally accepted accounting principles. In general, such accounting principles
require  accruals with respect to  contingent  liabilities  (including  asbestos
liabilities)  only to the extent that such  liabilities  are both  probable  and
reasonably  estimable.  With respect to such liabilities that are probable as to
which a reasonable  estimate can be made only in terms of a range (with no point
within the range  determined  to be more  probable  than any other point in such
range),  such  accounting  principles  require  only the  accrual  of the amount
representing the low point in such range.


<PAGE>


                                     - 39 -

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

10.   CONTINGENT LIABILITIES (continued)

In contrast,  analyses prepared by interested constituencies in asbestos-related
bankruptcy cases customarily  cover potential  liabilities over a 50 year period
(at the end of which it is anticipated that potential  asbestos  claimants would
in any event have died as a result of other non-asbestos-related  causes). Owens
Corning  believes that any such analyses,  and any  assumptions  utilized in the
preparation  of such  analyses,  are  inherently  speculative  for a  number  of
reasons, including the variables and uncertainties described in this Note.

Moreover,  because such analyses are prepared  solely for use in the negotiation
of a plan of reorganization,  they naturally reflect the respective interests of
the different constituencies putting them forward.  Certain constituencies,  for
example,  may have an interest in  presenting an analysis  that  estimates  such
liability at the highest level that can arguably be  justified;  others may have
an interest in estimating  such liability at the lowest  possible  level;  while
others may have an interest in estimating  such liability at a point between the
two extremes,  in an effort to achieve  consensus in the negotiation of the plan
of  reorganization.  In addition,  interested  constituencies in Owens Corning's
bankruptcy  proceedings may also take into account the  implications of any such
analyses  prepared for use in Owens  Corning's  bankruptcy  proceedings on their
position in one or more of the other  asbestos-related  bankruptcy cases pending
in the District of Delaware or elsewhere.

None of the creditor  constituencies has yet made available to Owens Corning any
such analysis of liability for pre-petition or future asbestos claims.  However,
based upon its recent  discussions and negotiations with  representatives of the
creditor constituencies,  Owens Corning believes that most, if not all, of these
creditor  analyses  associated  with  the  resolution  of  Owens  Corning's  and
Fibreboard's  asbestos-related  liabilities  in the  context  of the  Chapter 11
proceedings are likely to be well in excess of Owens Corning's and  Fibreboard's
historic asbestos-related  reserves. For example, Owens Corning believes that it
is  likely  that  one or more of such  creditor  constituencies  will  take  the
position for purposes of the  negotiation  of a plan or plans of  reorganization
that the aggregate  amount of pre-petition  and future asbestos claims for Owens
Corning and  Fibreboard,  on a combined net present value basis,  may exceed $15
billion.  In addition,  in October 2002, Owens Corning and Fibreboard  completed
their own analyses of liability for purposes of facilitating  plan  discussions,
which,  as to future  asbestos  claims,  were prepared by an outside  consultant
experienced   in   estimating   asbestos-related   claims  in   asbestos-related
bankruptcies.  These analyses  indicate net present values for  pre-petition and
future asbestos claims of Owens Corning and Fibreboard combined of approximately
$5.874 billion,  if NSP settlement  values are assumed,  and $8.547 billion,  if
5-year   historical   settlement   values  for  Owens  Corning  and  Fibreboard,
respectively,  are used.  Based upon these analyses and the information  derived
from Owens  Corning's  recent  discussions  and  negotiations  with the  various
creditor  constituencies  concerning their relative positions on the terms of an
acceptable plan of reorganization, Owens Corning has decided to increase its and
Fibreboard's  aggregate  asbestos-related  reserve  to the  lower of the two net
present value numbers  indicated by Owens Corning's and  Fibreboard's  analyses.
Consequently,  Owens  Corning has  increased  its  reserves for the period ended
September 30, 2002 through charges to income of $1.381 billion for Owens Corning
asbestos-related  liabilities  and $975 million for Fibreboard  asbestos-related
liabilities,  for an  aggregate  charge  of $2.356  billion.  As a result of the
increases in the reserves,  Owens  Corning's and  Fibreboard's  asbestos-related
reserves  as of  September  30, 2002 were  $3.564  billion  and $2.310  billion,
respectively,  for an aggregate  reserve of $5.874 billion.  In addition,  Owens
Corning  notes  that,   since  the  reserve  for   Fibreboard   asbestos-related
liabilities  exceeds  the funds held in the  Fibreboard  Settlement  Trust,  the
residual  amount  payable to charity  under the terms of the Trust (see Note 11)
has been reduced to zero as of September 30, 2002.


<PAGE>


                                     - 40 -

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

10.   CONTINGENT LIABILITIES (continued)

Ultimately,  Owens  Corning's (and  Fibreboard's)  total  liability for asbestos
claims will be finally determined after a lengthy period of negotiations and, if
necessary,  by the Bankruptcy  Court,  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,  the
total  amount  of  future  asbestos  claims  allowed,  and  the  impact  of  the
Administrative Consolidation.

At September 30, 2002,  as a result of the increase in such reserve  referred to
above,   the   approximate   balances  of  the  components  of  Owens  Corning's
asbestos-related reserve were:

                                                                 Balance
                                                                 -------
                                                        (In billions of dollars)

Unpaid Final Settlements (NSP and other)                         $ 0.60
Other Pending and Future Claims                                    3.00

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,  through the Chapter 11 process,  (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 believes that its reserve for asbestos claims  represents at least
a minimum in a range of possible outcomes of the plan negotiation  process as to
the amount of its total  liability  for  asbestos-related  claims  against it as
determined  through the  Chapter 11 process.  Given the nature of the Chapter 11
proceedings,   described   above,   Owens   Corning   cautions  that  the  total
asbestos-related  liability ultimately established in the Chapter 11 proceedings
may be either  higher or lower than the Company's  reserve.  Owens Corning notes
that it expects an ongoing high level of negotiations and information  exchanges
with the various creditor  constituencies  and other parties for the duration of
the Chapter 11  proceedings.  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  further  revision  to  the  reserve  is  appropriate  until  additional
significant  developments  occur  during  the  course of the  Chapter  11 Cases,
including  resolution  by  negotiation  or the  Bankruptcy  Court  of its  total
liability for asbestos claims. Any such revision could,  however, be material to
the Company's  consolidated  financial position and results of operations in any
given period.


<PAGE>


                                     - 41 -

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

10.   CONTINGENT LIABILITIES (continued)

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 22,000 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 Claims

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  206,000  Initial Claims
against Fibreboard,  approximately 118,000 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  $7,400.
As of the Petition Date,  approximately 62,000 of such Final NSP Settlements had
been paid in full or otherwise resolved and approximately  56,000 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 $330 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 6,000 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 ultimately be
treated under the terms of any plan or plans of reorganization.

Non-NSP Claims

As of the Petition Date,  approximately  9,000 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  2,000 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  ultimately be treated under the terms of any plan or plans
of reorganization.


<PAGE>


                                     - 42 -

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

10.   CONTINGENT LIABILITIES (continued)

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  billion during the fourth quarter of
1999 to fund costs of resolving pending and future  Fibreboard  asbestos-related
liabilities, whether under the NSP, in the tort system, or otherwise.

As of  September  30,  2002,  the  Insurance  Settlement  funds were held in and
invested by the Fibreboard  Settlement  Trust.  As of that date,  $1.208 billion
(net of outstanding  payables) was held in the Fibreboard  Settlement  Trust and
$127  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.  Based on currently  available  information,  Owens Corning does not
believe that any such assets will remain for  distribution  at the conclusion of
the Chapter 11 Cases.

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 September 30, 2002, these assets were reflected
as non-current assets, under the category "Restricted cash, securities and other
- Fibreboard." See Note 11 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 (see Item A) will  ultimately be under
the terms of any plan or plans of reorganization.

Asbestos-Related Payments

As a result of the Filing, Fibreboard has not made any asbestos-related payments
since the  Petition  Date.  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:

                                                  2000 (through October 4, 2000)
                                                  ------------------------------
                                                        (In millions of dollars)

     Pre-NSP Settlements                                          $  29
     NSP Settlements                                                705
     Non-NSP Settlements                                             41
     Defense, Claims Processing and Administrative Expenses          45
                                                                  -----
                                                                  $ 820

The payments for NSP  Settlements  include  Administrative  Deposits  during the
reporting period in respect of Fibreboard claims.


<PAGE>


                                     - 43 -

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

10.   CONTINGENT LIABILITIES (continued)

Reserve

Owens Corning  estimates a reserve for  Fibreboard in accordance  with generally
accepted accounting principles to reflect  asbestos-related  liabilities.  As of
June 30,  2002,  a reserve  of  approximately  $1.3  billion in respect of these
liabilities  (which  included an amount for residual  obligations  to charity as
described  below) was one of the items included in Owens Corning's  consolidated
balance  sheet  under the  category  "Liabilities  Subject to  Compromise."  For
periods  prior to the  Petition  Date,  they were  reflected as current or other
liabilities  (depending on the period in which  payment was expected)  under the
category  "Asbestos-related  liabilities - Fibreboard." Owens Corning notes that
these  liabilities 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
11).

The  approximate  balances of the components of the Fibreboard  asbestos-related
reserve at  September  30, 2000 (the ending  date of the last  reporting  period
preceding the Petition Date) were:

                                                           September 30, 2000
                                                           ------------------
                                                        (In billions of dollars)

  NSP backlog                                                    $ 0.80
  Non-NSP backlog                                                  0.10
  Future claims                                                    0.30
  Defense, Claims Processing and Administrative Expenses           0.05

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 ultimately be under the terms of any plan or plans of reorganization.


<PAGE>


                                     - 44 -

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

10.   CONTINGENT LIABILITIES (continued)

At September 30, 2002,  as a result of the increase in such reserve  referred to
in Item A above,  the  approximate  balances of the components of the Fibreboard
asbestos-related reserve were:

                                                             Balance
                                                             -------
                                                     (In billions of dollars)

Unpaid Final Settlements (NSP and other)                      $ 0.40
Other Pending and Future Claims                                 1.90

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.

-    The "Other Pending and Future Claims"  component  represented the estimated
     cost of resolving,  through the Chapter 11 process,  (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 believes that Fibreboard's  reserve for asbestos claims represents
at least a  minimum  in a range of  possible  outcomes  of the plan  negotiation
process as to the amount of Fibreboard's  total  liability for  asbestos-related
claims against it as determined through the Chapter 11 process. Given the nature
of the Chapter 11 proceedings,  described above, Owens Corning cautions that the
total  asbestos-related  liability  ultimately  established  in the  Chapter  11
proceedings  may be either  higher or lower  than  Fibreboard's  reserve.  Owens
Corning  notes  that it  expects  an  ongoing  high  level of  negotiations  and
information exchanges with the various creditor constituencies and other parties
for the duration of the Chapter 11  proceedings.  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 further  revision to the reserve is
appropriate until significant additional developments occur during the course of
the Chapter 11 Cases,  including  resolution by  negotiation  or the  Bankruptcy
Court of  Fibreboard's  total liability for asbestos  claims.  Any such revision
could, however, be material to the Company's consolidated financial position and
results of operations in any given period.

