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 March 31, 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 March 31, 2002

                                   55,329,036


<PAGE>


                                      - 2 -

                          PART I. FINANCIAL INFORMATION
                          ITEM 1. FINANCIAL STATEMENTS

                         OWENS CORNING AND SUBSIDIARIES
                     CONSOLIDATED STATEMENT OF INCOME (LOSS)
                                   (unaudited)
<TABLE>
<S>                                                                               <C>                   <C>

                                                                                          Quarter Ended
                                                                                             March 31,
                                                                                             ---------
                                                                                    2002                2001
                                                                                    ----                ----
                                                                                     (In millions of dollars,
                                                                                        except share data)
NET SALES                                                                     $      1,107        $      1,067
COST OF SALES                                                                          935                 896
                                                                              ------------        ------------
    Gross margin                                                                       172                 171
                                                                              ------------        ------------

OPERATING EXPENSES
  Marketing and administrative expenses                                                127                 127
  Science and technology expenses                                                       10                  10
  Restructure costs (Note 4)                                                             8                   9
  Chapter 11 related reorganization items (Note 1)                                      25                  21
  Other                                                                                 (1)                 21
                                                                              -------------       ------------
     Total operating expenses                                                          169                 188
                                                                              ------------        ------------

INCOME (LOSS) FROM OPERATIONS                                                            3                 (17)

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

LOSS BEFORE PROVISION (CREDIT) FOR
  INCOME TAXES                                                                          (1)                (17)

Provision (credit) for income taxes                                                      -                  (5)
                                                                              ------------        -------------

LOSS BEFORE MINORITY INTEREST AND
  EQUITY IN NET INCOME (LOSS) OF AFFILIATES                                             (1)                (12)

Minority interest                                                                        -                   -

Equity in net income (loss) of affiliates                                               (5)                  2
                                                                              -------------       ------------

NET LOSS                                                                      $         (6)       $        (10)
                                                                              =============       =============

NET LOSS PER COMMON SHARE
Basic net loss per share                                                      $       (.11)       $       (.19)
                                                                              -------------       -------------
Diluted net loss per share                                                    $       (.11)       $       (.19)
                                                                              -------------       -------------

Weighted average number of common shares outstanding and common equivalent
  shares during the period (in millions)
Basic                                                                                 55.1                55.0
Diluted                                                                               55.1                55.0

                                       The accompanying notes are an integral part of this statement.
</TABLE>

<PAGE>


                                      - 3 -

                         OWENS CORNING AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                                   (unaudited)
<TABLE>
<S>                                                                                     <C>                <C>

                                                                                    March 31,       December 31,
                                                                                       2002              2001
                                                                                       ----              ----
ASSETS                                                                                (In millions of dollars)
------

CURRENT
Cash and cash equivalents                                                       $           561     $         764
Receivables                                                                                 530               417
Inventories (Note 6)                                                                        435               437
Deferred income taxes                                                                         1                 1
Income tax receivable                                                                        10                 5
Other current assets                                                                         20                25
                                                                                ---------------     -------------

  Total current                                                                           1,557             1,649
                                                                                ---------------     -------------

OTHER
Insurance for asbestos litigation claims (Note 10)                                            4                 4
Restricted cash - asbestos and insurance-related (Note 10)                                  162               169
Restricted cash, securities and other - Fibreboard (Notes 10 and 11)                      1,282             1,284
Deferred income taxes                                                                     1,188             1,187
Goodwill (Note 12)                                                                          612               610
Investments in affiliates                                                                    59                48
Other noncurrent assets                                                                     244               247
                                                                                ---------------     -------------

  Total other                                                                             3,551             3,549
                                                                                ---------------     -------------

PLANT AND EQUIPMENT, at cost
Land                                                                                         66                67
Buildings and leasehold improvements                                                        639               669
Machinery and equipment                                                                   2,854             2,854
Construction in progress                                                                    257               256
                                                                                ---------------     -------------
                                                                                          3,816             3,846

   Less - Accumulated depreciation                                                       (1,996)           (2,003)
                                                                                ----------------    --------------

       Net plant and equipment                                                            1,820             1,843
                                                                                ---------------     -------------

TOTAL ASSETS                                                                    $         6,928     $       7,041
                                                                                ===============     =============

                                       The accompanying notes are an integral part of this statement.
</TABLE>

<PAGE>


                                      - 4 -

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

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

CURRENT
Accounts payable and accrued liabilities                                      $        628     $         740
Short-term debt                                                                         43                43
Long-term debt - current portion                                                        66                66
                                                                              ------------     -------------

   Total current                                                                       737               849
                                                                              ------------     -------------

LONG-TERM DEBT                                                                           4                 5
                                                                              ------------     -------------

OTHER
Other employee benefits liability                                                      344               331
Pension plan liability                                                                 296               291
Other                                                                                  141               141
                                                                              ------------     -------------

  Total other                                                                          781               763
                                                                              ------------     -------------

LIABILITIES SUBJECT TO COMPROMISE (Note 1)                                           6,790             6,804
                                                                              ------------     -------------

COMMITMENTS AND CONTINGENCIES (Notes 1, 9 and 10)

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


MINORITY INTEREST                                                                       31                37
                                                                              ------------     -------------

STOCKHOLDERS' EQUITY
Common stock                                                                           697               697
Deficit                                                                             (1,963)           (1,957)
Accumulated other comprehensive loss                                                  (347)             (355)
Other                                                                                   (2)               (2)
                                                                              -------------    --------------

    Total stockholders' equity                                                      (1,615)           (1,617)
                                                                              -------------    --------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                    $      6,928     $       7,041
                                                                              ============     =============

                                       The accompanying notes are an integral part of this statement.
</TABLE>

<PAGE>


                                      - 5 -

                         OWENS CORNING AND SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                   (unaudited)
<TABLE>
<S>                                                                                      <C>             <C>

                                                                                             Quarter Ended
                                                                                               March 31,
                                                                                               ---------
                                                                                        2002              2001
                                                                                        ----              ----
                                                                                       (In millions of dollars)
NET CASH FLOW FROM OPERATIONS
   Net loss                                                                       $         (6)     $        (10)

   Reconciliation of net cash used in operating activities
     Noncash items:
       Provision for depreciation and amortization                                          47                54
       Provision (credit) for deferred income taxes                                         (2)               12
       Other                                                                                16                23
   Increase in receivables                                                                (126)             (127)
   Increase in inventories                                                                   -               (51)
   Increase (decrease) in accounts payable and accrued liabilities                        (119)               28
   Decrease in restricted cash and other - asbestos related (Note 10)                        7                49
   Change in liabilities subject to compromise (Note 1)                                     (4)              (82)
   Other                                                                                    15                31
                                                                                  ------------      ------------
      Net cash flow from operations                                               $       (172)     $        (73)
                                                                                  -------------     -------------

NET CASH FLOW FROM INVESTING

  Additions to plant and equipment                                                $        (39)     $        (42)
  Proceeds from the sale of affiliate or business (Note 5)                                  10                20
  Other                                                                                     (1)                5
                                                                                  -------------     ------------

      Net cash flow from investing                                                $        (30)     $        (17)
                                                                                  -------------     -------------
NET CASH FLOW FROM FINANCING

  Other reductions to long-term debt                                              $         (1)     $         (1)
  Net decrease in short-term debt                                                            -                (2)
  Other                                                                                      1                (1)
                                                                                  ------------      -------------

    Net cash flow from financing                                                  $          -      $         (4)
                                                                                  ------------      -------------

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

Net decrease in cash and cash equivalents                                                 (203)              (96)

Cash and cash equivalents at beginning of period                                           764               550
                                                                                  ------------      ------------

Cash and cash equivalents at end of period                                        $        561      $        454
                                                                                  ============      ============

                                    The accompanying notes are an integral part of this statement.
</TABLE>

<PAGE>




                                      - 6 -

                         OWENS CORNING AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.   VOLUNTARY PETITION FOR RELIEF UNDER CHAPTER 11

On October 5, 2000 (the "Petition Date"), Owens Corning and the 17 United States
subsidiaries  listed  below   (collectively,   the  "Debtors")  filed  voluntary
petitions  for relief  (the  "Filing")  under  Chapter  11 of the United  States
Bankruptcy Code (the  "Bankruptcy  Code") in the United States  Bankruptcy Court
for the District of Delaware (the "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.

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.

<PAGE>


                                      - 7 -

                         OWENS CORNING AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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


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 as to
when the Debtors will file such a plan or plans, or that such plan or plans will
be confirmed by the Bankruptcy Court and consummated. Owens Corning is unable to
predict what impact the Administrative  Consolidation will have on the timing of
the Debtors' filing or 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 August 30, 2002, and similarly  extended
the Debtors'  exclusive rights to solicit  acceptances of a reorganization  plan
from April 3, 2001 to October 31,  2002.  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 equity
holders  entitled to vote on the plan,  other parties in interest in the Chapter
11 Cases may be permitted to propose their own plan(s) of reorganization for the
Debtors.

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

Owens Corning is unable to predict at this time what  treatment will be accorded
under  any such  reorganization  plan or plans  to  inter-company  indebtedness,
licenses,   transfers  of  goods  and  services  and  other   inter-company  and
intra-company  arrangements,  transactions and  relationships  that were entered
into  prior  to  the  Petition  Date.  These   arrangements,   transactions  and
relationships  may be challenged by various  parties in the Chapter 11 Cases and
payments and  other obligations  in respect thereof may  be restricted  by order

<PAGE>


                                      - 8 -

                         OWENS CORNING AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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
be under any such plan or plans  with  respect to (1) the  guaranties  issued by
certain of Owens Corning's U.S. subsidiaries,  including Owens-Corning Fiberglas
Technology Inc. ("OCFT") and IPM, Inc., 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 now in
default)  or (2) OCFT's  license  agreements  with Owens  Corning  and  Exterior
Systems, Inc., a wholly-owned subsidiary of Owens Corning ("Exterior"), pursuant
to which OCFT licenses intellectual property to Owens Corning and Exterior.

