SECURITIES AND EXCHANGE COMMISSION

                             Washington, D. C. 20549


                                    FORM 10-Q

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

                    For the Quarter Ended September 30, 2000

                           Commission File No. 1-3660

                                  Owens Corning

                            One Owens Corning Parkway

                               Toledo, Ohio 43659

                            Area Code (419) 248-8000

                             A Delaware Corporation

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


Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  Registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

                                Yes / X / No / /

               Shares of common stock, par value $.10 per share,
                       outstanding at September 30, 2000

                                   55,423,132


<PAGE>


                                      - 2 -

                          PART I. FINANCIAL INFORMATION
                          ITEM 1. FINANCIAL STATEMENTS

                         OWENS CORNING AND SUBSIDIARIES
                        CONSOLIDATED STATEMENT OF INCOME
                                   (unaudited)

On October 5, 2000,  Owens  Corning  and 17 of its United  States  subsidiaries,
including Fibreboard Corporation (collectively,  the "Debtors"), filed voluntary
petitions  for relief  (the  "Filing")  under  Chapter  11 of the United  States
Bankruptcy Code (the "Bankruptcy  Code").  Please see Note 1 to the Consolidated
Financial Statements.
<TABLE>
<S>                                                                <C>              <C>               <C>             <C>

                                                                       Quarter Ended                   Nine Months Ended
                                                                       September 30,                     September 30,
                                                                       -------------                     -------------
                                                                   2000             1999             2000             1999
                                                                   ----             ----             ----             ----
                                                                         (In millions of dollars, except share data)

NET SALES                                                        $  1,281      $    1,333         $  3,833        $    3,773
COST OF SALES                                                       1,036             984            3,003             2,837
                                                                 --------      ----------         --------        ----------
     Gross margin                                                     245             349              830               936
                                                                 --------      ----------         --------        ----------

OPERATING EXPENSES
     Marketing and administrative expenses                            143             155              437               446
     Science and technology expenses                                   13              14               42                44
     Provision for asbestos litigation claims (Note 12)                 -               -              790                 -
     Restructure costs (Note 4)                                         6               -                6                 -
     Other (Note 5)                                                     3              (3)               7                (2)
                                                                 --------      ----------         --------        ----------

        Total operating expenses                                      165             166            1,282               488
                                                                 --------      ----------         --------        ----------

INCOME (LOSS) FROM OPERATIONS                                          80             183             (452)              448

OTHER
     Cost of borrowed funds                                            55              40              149               112
     Other (Note 13)                                                    -               -                -                 -
                                                                 --------      ----------         --------        ----------

INCOME (LOSS) BEFORE PROVISION
  (CREDIT) FOR INCOME TAXES                                            25             143             (601)              336

Provision (credit) for income taxes                                    10              50             (244)              118
                                                                 --------      ----------         --------        ----------

INCOME (LOSS) BEFORE MINORITY INTEREST AND
  EQUITY IN NET INCOME (LOSS) OF AFFILIATES                            15              93             (357)              218

Minority Interest                                                      (3)             (2)              (6)               (5)

Equity in net income (loss) of affiliates                               2              (2)               -                (4)
                                                                 --------      ----------         --------        ----------

NET INCOME (LOSS)                                               $      14      $       89         $   (363)       $      209
                                                                =========      ==========         ========        ==========

NET INCOME (LOSS) PER COMMON SHARE

Basic net income (loss) per share                               $     .25       $    1.64          $ (6.64)        $    3.87
                                                                ---------       ---------          --------        ---------
Diluted net income (loss) per share                             $     .25       $    1.53          $ (6.64)        $    3.62
                                                                ---------       ---------          --------        ---------

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

   Basic                                                             55.0            54.3             54.8              54.1
   Diluted                                                           55.5            59.5             54.8              59.5


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


<PAGE>


                                      - 3 -

                         OWENS CORNING AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                                   (unaudited)

On October 5, 2000,  Owens  Corning  and 17 of its United  States  subsidiaries,
including Fibreboard Corporation (collectively,  the "Debtors"), filed voluntary
petitions  for relief  (the  "Filing")  under  Chapter  11 of the United  States
Bankruptcy Code (the "Bankruptcy  Code").  Please see Note 1 to the Consolidated
Financial Statements.
<TABLE>
<S>                                                                       <C>                          <C>           <C>

                                                                       September 30,      December 31,          September 30,
                                                                           2000               1999                   1999
                                                                           ----               ----                   ----
                                                                                      (In millions of dollars)
ASSETS
------

CURRENT
     Cash and cash equivalents                                         $      378              $       70        $       99
     Restricted cash (Note 12)                                                100                       -                 -
     Restricted cash and securities - Fibreboard -
       current portion (Note 13)                                              850                     900                 -
     Receivables                                                              507                     358               584
     Inventories                                                              532                     466               532
     Insurance for asbestos litigation claims -
        current portion (Note 12)                                              33                      25                25
     Deferred income taxes                                                    181                     185               264
     Income tax receivable                                                      4                      61                 -
     Other current assets                                                      25                      23                28
                                                                        ---------               ---------         ---------

           Total current                                                    2,610                   2,088             1,532
                                                                        ---------               ---------         ---------

OTHER

     Insurance for asbestos litigation claims (Note 12)                        59                     205               206
     Restricted cash (Note 12)                                                 44                       -                 -
     Restricted cash and securities - Fibreboard (Note 13)                    395                     938                 -
     Asbestos costs to be reimbursed - Fibreboard                               -                       -                41
     Deferred income taxes                                                    828                     547               551
     Goodwill (Note 5)                                                        649                     743               747
     Investments in affiliates                                                 87                      65                50
     Other noncurrent assets                                                  273                     208               243
                                                                        ---------               ---------         ---------