Other Matters

SECURITIES LITIGATION

On or about  April  30,  2001,  certain  of the  Company's  current  and  former
directors  and  officers,  as  well  as  certain  underwriters,  were  named  as
defendants in a lawsuit captioned John Hancock Life Insurance Company, et al. v.
Goldman,  Sachs & Co.,  et al.  in the  United  States  District  Court  for the
District of  Massachusetts.  An amended complaint was filed by the plaintiffs on
or about  July 5, 2001.  Owens  Corning  is not named in the  lawsuit.  The suit
purports to be a  securities  class  action on behalf of  purchasers  of certain
unsecured  debt  securities of Owens Corning in offerings  occurring on or about
April 30, 1998 and



<PAGE>


                                     - 45 -

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

10.   CONTINGENT LIABILITIES (continued)

July 23, 1998. The complaint alleges that the registration  statements  pursuant
to which the offerings were made contained  untrue and misleading  statements of
material  fact and omitted to state  material  facts  which were  required to be
stated  therein  and which were  necessary  to make the  statements  therein not
misleading,  in violation of sections 11,  12(a)(2) and 15 of the Securities Act
of 1933. The amended complaint seeks an unspecified  amount of damages or, where
appropriate,  rescission of the plaintiffs'  purchases.  The defendants  filed a
motion to dismiss the action on November  20,  2001.  A hearing was held on this
motion on April 11, 2002, and the Court issued a decision  denying the motion on
August 26, 2002. The Company believes that the claim is without merit. The named
defendants in this proceeding have each filed contingent  indemnification claims
with respect to this  litigation  against Owens Corning  pursuant to the General
Bar Date process described below.

GENERAL BAR DATE CLAIMS

In connection with the Chapter 11 Cases, the Bankruptcy Court set April 15, 2002
as the last date by which  holders of certain  pre-petition  claims  against the
Debtors  must file their claims (the  "General Bar Date").  The General Bar Date
does not apply to asbestos-related  personal injury claims and  asbestos-related
wrongful   death  claims  (other  than  claims  for   contribution,   indemnity,
reimbursement, or subrogation).  Approximately 24,000 proofs of claim (including
the claims  described  below under the headings  "PBGC Claim" and "Tax  Claim"),
totaling approximately $16.0 billion,  alleging a right to payment from a Debtor
were filed with the  Bankruptcy  Court in response to the General Bar Date.  For
further  information  concerning  these  claims,  please  see Note 1,  under the
heading "General Bar Date".

PBGC CLAIM

In connection  with the General Bar Date described  above,  the Pension  Benefit
Guaranty  Corporation  ("PBGC"),  an agency of the  United  States,  has filed a
claim, in the amount of approximately $458 million, in connection with statutory
liability  for  unfunded  benefit   liabilities  of  the  Owens  Corning  Merged
Retirement  Plan (the  "Pension  Plan").  The claim states that it is contingent
upon  termination  of the Pension Plan.  Since Owens Corning does not anticipate
that the Debtors' plan or plans of  reorganization  will provide for termination
of the Pension Plan, it believes that this claim ultimately will become moot.

TAX CLAIM

Owens Corning's federal income tax returns typically are audited by the Internal
Revenue  Service  ("IRS") in multi-year  audit  cycles.  The audit for the years
1992-1995  was  completed  in  late  2000.  Due  to the  Filing,  the  IRS  also
accelerated  and completed  the audit for the years ended  1996-1999 by March of
2001.  As the result of these  audits and  unresolved  issues  from prior  audit
cycles,  the IRS is asserting  claims for  approximately  $390 million in income
taxes plus interest of approximately $175 million.

Pending audit of Owens  Corning's  federal  income tax return for the year 2000,
the IRS has also filed a  protective  claim in the amount of  approximately  $50
million,  covering a tax refund  received by Owens  Corning for such year,  plus
interest.

As described in Note 1, under the heading  "General Bar Date", the United States
Department of Treasury has filed proofs of claim,  totaling  approximately  $530
million, in connection with these tax claims.



<PAGE>


                                     - 46 -

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

10.   CONTINGENT LIABILITIES (continued)

In accordance  with  generally  accepted  accounting  principles,  Owens Corning
maintains tax reserves to cover audit issues.  While Owens Corning believes that
the existing reserves are appropriate in light of the audit issues involved, its
defenses,  its prior  experience in resolving  audit issues,  and its ability to
realize certain challenged  deductions in subsequent tax returns if the IRS were
successful,  there can be no assurance  that such reserves  will be  sufficient.
Owens Corning will  continue to review its tax reserves on a periodic  basis and
make such adjustments as may be appropriate. Any such revision could be material
to the Company's  consolidated  financial  position and results of operations in
any given period.

11.   FIBREBOARD SETTLEMENT TRUST

Under  the  Insurance  Settlement  described  in Note  10,  two of  Fibreboard's
insurers  provided  $1.873 billion during the fourth quarter of 1999 to fund the
costs of resolving pending and future Fibreboard  asbestos-related  liabilities.
As of  September  30,  2002,  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.  Based on currently  available  information,  Owens Corning does not
believe that any such assets will remain for  distribution  at the conclusion of
the Chapter 11 cases.

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 Note 10,  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 income, thereby
enlarging the corpus of the Trust through tax-free income accumulation.

At this  time,  Owens  Corning is unable to predict  what the  treatment  of the
Fibreboard Settlement Trust, or the effect of the Asbestos Tax Fairness Bill (if
enacted),  will  ultimately  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 September 30, 2002, these assets were reflected
as non-current assets, under the category "Restricted cash, securities and other
-  Fibreboard."  Owens Corning  estimates a reserve for Fibreboard in accordance
with  generally  accepted  accounting  principles  to  reflect  asbestos-related
liabilities (see Note 10, Part B). As of September 30, 2002,  these  liabilities
were one of the items  included in Owens  Corning's  consolidated  balance sheet
under the category "Liabilities Subject to Compromise." For periods prior to the
Petition Date, they were reflected as current or other liabilities (depending on
the period in which payment was expected)  under the category  "Asbestos-related
liabilities - Fibreboard." Owens Corning notes that these liabilities are always
at least  equal to the funds  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.  Based on currently available information,
Owens Corning does not believe that any such assets will remain for distribution
at the conclusion of the Chapter 11 Cases. At September 30, 2002, as a result of
the increase in such reserve referred to in Note 10, the Consolidated  Financial
Statements reflect Fibreboard's reserve for asbestos litigation claims at $2.310
billion, with no residual obligation to charity.


<PAGE>


                                     - 47 -

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

11.   FIBREBOARD SETTLEMENT TRUST (continued)

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. At September 30, 2002 and December 31, 2001,  substantially all marketable
securities were classified as "available for sale".

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.

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. Cost for purposes of computing realized gains/losses is determined using
the specific identification method.

Prior to and during the third quarter of 2002,  the residual  liability that may
be paid to charity  increased/decreased,  with the related  decrease/increase to
other  comprehensive  income within  stockholders'  equity, net of tax and other
expense/income  on the  consolidated  statement of income.  As of September  30,
2002,  the liability that may be paid to charity was  reclassified  to the Trust
Assets as the  liability  for  asbestos  litigation  claims  exceeded  the Trust
Assets.

Results for the Periods Ended September 30, 2002 and 2001

During  the  third   quarters  of  2002  and  2001,   Trust   Assets   generated
interest/dividend   earnings  of  approximately  $14  million  and  $13  million
respectively  ($40  million and $42  million,  respectively,  for the first nine
months of the year),  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. During each of the periods ended
September 30, 2002 and 2001,  this income was offset by an equal charge to other
expense, which represented an increase in the residual liability to charity.

As a result of the Filing, there were no payments for asbestos litigation claims
from the Trust during the third quarter of 2002 or 2001. However,  approximately
$1 million  was paid  during the second  quarter of 2002 and $1 million was paid
during the first  quarter of 2002 for taxes  related to  earnings  of the Trust.
This payment was funded by existing  cash in the Trust or proceeds from the sale
of securities.  During the third quarter of 2001,  approximately $11 million was
paid for taxes related to earnings of the Trust.  The sale of securities  during
the third quarter of 2002 resulted in a realized loss of $1 million, while there
was a realized  gain of less than $1 million in 2001.  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  September  30, 2002 and 2001,  the fair market  value  adjustment  for those
securities  designated as available  for sale resulted in an unrealized  gain of
approximately $21 million and $11 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.

At  September  30,  2002,  the fair  value of Trust  Assets  and  Administrative
Deposits  was $1.335  billion,  which was  comprised  of Trust  Assets of $1.226
billion of marketable  securities  and $18 million of  outstanding  payables and
Administrative Deposits of $127 million.


<PAGE>


                                     - 48 -

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

11.   FIBREBOARD SETTLEMENT TRUST (continued)

The amortized cost, gross unrealized holding gains and losses and fair value of
the investment securities available for sale at September 30, 2002 and December
31, 2001 are as follows:

                                             September 30, 2002
                                             ------------------
                                  Gross Unrealized  Gross Unrealized
                        Cost             Gain              Loss      Fair Value
                        ----             ----              ----      ----------
                                       (In millions of dollars)

Municipal Bonds       $1,173           $   21          $      -          $1,194
Corporate Bonds            9                -                 -               9
Mutual Funds              23                -                 -              23
                      ------           ------          --------          ------

Total                 $1,205           $   21          $      -          $1,226
                      ======           ======          ========          ======

                                                  December 31, 2001
                                                  -----------------
                                         Gross Unrealized Gross Unrealized
                                  Cost          Gain          Loss    Fair Value
                                  ----          ----          ----    ----------
                                            (In millions of dollars)

Municipal Bonds                  $1,150       $      -       $    -       $1,150
Mutual Funds                         19              -            -           19
                                 ------       --------       ------       ------

Total                            $1,169       $      -       $    -       $1,169
                                 ======       ========       ======       ======

Maturities  of  investment  securities  classified  as  available  for  sale  at
September  30, 2002 and  December  31, 2001 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.

<TABLE>
<CAPTION>
                                                          September 30, 2002               December 31, 2001
                                                          ------------------               -----------------
                                                         Cost         Fair Value          Cost         Fair Value
                                                         ----         ----------          ----         ----------
                                                                        (In millions of dollars)

<S>                                                    <C>             <C>             <C>              <C>
Due within one year                                    $     141       $     141       $      91        $      91
Due after one year through five years                        758             775             679              679
Due after five years through ten years                       156             159             171              171
Due after ten years                                          150             151             228              228
                                                       ---------       ---------       ---------        ---------
Total                                                  $   1,205       $   1,226       $   1,169        $   1,169
                                                       =========       =========       =========        =========
</TABLE>



<PAGE>


                                     - 49 -

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

11.   FIBREBOARD SETTLEMENT TRUST (continued)

The table below summarizes Trust and  Administrative  Deposits  activity for the
nine months ended September 30, 2002:

<TABLE>
<CAPTION>
                                                          Interest   Unrealized Realized
                                                Balance      and        Gain/     Gain/                                     Balance
                                                12/31/01  Dividends    (Loss)    (Loss)  Provision     Other    Payments    9/30/02
                                                --------  ---------    ------    ------  ---------     -----    --------    -------

<S>                                              <C>        <C>       <C>       <C>        <C>        <C>        <C>        <C>
Assets
Cash (payable for purchase of securities)        $   (18)   $     -   $     -   $     -    $     -    $     -    $     -    $   (18)
Marketable securities:
  Available for sale                               1,169         40        21        (2)         -          -         (2)     1,226
                                                 -------    -------   -------   -------    -------    -------    -------    -------

     Total Trust assets                            1,151         40        21        (2)         -          -         (2)     1,208
                                                 -------    -------   -------   -------    -------    -------    -------    -------

Administrative Deposits                              133          -         -         -          -         (6)         -        127
                                                 -------    -------   -------   -------    -------    -------    -------    -------

Total assets                                     $ 1,284    $    40   $    21   $    (2)   $     -    $    (6)   $    (2)   $ 1,335
                                                 =======    =======   =======   =======    =======    =======    =======    =======

Liabilities
Asbestos litigation claims                       $ 1,213    $     -   $     -   $     -    $ 1,103    $    (6)   $     -    $ 2,310
Charity                                               71         40        21        (2)      (128)         -         (2)         -
                                                 -------    -------   -------   -------    -------    -------    -------    -------
     Total liabilities                             1,284         40        21        (2)       975         (6)        (2)     2,310

Liabilities in excess of Trust Assets                  -    $     -   $     -   $     -    $  (975)   $     -    $     -    $  (975)
                                                 -------    -------   -------   -------    -------    -------    -------    -------

Total liabilities                                $ 1,284    $    40   $    21   $    (2)   $     -    $    (6)   $    (2)   $ 1,335
                                                 =======    =======   =======   =======    =======    =======    =======    =======
</TABLE>


<PAGE>



                                     - 50 -

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

12.   GOODWILL AND OTHER INTANGIBLES

Effective January 1, 2002, the Company adopted Statement of Financial Accounting
Standards No. 142,  "Goodwill and Other Intangible Assets" (SFAS No. 142), which
it will use to account for goodwill and other  intangibles  in the future.  SFAS
No. 142 eliminates the amortization of goodwill and indefinite-lived  intangible
assets;  identifiable  intangible  assets with a  determinable  useful life will
continue to be amortized.  SFAS No. 142 requires an annual review for impairment
using a fair value methodology.