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

Pursuant to the Bankruptcy  Code,  schedules have been filed by the Debtors with
the Bankruptcy  Court setting forth the assets and liabilities of the Debtors as
of the date of the Filing.  Differences  between amounts recorded by the Debtors
and claims filed by creditors will be  investigated  and resolved as part of the
proceedings in the Chapter 11 Cases.

Bar Dates for Filing Claims
---------------------------

In connection with the Chapter 11 Cases, the Bankruptcy Court set April 15, 2002
as the last date by which  holders of  pre-petition  claims  against the Debtors
must file their claims.  Any holder of a claim that was required to file a claim
by such 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. Such deadline to file claims 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. Because the Debtors have not completed evaluation
of the results of the April 15, 2002 bar date and the  asbestos bar date has not
yet been set,  the  ultimate  number and  allowed  amount of such claims are not
presently known.


<PAGE>


                                      - 9 -

                         OWENS CORNING AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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 March 31, 2002,  contractual  interest expense not accrued
or recorded on  pre-petition  debt  totaled $258  million,  of which $36 million
relates  to the  first  quarter  of 2002 and $50  million  relates  to the first
quarter of 2001.

At March 31, 2002, the Company had $561 million of Cash and Cash Equivalents (of
which approximately $38 million was subject to administrative freeze pending the
resolution of certain alleged set-off rights by certain  pre-petition  lenders).
In addition,  in connection with the Filing, the Debtors obtained a $500 million
debtor-in-possession  credit  facility  from a group of  lenders  led by Bank of
America, N.A. (the "DIP Financing"),  which currently expires November 15, 2002.
There were no borrowings  outstanding  under the DIP facility at March 31, 2002,
however,  approximately  $42  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, (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.

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

<PAGE>


                                     - 10 -

                         OWENS CORNING AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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.

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  which are  eliminated in the
Consolidated Financial Statements.



<PAGE>


                                     - 11 -

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

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

                                        OWENS CORNING AND SUBSIDIARIES
                                 DEBTOR-IN-POSSESSION STATEMENT OF INCOME (LOSS)
                                 FOR THE QUARTERS ENDED MARCH 31, 2002 AND 2001

<TABLE>
<S>                                                                                 <C>                    <C>
                                                                                    2002                   2001
                                                                                    ----                   ----
                                                                                      (In millions of dollars)

NET SALES                                                                          $     973            $       916
COST OF SALES                                                                            849                    794
                                                                                   ---------            -----------
     Gross margin                                                                        124                    122
                                                                                   ---------            -----------

OPERATING EXPENSES
     Marketing and administrative expenses                                               116                    111
     Science and technology expenses                                                       9                      9
     Restructure costs                                                                     6                      3
     Chapter 11 related reorganization items                                              25                     21
     Other (Including interest income from non-Debtors of $14
        million in 2002 and 2001)                                                        (27)                    13
                                                                                   ----------           -----------

        Total operating expenses                                                         129                    157
                                                                                   ---------            -----------

LOSS FROM OPERATIONS                                                                      (5)                   (35)

OTHER
     Cost of borrowed funds                                                                2                      6
     Other                                                                                 -                     (4)
                                                                                   ---------            ------------

LOSS BEFORE CREDIT FOR INCOME TAXES                                                       (7)                   (37)

Credit for income taxes                                                                   (2)                   (12)
                                                                                   ----------           ------------

INCOME (LOSS) BEFORE EQUITY IN NET INCOME OF AFFILIATES                                   (5)                   (25)

Equity in net income of affiliates                                                        (5)                     2
                                                                                   ----------            ----------

NET LOSS                                                                           $     (10)            $      (23)
                                                                                   ==========            ===========
</TABLE>

<PAGE>


                                     - 12 -

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

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

                                              OWENS CORNING AND SUBSIDIARIES
                                            DEBTOR-IN-POSSESSION BALANCE SHEET

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

CURRENT
     Cash and cash equivalents                                                       $    415               $     605
     Receivables, net                                                                     432                     315
     Receivables - non-debtors                                                            820                     849
     Inventories                                                                          317                     311
     Deferred income taxes                                                                  4                       4
     Income tax receivable                                                                 10                       4
     Other current assets                                                                  19                      25
                                                                                     --------               ---------

           Total current                                                                2,017                   2,113
                                                                                     --------               ---------

OTHER
     Insurance for asbestos litigation claims                                               4                       4
     Restricted cash and other - asbestos related                                         162                     169
     Restricted cash, securities and other - Fibreboard                                 1,282                   1,284
     Deferred income taxes                                                              1,140                   1,143
     Goodwill, net                                                                        514                     513
     Investments in affiliates                                                             25                      29
     Investments in non-debtor subsidiaries                                               757                     758
     Other noncurrent assets                                                              137                     138
                                                                                    ---------               ---------

           Total other                                                                  4,021                   4,038
                                                                                     --------                --------

PLANT AND EQUIPMENT, at cost
     Land                                                                                  40                      41
     Buildings and leasehold improvements                                                 508                     533
     Machinery and equipment                                                            2,219                   2,194
     Construction in progress                                                             222                     217
                                                                                    ---------               ---------
                                                                                        2,989                   2,985

  Less:  Accumulated depreciation                                                      (1,562)                 (1,548)
                                                                                     ---------               ---------

      Net plant and equipment                                                           1,427                   1,437
                                                                                     --------                --------

TOTAL ASSETS                                                                         $  7,465                $  7,588
                                                                                     ========                ========
</TABLE>

<PAGE>


                                     - 13 -

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

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

                                            OWENS CORNING AND SUBSIDIARIES
                                           DEBTOR-IN-POSSESSION BALANCE SHEET

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

CURRENT
     Accounts payable and accrued liabilities                                   $     496            $        589
     Accounts payable and accrued liabilities - non-debtors                            17                      12
     Long-term debt - current portion                                                   1                       1
                                                                                ---------            ------------

        Total current                                                                 514                     602
                                                                                ---------            ------------

OTHER
  Other employee benefits liability                                                   331                     318
  Pension plan liability                                                              270                     264
  Other                                                                               110                     110
                                                                                ---------            ------------

        Total other                                                                   711                     692
                                                                                ---------            ------------

LIABILITIES SUBJECT TO COMPROMISE                                                   7,521                   7,565

STOCKHOLDERS' EQUITY
  Common stock                                                                        697                     697
  Deficit                                                                          (1,757)                 (1,747)
  Accumulated other comprehensive loss                                               (219)                   (219)
  Other                                                                                (2)                     (2)
                                                                                ----------            ------------

        Total stockholders' equity                                                 (1,281)                 (1,271)
                                                                                ----------            ------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                      $   7,465             $     7,588
                                                                                =========             ===========
</TABLE>

<PAGE>


                                     - 14 -

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

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

                                           OWENS CORNING AND SUBSIDIARIES
                                    DEBTOR-IN-POSSESSION STATEMENT OF CASH FLOWS
                                        FOR THE QUARTER ENDED MARCH 31, 2001

<TABLE>
<S>                                                                                        <C>             <C>
                                                                                           2002            2001
                                                                                           ----            ----
                                                                                         (In millions of dollars)

NET CASH FLOW FROM OPERATIONS

Net loss                                                                                 $    (10)      $     (23)
  Reconciliation of net cash provided by operating activities
        Noncash items:
            Provision for depreciation and amortization                                        36              38
            Provision (credit) for deferred income taxes                                       (3)             12
            Other                                                                              13              35
        Increase in receivables                                                              (127)           (116)
        Increase in inventories                                                                (6)            (41)
        Increase (decrease) in accounts payable and accrued liabilities                      (104)             50
        Decrease in restricted cash and other - asbestos related                                7              49
        Change in liabilities subject to compromise                                            (4)            (82)
        Other                                                                                  30              29
                                                                                         ---------      ----------

            Net cash flow from operations                                                $   (168)      $     (49)
                                                                                         ---------      ----------

NET CASH FLOW FROM INVESTING

        Additions to plant and equipment                                                 $    (31)      $     (42)
        Proceeds from sale of affiliate or business                                            10               -
        Other                                                                                   -               5
                                                                                         --------       ----------

            Net cash flow from investing                                                 $    (21)      $     (37)
                                                                                         ---------      ----------

NET CASH FLOW FROM FINANCING

        Other                                                                            $     (1)      $      (1)
                                                                                         ---------      ----------
            Net cash flow from financing                                                 $     (1)      $      (1)
                                                                                         ---------      ----------

Net decrease in cash and cash equivalents                                                $   (190)      $     (87)

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

Cash and cash equivalents at end of period                                               $    415       $     374
                                                                                         ========       =========
</TABLE>

<PAGE>


                                     - 15 -

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

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>
<S>                                                                                        <C>                <C>
                                                                                       March 31,          December 31,
                                                                                          2002                2001
                                                                                          ----                ----
                                                                                           (In millions of dollars)

  Accounts payable                                                                      $    197             $    195
  Accrued interest payable                                                                    40                   40
  Accrued liabilities                                                                         36                   36
  Debt                                                                                     2,843                2,843
  Income taxes payable                                                                       202                  209
  Reserve for asbestos litigation claims - Owens Corning                                   2,190                2,197
  Reserve for asbestos litigation claims - Fibreboard                                      1,282                1,284
                                                                                         -------             --------

         Total consolidated                                                                6,790                6,804

         Payables to non-debtors                                                             731                  761
                                                                                         -------             --------

         Total debtor                                                                    $ 7,521             $  7,565
                                                                                         =======             ========
</TABLE>

The amounts for Chapter 11 related  reorganization items in the Consolidated and
Debtor-in-Possession Income Statements consist of the following for the quarters
ended March 31:

<TABLE>
<S>                                                                                     <C>              <C>
                                                                                        2002             2001
                                                                                        ----             ----
                                                                                       (In millions of dollars)

Professional fees                                                                      $    18          $    18
Payroll and compensation                                                                     6                7
Interest income                                                                             (2)              (5)
Other, net                                                                                   3                1
                                                                                       -------          -------

     Total                                                                             $    25          $    21
                                                                                       =======          =======
</TABLE>