           Total other                                                      2,335                   2,706             1,838
                                                                        ---------               ---------         ---------

PLANT AND EQUIPMENT, at cost

     Land                                                                      58                      70                70
     Buildings and leasehold improvements                                     672                     725               719
     Machinery and equipment                                                2,547                   2,639             2,620
     Construction in progress                                                 360                     258               233
                                                                        ---------               ---------         ---------
                                                                            3,637                   3,692             3,642

  Less - accumulated depreciation                                          (1,944)                 (1,992)           (1,962)
                                                                        ---------               ---------         ---------

      Net plant and equipment                                               1,693                   1,700             1,680
                                                                        ---------               ---------         ---------

TOTAL ASSETS                                                            $   6,638               $   6,494         $   5,050
                                                                        =========               =========         =========




                          The  accompanying  notes are an integral  part of this statement.

</TABLE>

<PAGE>


                                      - 4 -

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

On October 5, 2000,  Owens  Corning  and 17 of its United  States  subsidiaries,
including Fibreboard Corporation (collectively,  the "Debtors"), filed voluntary
petitions  for relief  (the  "Filing")  under  Chapter  11 of the United  States
Bankruptcy Code (the "Bankruptcy  Code").  Please see Note 1 to the Consolidated
Financial Statements.
<TABLE>
<S>                                                                         <C>                   <C>                <C>

                                                                     September 30,          December 31,         September 30,
                                                                         2000                    1999                1999
                                                                         ----                    ----                ----
LIABILITIES AND STOCKHOLDERS' EQUITY                                                   (In millions of dollars)
------------------------------------

CURRENT
     Accounts payable and accrued liabilities                           $    696           $       839             $      784
     Reserve for asbestos litigation claims - current                                              950
       portion (Note 12)                                                   1,250                                        1,050
     Asbestos-related liabilities - Fibreboard - current
       portion (Note 13)                                                     850                   900                      -
     Short-term debt                                                          56                    68                    103
     Long-term debt - current portion (Note 6)                             2,733                   159                     84
                                                                        --------              --------              ---------

        Total current                                                      5,585                 2,916                  2,021
                                                                        --------              --------              ---------

LONG-TERM DEBT                                                                32                 1,764                  1,994
                                                                        --------              --------              ---------

OTHER
  Reserve for asbestos litigation claims (Note 12)                           980                   820                    958
  Asbestos-related liabilities - Fibreboard  (Note 13)                       395                   938                     67
  Other employee benefits liability                                          322                   318                    324
  Pension plan liability                                                      41                    42                     46
  Other                                                                      337                   339                    331
                                                                        --------              --------              ---------

        Total other                                                        2,075                 2,457                  1,726
                                                                        --------              --------              ---------

COMPANY OBLIGATED SECURITIES OF
  ENTITIES HOLDING SOLELY PARENT
  DEBENTURES                                                                 195                   194                    195
                                                                        --------              --------              ---------

MINORITY INTEREST                                                             47                    44                     43
                                                                        --------              --------              ---------

STOCKHOLDERS' EQUITY
  Common stock                                                               700                   695                    698
  Deficit                                                                 (1,884)               (1,510)                (1,565)
  Accumulated other comprehensive income (loss)                             (103)                  (51)                   (41)
  Other                                                                       (9)                  (15)                   (21)
                                                                        --------              --------              ---------

        Total stockholders' equity                                        (1,296)                 (881)                  (929)
                                                                        --------              --------              ---------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                              $  6,638              $  6,494              $   5,050
                                                                        ========              ========              =========


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

<PAGE>


                                      - 5 -

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

On October 5, 2000,  Owens  Corning  and 17 of its United  States  subsidiaries,
including Fibreboard Corporation (collectively,  the "Debtors"), filed voluntary
petitions  for relief  (the  "Filing")  under  Chapter  11 of the United  States
Bankruptcy Code (the "Bankruptcy  Code").  Please see Note 1 to the Consolidated
Financial Statements.
<TABLE>
<S>                                                                  <C>               <C>           <C>            <C>


                                                                         Quarter Ended                 Nine Months Ended
                                                                         September 30,                  September 30,
                                                                         --------------                 -------------
                                                                      2000            1999           2000           1999
                                                                      ----            ----           ----           ----
                                                                                   (In millions of dollars)

NET CASH FLOW FROM OPERATIONS

Net income                                                          $     14        $      89      $   (363)     $    209
  Reconciliation of net cash provided by operating
     activities
        Noncash items:
          Provision for asbestos litigation claims                         -                -           790             -
          Provision for depreciation and amortization                     44               53           137           154
          Provision (credit) for deferred income taxes                    (1)              44          (289)           83
          Other                                                            9                8           (23)           17
        (Increase) decrease in receivables                                (1)              29          (215)         (113)
        (Increase) decrease in inventories                                15              (29)         (105)          (89)
        Increase (decrease) in accounts payable and
          accrued liabilities                                             17               65           (43)         (161)
        (Increase) decrease in income tax receivable                       1                -            63           104
        (Increase) decrease in restricted cash                           106                -          (144)            -
        Proceeds from insurance for asbestos
          litigation claims, excluding Fibreboard (Note 12)                -              147           347           179
        Payments for asbestos litigation claims,
          excluding Fibreboard (Note 12)                                (176)            (252)         (540)         (622)
        Other                                                            (35)             (15)          (59)          (25)
                                                                   ---------        ---------      --------      --------