The Company  applied SFAS No. 142 beginning in the first quarter of 2002,  which
required  the  Company  to  cease  amortizing   goodwill  and   indefinite-lived
intangibles.  The  Company  has  no  indefinite-lived  intangibles,   separately
identified.  In addition,  the Company tested goodwill for impairment  using the
two-step  process  prescribed  in SFAS No.  142.  The first step is a screen for
potential  impairment.  The second step,  which is performed on those  reporting
units determined to have potential  impairment based on the first step, measures
the amount of the  impairment,  if any. The results of the first step  indicated
that the carrying values of some reporting units exceeded the corresponding fair
values,  which were  determined  based on the discounted  estimated  future cash
flows of the  reporting  units.  In the second  step,  the implied fair value of
goodwill of these reporting  units was determined  through the allocation of the
fair  value to the  underlying  assets  and  liabilities.  The  January  1, 2002
carrying value of the goodwill in these  reporting  units exceeded their implied
fair value by $491 million, resulting in a non-cash charge of $491 million ($441
million net of tax).  This charge was  determined  during the second  quarter of
2002 and, as required by SFAS No. 142, was recorded as a cumulative  effect of a
change in  accounting  principle  in the first  quarter  of 2002.  The  goodwill
recorded in the December 31, 2001 financial statements,  which included the $491
million described above, was supported by the undiscounted estimated future cash
flow of the  related  operations  in  accordance  with  Statement  of  Financial
Accounting  Standards  No. 121,  "Accounting  for the  Impairment  of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of".

To maintain a  consistent  basis for  measurement  of  performance,  the Company
reclassified  previously  reported segment  information  related to goodwill and
total assets to correspond to the earnings  measurements by which the businesses
are evaluated. Accordingly,  approximately $15 million of goodwill as of January
1, 2002, was  reclassified  to the Building  Materials  Systems segment from the
Composite  Solutions segment.  Previously  reported segment information has been
revised to reflect this change (see Note 2).

The changes in goodwill by segment during the quarter and nine months ended
September 30, 2002, were as follows:

<TABLE>
<CAPTION>
                                                  Quarter Ended September 30, 2002
                                                  --------------------------------
                                                                    Foreign Exhange     Balance at
                               Balance at                            Exchange and      September 30,
                              June 30, 2002       Reallocation           Other              2002
                              -------------       ------------           -----              ----
                                                      (In millions of dollars)
<S>                              <C>               <C>                   <C>              <C>
Composite Solutions              $     18          $     -               $   -            $    18
Building Materials Systems            106                -                  (2)               104
                                 --------          -------               ------           -------

Total                            $    124          $     -               $  (2)           $   122
                                 ========          =======               ======           =======
</TABLE>


<PAGE>


                                     - 51 -

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

12.   GOODWILL AND OTHER INTANGIBLES (continued)

<TABLE>
<CAPTION>
                                          Nine Months Ended September 30, 2002
                                          ------------------------------------
                                             Effect of                           Foreign      Balance at
                          Balance at       Adopting SFAS                         Exchange   September 30,
                       December 31, 2001      No. 142        Reallocation        and Other        2002
                       -----------------      -------        ------------        ---------        ----
                                                      (In millions of dollars)
<S>                           <C>              <C>               <C>               <C>            <C>
Composite Solutions           $  33            $   -             $ (15)            $   -          $  18
Building Materials              577             (491)               15                 3            104
                              -----            -----             -----             -----          -----
Total                         $ 610            $(491)            $   -             $   3          $ 122
                              =====            =====             =====             =====          =====
</TABLE>

SFAS No. 142 does not provide for  restatement  of our results of operations for
periods  ending prior to January 1, 2002.  A  reconciliation  of the  previously
reported  net income and  earnings per share as if SFAS No. 142 had been adopted
prior to January 1, 2001 is presented as follows:

                                                         Quarter Ended
                                                         -------------
                                           September 30, 2002 September 30, 2001
                                           ------------------ ------------------
                                 (In millions of dollars, except per share data)

Net income (loss):
  Reported net income (loss)                     $  (2,359)         $   27
  Add back goodwill amortization, net of tax             -               4
                                                 ---------          ------
Adjusted net income (loss)                       $  (2,359)         $   31
                                                 =========          ======

Basic earnings (loss) per share:
  As reported                                    $  (42.84)         $  .50
  Add back goodwill amortization, net of tax             -             .07
                                                 ---------          ------
Adjusted basic earnings (loss) per share         $  (42.84)         $  .57
                                                 =========          ======

Diluted earnings (loss) per share:
  As reported                                    $  (42.84)         $  .46
  Add back goodwill amortization, net of tax             -             .06
                                                 ---------          ------
Adjusted diluted earnings (loss) per share       $  (42.84)         $  .52
                                                 =========          ======



<PAGE>


                                     - 52 -

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

12.   GOODWILL AND OTHER INTANGIBLES (continued)

                                                     Nine Months Ended
                                                     -----------------
                                         September 30, 2002   September 30, 2001
                                         ------------------   ------------------
                                 (In millions of dollars, except per share data)

Net income (loss):
  Reported net income (loss)                  $  (2,770)            $   46
  Add back cumulative effect of change in
     accounting principle, net of tax               441                  -
  Add back goodwill amortization, net of tax          -                 11
                                              ---------             ------
Adjusted net income (loss)                    $  (2,329)            $   57
                                              =========             ======

Basic earnings (loss) per share:
  As reported                                 $  (50.31)            $  .84
  Add back cumulative effect of change in
     accounting principle, net of tax              8.01                  -
  Add back goodwill amortization, net of tax          -                .20
                                              ---------             ------
Adjusted basic earnings (loss) per share      $  (42.30)            $ 1.04
                                              =========             ======

Diluted earnings (loss) per share:
  As reported                                 $  (50.31)            $  .77
  Add back cumulative effect of change in
     accounting principle, net of tax              8.01                  -
  Add back goodwill amortization, net of tax          -                .18
                                              ---------             ------
Adjusted diluted earnings (loss) per share    $  (42.30)            $  .95
                                              =========             ======

All  of  the  Company's   acquired  other  intangible   assets  are  subject  to
amortization.  Other intangible asset amortization  expense was approximately $1
million  in the third  quarter  of 2002 and 2001.  The  Company  estimates  that
amortization  of intangibles  will be  approximately  $3 million for each of the
next five years. The components of other intangible assets are as follows:

<TABLE>
<CAPTION>
                                                  September 30, 2002
                                                  ------------------
                              Weighted Average     Gross Carrying              Accumulated
                                   Lives               Amount                  Amortization
                                   -----               ------                  ------------
                                                            (In millions of dollars)
<S>                                    <C>              <C>                       <C>
          Contract-based               6                $    3                    $   (1)
          Technology-based            22                    17                        (9)
          Marketing-related            6                    13                        (8)
                                                        ------                    -------
                                                        $   33                    $  (18)
                                                        ======                    =======
</TABLE>

13.   INCOME TAXES

In the  third  quarter  of 2002,  the  Company  increased  its  asbestos-related
reserves  through  charges  to  income  of  $1.381  billion  for  Owens  Corning
asbestos-related  liabilities  and $975 million for Fibreboard  asbestos-related
liabilities,  for an  aggregate  charge of  $2.356  billion  (See  Note 10).  In
connection  with such charges,  management  evaluated the amount of deferred tax
assets  attributable  to such  charges  and  also  assessed  the  likelihood  of
realization  of such  deferred  tax assets in light of the  Company's  financial
position  and the  Chapter 11  proceedings.  As the  result of such  assessment,
management  determined that, as of September 30, 2002, a valuation allowance was
required  for the full amount of such  attributable  deferred  tax assets.  As a
result,  no tax benefit was recorded in  connection  with the third quarter 2002
asbestos-related charges discussed above.


<PAGE>


                                     - 53 -

ITEM 2.       MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL
              CONDITION AND RESULTS OF OPERATIONS

(All per share information in Item 2 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  and  energy  costs,  residential  construction  activity,
mortgage  interest rate  movements,  achievement  of expected  cost  reductions,
developments in and the outcome of the Chapter 11 proceedings  described  below,
and general economic conditions.

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 "USBC").  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:

   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

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 10 to the
Consolidated Financial Statements.

In late 2001, the  asbestos-related  Chapter 11 cases pending in the District of
Delaware (the Chapter 11 Cases of Owens Corning and the cases of Armstrong World
Industries,  Inc.,  W.  R.  Grace & Co.,  Federal-Mogul  Global,  Inc.,  and USG
Corporation)  were ordered  transferred to the United States  District Court for
the District of Delaware (the "District  Court") before Judge Alfred M. Wolin to
facilitate  development and  implementation of a coordinated plan for management
(the  "Administrative  Consolidation").  The District Court has entered an order
referring  the  Chapter  11 Cases back to the USBC,  where they were  previously
pending,  subject to its ongoing right to withdraw such referral with respect to
any  proceedings or issues (the applicable  court from time to time  responsible
for any particular aspect of the Chapter 11 Cases being hereinafter  referred to
as the "Bankruptcy  Court").  Owens Corning is unable to predict what impact the
Administrative  Consolidation will have on the timing,  outcome or other aspects
of the Chapter 11 Cases.



<PAGE>


                                     - 54 -

ITEM 2.       MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL
              CONDITION AND RESULTS OF OPERATIONS

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. In addition,  the Bankruptcy  Court has appointed James J.
McMonagle as legal  representative  for the class of future  asbestos  claimants
against  one or  more  of the  Debtors.  The  two  committees  and  the  futures
representative  will have the right to be heard on all matters  that come before
the  Bankruptcy  Court.  Owens  Corning  expects that these  committees  and the
futures representative 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 that
such plan or plans will be confirmed by the  Bankruptcy  Court and  consummated.
Owens Corning is unable to predict what impact the Administrative  Consolidation
will have on the timing of the confirmation of such plan or plans or its effect,
if any, on the terms thereof.