<PAGE>


                                     - 16 -

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

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

<TABLE>
<S>                                                                               <C>               <C>
                                                                                        Quarter Ended
                                                                                          March 31,
                                                                                          ---------
                                                                                   2002               2001
NET SALES                                                                          ----               ----
                                                                                  (In millions of dollars)
Reportable  Segments
--------------------

  Building Materials Systems
     United States                                                          $       764         $       693
     Europe                                                                           1                   2
     Canada and other                                                                34                  36
                                                                            -----------         -----------

        Total Building Materials Systems                                    $       799         $       731
                                                                            -----------         -----------

  Composite Solutions
     United States                                                                  191                 193
     Europe                                                                          80                 100
     Canada and other                                                                37                  43
                                                                            -----------         -----------

        Total Composite Solutions                                           $       308                 336
                                                                            -----------         -----------

        Total Reportable Segments                                           $     1,107         $     1,067
                                                                            ===========         ===========

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

     United States                                                          $       955         $       886
     Europe                                                                          81                 102
     Canada and other                                                                71                  79
                                                                            -----------         -----------

     Net Sales                                                              $     1,107         $     1,067
                                                                            ===========         ===========
</TABLE>

<PAGE>


                                     - 17 -

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

2.   SEGMENT DATA (continued)

<TABLE>
<S>                                                                             <C>               <C>
                                                                                    Quarter Ended
                                                                                      March 31,
                                                                                      ---------
                                                                               2002               2001
INCOME (LOSS) FROM OPERATIONS                                                  ----               ----
                                                                              (In millions of dollars)
Reportable Segments
-------------------

  Building Materials Systems
     United States                                                      $        33       $          20
     Europe                                                                       -                   -
     Canada and other                                                             2                   1
                                                                        -----------         -----------

        Total Building Materials Systems                                         35                  21
                                                                        -----------         -----------

  Composite Solutions
     United States                                                                -                  19
     Europe                                                                      12                  13
     Canada and other                                                             3                   5
                                                                        -----------         -----------

        Total Composite Solutions                                                15                  37
                                                                        -----------         -----------

        Total Reportable Segments                                       $        50        $         58
                                                                        ===========        ============

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

  United States                                                                  33         $        39
  Europe                                                                         12                  13
  Canada and other                                                                5                   6
                                                                        -----------         -----------

     Total Reportable Segments                                          $        50         $        58
                                                                        ===========         ===========

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

  Restructuring and other charges                                               (12)                (42)
  Chapter 11 related reorganization items                                       (25)                (21)
  General corporate expense                                                     (10)                (12)
  Cost of borrowed funds                                                         (4)                 (4)
  Other                                                                           -                   4
                                                                        -----------         -----------

Consolidated Loss Before Provision (Credit)
  for Income Taxes                                                      $        (1)        $       (17)
                                                                        ============        ============
</TABLE>

<PAGE>


                                     - 18 -

                         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

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. The primary groups impacted include manufacturing and administrative
personnel.  As of March 31,  2002,  approximately  $1 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  plan to  realign  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 second  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.


<PAGE>


                                     - 19 -

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

4.    RESTRUCTURING OF OPERATIONS AND OTHER CHARGES (continued)

The $26 million  charge for  restructuring  represents $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.  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 March 31, 2002,
approximately $18 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.

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 March 31, 2002:

<TABLE>
<S>                                               <C>                 <C>                <C>
                                                                                    Liability at
                                                Original             Total            March 31,
(In millions of dollars)                       Liability           Payments             2002
                                               ---------           --------             ----

Personnel Costs                                  $   45            $   (33)          $      12
Facility and Business Exit Costs                      4                 (3)                  1
                                                 ------            --------          ---------

Total                                            $   49            $   (36)          $      13
                                                 ======            ========          =========
</TABLE>

During 1997 and 1998, the Company implemented a restructuring program related to
closing  manufacturing  locations and reducing  overhead.  As of March 31, 2002,
approximately  $15  million  in  reserves  remain and are  primarily  related to
ongoing personnel severance costs in Europe.

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>


                                     - 20 -

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

5.   DIVESTITURES OF 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
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.

6.   INVENTORIES

Inventories are summarized as follows:
<TABLE>
<S>                                                                      <C>                   <C>
                                                                       March 31,          December 31,
                                                                         2002                 2001
                                                                         ----                 ----
                                                                          (In millions of dollars)
  Finished goods                                                        $   365              $   378
  Materials and supplies                                                    163                  150
                                                                        -------              -------
  FIFO inventory                                                            528                  528
  Less:  reduction to LIFO basis                                            (93)                 (91)
                                                                        -------              -------
    Total inventory                                                     $   435              $   437
                                                                        =======              =======
</TABLE>

Approximately  $125  million and $120 million of total  inventories  were valued
using the LIFO method at March 31, 2002 and December 31, 2001, respectively.

7.    COMPREHENSIVE INCOME

The  Company's  comprehensive  income for the quarters  ended March 31, 2002 and
2001 was  income of $3  million  and a loss of $37  million,  respectively.  The
Company's   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

For the quarters ended March 31, 2002 and 2001, net losses of $6 million and $10
million, respectively,  were used for both basic and diluted earnings per share.
For the same periods,  55,087 and 55,042,  respectively,  were used for weighted
average  number of shares  outstanding  for both basic and diluted  earnings per
share.

Due to their  anti-dilutive  effect,  diluted shares outstanding during 2002 and
2001  excluded  approximately  4.6  million  common  shares  from the  potential
conversion  of preferred  securities  and  approximately  300 and 400  thousand,
respectively, non-vested restricted shares and deferred awards.


<PAGE>


                                     - 21 -

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

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.

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

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

<TABLE>
<S>                                                      <C>                      <C>
                                                     Notional Amount         Notional Amount
                                                     March 31, 2002         December 31, 2001
                                                     --------------         -----------------
                                                            (In millions of dollars)

     Forward currency exchange contracts                   $ 40                     $ 30
     Interest rate swaps                                     17                       19

     Commodity future contract                        540,000 MMBTU                    -
                                                        per month
</TABLE>

The Company  enters  into  forward  currency  exchange  contracts  to manage its
exposure against foreign currency fluctuations on certain assets and liabilities
denominated  in  foreign  currencies.  As of March 31,  2002 the  Company  had 3
forward currency exchange contracts that exchanged  approximately 3 million U.S.
dollars to euros,  75 million  Norwegian  krone to euros and 11 million euros to
pounds  sterling.  As of December 31, 2001,  the Company had 2 forward  currency
exchange  contracts that exchanged 75 million  Norwegian krone and approximately
14 million euros. These transactions are considered a natural hedge, as the gain
or loss on the hedge offsets the gain or loss from currency value  fluctuations.
The Company has elected not to apply hedge  accounting  for these  transactions,
but rather mark the  contracts to market  through the  statement of income,  the
effect of which 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.  This  contract  effectively  extended the hedge of U.S.
dollar  denominated debt entered into in 2001. These transactions are considered
natural  hedges,  as the gains or losses on the  hedges  offset the gain or loss
from  currency  value  fluctuations.  The Company has elected not to apply hedge
accounting,  but rather mark the  contracts to market  through the  statement of
income, the effect of which was not material.


<PAGE>


                                     - 22 -

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

9.   DERIVATIVE FINANCIAL INSTRUMENTS (continued)

During 2001 and the first quarter 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,  the Brazilian real
were swapped into U.S.  dollars at a U.S.  dollar  interest rate with  perfectly
matching  investment  amounts and maturity dates. The purpose of these hedges is
to reduce the impact of changes in the Brazilian real and U.S.  dollar  exchange
rates. At March 31, 2002, there were 14 such cross-currency  interest rate swaps
outstanding at a notional  amount of $17 million U.S.  dollars.  At December 31,
2001,  there were 18 such  cross-currency  interest rate swaps  outstanding at a
notional amount of $19 million U.S. dollars.

During 2001,  the Company  entered into a swap  agreement  for  approximately  5
million  MMBTU's of natural gas to hedge its exposure to  fluctuating  commodity
prices.  The swap is a cash flow hedge and changes in the fair market  value are
recorded  in  other  comprehensive  income  (loss),  except  to  the  extent  of
inefficiencies which are recorded as other income in the statement of income. At
March 31, 2002, the accumulated other comprehensive income (loss) related to the
swap was income of  approximately  $2 million and the  inefficiency  recorded as
other income (loss) was not material.  At December 31, 2001,  accumulated  other
comprehensive  income (loss) related to the swap was a loss of  approximately $2
million and the inefficiency recorded as other income (loss) was not material.

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

As of March 31, 2002 and December 31, 2001, the Company is  contingently  liable
for  guarantees of  indebtedness  owed by certain  unconsolidated  affiliates of
approximately $28 million and $38 million,  respectively.  As of March 31, 2002,
and December 31, 2001, approximately $23 and $34 million,  respectively, of such
indebtedness  was  alleged  to be in  default  as a result  of the  Filing.  The
affiliate  that  owed  approximately  $19  million  of such  indebtedness  is in
negotiations  with its  lenders  and other  parties,  including  Owens  Corning,
concerning  the status of this  indebtedness.  Depending  on the outcome of such
negotiations, it is possible that the lender will attempt to enforce the related
guarantee  against Owens  Corning.  Any such claim would  constitute a liability
subject to compromise, since the claim would relate to a pre-petition obligation
of Owens  Corning,  and may give rise to a loss of up to the full  amount of the
claim.  Subject to the  foregoing  uncertainties,  the Company is of the opinion
that its other  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.

As of March 31, 2002 and December 31, 2001, the Company is  contingently  liable
for guarantees of indebtedness owed by certain unconsolidated affiliates.  There
is no market for these  guarantees and they were issued  without  explicit cost.
Therefore, it is not practicable to establish their fair value.


<PAGE>


                                     - 23 -

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


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.