            Net cash flow from operations                          $      (7)       $     139      $   (444)     $   (264)
                                                                   ---------        ---------      --------      --------

NET CASH FLOW FROM INVESTING

        Additions to plant and equipment                                (113)             (39)         (278)         (138)
        Investment in subsidiaries, net of cash
          acquired                                                         -                -            (4)            -
        Proceeds from the sale of  affiliate or business
          (Note 5)                                                         -                -           193             -
        Other (Note 5)                                                     1               14           (35)          (13)
                                                                   ---------        ---------      --------      --------

            Net cash flow from investing                           $    (112)       $     (25)     $   (124)     $   (151)
                                                                   ---------        ---------      --------      --------




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

<PAGE>


                                      - 6 -

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

On October 5, 2000,  Owens  Corning  and 17 of its United  States  subsidiaries,
including Fibreboard Corporation (collectively,  the "Debtors"), filed voluntary
petitions  for relief  (the  "Filing")  under  Chapter  11 of the United  States
Bankruptcy Code (the "Bankruptcy  Code").  Please see Note 1 to the Consolidated
Financial Statements.
<TABLE>
<S>                                                               <C>              <C>              <C>              <C>

                                                                      Quarter Ended                   Nine Months Ended
                                                                      September 30,                     September 30,
                                                                      -------------                     -------------
                                                                  2000             1999             2000             1999
                                                                  ----             ----             ----             ----
                                                                                 (In millions of dollars)

NET CASH FLOW FROM FINANCING

  Net additions (reductions) to long-term
    credit facilities                                         $       (7)       $    (14)        $    948        $     247
  Other additions to long-term debt                                    -               2               22              253
  Other reductions to long-term debt                                  (1)             (4)             (84)             (37)
  Net increase (decrease) in short-term debt                          13             (18)               4               10
  Dividends paid                                                      (4)             (4)             (12)             (12)
  Other                                                                -              (1)               -               (1)
                                                              ----------        --------        ---------       ----------

      Net cash flow from financing                                     1             (39)             878              460
                                                              ----------        --------        ---------       ----------

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

Net increase (decrease) in cash and cash
  equivalents                                                       (119)             73              308               45

Cash and cash equivalents at beginning of
  period                                                             497              26               70               54
                                                              ----------        --------        ---------       ----------

Cash and cash equivalents at end of period                    $      378        $     99        $     378       $       99
                                                              ==========        ========        =========       ==========

</TABLE>

<PAGE>


                                      - 7 -

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

1.  SUBSEQUENT EVENT - VOLUNTARY PETITION FOR RELIEF UNDER CHAPTER 11

On October 5, 2000,  Owens  Corning  and 17 of its United  States  subsidiaries,
including Fibreboard Corporation (collectively,  the "Debtors"), filed voluntary
petitions  for relief  (the  "Filing")  under  Chapter  11 of the United  States
Bankruptcy Code (the  "Bankruptcy  Code") in the United States  Bankruptcy Court
for the  District  of  Delaware  (the  "Bankruptcy  Court")  and  are  currently
operating their  respective  businesses as  debtors-in-possession  in accordance
with provisions of the Bankruptcy  Code. The Chapter 11 cases of the Debtors are
being jointly administered under Case No. 00-3837 (MFW).

Owens Corning  filed for relief under Chapter 11 to address the growing  demands
on its cash flow resulting from its  multi-billion  dollar  asbestos  liability.
This  liability is discussed  in greater  detail in Note 12 to the  Consolidated
Financial Statements.  Based upon the recent developments discussed below, Owens
Corning  believes  that the Filing offers the only viable legal process by which
it and its subsidiaries  will achieve a comprehensive  resolution of its current
and future asbestos-related liabilities.

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

As a consequence of the Filing,  all pending  litigation  against the Debtors is
stayed and no party may take any action to  realize on its  pre-petition  claims
except  pursuant to further  order of the  Bankruptcy  Court.  In addition,  the
Debtors  may  reject  pre-petition   executory  contracts  and  unexpired  lease
obligations,  and parties  affected by these rejections may file claims with the
Bankruptcy Court. The Company  anticipates that substantially all liabilities as
of the  date of the  Filing  will be  dealt  with in  accordance  with a plan of
reorganization  which  will be  proposed  and  voted on in  accordance  with the
provisions of the Bankruptcy Code. Two creditors'  committees,  one representing
asbestos claimants and the other representing  other unsecured  creditors,  have
been formed and, in accordance with the provisions of the Bankruptcy  Code, will
have the right to be heard on all matters that come before the Bankruptcy Court.
Owens Corning expects that the  committees,  together with a  representative  of
future asbestos  claimants to be appointed by the Bankruptcy  Court, will be the
primary  entities  with which the Company will  negotiate the terms of a plan of
reorganization.

The accompanying Consolidated Financial Statements have been prepared on a going
concern  basis,  which  contemplates  continuity of  operations,  realization of
assets and  liquidation  of  liabilities  in the  ordinary  course of  business.
However,  as a result of the Filing,  such realization of assets and liquidation
of   liabilities    are   subject   to    uncertainty.    While   operating   as
debtors-in-possession under the protection of Chapter 11 of the Bankruptcy Code,
and subject to Bankruptcy Court approval or otherwise as permitted in the normal
course of  business,  the  Company 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,  which do not give effect to any adjustments to
the carrying value of assets or amounts of  liabilities  that might be necessary
as a consequence of a plan of reorganization.