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. By subsequent  action,  the Bankruptcy  Court has
extended such exclusivity period until November 26, 2002, and similarly extended
the Debtors'  exclusive rights to solicit  acceptances of a reorganization  plan
from April 3, 2001 to January 28,  2003.  If the Debtors  fail to file a plan of
reorganization prior to the ultimate expiration of the exclusivity period, or if
such plan is not  accepted  by the  requisite  numbers  of  creditors  and other
interest  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.

In this regard, at a status conference on the Chapter 11 Cases held on September
20,  2002,  the  District  Court  requested  that the  Debtors  submit a plan of
reorganization  by October 31, 2002, or risk the shortening or  non-extension of
their exclusivity period for filing a plan of reorganization. The District Court
has  subsequently  indicated that the deadline for submission  might be extended
until the latter  part of November  2002.  As a result of the  District  Court's
request, the Debtors, the creditors' committees, the futures representative, and
other  parties in interest  have  increased  the pace of their  discussions  and
negotiations, including the exchange of information, concerning their respective
positions on the appropriate  terms of a plan of  reorganization.  Owens Corning
intends to comply with the request of the District Court by submitting a plan of
reorganization  to the District Court either in conjunction  with one or more of
the creditor  constituencies as plan proponents or, alternatively,  with no plan
proponent other than the Debtors. Because discussions and negotiations among the
various creditor  constituencies  and the Debtors are ongoing,  Owens Corning is
unable to predict  the terms of such a plan of  reorganization  or whether  such
plan will be supported by one or more of the creditor constituencies.


<PAGE>


                                     - 55 -

ITEM 2.       MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL
              CONDITION AND RESULTS OF OPERATIONS

Owens  Corning  believes  that it is  likely  that  the  terms,  conditions  and
provisions of any plan or plans of  reorganization  initially filed or submitted
by it will be the subject of  continuing  negotiations  or litigation to resolve
differences   among  the  creditor   constituencies   as  to  their   treatment.
Accordingly,  Owens Corning is unable to predict at this time what the treatment
of creditors and equity  holders of the  respective  Debtors will  ultimately be
under any plan or plans of  reorganization  finally  confirmed.  However,  it is
likely that any plan or plans will 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. In
addition,  Owens Corning  believes it is likely that any such plan or plans will
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  ultimately
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
payments and other  obligations in respect thereof may be restricted or modified
by order of, or subject to review and approval  by, the  Bankruptcy  Court.  The
outcome of such challenges and other actions,  if any, may have an impact on the
treatment  of  various  claims  under  such plan or plans and on the  respective
assets,  liabilities  and  results  of  operations  of  Owens  Corning  and  its
subsidiaries.  For example, Owens Corning is unable to predict at this time what
the  treatment  will  ultimately be under any such plan or plans with respect to
(1) the  guarantees  issued by certain  of Owens  Corning's  U.S.  subsidiaries,
including  Owens-Corning  Fiberglas  Technology  Inc.  ("OCFT")  and IPM Inc., a
Non-Debtor  Subsidiary  that  holds  Owens  Corning's  ownership  interest  in a
majority of Owens Corning's foreign subsidiaries  ("IPM"), with respect to Owens
Corning's  $1.8 billion  pre-petition  bank credit  facility (the  "Pre-Petition
Credit  Facility",  which is in default) or (2) OCFT's license  agreements  with
Owens Corning and Exterior Systems, Inc., an indirect 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.  Based on information  now available to Owens Corning,  it
appears  unlikely  that there will be  sufficient  assets to satisfy  all of the
Debtors' pre-petition  liabilities.  In addition,  the pre-petition creditors of
some Debtors may be treated  differently  than those of other Debtors.  Based on
the  Debtors'  known  assets  and  known  and  currently  estimated  liabilities
(including  the  asbestos  liabilities  described  more  fully in Note 10 to the
Consolidated  Financial  Statements),  it is likely that pre-petition  creditors
generally will receive under a plan or plans less than 100% of the face value of
their claims,  and that the interests of Owens Corning's equity security holders
will be substantially  diluted or cancelled in whole or in part. As noted above,
it is not otherwise  possible at this time to predict the outcome of the Chapter
11 Cases, the effect of the  Administrative  Consolidation,  the final terms and
provisions of any plan or plans of reorganization, or the ultimate effect of the
Chapter 11 reorganization  process on the claims of the creditors of the Debtors
or the interests of the Debtors' respective equity security holders.



<PAGE>


                                     - 56 -

ITEM 2.       MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL
              CONDITION AND RESULTS OF OPERATIONS

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.

Bar Dates for Filing Claims

GENERAL BAR DATE

In connection with the Chapter 11 Cases, the Bankruptcy Court set April 15, 2002
as the last date by which  holders of certain  pre-petition  claims  against the
Debtors  must file their claims (the  "General Bar Date").  The General Bar Date
does not apply to asbestos-related  personal injury claims and  asbestos-related
wrongful   death  claims  (other  than  claims  for   contribution,   indemnity,
reimbursement,  or subrogation). Any holder of a claim that was required to file
a claim by the General Bar Date and did not do so will be barred from  asserting
such  claim  against  any  of  the  Debtors  and  will  not  participate  in any
distribution in any of the Chapter 11 Cases on account of such claim.

Approximately  24,000 proofs of claim (including  late-filed  claims),  totaling
approximately  $16.0  billion,  alleging a right to payment  from a Debtor  were
filed with the  Bankruptcy  Court in response  to the  General  Bar Date.  Owens
Corning  is  investigating  these  claims  to  determine  their  validity.   The
Bankruptcy  Court  will  ultimately  determine  liability  amounts  that will be
allowed for these claims in the Chapter 11 Cases.

In its  initial  review  of the  filed  claims,  Owens  Corning  has  identified
approximately  15,000  claims,  totaling  approximately  $8.3 billion,  which it
believes should be disallowed by the Bankruptcy  Court,  primarily  because they
appear to be  duplicate  claims or claims that are not related to the  indicated
Debtor (the "Objectionable  Claims").  Owens Corning likely will file objections
to these  Objectionable  Claims.  While the  Bankruptcy  Court  will  ultimately
determine liability amounts, if any, that will be allowed as part of the Chapter
11 Cases,  Owens Corning believes that all or substantially  all of these claims
will be disallowed.

In addition to the Objectionable  Claims described above, at September 30, 2002,
the  remaining  filed  proofs  of claim  included  approximately  9,000  claims,
totaling approximately $7.7 billion, as follows:

-    Approximately 2,900 claims, totaling approximately $1.4 billion, associated
     with   asbestos-related   contribution,    indemnity,   reimbursement,   or
     subrogation  claims.   Owens  Corning  will  address  all  asbestos-related
     personal  injury  and  wrongful  death  claims in the future as part of the
     Chapter  11  Cases.  Please  see  Note  10 to  the  Consolidated  Financial
     Statements   for   additional   information   concerning   asbestos-related
     liabilities.

-    Approximately 600 claims,  totaling  approximately  $0.7 billion,  alleging
     asbestos-related  property damage. Most of these claims were submitted with
     insufficient  documentation to assess their validity. Owens Corning expects
     to vigorously defend any asserted  asbestos-related  property damage claims
     in the Bankruptcy Court.  Based upon its historic  experience in respect of
     asbestos-related  property damage claims, Owens Corning does not anticipate
     significant liability from any such claims.

-    Approximately 5,500 claims,  totaling approximately $5.6 billion,  alleging
     rights  to  payment  for  financing,  environmental,  trade  debt and other
     matters  (the  "General  Claims").  The  Company  has  previously  recorded
     approximately $3.7 billion in liabilities for these claims.  Based upon the
     claims information submitted,  the General Claims with the largest variance
     from the recorded  amounts are:  claims by the United States  Department of
     Treasury,  totaling  approximately  $530 million,  in connection with taxes
     (see  discussion   under  the  heading  "Tax  Claim"  in  Note  10  to  the



<PAGE>


                                     - 57 -

ITEM 2.       MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL
              CONDITION AND RESULTS OF OPERATIONS (continued)

     Consolidated  Financial  Statements);  a contingent claim for approximately
     $458 million by the Pension Benefit Guaranty Corporation, as described more
     fully  under  the  heading  "PBGC  Claim"  in Note  10 to the  Consolidated
     Financial   Statements;   claims   for   contract   rejections,    totaling
     approximately  $310  million,  of  which  approximately  $250  million  are
     protective  claims  covering  contracts which have not been rejected by the
     Debtors as of  September  30,  2002;  a $275  million  class  action  claim
     involving  alleged problems with a specialty  roofing product,  which claim
     Owens  Corning  does not  believe is  meritorious  based upon its  historic
     experience  with  servicing  its  warranty  program for such  product;  and
     environmental claims, totaling approximately $244 million.

Owens  Corning  has  recorded  liability  amounts  for those  claims that can be
reasonably  estimated and which it believes are probable of being allowed by the
Bankruptcy  Court.  At this time, it is  impossible  to reasonably  estimate the
value of all the claims that will ultimately be allowed by the Bankruptcy Court,
due to the  uncertainties  of the Chapter 11 process,  the in-progress  state of
Owens Corning's investigation of submitted claims, and the lack of documentation
submitted in support of many claims.  Owens Corning continues to evaluate claims
filed  in the  Chapter  11  Cases  and  will  make  such  adjustments  as may be
appropriate.   Any  such   adjustments   could  be  material  to  the  Company's
consolidated  financial  position and results of operations in any given period.
For a discussion  of liability  amounts in respect of asbestos  personal  injury
claims, see Note 10 to the Consolidated Financial Statements.

ASBESTOS BAR DATE

As  indicated  above,  the General  Bar Date does not apply to  asbestos-related
personal  injury claims and  asbestos-related  wrongful death claims (other than
claims for contribution,  indemnity,  reimbursement, or subrogation). A bar date
for filing proofs of claim against the Debtors with respect to  asbestos-related
personal injury claims and  asbestos-related  wrongful death claims has not been
set.  Despite this,  approximately  2,900 proofs of claim (in addition to claims
described above under "General Bar Date"),  totaling approximately $2.2 billion,
with respect to  asbestos-related  personal  injury or wrongful death were filed
with the Bankruptcy  Court in response to the General Bar Date. Of these claims,
Owens Corning has identified  approximately 1,100,  totaling  approximately $0.5
billion, as Objectionable Claims, for which it will file a motion to dismiss. Of
the  remaining  claims,  Owens  Corning  believes  that a  substantial  majority
represented  claimants  that had  previously  asserted  asbestos-related  claims
against the Company.  Owens Corning will address all  asbestos-related  personal
injury and wrongful  death claims in the future as part of the Chapter 11 Cases.
Please  see Note 10 to the  Consolidated  Financial  Statements  for  additional
information concerning asbestos-related liabilities.

INCREASE IN ASBESTOS RESERVES

Owens  Corning has reviewed its and  Fibreboard's  asbestos-related  reserves in
light of recent developments, including information derived from Owens Corning's
recent  discussions and negotiations  with the various  creditor  constituencies
concerning their relative  positions on an acceptable plan of reorganization and
information  derived  from Owens  Corning's  and  Fibreboard's  own  analyses of
liability,  prepared by an outside  consultant for purposes of facilitating plan
discussions.  As a result  of this  review,  Owens  Corning  has  increased  its
reserves for the period ended  September  30, 2002 through  charges to income of
$1.381 billion for Owens Corning  asbestos-related  liabilities and $975 million
for Fibreboard asbestos-related  liabilities,  for an aggregate charge of $2.356
billion.  As a result of the  increases in the  reserves,  Owens  Corning's  and
Fibreboard's  asbestos-related  reserves  as of  September  30, 2002 were $3.564
billion and $2.310  billion,  respectively,  for an aggregate  reserve of $5.874
billion. In addition, Owens Corning notes that, since the reserve for Fibreboard
asbestos-related liabilities exceeds the funds held in the Fibreboard Settlement
Trust,  the residual amount payable to charity under the terms of the Trust (see
Note 11 to the Consolidated Financial Statements) has been reduced to zero as of
September 30, 2002. Please see Note 10 to the Consolidated  Financial Statements
for additional information concerning asbestos-related liabilities.