Prior to October 5, 2000,  when the Debtors,  including  Fibreboard  (see Item B
below),  filed  voluntary  petitions  for relief under  Chapter 11 of the United
States  Bankruptcy Code, the vast majority of asserted  asbestos personal injury
claims were in the process of being  resolved  through the  National  Settlement
Program  described below. As a result of the Filing,  all pre-petition  asbestos
claims and pending litigation against the Debtors,  including without limitation
claims arising under the National Settlement Program,  were automatically stayed
(see Note 1). Owens Corning  expects that all pending and future asbestos claims
against  Owens  Corning and  Fibreboard  will be resolved  pursuant to a plan or
plans of  reorganization.  Owens  Corning  is unable to  determine  at this time
whether  asbestos-related  claims asserted against Fibreboard will be treated in
the same  manner as those  asserted  against  Owens  Corning in any such plan or
plans.

National Settlement Program
---------------------------

Beginning in late 1998, Owens Corning  implemented a National Settlement Program
("NSP") to resolve personal injury asbestos claims through settlement agreements
with individual plaintiffs' law firms. The NSP was intended to better manage the
asbestos  liabilities of Owens Corning and Fibreboard (see Item B below), and to
help Owens Corning  better  predict the timing and amount of indemnity  payments
for both pending and future asbestos claims.

The number of law firms  participating in the NSP expanded from approximately 50
when the NSP was established to approximately  120 as of the Petition Date. Each
of these  participating  law firms  agreed to a long-term  settlement  agreement
which  varied by firm ("NSP  Agreement")  extending  through at least 2008 which
provided for the resolution of their existing asbestos claims, including unfiled
claims  pending with the  participating  law firm at the time it entered into an
NSP Agreement ("Initial Claims"). The NSP agreements also established procedures
and fixed payments for resolving without  litigation claims against either Owens
Corning or Fibreboard,  or both, arising after a participating firm entered into
an NSP Agreement ("Future Claims").

Terms and Conditions of NSP Agreements
--------------------------------------

Settlement  amounts for both Initial  Claims and Future  Claims were  negotiated
with each firm  participating  in the NSP, and each firm was to communicate with
its respective clients to obtain authority to settle individual claims. Payments
to individual claimants were to vary based on a number of factors, including the
type and severity of disease, age and occupation. All such payments were subject
to delivery of  satisfactory  evidence of a  qualifying  medical  condition  and
exposure to Owens Corning's and/or Fibreboard's products,  delivery of customary

<PAGE>


                                     - 24 -

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

10.   CONTINGENT LIABILITIES (continued)

releases by each claimant,  and other  conditions.  Certain  claimants  settling
non-malignancy  claims with Owens Corning and/or  Fibreboard were entitled to an
agreed pre-determined amount of additional  compensation if they later developed
a more severe asbestos-related medical condition.

As to  Future  Claims,  each  participating  NSP firm  agreed  (consistent  with
applicable  legal  requirements)  to recommend to its future  clients,  based on
appropriately   exercised  professional  judgment,  to  resolve  their  asbestos
personal  injury  claims  against  Owens Corning  and/or  Fibreboard  through an
administrative  processing arrangement,  rather than litigation.  In the case of
Future  Claims  involving  non-malignancy,  claimants  were  required to present
medical  evidence of  functional  impairment,  as well as the  product  exposure
criteria and other requirements set forth above, to be entitled to compensation.

Owens  Corning  and  Fibreboard  (see Item B below) each  retained  the right to
terminate  any  individual  NSP  Agreement  if in any year more than a specified
number of plaintiffs  represented by the plaintiffs'  firm in question  rejected
and ultimately opted out of such agreement. Opt out procedures were specified in
the settlement  agreements,  and provided for mediation and further  negotiation
before a claimant could pursue his or her case in the court system.  Through the
Petition  Date,  fewer than 300  claimants  had  elected to reject the  original
settlement proposal, and to mediate under the terms of the NSP Agreement.

As of the Petition Date, the NSP covered  approximately  240,000 Initial Claims,
approximately 148,000 of which had satisfied all conditions to final settlement,
including  receipt of executed  releases,  or other  resolution  (the "Final NSP
Settlements")  at an average cost per claim of approximately  $9,000.  As of the
Petition Date,  approximately 88,000 of such Final NSP Settlements had been paid
in full or otherwise resolved,  and approximately 60,000 were unpaid in whole or
in part. As of such date, the remaining  balance payable under NSP Agreements in
connection  with these  unpaid  Final NSP  Settlements  was  approximately  $539
million.  Through the Petition  Date,  Owens Corning had received  approximately
3,800 Future Claims under the NSP.

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

Non-NSP Claims
--------------

As of the Petition Date,  approximately  36,000 asbestos  personal injury claims
were  pending   against   Owens-Corning   outside  the  NSP.  This  compares  to
approximately  25,300 such claims pending on December 31, 1999. The  information
needed for a critical  evaluation  of pending  claims,  including the nature and
severity of disease and definitive identifying information concerning claimants,
typically becomes available only through the discovery process or as a result of
settlement  negotiations,  which often occur years after  particular  claims are
filed.  As a result,  Owens Corning has limited  information  about many of such
claims,  and the  actual  number of  pending  claims  may vary from the  numbers
indicated.

Owens  Corning  resolved  (by  settlement  or  otherwise)  approximately  10,200
asbestos  personal injury claims outside the NSP during 1998,  4,800 such claims
during 1999 and 3,100 such claims  during 2000 prior to the Petition  Date.  The
average  cost of  resolution  was  approximately  $35,900  per claim for  claims
resolved  during 1998,  $34,600 per claim for claims  resolved  during 1999, and
$44,800 per claim for claims resolved during 2000 prior to the Petition Date. As
a rule,  these claims were  settled  as they were scheduled for trial,  and they


<PAGE>


                                     - 25 -

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

10.   CONTINGENT LIABILITIES (continued)

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

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  $14 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:

<TABLE>
<S>                                                                           <C>                    <C>
                                                                                                 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
                                                                          =======                   =======
</TABLE>

Prior to the Petition Date,  Owens Corning  deposited  certain amounts in escrow
accounts  to  facilitate  claims  processing  under  the  NSP   ("Administrative
Deposits").  Amounts deposited into escrow in  Administrative  Deposits during a
reporting  period are included in the payments shown for NSP Settlements  during
the period.  At March 31, 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 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 to the escrow  beneficiaries.
At a February 25, 2002 hearing on this motion,  the Bankruptcy  Court ruled that
escrow  beneficiaries  that had  received  both  written  notice of approval for
payment and an initial  payment from the escrow  deposits  prior to the Petition
Date would be entitled to receive their remaining payments from the principal of
the  escrow  deposits,  with  the  balance  of the  deposits,  if any,  plus any
investment proceeds to be returned to Owens Corning (or Fibreboard).  The ruling
is subject to entry of a final order by the  Bankruptcy  Court and appeal by any
of the parties in interest.


<PAGE>



                                     - 26 -

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

10.   CONTINGENT LIABILITIES (continued)

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

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 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>



                                     - 27 -

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

10.   CONTINGENT LIABILITIES (continued)

Insurance
---------

As of March 31, 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 March 31,  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."




<PAGE>



                                     - 28 -

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

10.   CONTINGENT LIABILITIES (continued)

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:

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


In connection with this asbestos reserve, Owens Corning notes that:

-    The "NSP backlog"  component  represented  the remaining  estimated cost of
     resolving Initial Claims under the NSP.

-    The "Non-NSP backlog" component represented the estimated cost of resolving
     asbestos  personal  injury claims pending against Owens Corning outside the
     NSP.

-    The "Future claims"  component  represented the estimated cost of resolving
     (i) Future Claims under the NSP and (ii) non-NSP claims subsequently made.

As Owens Corning has discussed in previous public  filings,  any estimate of its
liabilities  for  pending  and  expected  future  asbestos  claims is subject to
considerable  uncertainty  because such  liabilities  are influenced by numerous
variables that are inherently  difficult to predict. As discussed further below,
such uncertainties  significantly increased as a result of the Chapter 11 Cases.
Prior to the Petition Date, such variables  included,  among others, the cost of
resolving  pending  non-NSP  claims;  the disease mix and severity of disease of
pending NSP claims; the number,  severity of disease, and jurisdiction of claims
filed in the future  (especially  the number of mesothelioma  claims);  how many
future claimants were covered by an NSP Agreement;  the extent, if any, to which
individual  claimants  exercised a right to opt out of an NSP  Agreement  and/or
engage  counsel  not  participating  in the NSP;  the  extent,  if any, to which
counsel not bound by an NSP Agreement  undertook the  representation of asbestos
personal injury plaintiffs  against Owens Corning;  the extent, if any, to which
Owens Corning exercised its right to terminate one or more of the NSP Agreements
due to excessive  opt-outs or for other reasons;  and Owens Corning's success in
controlling the costs of resolving future non-NSP claims.

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.




<PAGE>


                                     - 29 -

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

10.   CONTINGENT LIABILITIES (continued)

The  Chapter 11 Cases  significantly  increase  the  inherent  difficulties  and
uncertainties  involved  in  estimating  the  number and cost of  resolution  of
present and future  asbestos-related  claims  against Owens Corning and may have
the effect of  increasing  the number and ultimate  cost of  resolution  of such
claims, perhaps substantially.  In particular,  the status of the NSP Agreements
and the  treatment of pending and future  claims  thereunder  will depend on the
outcome of negotiations among the various constituencies in the Chapter 11 Cases
and  determinations  by the Bankruptcy Court as to the issues involved,  none of
which can be  predicted  at this time.  The  uncertainties  associated  with the
status of the NSP Agreements and the treatment of claims thereunder  include the
following:

-    It is possible that one or more  constituencies in the Chapter 11 Cases may
     seek to set aside the NSP Agreements on various  grounds.  In any event, it
     is highly uncertain how any plan or plans of reorganization  will treat the
     various types of NSP claims,  including  without  limitation claims with no
     evidence of  significant  medical  impairment,  or whether such  unimpaired
     claims will be treated as allowed claims thereunder.