Substantially  all of the Company's  pre-petition  debt is now in default due to
the Filing. Although the Filing occurred after the end of the third quarter, the
accompanying  Consolidated  Financial  Statements  reflect the classification of
most of the  Company's  pre-petition  debt as current.  This includes debt under
Owens  Corning's  $1.8 billion bank credit  facility,  which was in default as a
result of a breach of  covenant  on October 1, 2000,  as  described  below,  and
approximately  $1.4 billion of other  outstanding  debt, which is expected to be
subject to cross-default provisions at some point during the next twelve months.
As required by Statement of Position  90-7 (SOP 90-7),  "Financial  Reporting by
Entities in Reorganization under the Bankruptcy Code," the Company, beginning in
the fourth quarter of 2000, will be required to record its debt

<PAGE>


                                      - 8 -

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

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

instruments  at the allowed  amount,  as defined by SOP 90-7.  Accordingly,  the
Company will accelerate the amortization of its debt-related  costs attributable
to the Debtors and record a pretax expense of  approximately  $29 million during
October 2000.  This expense will be classified as a  Reorganization  Cost and is
comprised of a $27 million charge for unamortized financing costs,  including $5
million  associated with the Monthly Income Preferred  Securities (MIPS), and $2
million for unamortized discounts.

The Company has negotiated a debtor-in-possession revolving credit facility with
Bank of America,  N.A. in the aggregate amount of $500 million,  which financing
is subject, among other conditions, to approval by the Bankruptcy Court.

The Company has received  approval from the Bankruptcy Court to pay or otherwise
honor  certain of its  pre-petition  obligations,  including  claims of critical
vendors and employee wages and benefits in the ordinary course of business.

Background of Filing
--------------------

Since the  adoption of its  National  Settlement  Program  ("NSP") in the fourth
quarter of 1998, Owens Corning's  strategy has been to use that program to avoid
the costly and unpredictable  traditional tort system and to quantify the amount
of payments to asbestos  claimants  and control the timing of those  payments to
match the Company's ability to make such payments.  The NSP achieved these goals
in many  respects  and also  facilitated  the  negotiation  of the  deferral  of
payments to NSP  participants  earlier  this year.  As  discussed in more detail
below,  however,  Owens  Corning's  inability  to obtain  ongoing  financing  on
acceptable  terms,  the lack of support for additional  payment  deferrals,  the
higher than  anticipated  number of  asbestos-related  claims  (which  adversely
affected the Company's  estimated  liquidity needs through 2004), and the recent
deterioration of Owens Corning's  operations,  resulted in the decision by Owens
Corning to make the Filing.

Refinancing.   As  previously  disclosed,  Owens  Corning  had  agreed  to  make
------------
substantial  payments for  asbestos-related  liabilities  through at least 2004;
those payments were expected to require the dedication of a significant  portion
of Owens Corning's  sources of liquidity  during the period;  and,  depending on
operational  cash flow and other  sources of cash,  Owens  Corning might require
additional  financing.  During the third quarter of 2000, Owens Corning met on a
number of occasions  with the agent for its bank group to discuss a  refinancing
of its $1.8 billion bank credit facility,  which was scheduled to expire in June
2002 (the  "Refinancing").  Owens Corning requested that the Refinancing  extend
into  2005  and be  increased  to an  amount  sufficient  to meet  its  expected
liquidity  needs,  including  the  repayment  on  maturity  of $300  million  of
debentures in 2005. Following extended negotiations,  Owens Corning concluded at
the end of the third quarter that its lenders would not be willing to agree to a
Refinancing  that  would  meet the  Company's  needs.  Moreover,  Owens  Corning
concluded  that the lenders would  require  that, as a part of any  Refinancing,
Owens  Corning  pledge  its  assets to  secure  the loans and agree to limits on
payments  for  asbestos   liabilities  that  would  be  inconsistent   with  its
anticipated asbestos payment obligations.

Support for Payment Deferrals.  During the course of the third quarter,  support
-----------------------------
for asbestos payment deferrals was adversely impacted by several factors. First,
as a result of the downturn in the Company's  operations in the third quarter of
2000 (discussed below), Owens Corning approached certain NSP firms to

<PAGE>


                                      - 9 -

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


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

request additional payment deferrals. Based on those discussions,  Owens Corning
determined that it would not be feasible to obtain additional  payment deferrals
and that the likely terms of the  Refinancing  would be  unacceptable to the NSP
participants.  Second, the NSP Executive Committee and other participants in the
NSP declined to agree to any deferral in payments due from Fibreboard.  Finally,
several NSP firms  declined  to grant the  deferrals  previously  agreed upon in
principle  and  initiated  legal  proceedings  to  enforce  the  terms  of their
respective NSP Agreements.

Asbestos-Related Claims. Prior to the Filing, Owens Corning noted several trends
-----------------------  which  indicated  that it would  likely be  required to
defer  asbestos-related  payments in excess of deferrals  previously  negotiated
with law firms  participating  in the NSP.  First,  Owens  Corning  began to see
evidence that a higher than anticipated number of new  asbestos-related  claims,
particularly  higher value claims,  was being filed by non-NSP firms,  including
new firms (where the timing of resolution is uncertain and the amount and timing
of payments may be determined by the  traditional  tort system).  Second,  Owens
Corning noted a substantial  increase in the rate of claims filed,  particularly
during September 2000. Approximately 7,800 asbestos-related claims were received
by Owens  Corning  (excluding  Fibreboard)  during  the third  quarter  of 2000,
compared to  approximately  3,400 and 4,200 claims received during the first and
second quarters,  respectively.  While Owens Corning believes that this increase
in claims filings represented an acceleration of claims from future periods as a
result of the downgrading of Owens Corning's  credit rating in mid-2000,  rather
than an increase in the total number of asbestos-related  claims to be expected,
this trend  would have had the effect of  accelerating  the  related  settlement
payments  and  increasing  liquidity  needs  through  2004  and/or  the  need to
negotiate further deferrals of asbestos payments.