<PAGE>


                                     - 58 -

ITEM 2.       MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL
                              CONDITION AND RESULTS OF OPERATIONS (continued)

RESULTS OF OPERATIONS

Business Overview

Owens  Corning is committed to  continuing  to invest in our  businesses  and to
provide quality products to our customers.  The Company is committed to engaging
our employees to provide  outstanding  support for our customers and world-class
performance for our Company.

Owens  Corning's   strategy  also  includes  the  divestiture  of  non-strategic
businesses and the realignment of existing businesses.  During the first quarter
of 2001, the Company  completed the sale of the majority of its Engineered  Pipe
Business, a producer of glass-reinforced plastic pipe. During the fourth quarter
of 2001, the Company completed the sale of its remaining 40% interest in Alcopor
Owens  Corning,  a  producer  of  insulation  products  in Europe and the United
Kingdom.  During the third quarter of 2002, the Company increased its investment
in Owens  Corning  (India)  Limited,  a  producer  of  composite  materials,  to
approximately 60%.

Quarter and Nine Months Ended September 30, 2002

SALES AND PROFITABILITY FOR THE QUARTER ENDED SEPTEMBER 30, 2002

Net sales for the quarter ended  September 30, 2002 were $1.306  billion,  up 1%
from the third  quarter  of 2001  level of $1.291  billion,  principally  due to
higher  volumes in U.S.  Building  Materials.  Sales in the  Building  Materials
segment  increased 2% to $963 million in the third quarter of 2002,  compared to
$943 million in the third quarter of 2001,  primarily due to volume increases in
the U.S. roofing and recreational  vehicle markets.  In the Composite  Solutions
business, sales were $343 million during the third quarter of 2002, down 1% from
$348 million in 2001,  primarily  due to lower sales volume in the U.S. In total
for the Company,  sales outside the U.S.  represented  13% of total sales during
the  third  quarter  of 2002 and  2001.  Please  see Note 2 to the  Consolidated
Financial  Statements for further  details of segment  sales.  On a consolidated
basis,  there  was  a  more  favorable  currency  translation  impact  on  sales
denominated in foreign  currencies  during the third quarter of 2002 compared to
the third  quarter of 2001.  Gross margin for the quarters  ended  September 30,
2002 and 2001 was 16% and 19% of net sales, respectively.

On a comparative  basis,  income from  operations  decreased to a loss of $2.342
billion for the quarter  ended  September 30, 2002 from income of $63 million in
2001.  This decrease was primarily due to the provision for asbestos  litigation
claims taken in the third quarter of 2002. Other factors included higher Chapter
11 related costs and higher  restructure and other charges partially offset by a
decrease in marketing and  administrative  expenses to $131 million in the third
quarter  of  2002,  compared  to $141  million  in the  third  quarter  of 2001,
primarily  as a result of cost  saving  initiatives  implemented  as part of the
Company's ongoing efforts to reduce cost. Please see the table below for further
details of these items. Further negatively impacting income from operations were
increased  costs  associated  with  post-retirement  health and pension  related
expenses,  which  were up  approximately  $9  million  from  the  quarter  ended
September 30, 2001, due mainly to changes in plan assumptions and prior declines
in plan asset  values.  The  primary  drivers of income from  operations  in our
business  segments  were  lower  price  in  our  Composites  business  and  U.S.
residential  insulation markets,  lower volume in our Composites  business,  and
higher  material  costs.  These  factors  were  partially  offset  by  increased
manufacturing  productivity,  primarily  in  our  insulation  and  vinyl  siding
businesses,  increases  in both  price  and  volume in our  residential  roofing
markets,  and higher prices in our residential siding market.  Please see Note 2
to the Consolidated  Financial  Statements for further details of segment income
from operations.


<PAGE>


                                     - 59 -

ITEM 2.       MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL
                              CONDITION AND RESULTS OF OPERATIONS (continued)

Income from ongoing  operations  is a  measurement  utilized by  management  for
evaluating  the results of the Company.  It is provided to give an indication of
the  performance  of the Company after taking into account the items detailed in
the table below. Income from ongoing operations is not a recognized  measurement
of results under accounting  principles generally accepted in the United States,
and may not be consistent with similarly titled amounts of other companies.  The
reconciliation  from income from operations to income from ongoing operations is
as follows:

                                                                Quarter Ended
                                                                September 30,
                                                                -------------
                                                        (In millions of dollars)
                                                               2002       2001
                                                               ----       ----
Reported income (loss) from operations                       $(2,342)   $    63
Restructure charges (See below)                                   11          8
Other charges in cost of sales and operating expenses
  (See below)                                                     33         27
Chapter 11 related reorganization items (See Note 1)              35         23
Proceeds from insurance for asbestos litigation claims,
  excluding Fibreboard (See Note 10)                               -         (5)
Provision for asbestos litigation claims (See Note 10)         2,356          -
                                                             -------    -------
Income from ongoing operations                               $    93    $   116
                                                             =======    =======

For the quarter ended September 30, 2002,  Owens Corning  reported a net loss of
$2.359 billion, or $(42.84) per share on a diluted basis, compared to net income
of $27  million,  or $.46 per share on a diluted  basis,  for the quarter  ended
September  30,  2001.  Cost of  borrowed  funds was $5 million  and $4  million,
respectively,  for the  referenced  quarters  (from the  Petition  Date  through
September  30,  2002,  contractual  interest  expense not accrued or recorded on
pre-petition  debt totaled  $329  million,  of which $35 million  relates to the
third  quarter  of 2002 and $42  million  relates  to the third  quarter of 2001
(please see Note 1 to the Consolidated Financial Statements)).

SALES AND PROFITABILITY FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002

Net sales for the nine months ended September 30, 2002 were $3.698  billion,  up
3% from  the  $3.597  billion  reported  for the  first  nine  months  of  2001,
principally due to higher volumes in U.S. Building Materials partially offset by
lower volume in the European composite market.

On a  comparative  basis,  income  from  operations  for the nine  months  ended
September  30,  2002 was a loss of  $2.269  billion  compared  to income of $103
million for 2001.  This decrease was primarily due to the provision for asbestos
litigation  claims taken in the third quarter of 2002.  Other  factors  included
lower restructure and other charges,  partially offset by an increase in Chapter
11 related costs. Please see the table below for further details of these items.
Further  negatively  impacting  income  from  operations  were  increased  costs
associated with post-retirement health and pension related expenses,  which were
up approximately  $27 million from the nine months ended September 30, 2001, due
mainly to changes in plan  assumptions  and prior declines in plan asset values.
Factors  affecting income from operations in our business segments include sales
volume and price decreases in our Composites business, partially offset by sales
volume increases primarily in our roofing and siding businesses. Please see Note
2 to the Consolidated Financial Statements for further details of segment income
from operations.


<PAGE>


                                     - 60 -

ITEM 2.       MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL
                              CONDITION AND RESULTS OF OPERATIONS (continued)

The reconciliation from income from operations to income from ongoing operations
(see description above) is as follows:

                                                               Nine Months Ended
                                                                 September 30,
                                                                 -------------
                                                        (In millions of dollars)
                                                                2002       2001
                                                                ----       ----
Reported income (loss) from operations                       $(2,269)   $   103
Restructure charges (See below)                                   18         24
Other charges in cost of sales and operating expenses
  (See below)                                                     35         70
Chapter 11 related reorganization items (See Note 1)              85         60
Proceeds from insurance for asbestos litigation claims,
  excluding Fibreboard (See Note 10)                              (5)        (5)
Provision for asbestos litigation claims (See Note 10)         2,356          -
                                                             -------    -------
Income from ongoing operations                               $   220    $   252
                                                             =======    =======

The net loss for the nine months ended September 30, 2002 was $2.770 billion, or
$(50.31) per share on a diluted basis,  compared to net income of $46 million or
$.77 per share on a diluted  basis for the same  period in 2001.  In addition to
the  asbestos-related  charges,  results for the nine months ended September 30,
2002 reflect a non-cash  charge of $491 million ($441 million net of tax) as the
result  of the  implementation  of SFAS No.  142  (see  discussion  below  under
"Accounting  Changes").  Cost of borrowed funds was $13 million and $11 million,
respectively,  for the referenced periods of 2002 and 2001 (contractual interest
expense not accrued or recorded on  pre-petition  debt  totaled $106 million for
the nine months  ended  September  30, 2002 and $134 million for the nine months
ended  September  30,  2001  (please  see Note 1 to the  Consolidated  Financial
Statements)).

RESTRUCTURING OF OPERATIONS AND OTHER CHARGES

Ongoing Business Review

In connection  with the Chapter 11 proceedings  and the development of a plan or
plans of  reorganization,  the Company has initiated a  comprehensive  strategic
review  of its  businesses.  During  the  course  of that  review,  the  Company
anticipates that additional  restructuring and similar charges,  including asset
impairment and wind-up costs,  may be identified and recorded  during the fourth
quarter of 2002 and  periods  beyond.  Such  charges  could be  material  to the
consolidated  financial position and results of operations of the Company in any
given period.  In addition,  Owens Corning notes that certain of its  businesses
are operated wholly or in part through subsidiary  entities.  To the extent that
any  restructuring  or similar  charges  impact such  subsidiary  entities,  the
financial  condition or results of operations of such subsidiary  entities,  and
potentially other entities holding obligations of such subsidiary entities,  may
be adversely impacted, perhaps materially.

Third Quarter 2002

In the  third  quarter  of  2002,  certain  previously  announced  restructuring
programs continued throughout the period. In addition, a strategic review of the
Company's businesses resulted in additional  restructuring  charges. The Company
recorded  approximately  $44 million in pretax  charges in the third  quarter of
2002.  These pretax  charges were  comprised of an $11 million  pretax charge to
restructure costs (classified as a separate  component of operating  expenses in
the Consolidated Statement of Income (Loss)) and a charge of $33 million to cost
of sales. The $11 million restructure charge represents $3 million for severance



<PAGE>


                                     - 61 -

ITEM 2.       MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL
                              CONDITION AND RESULTS OF OPERATIONS (continued)

costs associated with the elimination of approximately 215 positions,  primarily
impacting  manufacturing  and  administrative  personnel  in the  US,  of  which
approximately  57  were  actually  terminated  as of  September  30,  2002.  The
remaining  $8  million  represents  charges  for the  closing  of  non-strategic
businesses and associated  facilities,  which consisted mainly of non-cash asset
write-downs to fair values and exit cost liabilities.

The $33 million charge to cost of sales mainly  includes a charge of $30 million
to write down a group of assets within the Company's  Building Materials Systems
segment to estimated  realizable  value. The groups of assets are being marketed
for sale and  accordingly a valuation of the future cash flows of the assets was
completed  using  assumptions  consistent  with current market  conditions.  The
Company's ultimate decisions and actions regarding these assets require approval
by the Bankruptcy Court and, due to  uncertainties  in the valuations  performed
around future market conditions and bankruptcy court proceedings, it is possible
that the  estimate  of fair  value  may  materially  change  in the  future.  In
addition, various  parties-in-interest may perform their own valuations of these
assets and such valuations may differ  significantly from the Company's estimate
of fair value.  The remaining $3 million charge  represents  charges  associated
with the Company's plan to realign its Newark,  Ohio manufacturing  facility and
various costs. The realignment plan for the Newark facility was announced in the
third quarter of 2000 and is anticipated to be complete in the fourth quarter of
2002.