-    The settlement values for specified  categories of disease set forth in the
     NSP  Agreements  were  established  by  arms-length  negotiations  with the
     participating  law  firms  in  circumstances   very  different  from  those
     prevailing  in the Chapter 11 Cases.  The  settlement  values  available to
     individual  claimants under the  arrangements to be included in any plan or
     plans of reorganization  may vary  substantially from those contemplated by
     the NSP  Agreements.  Because Owens  Corning's  estimate of  liabilities in
     respect of non-NSP claims assumed  payment of settlement  values similar to
     those contained in the NSP Agreements,  such estimate is subject to similar
     uncertainty.

Additional uncertainties raised by the Chapter 11 Cases include the following:

-    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.





<PAGE>


                                     - 30 -

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

10.   CONTINGENT LIABILITIES (continued)

-    Owens Corning  anticipates that the number and estimated aggregate value of
     allowed  future  claims  will be  determined  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  at this time. In  connection  with such  negotiations,  it is
     anticipated  that a number  of  interested  constituencies,  including  the
     representatives of the pre-petition and future asbestos claimants and other
     pre-petition  creditors,  will  develop  analyses  of  liability  for  both
     pre-petition and future asbestos claims.  Owens Corning and Fibreboard will
     also prepare analyses for use in the negotiation process. Such analyses are
     also 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.  These  analyses could vary  substantially  from one another and
     from the amounts of Owens  Corning's and  Fibreboard's  existing  reserves.
     Such analyses will be prepared  solely for use in the negotiation of a plan
     of reorganization  and will not involve the same type of estimation process
     required in connection with the preparation of financial  statements  under
     generally accepted accounting principles.

Ultimately,  Owens  Corning's (and  Fibreboard's)  total  liability for asbestos
claims  will be  determined  after a lengthy  period  of  negotiations  and,  if
necessary,  by the Bankruptcy  Court,  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 March 31, 2002, as a result of the Filing and the  uncertainties  referred to
above,   the   approximate   balances  of  the  components  of  Owens  Corning's
asbestos-related reserve were:

<TABLE>
<S>                                                                                         <C>
                                                                                         Balance
                                                                                         -------
                                                                                 (In billions of dollars)

Unpaid Final Settlements (NSP and other)                                                $    0.60
Other Pending and Future Claims                                                              1.60
</TABLE>

In connection with this asbestos reserve, Owens Corning notes that:

-    The  "Unpaid  Final  Settlements"   component   represented  the  remaining
     estimated  cost for all asbestos  personal  injury claims  pending  against
     Owens Corning which were subject to final  settlement  agreements for which
     releases from claimants were obtained, and under which all other conditions
     to settlement had been satisfied, as of the Petition Date.

-    The "Other Pending and Future Claims"  component  represented the estimated
     cost of resolving (i) asbestos personal injury claims pending against Owens
     Corning which were subject to resolution under NSP Agreements but for which
     releases were not obtained from claimants  prior to the Petition Date; (ii)
     all other asbestos  personal  injury claims  pending  against Owens Corning
     which  were not  subject  to any  settlement  agreement;  and (iii)  future
     asbestos  personal  injury  claims  against  Owens  Corning  made after the
     Petition Date.

<PAGE>



                                     - 31 -

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

10.   CONTINGENT LIABILITIES (continued)

Owens Corning will continue to review its asbestos  reserve on a periodic  basis
and make such  adjustments as may be appropriate.  However,  it is possible that
Owens  Corning  will not be in a position  to  conclude  that a revision  to the
reserve is appropriate until significant developments occur during the course of
the Chapter 11 Cases, including resolution of the uncertainties described above.
Any such revision  could,  however,  be material to the  Company's  consolidated
financial position and results of operations in any given period.

ITEM B. - FIBREBOARD (EXCLUDING OWENS CORNING)

Prior to 1972, Fibreboard  manufactured insulation products containing asbestos.
Fibreboard  has since been named as  defendant  in many  thousands  of  personal
injury claims for injuries  allegedly  caused by asbestos  exposure.  Fibreboard
received approximately 21,600 asbestos personal injury claims during 2000. Prior
to the Petition Date, the vast majority of Fibreboard  asbestos  personal injury
claims were in the  process of being  resolved  through  the NSP,  as  described
below. As a result of the Filing,  all pre-petition  asbestos claims and pending
litigation  against the Debtors  were  automatically  stayed (see Note 1). Owens
Corning  expects  that all  pending and future  asbestos  claims  against  Owens
Corning  and  Fibreboard  will  be  resolved  pursuant  to a plan  or  plans  of
reorganization.  Owens  Corning  is unable  to  determine  at this time  whether
asbestos-related  claims asserted against Fibreboard will be treated in the same
manner as those asserted against Owens Corning in any such plan or plans.

National Settlement Program
---------------------------

Fibreboard  is a  participant  in the NSP and is a party  to the NSP  Agreements
discussed in Item A. The NSP Agreements became effective as to Fibreboard in the
fourth quarter of 1999, when the Insurance  Settlement  (discussed below) became
effective.  The NSP Agreements  settled asbestos personal injury claims that had
been filed against Fibreboard by participating  plaintiffs' law firms and claims
that could have been  filed  against  Fibreboard  by such  firms  following  the
lifting,  in the third quarter of 1999,  of an  injunction  which had barred the
filing of asbestos personal injury claims against Fibreboard.

As of the Petition Date, the NSP covered  approximately  212,000  Initial Claims
against Fibreboard,  approximately 116,000 of which had satisfied all conditions
to final settlement, including receipt of executed releases, or other resolution
as Final NSP Settlements at an average cost per claim of  approximately  $7,500.
As of the Petition Date,  approximately 61,000 of such Final NSP Settlements had
been paid in full or otherwise resolved and approximately  55,000 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 $357 million.  The NSP Agreements also provided for the resolution
of Future  Claims  against  Fibreboard  through  the  administrative  processing
arrangement  described  in Item A.  Through the Petition  Date,  Fibreboard  had
received approximately 3,800 Future Claims under the NSP.

At this time,  Owens  Corning  is unable to predict  the manner in which the NSP
Agreements and the resolution of Fibreboard  claims  thereunder  will be treated
under the terms of any plan or plans of reorganization.



<PAGE>


                                     - 32 -

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

10.   CONTINGENT LIABILITIES (continued)

Non-NSP Claims
--------------

As of the Petition Date,  approximately  15,000 asbestos  personal injury claims
were pending against  Fibreboard outside the NSP. This compares to approximately
1,000  such  claims  pending on  December  31,  1999.  Fibreboard  resolved  (by
settlement or otherwise)  approximately  2,300 asbestos  personal  injury claims
outside the NSP during  2000 prior to the  Petition  Date at an average  cost of
resolution  of  approximately  $45,000 per claim.  Generally,  these claims were
settled as they were  scheduled  for trial,  and they  typically  involved  more
serious injuries and diseases.  Accordingly, Owens Corning does not believe that
such average costs of resolution are  representative of the value of the non-NSP
claims then pending against Fibreboard.

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

Insurance Settlement
--------------------

In  1993,  Fibreboard  and two of its  insurers,  Continental  Casualty  Company
("Continental")  and Pacific  Indemnity  Company  ("Pacific"),  entered into the
Insurance  Settlement.  The Insurance  Settlement became effective in the fourth
quarter of 1999, is final and is not subject to appeal.

Since 1993,  Continental and Pacific paid,  either directly or through an escrow
account funded by them, for  substantially  all  settlements of asbestos  claims
reached  prior to the  initiation of the NSP.  Under the  Insurance  Settlement,
Continental  and Pacific  provided  $1,873  million during the fourth quarter of
1999 to fund costs of resolving pending and future  Fibreboard  asbestos-related
liabilities, whether under the NSP, in the tort system, or otherwise.

As of March 31, 2002, the Insurance  Settlement  funds were held in and invested
by the  Fibreboard  Settlement  Trust.  As of that date,  $1,155 million (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.  It will not be known  whether  any such  assets  will  remain  for
distribution until 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 March 31, 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 be under the terms of
any plan or plans of reorganization.



<PAGE>


                                     - 33 -

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

10.   CONTINGENT LIABILITIES (continued)

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:

<TABLE>
<S>                                                                                            <C>
                                                                                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
                                                                                            =======
</TABLE>

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

Reserve
-------

Owens Corning  estimates a reserve for  Fibreboard in accordance  with generally
accepted accounting principles to reflect  asbestos-related  liabilities.  As of
March 31,  2002,  a reserve of  approximately  $1.3  billion in respect of these
liabilities  was one of the  items  included  in  Owens  Corning's  consolidated
balance  sheet  under the  category  "Liabilities  Subject to  Compromise."  For
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."   These  liabilities
(including any reserve for the  charitable  remainder) are always at least equal
to  the  funds  held  in  the  Fibreboard   Settlement  Trust  and  Fibreboard's
Undistributed  Administrative  Deposits since, under the terms of the Trust, the
funds held in the Trust must be expended either in connection with  Fibreboard's
asbestos-related  liabilities,  or to satisfy the obligation  under the Trust to
distribute  to  charity  the  assets,  if  any,  remaining  in the  Trust  after
satisfaction of all such liabilities (see Note 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:

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

<PAGE>


                                     - 34 -

                         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 against Fibreboard under the NSP.

-    The "Non-NSP backlog" component represented the estimated cost of resolving
     asbestos personal injury claims pending against Fibreboard outside the NSP.

-    The "Future claims"  component  represented the estimated cost of resolving
     (i) Future Claims against  Fibreboard under the NSP and (ii) non-NSP claims
     subsequently made against Fibreboard.

As noted  in Item A above as to Owens  Corning,  the  estimate  of  Fibreboard's
liabilities  for  pending  and  expected  future  asbestos  claims is subject to
considerable  uncertainty  because such  liabilities  are influenced by numerous
variables  that are  inherently  difficult  to predict,  and such  uncertainties
significantly increased as a result of the Filing,  including those set forth in
Item A above. In addition,  as noted above, at this time Owens Corning is unable
to predict what the treatment of funds held in the Fibreboard  Settlement  Trust
and in  Undistributed  Administrative  Deposits in respect of Fibreboard  claims
will be under the terms of any plan or plans of reorganization.