Downturn in  Operations.  Owens  Corning's  results of  operations  deteriorated
-----------------------
significantly  in the third quarter of 2000, with  expectations  for the quarter
declining particularly during the last half of the period. As a result of, among
other factors,  the fall in demand for building  materials,  elevated energy and
raw materials  costs and the inability of Owens Corning to fully recapture these
costs in price  adjustments,  Owens Corning's margins and income from operations
were significantly  reduced. As a result, Owens Corning's ability to service its
ongoing  asbestos  payments  and  continue  to comply with its  pre-Filing  loan
covenants was  adversely  affected.  Owens  Corning  concluded at the end of the
third quarter of 2000 that, unless it used a substantial  portion of its cash to
repay a portion of its bank debt,  Owens  Corning  would be in  violation of the
leverage ratio covenant under its $1.8 billion bank credit  facility.  Moreover,
in view of  reduced  expectations  concerning  operating  results  in the fourth
quarter and beyond,  the Company  concluded that its long-term  liquidity  needs
(driven in large measure by asbestos  payment  obligations)  could not likely be
met by its cash and available  credit under its bank credit  facility (which was
limited by leverage ratio and other loan covenants).

Timing of Chapter 11 Filing
---------------------------

As a result of the above factors,  Owens Corning  management  determined late in
the third  quarter that it was unlikely that Owens Corning would be able to meet
its long-term  liquidity  needs,  including  agreed and other required  asbestos
payments  and  repayment  of debt on  maturity.  While Owens  Corning  held $378
million of Cash and Cash  Equivalents  at the end of the third  quarter of 2000,
and  Owens  Corning's  operations   (excluding  the  effects  of  asbestos)  are
traditionally  profitable  and generate  strong  positive cash flow,  management
determined  that a Chapter 11 filing in October would be in the best interest of
all Owens Corning stakeholders.


<PAGE>


                                     - 10 -

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


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

Post-Filing Liquidity
---------------------

At  September  30,  2000,  Owens  Corning  had  $378  million  of Cash  and Cash
Equivalents.  In connection  with the Filing,  Owens Corning has obtained a $500
million  debtor-in-possession  financing  commitment from Bank of America,  N.A.
(the  "DIP  Financing"),  which  is  subject  to  certain  conditions  including
Bankruptcy Court approval.

The accounts receivable  securitization facility between Owens Corning,  certain
lenders,  and Owens Corning Funding  Corporation (a bankruptcy remote and wholly
owned  subsidiary of Owens  Corning),  scheduled to expire in October 2000,  has
been  terminated  due to the  Filing.  As of October 31,  2000,  all of the $125
million of receivables  sold to lenders under this facility have been settled as
collected.

Owens Corning expects that cash from operations (and, if concluded and approved,
the DIP Financing) will provide sufficient funds to allow it to continue its and
its  subsidiaries'  operating  activities and to meet its  post-Filing  debt and
capital  requirements for the foreseeable future, while a plan of reorganization
is developed and considered.


<PAGE>


                                     - 11 -

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


2.  SEGMENT DATA

Effective July 1, 2000, the Company realigned its internal  operating  segments.
Following  this  realignment,  the Company  reviewed its  operating  segments in
accordance  with SFAS 131 and concluded  that the  aggregation  of its operating
segments into two  reportable  operating  segments was still  appropriate.  As a
result of this realignment,  however, intersegment transactions no longer exist.
Net  sales  and  income  from  operations  have been  restated  for all  periods
presented to reflect this change.
<TABLE>
<S>                                                          <C>              <C>          <C>               <C>


                                                                Quarter Ended                  Nine Months Ended
                                                               September 30,                     September 30,
                                                               --------------                    -------------
                                                             2000            1999          2000              1999
                                                             ----            ----          ----              ----
                                                                            (In millions of dollars)
NET SALES

Reportable Operating Segments
-----------------------------

  Building Materials
    United States                                          $    994        $  1,025        $ 2,901           $  2,837
    Europe                                                        1              54             89                174
    Canada and other                                             53              48            143                133
                                                           --------        --------        -------           --------

       Total Building Materials                               1,048           1,127          3,133              3,144
                                                           --------        --------        -------           --------

  Composite Materials
    United States                                               104              92            309                277
    Europe                                                       85              75            256                243
    Canada and other                                             44              39            135                109
                                                           --------        --------        -------           --------

       Total Composite Materials                                233             206            700                629
                                                           --------        --------        -------           --------

       Total Reportable Operating Segments                 $  1,281        $  1,333        $ 3,833           $  3,773
                                                           ========        ========        =======           ========

External Customer Sales by Geographic Region
--------------------------------------------
  United States                                            $  1,098        $  1,117        $ 3,210           $  3,114
  Europe                                                         86             129            345                417
  Canada and other                                               97              87            278                242
                                                           --------        --------        -------           --------

       Net Sales                                           $  1,281        $  1,333        $ 3,833           $  3,773
                                                           ========        ========        =======           ========


</TABLE>

<PAGE>


                                     - 12 -

                         OWENS CORNING AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
                                   (unaudited)
<TABLE>
<S>                                                           <C>                <C>             <C>               <C>

                                                                  Quarter Ended                     Nine Months Ended
                                                                  September 30,                      September 30,
                                                                  -------------                      -------------
2.  SEGMENT DATA (continued)                                  2000              1999             2000              1999
                                                              ----              ----             ----              ----
                                                                              (In millions of dollars)
INCOME (LOSS) FROM OPERATIONS