Second Quarter 2002

During the second quarter of 2002, certain restructuring programs put into place
during 2000 and 2001  continued  due to the timing of events in these  programs.
The  combination of these  continued  restructuring  programs led to the Company
recording  approximately  $3 million in a pretax credit in the second quarter of
2002.  This pretax credit was  comprised of a $5 million  pretax credit to other
operating  expense,  a $1 million pretax credit to restructure costs (classified
as a separate component of operating  expenses in the Consolidated  Statement of
Income (Loss)),  and a $3 million pretax charge to cost of sales.  The credit to
other  operating  expense  included a credit for the settlement of certain funds
subject  to an  administrative  freeze  that  were  previously  estimated  to be
unrealizable (See Note 1). The rights to these funds were originally transferred
to the  Company as part of the sale of the  Company's  40%  interest  in Alcopor
Owens Corning (See Note 5). The credit to restructure costs included adjustments
for a  reduction  in the number of  positions  to be  eliminated  as part of the
restructure  charge taken  during 2001 (see below).  The charge to cost of sales
included  charges  associated  with the Company's  previously  announced plan to
realign its Newark,  Ohio  manufacturing  facility and a write down to inventory
mainly to reflect updated estimates of the net realizable value.

First Quarter 2002

In response to the slowed economy and to the declining margins in the composites
business,  the  Company  has  continued  to assess  cost  structures  of certain
businesses  and  facilities  as well as  overhead  expenditures  for the  entire
company. In addition,  certain restructuring programs put into place during 2000
and 2001  continued in the first  quarter of 2002 due to the timing of events in
these programs.  The combination of these continued  restructuring  programs and
the  continued  assessment  of  the  businesses  led to  the  Company  recording
approximately  $12 million in pretax charges in the first quarter of 2002. These
pretax charges were comprised of an $8 million pretax  restructure charge and $4
million of pretax other charges.  The restructure  charge  represents  severance
costs associated with the elimination of approximately 230 positions,  primarily
in the U.S.,  which was adjusted to  approximately  218 in the second quarter of
2002 (see  above) of which  approximately  210 were  actually  terminated  as of
September  30, 2002.  The primary  groups  impacted  include  manufacturing  and
administrative personnel. As of September 30, 2002, approximately $5 million has
been paid and  charged  against the  reserve.  The  restructure  charge has been
classified  as a separate  component  of  operating  expenses  on the  Company's
Consolidated Statement of Income (Loss).



<PAGE>


                                     - 62 -

ITEM 2.       MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL
                              CONDITION AND RESULTS OF OPERATIONS (continued)

The $4 million in pretax other charges included $2 million in charges associated
with  the  Company's  previously  announced  realignment  at  its  Newark,  Ohio
manufacturing  facility  and various  other  charges  totaling  $2 million.  The
realignment  plan for the Newark  facility was announced in the third quarter of
2000 and is  anticipated  to be complete in the fourth  quarter of 2002. As work
progresses  on the  facility,  costs are recorded as they are  incurred.  The $4
million  pretax charge was accounted for as a $5 million charge to cost of sales
and a $1 million credit to other operating expenses.

2001 Charges

The Company spent a significant  amount of time reviewing its cost structures in
2001 as a response to the impact of the weaker  economy.  This review led to the
Company  recording  approximately  $140 million in pretax  charges  during 2001,
comprised of a $26 million pretax  restructure charge and $114 million of pretax
other  charges.  The $114 million of pretax other charges was accounted for as a
$79 million  pretax  charge to cost of sales and a $35 million  pretax charge to
other operating expense. The Company recorded $46 million in the fourth quarter,
$35  million in the third  quarter,  $17  million in the second  quarter and $42
million in the first quarter.

The $26 million  charge for  restructuring  included  $21 million for  severance
costs associated with the elimination of approximately 460 positions,  primarily
impacting manufacturing and administrative personnel in the U.S., Canada and the
U.K., of which  approximately  450 were actually  terminated as of September 30,
2002.  The  remaining $5 million  represented  a charge for the  divestiture  of
non-strategic  businesses and  facilities,  which  consisted  mainly of non-cash
asset write-downs to fair value and exit cost  liabilities.  As of September 30,
2002, approximately $19 million has been paid and charged against this reserve.

The $114 million of other  charges  included $29 million in costs related to the
realignment  of  the  Newark  manufacturing   facility;  $39  million  of  asset
impairments mainly associated with the building materials business,  principally
to  write-down  assets  to net  estimated  fair  value on a held in use basis in
certain manufacturing  facilities due to changes in the Company's  manufacturing
and marketing  strategies;  $6 million to write down inventory mainly to reflect
updated  estimates of the net  realizable  value;  $4 million to write-down  the
Company's  investment and related assets in Alcopor Owens Corning, a producer of
insulation  products in Europe and the United Kingdom,  to net realizable  value
(the sale of the Company's investment in this joint venture was completed in the
fourth  quarter of 2001);  a $2 million  pretax  loss from  assets held for sale
which represented the results of operations for the Company's investments in its
Pipe joint  ventures and  subsidiaries  on a  held-for-sale  basis (the sale was
completed in February 2001); and various other charges totaling $34 million.

INCOME TAXES

The Company  currently  projects  that its  effective tax rate for the full year
2002 will be (3%),  compared to 55% for the full year 2001. In the third quarter
of 2002, the Company increased its asbestos-related  reserves through charges to
income of $1.381 billion for Owens Corning asbestos-related liabilities and $975
million for Fibreboard asbestos-related  liabilities, for an aggregate charge of
$2.356  billion  (See  Note 10 to the  Consolidated  Financial  Statements).  In
connection  with such charges,  management  evaluated the amount of deferred tax
assets  attributable  to such  charges  and  also  assessed  the  likelihood  of
realization  of such  deferred  tax assets in light of the  Company's  financial
position  and the  Chapter 11  proceedings.  As the  result of such  assessment,
management  determined that, as of September 30, 2002, a valuation allowance was
required  for the full amount of such  attributable  deferred  tax assets.  As a
result,  no tax benefit was recorded in  connection  with the third quarter 2002
asbestos-related charges discussed above.


<PAGE>


                                     - 63 -

ITEM 2.       MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL
                              CONDITION AND RESULTS OF OPERATIONS (continued)

LIQUIDITY, CAPITAL RESOURCES AND OTHER RELATED MATTERS

Cash flow from operations was $86 million in the nine months ended September 30,
2002, compared to $114 million for the nine months ended September 30, 2001. The
decrease  in cash flow from  operations  in 2002 is  primarily  attributable  to
working capital items,  including the cash flow effect of a decrease in accounts
payable  and  accrued  liabilities  of $43  million  in the  nine  months  ended
September 30, 2002 compared to an increase of $125 million in the same period of
2001.  The effects of the changes in these items largely  offset the net effects
of higher pension fund contributions during 2001.

Total  inventories  at  September  30, 2002  increased  by $56 million  from the
December  31,  2001 level due  largely  to the  seasonal  build of  inventories.
Receivables  at September  30, 2002 were $570 million,  a $153 million  increase
over the  December  31, 2001 level,  attributable  to the  seasonal  increase in
sales.  At September  30, 2002,  Owens  Corning's  net working  capital was $940
million and the Company's  current ratio was 2.13,  compared to $800 million and
1.94,   respectively,   at  December   31,  2001  and  $874  million  and  2.11,
respectively, at September 30, 2001.

Investing  activities consumed $172 million of cash during the nine months ended
September 30, 2002, compared to $115 million in the same period of 2001. Capital
spending for property, plant and equipment, excluding acquisitions, for the nine
months was $171 million in 2002 and $133  million in 2001.  We  anticipate  that
2002 spending for capital and investments will be approximately  $250 million, a
portion  of which is  uncommitted.  We expect  that these  expenditures  will be
funded from the Company's operations and existing cash on hand.

Financing  activities in the nine months ended September 30, 2002 resulted in no
change in cash,  compared to an increase of $1 million during the same period in
2001. The results for 2002 reflect an allowed claim of approximately $19 million
in debt subject to compromise as part of our investment in Owens Corning (India)
Limited,  which increased our ownership to approximately 60%, and an $18 million
application of funds previously subject to administrative freeze (see discussion
below) to satisfy certain pre-petition  indebtedness.  At September 30, 2002, we
had $2.854 billion of borrowings subject to compromise and $176 million of other
borrowings  (of which $97 million were in default as a consequence of the Filing
and  therefore  classified as current on the  Consolidated  Balance  Sheet).  At
September  30, 2001, we had $2.843  billion of borrowings  subject to compromise
and $114 million of other  borrowings (of which $97 million were in default as a
consequence   of  the  Filing  and  therefore   classified  as  current  on  the
Consolidated Balance Sheet).

At September 30, 2002, the Company had $686 million of Cash and Cash Equivalents
(of which approximately $4 million was subject to administrative  freeze pending
the  resolution  of  certain  alleged  set-off  rights by  certain  pre-petition
lenders).  During the second quarter of 2002,  the  Bankruptcy  Court approved a
settlement reached with certain pre-petition lenders covering  approximately $36
million  of  funds  previously  subject  to  administrative   freeze  (of  which
approximately   $32  million  was   previously   reflected   in  cash  and  cash
equivalents).  Under this  settlement,  the Company received  approximately  $18
million of the funds and the  remainder  was  applied by the  lenders to satisfy
certain pre-petition indebtedness.

The  Company  has  significant  liabilities  related  to  pension  plans for its
employees.  The Company has reviewed its assumptions related to the valuation of
this  liability,  including  the rate of return on pension  plan  assets and the
discount rate on the liability  compared to actual  results to date. The rate of
return and discount rate have been significantly  lower than expected.  This may
result in management  changing its assumptions for 2003,  which could materially
increase expense. In addition, the actual decrease in the market value of assets
during 2002 and lower  interest  rates may result in a material  increase in the
Company's required contributions to the pension plans in future years.


<PAGE>


                                     - 64 -

ITEM 2.       MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL
                              CONDITION AND RESULTS OF OPERATIONS (continued)

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"),  which currently expires November 15, 2002.
The Debtors have reached  agreement  with the lenders to renew the DIP Financing
for an additional term of two years, with a reduced maximum availability of $250
million. This renewal is subject to Bankruptcy Court approval, which is expected
prior to the current expiration.  There were no borrowings outstanding under the
DIP facility at September 30, 2002,  however,  approximately  $56 million of the
availability under this credit facility was utilized as a result of the issuance
of standby letters of credit and similar uses.

As a  consequence  of the Filing and the  impact of  certain  provisions  of 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 pay  dividends  and to  transfer  cash and other
assets to each other and to their affiliates.

The Company believes,  based on information  presently available to it, that its
cash and cash equivalents,  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 and to renew the DIP
Financing  as  described  above,  (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.

ACCOUNTING CHANGES

Effective January 1, 2002, the Company adopted Statement of Financial Accounting
Standards No. 142,  "Goodwill and Other Intangible Assets" (SFAS No. 142), which
it will use to account for goodwill and other  intangibles  in the future.  SFAS
No. 142 eliminates the amortization of goodwill and indefinite-lived  intangible
assets;  identifiable  intangible  assets with a  determinable  useful life will
continue to be amortized.  SFAS No. 142 requires an annual review for impairment
using a fair value methodology.