At March 31, 2002, as a result of the Filing and the  uncertainties  referred to
above,   the   approximate   balances  of  the   components  of  the  Fibreboard
asbestos-related reserve were:

<TABLE>
<S>                                                                                      <C>
                                                                                       Balance
                                                                                       -------
                                                                               (In billions of dollars)

Unpaid Final Settlements (NSP and other)                                            $    0.40
Other Pending and Future Claims                                                          0.90
</TABLE>

In connection with this asbestos reserve, Owens Corning notes that:

-    The  "Unpaid  Final  Settlements"   component   represented  the  remaining
     estimated  cost for all asbestos  personal  injury claims  pending  against
     Fibreboard  which were  subject to final  settlement  agreements  for which
     releases from claimants were obtained, and under which all other conditions
     to settlement had been satisfied, as of the Petition Date.

-    The "Other Pending and Future Claims"  component  represented the estimated
     cost of resolving  (i) asbestos  personal  injury  claims  pending  against
     Fibreboard  which were subject to resolution  under NSP  Agreements but for
     which releases were not obtained from claimants prior to the Petition Date;
     (ii) all other asbestos  personal injury claims pending against  Fibreboard
     which  were not  subject  to any  settlement  agreement;  and (iii)  future
     asbestos personal injury claims against  Fibreboard made after the Petition
     Date. This component also included the residual obligation to charity under
     the Fibreboard Settlement Trust (see Note 11).



<PAGE>


                                     - 35 -

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

10.   CONTINGENT LIABILITIES (continued)

Owens  Corning  will  continue  to review  Fibreboard's  asbestos  reserve  on a
periodic basis and make such adjustments as may be appropriate.  However,  it is
possible  that  Owens  Corning  will not be in a  position  to  conclude  that a
revision to the reserve is  appropriate  until  significant  developments  occur
during  the  course  of  the  Chapter  11  Cases,  including  resolution  of the
uncertainties  described above. Any such revision could, however, be material to
the Company's  consolidated  financial position and results of operations in any
given period.

Non-Asbestos Liabilities
------------------------

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 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 has taken the matter
under advisement. The Company believes that the claim is without merit.

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.

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.


<PAGE>


                                     - 36 -

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


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 March 31, 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.

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

General Accounting Treatment
----------------------------

The  assets  of the  Trust  are  comprised  of cash  and  marketable  securities
(collectively,   the  "Trust  Assets")  and,  with  Fibreboard's   Undistributed
Administrative  Deposits,  are reflected on Owens Corning's consolidated balance
sheet as restricted  assets.  At March 31, 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 March 31, 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."  These  liabilities  (including  any  reserve  for  the  charitable
remainder)  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.  It will not be known whether any
such assets will remain for distribution  until the conclusion of the Chapter 11
Cases.  At  March  31,  2002,  the  Consolidated  Financial  Statements  reflect
Fibreboard's  liabilities for asbestos litigation claims at $1.208 billion, with
a residual obligation to charity of $74 million.

For accounting  purposes,  the Trust Assets are classified  from time to time as
"available for sale" or "held to maturity" and are reported in the  Consolidated
Financial  Statements in accordance  with SFAS No. 115,  "Accounting for Certain
Investments in Debt and Equity Securities."  Accordingly,  marketable securities
classified  as  available  for  sale  are  recorded  at fair  market  value  and
marketable  securities  designated as held to maturity are recorded at amortized
cost.  At March 31, 2002 and  December 31, 2001,  substantially  all  marketable
securities were classified as "available for sale".


<PAGE>


                                     - 37 -

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

11.   FIBREBOARD SETTLEMENT TRUST (continued)

Any unrealized  increase/decrease  in fair market value is reflected as a change
in the carrying amount of the asset on the consolidated balance sheet as well as
an increase/decrease to other comprehensive income within stockholders'  equity,
net of tax.  The  residual  liability  that  may be paid to  charity  will  also
increase/decrease,  with a  related  decrease/increase  to  other  comprehensive
income within stockholders' equity, net of tax.

Any earnings and realized  gains/losses  on the Trust Assets are reflected as an
increase/decrease  in the  carrying  amount of such  assets on the  consolidated
balance sheet as well as other  income/expense on the consolidated  statement of
income.

The residual liability that may be paid to charity will also  increase/decrease,
with related other expense/income on the consolidated  statement of income. Cost
for purposes of computing realized gains/losses is determined using the specific
identification method.

Results for the Period Ending March 31, 2002
--------------------------------------------

During  the  first   quarter   of  2002  and  2001,   Trust   Assets   generated
interest/dividend  earnings  of  approximately  $13  million  and  $16  million,
respectively,  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 period, this income has been
offset by an equal charge to other expense,  which represents 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 first quarter of 2002 or 2001. However,  approximately
$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.  The sale of securities  during the first
quarter of 2002 resulted in a realized loss of less than $1 million, while there
was a realized  gain of  approximately  $4 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 March  31,  2002 and  2001,  the  fair  market  value  adjustment  for  those
securities  designated as available  for sale resulted in an unrealized  loss of
approximately  $9  million  and an  unrealized  gain  of less  than $1  million,
respectively.  These amounts have been  reflected in the Company's  consolidated
balance  sheet as a change  to the  carrying  amount  of the  asset and to other
comprehensive  income. These amounts have also been reflected as a change to the
liability to charity, with a corresponding effect to other comprehensive income.

At March 31, 2002, the fair value of Trust Assets was $1.282 billion,  which was
comprised of $1.173 billion of marketable securities, $18 million of outstanding
payables and $127 million of restricted  cash,  which  represents  undistributed
administrative deposits.


<PAGE>


                                     - 38 -

                         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 March 31, 2002 and December 31,
2001 are as follows:

<TABLE>
<S>                                           <C>                <C>                     <C>               <C>
                                                                      March 31, 2002
                                                                      --------------
                                                       Gross Unrealized        Gross Unrealized
                                            Cost                Gain                   Loss             Fair Value
                                            ----                ----                   ----             ----------
                                                                 (In millions of dollars)

Municipal Bonds                          $    1,138             $    -                 $     9         $    1,129
Mutual Funds                                     44                  -                       -                 44
                                         ----------             ------                 -------         ----------

Total                                    $    1,182             $    -                 $     9         $    1,173
                                         ==========             ======                 =======         ==========
</TABLE>


<TABLE>
<S>                                            <C>                <C>                    <C>               <C>
                                                                     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
                                         ==========             ======                 =======        ===========
</TABLE>

Maturities  of investment  securities  classified as available for sale at March
31, 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>
<S>                                                          <C>           <C>                <C>           <C>
                                                             March 31, 2002                 December 31, 2001
                                                             --------------                 -----------------
                                                         Cost          Fair Value          Cost        Fair Value
                                                         ----          ----------          ----        ----------
                                                                        (In millions of dollars)

Due within one year                                    $     124       $      124          $    91        $    91
Due after one year through five years                        680              676              679            679
Due after five years through ten years                       160              156              171            171
Due after ten years                                          218              217              228            228
                                                       ---------       ----------          -------        -------
Total                                                  $   1,182       $    1,173          $ 1,169        $ 1,169
                                                       =========       ==========          =======        =======
</TABLE>

<PAGE>


                                     - 39 -

                         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
quarter ended March 31, 2002:

<TABLE>
<S>                                           <C>          <C>       <C>          <C>        <C>       <C>      <C>         <C>
                                                       Interest   Unrealized   Net Sales   Realized
                                            Balance       and        Gain/           of      Gain/                        Balance
                                           12/31/01    Dividends    (Loss)     Securities   (Loss)    Other   Payments    3/31/02
                                           --------    ---------    ------     ----------   ------    -----   --------    -------
Assets
------
Cash (payable for purchase of securities)  $    (18)    $     -     $     -      $    -       $  -    $  -     $    -     $   (18)
Restricted Cash                                 133           -           -           -          -      (6)         -         127
Marketable Securities:
  Available for Sale                          1,169          13          (9)          -          -       1         (1)      1,173
                                           --------     -------     --------     ------       ----    ----     -------    -------

Total Assets                               $  1,284     $    13     $    (9)     $    -       $  -    $ (5)    $   (1)    $ 1,282
                                           ========     =======     ========     ======       ====    =====    =======    =======

Liabilities
-----------
Asbestos Litigation Claims                 $  1,213     $     -     $     -      $    -       $  -    $ (5)    $    -     $ 1,208
Charity                                          71          13          (9)          -          -       -         (1)         74
                                           --------     -------     --------     ------       ----    -----    -------    -------

Total  Liabilities                         $  1,284     $    13     $    (9)     $    -       $  -    $ (5)    $   (1)    $ 1,282
                                           ========     =======     ========     ======       ====    =====    =======    =======
</TABLE>

<PAGE>




                                     - 40 -

                         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). SFAS
No. 142 eliminates the amortization of goodwill and indefinite-lived  intangible
assets and initiates an annual review for  impairment.  Identifiable  intangible
assets with a  determinable  useful  life will  continue  to be  amortized.  The
Company applied SFAS No. 142 beginning in the first quarter of 2002. 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,  while the second step
measures the amount of the  impairment,  if any. The Company has  performed  the
first of the required  impairment tests of goodwill as of January 1, 2002 in the
first  quarter of 2002.  It is likely that  between $450 and $500 million of the
goodwill  related to  Building  Materials  Systems  will be  impaired  using the
impairment  test required by SFAS No. 142. As of March 31, 2002, the Company has
net  unamortized  goodwill of $612  million.  The Company  plans to complete the
measurement  of the  impairment  loss in the  second  quarter  of 2002  and will
address the tax implications, if any, on this impairment loss at that time. When
the  measurement  is completed in the second  quarter,  the  impairment  that is
required to be  recognized  when  adopting  SFAS No. 142 will be  reflected as a
cumulative effect of a change in accounting principle as of January 1, 2002.