Reportable Operating Segments
-----------------------------
  Building Materials
    United States                                          $      73          $    160        $     285         $    381
    Europe                                                         -                 1                2                5
    Canada and other                                              12                 8               26               24
                                                           ---------          --------        ---------         --------

       Total Building Materials                                   85               169              313              410
                                                           ---------          --------        ---------         --------

  Composite Materials
    United States                                                  5                15               54               42
    Europe                                                         7                (4)              10               (7)
    Canada and other                                               4                 4               16               11
                                                           ---------          --------        ---------         --------

       Total Composite Materials                                  16                15               80               46
                                                           ---------          --------        ---------         --------

       Total Reportable Operating Segments                 $     101          $    184        $     393         $    456
                                                           ---------          --------        ---------         --------

Geographic Regions
------------------
    United States                                          $      78          $    175        $     339         $    423
    Europe                                                         7                (3)              12               (2)
    Canada and other                                              16                12               42               35
                                                           ---------          --------        ---------         --------

        Total Reportable Operating Segments                $     101          $    184        $     393         $    456
                                                           =========          ========        =========         ========

Reconciliation to Consolidated Income
-------------------------------------
  Before Provision for Income Taxes
  ---------------------------------

   Provision for asbestos litigation claims                        -                 -             (790)               -
   General corporate income (expense)                            (21)               (1)             (55)              (8)
   Cost of borrowed funds                                        (55)              (40)            (149)            (112)
                                                           ---------          --------        ---------         --------

      Consolidated Income Before
         Provision for Income Taxes                        $      25          $    143        $    (601)        $    336
                                                           ---------          --------        ---------         --------
</TABLE>

<PAGE>


                                     - 13 -

                         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  1999 Annual  Report on Form 10-K, as filed with the
Securities and Exchange Commission.

Certain  reclassifications  have  been made to the 1999  Consolidated  Financial
Statements to conform with the classifications used in 2000.

4.  RESTRUCTURING OF OPERATIONS AND OTHER ACTIONS

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

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

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

The $115 million for personnel reductions represented severance costs associated
with the elimination of  approximately  2,450 positions  worldwide.  The primary
groups affected  included  manufacturing  and  administrative  personnel.  As of
September 2000, approximately $105 million has been paid and charged against the
reserve for personnel reductions. Charges of approximately $14 million have been
made against exit cost liabilities  through  September 2000. No adjustments have
been made to the liabilities.

<PAGE>


                                     - 14 -

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

4.  RESTRUCTURING OF OPERATIONS AND OTHER ACTIONS (continued)

The  following  table   summarizes  the  status  of  the  liabilities  from  the
restructure   program  described  above,   including   cumulative  spending  and
adjustments and the remaining balance as of September 30, 2000:
<TABLE>
<S>                                                             <C>                 <C>                  <C>

                                                        Beginning                  Total                Ending
                                                        Liability                 Payments             Liability
(In millions of dollars)                                ---------                 --------             ---------

Personnel Costs                                          $  115                  $   (105)             $     10
Facility and Business Exit Costs                             16                       (14)                    2
Other                                                         2                        (2)                    -
                                                         ------                  --------              --------

Total                                                    $  133                  $   (121)             $     12
                                                         ======                  ========              ========
</TABLE>


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

5.  ACQUISITIONS AND DIVESTITURES OF BUSINESSES

On May 31,  2000,  the  Company  completed  the  sale of its  European  Building
Materials business to an unconsolidated joint venture, Alcopor Owens Corning, in
which  the  Company  has a 40%  interest.  Proceeds  from the  sale,  net of the
Company's $34 million cash infusion into the joint  venture,  were $177 million.
In connection  with this  transaction,  the joint venture assumed $62 million of
debt from Owens  Corning  and the  Company  incurred  fees of  approximately  $6
million,  resulting in net cash proceeds of approximately $109 million. A pretax
gain of approximately $5 million, including a $54 million write-off of goodwill,
was  realized  from the sale.  This pretax gain was  recorded as a reduction  of
other operating expenses on the consolidated statement of income.

The results of  operations  of the  European  Building  Materials  business  are
reflected in the Company's  consolidated  statement of income through the period
ending May 31, 2000.  For the nine months ended  September 30, 2000 and the year
ended  December 31, 1999, the European  Building  Materials  business  generated
sales of approximately  $88 million and $234 million,  respectively,  and income
from  operations  of  approximately  $1 million and $12  million,  respectively.
Effective  May 31,  2000,  the Company  accounts for its  ownership  interest in
Alcopor  Owens  Corning  under  the  equity  method.  Please  see  Note 2 to the
Consolidated Financial Statements.

During the first quarter of 2000,  the Company  completed the sale of the assets
of Falcon Foam, a producer of foam  insulation in Michigan and  California.  Net
proceeds  from the sale  were  $50  million  and  resulted  in a pretax  loss of
approximately $5 million,  including a $32 write-off of goodwill.  This loss was
recorded as other operating  expenses on the  consolidated  statement of income.
During the first  quarter of 2000,  the Company also  realigned its vinyl siding
manufacturing  operations,  resulting  in the closure of its Fair  Bluff,  North
Carolina  manufacturing  plant. This realignment resulted in a $9 million pretax
expense,  all  of  which  was  recorded  as  other  operating  expenses  on  the
consolidated statement of income.