The Company  applied SFAS No. 142 beginning in the first quarter of 2002,  which
required  the  Company  to  cease  amortizing   goodwill  and   indefinite-lived
intangibles.  The  Company  has  no  indefinite-lived  intangibles,   separately
identified.  In addition,  the Company tested goodwill for impairment  using the
two-step  process  prescribed  in SFAS No.  142.  The first step is a screen for
potential  impairment.  The second step,  which is performed on those  reporting
units determined to have potential  impairment based on the first step, measures
the amount of the  impairment,  if any. The results of the first step  indicated
that the carrying values of some reporting units exceeded the corresponding fair
values,  which were  determined  based on the discounted  estimated  future cash
flows of the  reporting  units.  In the second  step,  the implied fair value of
goodwill of these reporting  units was determined  through the allocation of the
fair  value to the  underlying  assets  and  liabilities.  The  January  1, 2002
carrying value of the goodwill in these reporting  units exceeded  their implied



<PAGE>


                                     - 65 -

ITEM 2.       MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL
                              CONDITION AND RESULTS OF OPERATIONS (continued)

fair value by $491 million, resulting in a non-cash charge of $491 million ($441
million net of tax).  This charge was  determined  during the second  quarter of
2002 and, as required by SFAS No. 142, was recorded as a cumulative  effect of a
change in  accounting  principle  in the first  quarter  of 2002.  The  goodwill
recorded in the December 31, 2001 financial statements,  which included the $491
million described above, was supported by the undiscounted estimated future cash
flow of the  related  operations  in  accordance  with  Statement  of  Financial
Accounting  Standards  No. 121,  "Accounting  for the  Impairment  of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of".

Determining the fair value of goodwill  through the allocation of the fair value
to the underlying assets and liabilities requires management to make significant
assumptions,  including but not limited to,  projections of cash flow,  discount
rate,  and  general  market  conditions.  Management's  judgments  are  based on
historical  experience,  market trends,  economic trends, and other information.
While  management  believes their estimates  based on the  assumptions  used are
reasonable, actual results could differ from these estimates.

To maintain a  consistent  basis for  measurement  of  performance,  the Company
reclassified  previously  reported segment  information  related to goodwill and
total assets to correspond to the earnings  measurements by which the businesses
are evaluated. Accordingly,  approximately $15 million of goodwill as of January
1, 2002, was  reclassified  to the Building  Materials  Systems segment from the
Composite  Solutions segment.  Previously  reported segment information has been
revised  to  reflect  this  change  (see  Note 2 to the  Consolidated  Financial
Statements).

The  changes in goodwill  by segment  during the  quarter and nine months  ended
September 30, 2002, were as follows:

<TABLE>
<CAPTION>
                                                  Quarter Ended September 30, 2002
                                                  --------------------------------
                                                                    Foreign Exhange     Balance at
                               Balance at                            Exchange and      September 30,
                              June 30, 2002       Reallocation           Other              2002
                              -------------       ------------           -----              ----
                                                      (In millions of dollars)
<S>                              <C>               <C>                   <C>              <C>
Composite Solutions              $     18          $     -               $   -            $    18
Building Materials Systems            106                -                  (2)               104
                                 --------          -------               ------           -------

Total                            $    124          $     -               $  (2)           $   122
                                 ========          =======               ======           =======
</TABLE>

<TABLE>
<CAPTION>
                                             Nine Months Ended September 30, 2002
                                             ------------------------------------
                                             Effect of                           Foreign      Balance at
                          Balance at       Adopting SFAS                         Exchange   September 30,
                       December 31, 2001      No. 142        Reallocation        and Other        2002
                       -----------------      -------        ------------        ---------        ----
                                                      (In millions of dollars)
<S>                           <C>              <C>               <C>               <C>            <C>
Composite Solutions           $  33            $   -             $ (15)            $   -          $  18
Building Materials              577             (491)               15                 3            104
                              -----            -----             -----             -----          -----
Total                         $ 610            $(491)            $   -             $   3          $ 122
                              =====            =====             =====             =====          =====
</TABLE>



<PAGE>


                                     - 66 -

ITEM 2.       MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL
                              CONDITION AND RESULTS OF OPERATIONS (continued)

SFAS No. 142 does not provide for  restatement  of our results of operations for
periods  ending prior to January 1, 2002.  A  reconciliation  of the  previously
reported  net income and  earnings per share as if SFAS No. 142 had been adopted
prior to January 1, 2001 is presented as follows:

                                                       Quarter Ended
                                                       -------------
                                           September 30, 2002 September 30, 2001
                                           ------------------ ------------------
                                 (In millions of dollars, except per share data)

Net income (loss):
  Reported net income (loss)                     $  (2,359)         $   27
  Add back goodwill amortization, net of tax             -               4
                                                 ---------          ------
Adjusted net income (loss)                       $  (2,359)         $   31
                                                 =========          ======

Basic earnings (loss) per share:
  As reported                                    $  (42.84)         $  .50
  Add back goodwill amortization, net of tax             -             .07
                                                 ---------          ------
Adjusted basic earnings (loss) per share         $  (42.84)         $  .57
                                                 =========          ======

Diluted earnings (loss) per share:
  As reported                                    $  (42.84)         $  .46
  Add back goodwill amortization, net of tax             -             .06
                                                 ---------          ------
Adjusted diluted earnings (loss) per share       $  (42.84)         $  .52
                                                 =========          ======



                                                     Nine Months Ended
                                                     -----------------
                                         September 30, 2002   September 30, 2001
                                         ------------------   ------------------
                                 (In millions of dollars, except per share data)

Net income (loss):
  Reported net income (loss)                  $  (2,770)            $   46
  Add back cumulative effect of change in
     accounting principle, net of tax               441                  -
  Add back goodwill amortization, net of tax          -                 11
                                              ---------             ------
Adjusted net income (loss)                    $  (2,329)            $   57
                                              =========             ======

Basic earnings (loss) per share:
  As reported                                 $  (50.31)            $  .84
  Add back cumulative effect of change in
     accounting principle, net of tax              8.01                  -
  Add back goodwill amortization, net of tax          -                .20
                                              ---------             ------
Adjusted basic earnings (loss) per share      $  (42.30)            $ 1.04
                                              =========             ======

Diluted earnings (loss) per share:
  As reported                                 $  (50.31)            $  .77
  Add back cumulative effect of change in
     accounting principle, net of tax              8.01                  -
  Add back goodwill amortization, net of tax          -                .18
                                              ---------             ------
Adjusted diluted earnings (loss) per share    $  (42.30)            $  .95
                                              =========             ======


<PAGE>


                                     - 67 -

ITEM 2.       MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL
                              CONDITION AND RESULTS OF OPERATIONS (continued)

All  of  the  Company's   acquired  other  intangible   assets  are  subject  to
amortization.  Other intangible asset amortization  expense was approximately $1
million  in the third  quarter  of 2002 and 2001.  The  Company  estimates  that
amortization  of intangibles  will be  approximately  $3 million for each of the
next five years. The components of other intangible assets are as follows:

  <TABLE>
<CAPTION>
                                                    September 30, 2002
                                                    ------------------
                               Weighted Average    Gross Carrying              Accumulated
                                    Lives              Amount                  Amortization
                                    -----              ------                  ------------
                                                           (In millions of dollars)
<S>                                     <C>             <C>                         <C>
          Contract-based                6               $    3                      $   (1)
          Technology-based             22                   17                          (9)
          Marketing-related             6                   13                          (8)
                                                        ------                      -------
                                                        $   33                      $  (18)
                                                        ======                      =======
</TABLE>

Effective January 1, 2002, the Company adopted Statement of Financial Accounting
Standards  No. 144,  "Accounting  for the  Impairment  of Disposal of Long-Lived
Assets".  This Statement  addresses  financial  accounting and reporting for the
impairment or disposal of long-lived  assets.  This  Statement  supersedes  FASB
Statement No. 121,  "Accounting for the Impairment of Long-Lived  Assets and for
Long-Lived  Assets  to  Be  Disposed  Of,"  and  the  accounting  and  reporting
provisions  of APB  Opinion  No.  30,  "Reporting  the  Results  of  Operations,
Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary,
Unusual and Infrequently Occurring Events and Transactions," for the disposal of
a segment of a business (as previously defined in that Opinion).  This Statement
also amends ARB No. 51,  "Consolidated  Financial  Statements," to eliminate the
exception to  consolidation  for a subsidiary  for which control is likely to be
temporary.

Effective  January 1,  2003,  the  Company  will adopt  Statement  of  Financial
Accounting  Standards No. 145, "Rescission of FASB Statements No. 4, 44, and 64,
Amendment of FASB Statement No. 13, and Technical Corrections as of April 2002."
This Statement  rescinds FASB Statement No. 4, "Reporting  Gains and Losses from
Extinguishment of Debt", and an amendment of that Statement,  FASB Statement No.
64,  "Extinguishments of Debt Made to Satisfy Sinking-Fund  Requirements".  This
Statement also rescinds FASB Statement No. 44, "Accounting for Intangible Assets
of Motor Carriers". This Statement amends FASB Statement No. 13, "Accounting for
Leases",  to eliminate an  inconsistency  between the  required  accounting  for
sale-leaseback  transactions  and the  required  accounting  for  certain  lease
modifications  that have  economic  effects  that are similar to  sale-leaseback
transactions.   This  Statement   also  amends  other   existing   authoritative
pronouncements  to make various  technical  corrections,  clarify  meanings,  or
describe their applicability  under changed  conditions.  The impact of adoption
has not yet been determined.

Effective  January 1,  2003,  the  Company  will adopt  Statement  of  Financial
Accounting  Standards No. 146,  "Accounting  for Costs  Associated  with Exit or
Disposal   Activities."  This  Statement  addresses  financial   accounting  and
reporting for costs  associated  with exit or disposal  activities and nullifies
Emerging  Issues Task Force (EITF) Issue No. 94-3,  "Liability  Recognition  for
Certain  Employee  Termination  Benefits  and  Other  Costs to Exit an  Activity
(including Certain Costs Incurred in a Restructuring)."  This Statement requires
that a liability  for a cost  associated  with an exit or  disposal  activity be
recognized  and  measured  initially  at fair value only when the  liability  is
incurred.  The accounting for similar events and circumstances will be the same,
thereby  improving  the  comparability  and  representational   faithfulness  of
reported  financial  information.  The  impact  of  adoption  has not  yet  been
determined.


<PAGE>


                                     - 68 -

ITEM 2.       MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL
                              CONDITION AND RESULTS OF OPERATIONS (continued)

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. At September 30,
2002, a total of 56 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 $26 million reserve for our Superfund (and similar
state, local and private action) contingent liabilities.  In connection with the
Filing, the Company has initiated a program to identify and discharge contingent
environmental liabilities as part of its plan or plans of reorganization.  Under
the  program,  the  Company  will seek  settlements,  subject to approval of the
Bankruptcy Court, with various federal, state and local authorities,  as well as
private claimants. The Company will continue to review its environmental reserve
in light of such program and make such adjustments as may be appropriate.

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. The EPA issued
final  regulations  for wool  fiberglass  and  mineral  wool in June  1999,  for
amino/phenolic  resin in January 2000, for secondary  aluminum smelting in March
2000,  and for wet formed  glass mat and metal coil coating in June,  2002.  The
Company  anticipates  that  other  sources  to  be  regulated  will  be  asphalt
processing and roofing, open molded fiber-reinforced plastics, and large burners
and boilers. Based on information now known to the Company, including the nature
and limited number of regulated  materials Owens Corning emits, we do not expect
the Act to have a  materially  adverse  effect  on our  results  of  operations,
financial condition or long-term liquidity.