As required by SFAS No. 142,  the results of the prior  year's  quarter have not
been restated. A reconciliation of the previously reported net loss and loss per
share as if SFAS No. 142 had been  adopted as of January 1, 2001 is presented as
follows:

<TABLE>
<S>                                                                     <C>                           <C>
                                                                               Three months ended
                                                                  March 31, 2002                March 31, 2001
        `                                                         --------------                --------------
                                                                 (In millions of dollars, except per share data)

Net income (loss):
  Reported net loss                                                     $   (6)                      $  (10)
  Add back goodwill amortization, net of tax                                 -                            3
                                                                        ------                       ------
Adjusted net loss                                                       $   (6)                      $   (7)
                                                                        =======                      =======

Basic and diluted earnings (loss) per share:
  As Reported                                                           $ (.11)                      $ (.19)
  Add back goodwill amortization, net of tax                                 -                          .05
                                                                        ------                       ------
Adjusted basic and diluted loss per share                               $ (.11)                      $ (.14)
                                                                        =======                      =======
</TABLE>

All of the Company's  acquired  intangible  assets are subject to  amortization.
Intangible asset amortization  expense was approximately $1 million in the first
quarter of 2002 and 2001. The Company estimates that amortization of intangibles
will be $3 million for each of the next 5 years.  The  components  of intangible
assets are as follows:

<TABLE>
<S>                                             <C>                        <C>                        <C>
                                                                     March 31, 2002
                                                                     --------------
                                          Weighted Average           Gross Carrying               Accumulated
                                               Lives                     Amount                  Amortization
                                               -----                     ------                  ------------
                                                                             (In millions of dollars)
          Contract-based                           6                       $  2                      $   -
          Technology-based                        22                         17                         (7)
          Marketing-related                        6                         13                         (7)
                                                                           ----                      ------
                                                                           $ 32                      $ (14)
                                                                           ====                      ======
</TABLE>

<PAGE>




                                     - 41 -

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  costs,  construction  activity,  interest rate  movements,
issues involving implementation of new business systems, achievement of expected
cost  reductions,  developments in and the outcome of the Chapter 11 proceedings
described below, and general economic conditions.

GENERAL

Voluntary Petition for relief under Chapter 11
----------------------------------------------

On October 5, 2000 (the "Petition Date"), Owens Corning and the 17 United States
subsidiaries  listed  below   (collectively,   the  "Debtors")  filed  voluntary
petitions  for relief  (the  "Filing")  under  Chapter  11 of the United  States
Bankruptcy Code (the  "Bankruptcy  Code") in the United States  Bankruptcy Court
for the District of Delaware (the "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.



<PAGE>


                                     - 42 -

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

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.

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 as to
when the Debtors will file such a plan or plans, or that such plan or plans will
be confirmed by the Bankruptcy Court and consummated. Owens Corning is unable to
predict what impact the Administrative  Consolidation will have on the timing of
the Debtors' filing or 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 August 30, 2002, and similarly  extended
the Debtors'  exclusive rights to solicit  acceptances of a reorganization  plan
from April 3, 2001 to October 31,  2002.  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 equity
holders  entitled to vote on the plan,  other parties in interest in the Chapter
11 Cases may be permitted to propose their own plan(s) of reorganization for the
Debtors.



<PAGE>


                                     - 43 -

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

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

Owens Corning is unable to predict at this time what  treatment will be accorded
under  any such  reorganization  plan or plans  to  inter-company  indebtedness,
licenses,   transfers  of  goods  and  services  and  other   inter-company  and
intra-company  arrangements,  transactions and  relationships  that were entered
into  prior  to  the  Petition  Date.  These   arrangements,   transactions  and
relationships  may be challenged by various  parties in the Chapter 11 Cases and
payments and other obligations in respect thereof may be restricted 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
be under any such plan or plans  with  respect to (1) the  guaranties  issued by
certain of Owens Corning's U.S. subsidiaries,  including Owens-Corning Fiberglas
Technology Inc. ("OCFT") and IPM, Inc., 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 now in
default)  or (2) OCFT's  license  agreements  with Owens  Corning  and  Exterior
Systems, Inc., a wholly-owned subsidiary of Owens Corning ("Exterior"), pursuant
to which OCFT licenses intellectual property to Owens Corning and Exterior.

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



<PAGE>


                                     - 44 -

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

Pursuant to the Bankruptcy  Code,  schedules have been filed by the Debtors with
the Bankruptcy  Court setting forth the assets and liabilities of the Debtors as
of the date of the Filing.  Differences  between amounts recorded by the Debtors
and claims filed by creditors will be  investigated  and resolved as part of the
proceedings in the Chapter 11 Cases.

Bar Dates for Filing Claims
---------------------------

In connection with the Chapter 11 Cases, the Bankruptcy Court set April 15, 2002
as the last date by which  holders of  pre-petition  claims  against the Debtors
must file their claims.  Any holder of a claim that was required to file a claim
by such 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. Such deadline to file claims 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. Because the Debtors have not completed evaluation
of the results of the April 15, 2002 bar date and the  asbestos bar date has not
yet been set,  the  ultimate  number and  allowed  amount of such claims are not
presently known.

RESULTS OF OPERATIONS

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

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

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.

Quarter Ended March 31, 2002
----------------------------

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

Net sales for the quarter ended March 31, 2002 were $1.107  billion,  up 4% from
the first  quarter  2001  level of  $1.067  billion,  principally  due to higher
volumes in U.S. Building Materials  partially offset by declines in the European
composite market.  In the Building  Materials  business,  sales during the first
quarter of 2002 reflect volume increases in U.S. residential insulation,  window
distribution and roofing markets.  In the Composite  Solutions  business,  sales
reflect price decreases  primarily in the U.S. and volume decreases primarily in
Europe. On a consolidated basis, there was an unfavorable  currency  translation
impact on sales  denominated in foreign  currencies  during the first quarter of
2002  compared  to  the  first  quarter  of  2001.  Please  see  Note  2 to  the
Consolidated Financial Statements.


<PAGE>


                                     - 45 -

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

Sales outside the U.S.  represented  14% of total sales during the first quarter
of 2002,  compared  to 17% during  the first  quarter  of 2001.  The  decline in
non-U.S. sales is primarily due to decreases in composite materials in Europe as
well as in the Canadian  market.  Gross  margin for each of the  quarters  ended
March  31,  2002 and 2001 was 16% of net  sales.  Marketing  and  administrative
expenses stayed flat in the first quarter of 2002 compared to 2001, $127 million
for both periods.

For the quarter ended March 31, 2002,  Owens  Corning  reported a net loss of $6
million,  or $.11 per  share,  compared  to a loss of $10  million,  or $.19 per
share,  for the quarter  ended  March 31,  2001.  Cost of borrowed  funds was $4
million for each of the  referenced  quarters  (from the  Petition  Date through
March 31,  2002,  contractual  interest  expense  not  accrued  or  recorded  on
pre-petition  debt totaled  $258  million,  of which $36 million  relates to the
first  quarter  of 2002 and $50  million  relates  to the first  quarter of 2001
(please  see Note 1 to the  Consolidated  Financial  Statements)).  On a pre-tax
basis,  Owens Corning reported income of $3 million from operations in the first
quarter of 2002  compared  to a loss of $17  million in the same period of 2001.
When  adjusted for the costs of  restructuring  and other charges and Chapter 11
related expenditures, Owens Corning generated $40 million in income from ongoing
operations in the first  quarter of 2002,  compared to $46 million for the first
quarter of 2001.

<TABLE>
<S>                                                                  <C>                   <C>
                                                                            Quarter Ended
                                                                              March 31,
                                                                              ---------
                                                                      (In millions of dollars)
                                                                     2002                   2001
                                                                     ----                   ----
        Reported income (loss) from operations                     $    3                 $  (17)
        Restructure and other charges                                  12                     42
        Chapter 11 related reorganization items                        25                     21
                                                                   ------                 ------
        Income from ongoing operations                             $   40                 $   46
                                                                   ======                 ======
</TABLE>

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
above. Income from ongoing operations is not a recognized measurement of results
under accounting principles generally accepted in the United States.

On a  comparative  basis,  the decline  from 2001  reflects  price  decreases in
insulation  and  composites,  increased  material  and  energy  costs and higher
operating  expenses.  These  factors  were  offset  slightly  by an  increase in
volumes, primarily in roofing and vinyl products.

Restructuring of Operations and Other Charges
---------------------------------------------

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 pretax other charges.  The restructure charge represents severance costs
associated with the elimination of approximately 230 positions, primarily in the
U.S.  The primary  groups  impacted  include  manufacturing  and  administrative
personnel.  As of March 31,  2002,  approximately  $1 million  has been paid and
charged against  the reserve.   The restructure charge has been classified as a

<PAGE>


                                     - 46 -

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

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  plan to  realign  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 second  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.

Due to the timing of events,  we anticipate  that additional  restructuring  and
other charges will be recorded during 2002.

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 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  represents $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.  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 March 31, 2002,
approximately $18 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.

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

In the Building Materials Systems segment,  sales increased 9%, to $799 million,
in the first  quarter  of 2002  compared  to the  first  quarter  of 2001.  This
increase in sales resulted mostly from increased volume attributable to all U.S.
businesses,  particularly roofing and vinyl products. Building Materials Systems
sales also  reflect a slight  price  decrease  in the U.S.  insulation  markets.
Income  from  operations  was $35  million  during  the first  quarter  of 2002,
compared to $21 million in the same period in 2001.  Income from  operations  in
the first quarter of 2002 reflects the volume increases  described above as well
as  improved  gross  margins.  Please see Note 2 to the  Consolidated  Financial
Statements.


<PAGE>


                                     - 47 -

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

Composite Solutions
-------------------

In the Composite Solutions segment, sales were down 8%, to $308 million,  during
the first quarter of 2002  compared to the first quarter of 2001,  primarily due
to price and volume  decreases.  Price  decreases  were most  significant in the
U.S.,  however,  all markets  were  impacted.  Volume  decreases  in Europe were
partially  offset by increases in the U.S.  The currency  translation  impact on
sales denominated in foreign currencies was unfavorable during the first quarter
of 2002 compared to 2001.  Income from  operations  was $15 million in the first
quarter of 2002,  compared to $37 million in the same period of 2001,  with most
of the decline  attributable  to the U.S. The decrease in income from operations
resulted from the price decreases  mentioned above, and lost productivity in the
reinforcement  glass and solutions market primarily caused by decreased  demand.
Please see Note 2 to the Consolidated Financial Statements.