<PAGE>


                                     - 15 -

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

5.  ACQUISITIONS AND DIVESTITURES OF BUSINESSES (continued)

In connection  with a proposal  received from its Korean joint venture  partner,
the  Company  infused  approximately  $29  million of cash into this  venture in
March, 1999. As a result of this investment,  along with additional  investments
by the other  partner,  the Company  increased its  ownership  interest in Owens
Corning  Korea to 70%.  The Company  accounted  for this  transaction  under the
purchase  method of  accounting  whereby  the assets  acquired  and  liabilities
assumed,  including $84 million in debt, have been recorded at their fair values
and  the  results  of  operations  have  been  consolidated  since  the  date of
acquisition.  Prior to that date,  the Company  accounted for this joint venture
under the equity method.

6.  LONG-TERM DEBT

During the first quarter of 1999, the Company issued $250 million of senior debt
securities  (maturing  in 2009 and  bearing an annual  rate of  interest of 7.0%
payable semiannually) as unsecured obligations of the Company. The proceeds from
the  issuance  of these  securities  were  used to reduce  borrowings  under the
Company's $1.8 billion bank credit facility.

As of October 1, 2000,  the  Company  was in  violation  of the  leverage  ratio
covenant  under  its $1.8  billion  bank  credit  facility.  As a result of this
condition,   the  Company   anticipates  that  substantially  all  of  its  debt
obligations will be subject to cross-default provisions at some point during the
next twelve  months.  Accordingly,  approximately  $2.7  billion of  outstanding
borrowings, including $1.3 billion of outstanding  borrowings,  under the credit
facility and $1.4 billion of other outstanding borrowings at September 30, 2000,
have been classified as a current liability on the consolidated balance sheet.

7.  INCOME TAXES

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

                                                                Quarter                      Nine  Months
                                                                 Ended                           Ended
                                                            September 30,                    September 30,
                                                            --------------                   -------------
                                                         2000            1999             2000            1999
                                                         ----            ----             ----            ----

U.S. federal statutory rate                               35%             35%              (35%)            35%
State and local income taxes                              (3)              2                (5)              3
Operating losses of foreign subsidiaries                  11               1                 1               1
Special tax election (a)                                   -              (6)               (2)             (3)
Foreign tax rate differences                              (1)              -                 -               -
Other                                                      -               3                 -              (1)
                                                       ------         ------            ------          ------

Effective tax rate                                        42%             35%              (41%)            35%
                                                       ======         ======            ======          ======

(a)  Represents the implementation of a tax strategy associated with one of our foreign subsidiaries.
</TABLE>


<PAGE>


                                     - 16 -

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

8.  INVENTORIES (continued)
<TABLE>
<S>                                                             <C>                           <C>

                                                          September 30, 2000         December 31, 1999
                                                          ------------------         -----------------
                                                                    (In millions of dollars)
Inventories are summarized as follows:

Finished goods                                              $        406                $        374
Materials and supplies                                               199                         158
                                                            ------------                ------------
FIFO inventory                                                       605                         532
Less:  Reduction to LIFO basis                                       (73)                        (66)
                                                            ------------                ------------
Total Inventory                                             $        532                $        466
                                                            ============                ============

</TABLE>

Approximately  $381  million and $269 million of total  inventories  were valued
using the LIFO method at September 30, 2000 and December 31, 1999, respectively.

9.  CONSOLIDATED STATEMENT OF CASH FLOWS

Cash  payments  (refunds)  for  income  taxes  and cost of  borrowed  funds  are
summarized as follows:
<TABLE>
<S>                                           <C>                 <C>             <C>               <C>
                                                      Quarter                          Nine Months
                                                       Ended                              Ended
                                                  September 30,                       September 30,
                                                  --------------                      -------------
                                               2000              1999             2000              1999
                                               ----              ----             ----              ----
                                                               (In millions of dollars)
Income taxes                                   $   5             $   1            $ (30)            $ (82)
Cost of borrowed funds                            54                34              154                87


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


As  discussed  in  Note  1 to  the  Consolidated  Financial  Statements  and  in
Management's  Discussion  and  Analysis,  all  pre-petition  liabilities  of the
Debtors  have been stayed due to the Filing.  As a result,  interest  related to
pre-petition  debt  instruments  of the  Debtors is not  expected  to be paid or
accrued in future  periods  and cost of  borrowed  funds is expected to decrease
significantly beginning in the fourth quarter of 2000.

Please refer to Notes 4 and 12 for disclosure of Non-Cash activities.

10.  COMPREHENSIVE INCOME

The Company's comprehensive income for the quarters ended September 30, 2000 and
1999 was a loss of $15 million and income of $96 million,  respectively. For the
nine months ended September 30, 2000 and 1999,  comprehensive  income was a loss
of  $415  million  and  income  of $206  million,  respectively.  The  Company's
comprehensive income includes net income, currency translation adjustments,  and
deferred gains and losses on certain  hedging  transactions.  The  comprehensive
loss  for the  quarter  and  nine  months  ended  September  30,  2000  includes
unfavorable  currency  translation  adjustments  of $29 million and $52 million,
respectively,  reflecting the impact of the strengthening U.S. dollar during the
year.

The  comprehensive  loss for the nine months ended September 30, 2000 includes a
reclassification  from other comprehensive income to net income of approximately
$13  million.  This   reclassification   reflects  the  expense  recognition  of
accumulated  currency  translation  adjustments  resulting  from the sale of the
European Building  Materials business to Alcopor Owens Corning during the second
quarter of 2000 (see Note 5).