<PAGE>


                                     - 69 -

ITEM 3.       QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The  Company is exposed  to the impact of changes in foreign  currency  exchange
rates,  interest rates, and natural gas prices in the normal course of business.
The Company did not experience any significant  changes in such exposures during
2002. 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,
which has not changed from the Company's  objective  used during 2001 and is not
expected to change in 2003.

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 also enters into cash-settled natural gas futures to protect against
changes in natural gas prices.

The Company's policy is to use foreign currency,  interest rate, and natural gas
derivative  financial  instruments  only  to  the  extent  necessary  to  manage
exposures as described above. The Company does not enter into such  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 the  referenced  financial
instruments.  The VAR model uses  historical  foreign  exchange,  interest,  and
natural gas 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  average,  minimum,  and  maximum
potential  one-day loss in fair value that the Company would expect from adverse
changes in foreign currency exchange rates, interest rates or natural gas prices
assuming a 95% confidence level:

<TABLE>
<CAPTION>
                                      September 30,                                 December 31,
                                         2002                                           2001
                                         ----                                           ----
Risk Category              Average      Minimum        Maximum           Average       Minimum        Maximum
                           -------      -------        -------           -------       -------        -------
                            (In millions of dollars)
<S>                         <C>          <C>           <C>                <C>           <C>           <C>
Foreign currency            $   -        $   -         $   -              $   -         $   -         $   -
Interest rate               $  12        $  11         $  12              $  12         $  11         $  13
Natural gas                 $   -        $   -         $   1              $   1         $   1         $   1
</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 on debt subject to compromise.


<PAGE>


                                     - 70 -

ITEM 4.       CONTROLS AND PROCEDURES

CONTROLS AND PROCEDURES

The Company's Chief Executive Officer and Chief Financial Officer have evaluated
the effectiveness of the Company's  disclosure  controls and procedures (as such
term is defined in Rules 13a-14(c) and 15d-14(c)  under the Securities  Exchange
Act of 1934, as amended (the "Exchange  Act")) as of a date within 90 days prior
to the filing date of this quarterly  report (the "Evaluation  Date").  Based on
such  evaluation,  such officers have concluded that, as of the Evaluation Date,
the Company's  disclosure controls and procedures are effective in alerting them
on a timely basis to material information relating to the Company (including its
consolidated  subsidiaries)  required to be included in the  Company's  periodic
filings under the Exchange Act.

CHANGES IN INTERNAL CONTROLS

Since the Evaluation  Date,  there have not been any significant  changes in the
Company's internal controls or in other factors that could significantly  affect
such controls.


<PAGE>


                                     - 71 -

                           PART II. OTHER INFORMATION

ITEM 1.       LEGAL PROCEEDINGS

See Note 10, Contingent  Liabilities,  to Owens Corning's Consolidated Financial
Statements above, which is incorporated here by reference.

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 "USBC").  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
subsidiary Debtors that filed Chapter 11 petitions for relief are:

   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

In late 2001, the  asbestos-related  Chapter 11 cases pending in the District of
Delaware (the Chapter 11 Cases of Owens Corning and the cases of Armstrong World
Industries,  Inc.,  W.  R.  Grace & Co.,  Federal-Mogul  Global,  Inc.,  and USG
Corporation)  were ordered  transferred to the United States  District Court for
the District of Delaware (the "District  Court") before Judge Alfred M. Wolin to
facilitate  development and  implementation of a coordinated plan for management
(the  "Administrative  Consolidation").  The District Court has entered an order
referring  the  Chapter  11 Cases back to the USBC,  where they were  previously
pending,  subject to its ongoing right to withdraw such referral with respect to
any  proceedings or issues (the applicable  court from time to time  responsible
for any particular aspect of the Chapter 11 Cases being hereinafter  referred to
as the "Bankruptcy Court").

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 action to recover on pre-petition claims against the Debtors.  See Note
1,  Voluntary   Petition  for  Relief  Under  Chapter  11,  to  Owens  Corning's
Consolidated Financial Statements above.

ITEM 2.    CHANGES IN SECURITIES AND USE OF PROCEEDS

As a  consequence  of the Filing and the  impact of  certain  provisions  of the
Company's DIP Financing and in a cash management order entered by the Bankruptcy
Court,  the Company and its  subsidiaries  are subject to certain  restrictions,
including  on their  ability to pay  dividends  and to  transfer  cash and other
assets to each other and to their affiliates. See Note 1, Voluntary Petition for
Relief Under Chapter 11, to Owens Corning's  Consolidated  Financial  Statements
above.


<PAGE>


                                     - 72 -

                     PART II. OTHER INFORMATION (continued)

ITEM 3.       DEFAULTS UPON SENIOR SECURITIES

Substantially  all of the Company's  pre-petition  debt is now in default due to
the Filing. See Note 1, Voluntary Petition for Relief Under Chapter 11, to Owens
Corning's  Consolidated  Financial Statements above. As described in Note 1, the
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,  at the Petition  Date the Company  recorded the
Debtors'  pre-petition debt instruments at the allowed amount, as defined by SOP
90-7.  The  Consolidated  Financial  Statements  present  pre-petition  debt  of
Non-Debtor  Subsidiaries  that is in default due to the Filing, in the amount of
approximately  $97  million  as  of  September  30,  2002,  as  current  on  the
Consolidated Balance Sheet.

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

No matter was submitted to a vote of security  holders  during the quarter ended
September 30, 2002.

ITEM 5.       OTHER INFORMATION

The Company does not elect to report any information under this Item.

ITEM 6.       EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits.

         See Exhibit Index below, which is incorporated here by reference.

(b)      Reports on Form 8-K.

         During the quarter ended September 30, 2002, Owens Corning filed the
         following current report on Form 8-K:
         o        Dated August 12, 2002, under Item 9, to submit sworn
                  statements pursuant to Securities and Exchange Commission
                  Order No. 4-460.


<PAGE>


                                     - 73 -

                                   SIGNATURES

Pursuant to the  requirements  of the  Securities  Exchange  Act of 1934,  Owens
Corning  has  duly  caused  this  report  to be  signed  on  its  behalf  by the
undersigned, thereunto duly authorized.


                                                 OWENS CORNING

                                                 Registrant


Date:    October 28, 2002                        By:   /s/ Michael H. Thaman
     --------------------                        ------------------------------
                                                 Michael H. Thaman
                                                 Chairman of the Board and
                                                 Chief Financial Officer
                                                 (as duly authorized officer)



Date:    October 28, 2002                        By:   /s/ Charles E. Dana
     --------------------                        ------------------------------
                                                 Charles E. Dana
                                                 Vice President - Corporate
                                                 Controller and Global Sourcing


<PAGE>


                                     - 74 -

                                  CERTIFICATION

I, David T. Brown, Chief Executive Officer of the registrant, certify that:

(1)  I have reviewed this quarterly report on Form 10-Q of Owens Corning;

(2)  Based on my knowledge, this quarterly report does not contain any untrue
     statement of a material fact or omit to state a material fact necessary to
     make the statements made, in light of the circumstances under which such
     statements were made, not misleading with respect to the period covered by
     this quarterly report;

(3)  Based on my knowledge, the financial statements, and other financial
     information included in this quarterly report, fairly present in all
     material respects the financial condition, results of operations and cash
     flows of the registrant as of, and for, the periods presented in this
     quarterly report;

(4)  The registrant's other certifying officer and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     (a) designed such disclosure controls and procedures to ensure that
         material information relating to the registrant, including its
         consolidated subsidiaries, is made known to us by others within those
         entities, particularly during the period in which the report was being
         prepared;

     (b) evaluated the effectiveness of the registrant's disclosure controls and
         procedures as of a date within 90 days prior to the filing date of this
         quarterly report (the "Evaluation Date"); and

     c)  presented in this quarterly report our conclusions about the
         effectiveness of the disclosure controls and procedures based on our
         evaluation as of the Evaluation Date;

(5)  The registrant's other certifying officer and I have disclosed, based on
     our most recent evaluation, to the registrant's auditors and the audit
     committee of the registrant's board of directors (or persons performing the
     equivalent function):

     (a) all significant deficiencies in the design or operation of internal
         controls which could adversely affect the registrant's ability to
         record, process, summarize and report financial data and have
         identified for the registrant's auditors any material weaknesses in
         internal controls; and

     (b) any fraud, whether or not material, that involves management or other
         employees who have a significant role in the registrant's internal
         controls; and

(6)  The registrant's other certifying officer and I have indicated in this
     quarterly report whether or not there were significant changes in internal
     controls or in other factors that could significantly affect internal
     controls subsequent to the date of our most recent evaluation, including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.



October 28, 2002

/s/ David T. Brown
------------------------------
David T. Brown
Chief Executive Officer


<PAGE>


                                     - 75 -

                                  CERTIFICATION

I, Michael H. Thaman, Chief Financial Officer of the registrant, certify that:

(1)  I have reviewed this quarterly report on Form 10-Q of Owens Corning;

(2)  Based on my knowledge, this quarterly report does not contain any untrue
     statement of a material fact or omit to state a material fact necessary to
     make the statements made, in light of the circumstances under which such
     statements were made, not misleading with respect to the period covered by
     this quarterly report;

(3)  Based on my knowledge, the financial statements, and other financial
     information included in this quarterly report, fairly present in all
     material respects the financial condition, results of operations and cash
     flows of the registrant as of, and for, the periods presented in this
     quarterly report;

(4)  The registrant's other certifying officer and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     (a) designed such disclosure controls and procedures to ensure that
         material information relating to the registrant, including its
         consolidated subsidiaries, is made known to us by others within those
         entities, particularly during the period in which the report was being
         prepared;

     (b) evaluated the effectiveness of the registrant's disclosure controls and
         procedures as of a date within 90 days prior to the filing date of this
         quarterly report (the "Evaluation Date"); and

     c)  presented in this quarterly report our conclusions about the
         effectiveness of the disclosure controls and procedures based on our
         evaluation as of the Evaluation Date;

(5)  The registrant's other certifying officer and I have disclosed, based on
     our most recent evaluation, to the registrant's auditors and the audit
     committee of the registrant's board of directors (or persons performing the
     equivalent function):

     (a) all significant deficiencies in the design or operation of internal
         controls which could adversely affect the registrant's ability to
         record, process, summarize and report financial data and have
         identified for the registrant's auditors any material weaknesses in
         internal controls; and

     (b) any fraud, whether or not material, that involves management or other
         employees who have a significant role in the registrant's internal
         controls; and

(6)  The registrant's other certifying officer and I have indicated in this
     quarterly report whether or not there were significant changes in internal
     controls or in other factors that could significantly affect internal
     controls subsequent to the date of our most recent evaluation, including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.



October 28, 2002

/s/ Michael H. Thaman
------------------------------
Michael H. Thaman
Chief Financial Officer


<PAGE>


                                     - 76 -

                                  EXHIBIT INDEX

Exhibit
Number                     Document Description

 (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).

(99)          Additional Exhibits

              Subsidiaries of Owens Corning, as amended (filed herewith).

              Certification pursuant to 18 U.S.C. Section 1350, as adopted
                    pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
                    (Chief Executive Officer) (filed herewith).

              Certification pursuant to 18 U.S.C. Section 1350, as adopted
                    pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
                    (Chief Financial Officer) (filed herewith).