Income Taxes
------------

The Company  currently  projects  that its  effective tax rate for the full year
2002 will be 55%, consistent with full year 2001.

LIQUIDITY, CAPITAL RESOURCES AND OTHER RELATED MATTERS

Cash flow from  operations was negative $172 million for the quarter ended March
31, 2002, compared to negative $73 million for the quarter ended March 31, 2001.
The decrease in cash flow from operations in 2002 is primarily attributable to a
decrease in accounts payable and accrued liabilities during the first quarter of
2002 compared with  increases in these amounts  during the first quarter of 2001
from the  abnormally low levels that existed at year-end 2000 as a result of the
Filing.  In addition,  during the first quarter of 2002,  there was minimal cash
usage for inventory,  compared to $51 million of cash usage in the first quarter
of 2001. This favorable variance, in part, reflects increased sales in the first
quarter of 2002.

Inventories at March 31, 2002 decreased by $2 million from the December 31, 2001
level.  Receivables at March 31, 2002 were $530 million, a $113 million increase
over the  December  31, 2001 level,  attributable  to the  seasonal  increase in
sales.  At March 31, 2002,  Owens Corning's net working capital was $820 million
and our current ratio was 2.10, compared to $800 million and 1.94, respectively,
at December 31, 2001 and $947 million and 2.46, respectively, at March 31, 2001.

Investing  activities  used $30  million  of cash  during  first  quarter  2002,
compared to $17 million in the same  period of 2001.  The first  quarter of 2002
reflects $9 million received from the sale of our remaining  interest in Alcopor
Owens Corning.  The first quarter of 2001 includes $20 million received from the
sale of our Engineered Pipe Business.  Capital spending for property,  plant and
equipment,  excluding acquisitions, in the first quarter was $39 million in 2002
and $42 million in 2001. We anticipate that 2002 capital spending,  exclusive of
acquisitions,  will be  approximately  $280  million,  the  majority of which is
uncommitted.  We expect  that  funding for these  expenditures  will be from the
Company's operations, existing cash on hand and the credit availability from the
DIP Financing.

Financing activities in the first quarter of 2002 had no impact on cash compared
to a use of $4 million during the same period in 2001. At March 31, 2002, we had
$2.843  billion of borrowings  subject to  compromise  and $113 million of other
borrowings  (of which $96 million were in default as a consequence of the Filing
and therefore classified as current on the Consolidated Balance Sheet). At March
31, 2001,  we had $2.827  billion of borrowings  subject to compromise  and $122
million  of  other  borrowings  (of  which  $94  million  were in  default  as a
consequence   of  the  Filing  and  therefore   classified  as  current  on  the
Consolidated Balance Sheet).


<PAGE>




                                     - 48 -

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

At March 31, 2002, the Company had $561 million of Cash and Cash Equivalents (of
which approximately $38 million was subject to administrative freeze pending the
resolution of certain alleged set-off rights by certain  pre-petition  lenders).
In addition,  in connection with the Filing, the Debtors obtained a $500 million
debtor-in-possession  credit  facility  from a group of  lenders  led by Bank of
America, N.A. (the "DIP Financing"),  which currently expires November 15, 2002.
There were no borrowings  outstanding  under the DIP facility at March 31, 2002,
however,  approximately  $42  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,  (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, 2001,  the  Company  implemented  Statement  of  Financial
Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities"  (SFAS  133).  This  statement  and  its  interpretations  establish
accounting and reporting standards requiring derivative  instruments  (including
certain  derivative  instruments  embedded in other contracts) to be recorded in
the balance  sheet as either an asset or  liability  measured at its fair value.
The impact of adoption at January 1, 2001 did not have a material  effect in the
Consolidated  Statement  of Income  (Loss) and  resulted in other  comprehensive
income of approximately $1 million.

Effective January 1, 2002, the Company adopted Statement of Financial Accounting
Standards No. 142,  "Goodwill and Other Intangible  Assets" (SFAS No. 142). SFAS
No. 142 eliminates the amortization of goodwill and indefinite-lived  intangible
assets and initiates an annual review for  impairment.  Identifiable  intangible
assets with a  determinable  useful  life will  continue  to be  amortized.  The
Company applied SFAS No. 142 beginning in the first quarter of 2002. 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,  while the second step
measures the amount of the  impairment,  if any. The Company has  performed  the
first of the required  impairment tests of goodwill as of January 1, 2002 in the
first  quarter of 2002.  It is likely that  between $450 and $500 million of the
goodwill  related to  Building  Materials  Systems  will be  impaired  using the
impairment  test required by SFAS No. 142. As of March 31, 2002, the Company has
net  unamortized  goodwill of $612  million.  The Company  plans to complete the
measurement  of the  impairment  loss in the  second  quarter  of 2002  and will
address the tax implications, if any, on this impairment loss at that time. When
the  measurement  is completed in the second  quarter,  the  impairment  that is
required to be  recognized  when  adopting  SFAS No. 142 will be  reflected as a
cumulative effect of a change in accounting principle as of January 1, 2002.


<PAGE>


                                     - 49 -

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

As required by SFAS No. 142,  the results of the prior  year's  quarter have not
been restated. A reconciliation of the previously reported net loss and loss per
share as if SFAS No. 142 had been  adopted as of January 1, 2001 is presented as
follows:

<TABLE>
<S>                                                                     <C>                            <C>
                                                                               Three months ended
                                                                  March 31, 2002                March 31, 2001
                                                                  --------------                --------------
                                                                 (In millions of dollars, except per share data)

Net income (loss):
  Reported net loss                                                     $   (6)                      $  (10)
  Add back goodwill amortization, net of tax                                 -                            3
                                                                        ------                       ------
Adjusted net loss                                                       $   (6)                      $   (7)
                                                                        =======                      =======

Basic and diluted earnings (loss) per share:
  As Reported                                                           $ (.11)                      $ (.19)
  Add back goodwill amortization, net of tax                                 -                          .05
                                                                        ------                       ------
Adjusted basic and diluted loss per share                               $ (.11)                      $ (.14)
                                                                        =======                      =======
</TABLE>


All of the Company's  acquired  intangible  assets are subject to  amortization.
Intangible asset amortization  expense was approximately $1 million in the first
quarter of 2002 and 2001. The Company estimates that amortization of intangibles
will be $3 million for each of the next 5 years.  The  components  of intangible
assets are as follows:

<TABLE>
<S>                                              <C>                           <C>                      <C>
                                                                     March 31, 2002
                                                                     --------------
                                          Weighted Average           Gross Carrying               Accumulated
                                               Lives                     Amount                  Amortization
                                               -----                     ------                  ------------
                                                                             (In millions of dollars)
          Contract-based                           6                       $  2                      $   -
          Technology-based                        22                         17                         (7)
          Marketing-related                        6                         13                         (7)
                                                                           ----                      ------
                                                                           $ 32                      $ (14)
                                                                           ====                      ======
</TABLE>

Effective January 1, 2002, the Company adopted Statement of Financial Accounting
Standards  No. 144,  "Accounting  for the  Impairment  or Disposal of Long-Lived
Assets." This statement  replaces SFAS No. 121. The new statement  establishes a
single  accounting  model for  long-lived  assets to be disposed of by sale, and
requires companies to measure long-lived assets at the lower of fair value minus
cost to sell or the carrying  value.  There was no impact of adoption during the
first quarter of 2002.

Effective  January 1,  2003,  the  Company  will adopt  Statement  of  Financial
Accounting  Standards No. 143,  "Accounting for Asset  Retirement  Obligations."
This  statement  requires  that  the  fair  value  of a  liability  for an asset
retirement  obligation  be recognized in the period in which it is incurred if a
reasonable  estimate  of fair  value  can be made,  while the  associated  asset
retirement  costs  are  capitalized  as  part  of  the  carrying  amount  of the
long-lived  asset.  The  Company  does not expect the  effects of adoption to be
significant.




<PAGE>


                                     - 50 -

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 December 31,
2001, a total of 54 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,  and for secondary  aluminum  smelting in
March 2000. The Company  anticipates  that other sources to be regulated will be
wet formed glass mat, asphalt  processing and roofing,  metal coil coating,  and
open molded  fiber-reinforced  plastics.  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>


                                     - 51 -

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  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.

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 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>
<S>                                                              <C>                                <C>
                                                           March 31,                       December 31,
                    Risk Category                             2002                             2001
                    -------------                             ----                             ----
                                                                     (In millions of dollars)
                    Foreign currency                         $   -                             $   -
                    Interest rate                            $   9                             $  13
                    Natural gas                              $   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>


                                     - 52 -

                           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 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. See Note 1, Voluntary Petition for
Relief Under Chapter 11, to Owens Corning's  Consolidated  Financial  Statements
above.



<PAGE>


                                     - 53 -

                     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.

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
March 31, 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 March 31,  2002,  Owens  Corning  filed the
          following  current  report on Form 8-K:
               -    Dated March 22, 2002, under Items 4 and 7, to report changes
                    in Owens Corning's certifying accountant.



<PAGE>



                                     - 54 -

                                   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:   May 10,2002                   By:     /s/ Michael H. Thaman
     --------------------------          ---------------------------------------
                                           Michael H. Thaman
                                           Chairman of the Board and
                                           Chief Financial Officer
                                           (as duly authorized officer)



Date:   May 10, 2002                  By:     /s/ Charles E. Dana
     ---------------------------         ---------------------------------------
                                           Charles E. Dana
                                           Vice President - Corporate
                                           Controller and Global Sourcing





<PAGE>


                                     - 55 -

                                  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).

(10)          Material Contracts

              Director's  Charitable  Award  Program  (incorporated  herein  by
              reference to Exhibit  (10) to Owens  Corning's  annual  report on
              Form 10-K  (File No.  1-3660)  for the year  ended  December  31,
              2001).

(99)          Additional Exhibits

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