<PAGE>


                                     - 17 -

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

11.  EARNINGS PER SHARE

The following table reconciles the net income (loss) and weighted average number
of shares used in the basic earnings per share calculation to the net income and
weighted average number of shares used to compute diluted earnings per share.
<TABLE>
<S>                                                         <C>             <C>              <C>            <C>
                                                               Quarter Ended                  Nine Months Ended
                                                               September 30,                    September 30,
                                                               -------------                    -------------
                                                            2000            1999             2000            1999
                                                            ----            ----             ----            ----
                                                                (In millions of dollars, except share data)

Net income (loss) used for basic earnings
  per share                                              $     14          $     89        $   (363)        $   209

Net income (loss) effect of assumed
  conversion of  preferred securities                           -                 2               -               6
                                                         --------          --------        --------         -------

Net income used for diluted earnings per share           $     14          $     91        $   (363)        $   215
                                                         ========          ========        ========         =======

Weighted average number of shares
  outstanding used for basic earnings per share
  (thousands)                                              55,008            54,292          54,759          54,111

Deferred awards and stock options
  (thousands)                                                 457               664               -             789

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

Weighted average number of shares
  outstanding and common equivalent shares used
  for diluted earnings per share
  (thousands)                                              55,465            59,522          54,759          59,466
                                                         ========          ========        ========         =======
</TABLE>


<PAGE>


                                     - 18 -

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

12.   CONTINGENT LIABILITIES

Asbestos Liabilities
--------------------

ITEM A. - OWENS CORNING (EXCLUDING FIBREBOARD)

Numerous  claims have been  asserted  against Owens  Corning  alleging  personal
injury 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 7,800 asbestos personal injury claims during the
third quarter of 2000,  approximately  15,400 such claims during the first three
quarters of 2000, and approximately 32,000 such claims during 1999.

Prior to October  5,  2000,  when  Owens  Corning  and 17 of its  United  States
subsidiaries  (collectively,  the "Debtors"),  including  Fibreboard (see Item B
below),  filed voluntary petitions for relief (the "Filing") under Chapter 11 of
the United States Bankruptcy Code, the vast majority of 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 claims  against the
Debtors have been stayed (see Note 1). The final  resolution  of all pending and
future  asbestos  claims against Owens Corning and Fibreboard will be dealt with
as part of Owens Corning's plan of reorganization.

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
Owens Corning's asbestos  liability,  and that of Fibreboard (see Item B below),
and to help Owens  Corning  better  predict  the timing and amount of  indemnity
payments for both pending and future claims.

The number of law firms  participating in the NSP expanded from approximately 50
when the NSP was established to approximately 120 as of September 30, 2000. Each
of these  participating  law firms  agreed to a long-term  settlement  agreement
("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 and Future Claims were negotiated with each
participating  firm,  and each firm  communicated  with its  respective  current
clients to obtain authority to settle individual claims.  Payments to individual
claimants  varied based on a number of factors,  including the type and severity
of  disease,  age and  occupation.  All  payments  were  subject to  delivery of
satisfactory  evidence of a qualifying  medical  condition and exposure to Owens
Corning's and/or Fibreboard's  products,  delivery of customary releases by each
claimant, and other conditions. Certain claimants settling non-malignancy claims
with Owens Corning and/or  Fibreboard were entitled to an agreed  pre-determined
amount  of  additional  compensation  if  they  later  developed  a more  severe
asbestos-related medical condition.


<PAGE>


                                     - 19 -

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

12.  CONTINGENT LIABILITIES

ITEM A. - OWENS CORNING (EXCLUDING FIBREBOARD)  (continued)

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

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
September  2000,  fewer than 300  claimants  had elected to reject the  original
settlement proposal, and to mediate under the terms of the NSP Agreement.

As of September 30, 2000, Owens Corning had agreed to settle, through the NSP, a
total of  approximately  240,000 Initial Claims.  As of that date, Owens Corning
had paid more than $900 million (including  Administrative Deposits as described
below) of the estimated $1.9 billion total settlement  amounts payable under the
NSP in connection with the resolution of these Initial Claims. Through September
2000,  Owens  Corning had received  approximately  3,800 Future Claims under the
NSP,  approximately  2,600 of which were  received in the third quarter of 2000.

NSP Initial Claims Payment Schedules
------------------------------------

Payments under the NSP for Initial  Claims were  generally  scheduled to be made
through  2002.  Prior  to the  Filing,  Owens  Corning  had  requested  that NSP
participating  firms  agree to defer  payments in 2000  through  2002 on Initial
Claims to the extent  necessary to ensure that Owens  Corning  limited its total
asbestos-related  payments to the following schedule: $950 million in 2000, $400
million in 2001, and $250 million in 2002 ("Deferral Program").  On the basis of
preliminary  information,  Owens Corning had estimated that the Deferral Program
might result in the deferral of  approximately  $500 million of anticipated  NSP
payments, with any such deferred amounts to be paid in two equal installments in
2003 and 2004, subject to then applicable loan covenants.

NSP Future Claims Payment Schedules
-----------------------------------

Payments for qualifying  Future Claims were scheduled to begin in 2003, with the
timing of such  payments  generally  being based on the 18 month period in which
the claims were accepted by Owens Corning for payment.  Subject to the variables
and uncertainties  discussed below, Owens Corning had expected that the payments
for Future Claims beginning in 2003 would not exceed $150 million per year, plus
any amounts

<PAGE>


                                     - 20 -

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

12.  CONTINGENT LIABILITIES

ITEM A. - OWENS CORNING (EXCLUDING FIBREBOARD)  (continued)

payable pursuant to the Deferral Program discussed above.  Additional settlement
payments were expected to be made by Fibreboard (see Item B below).

As a result of the Filing, there is substantial additional uncertainty as to the
number of Future Claims that will be made.

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

As of September 30, 2000,  approximately  31,000 asbestos personal injury claims
were  pending   against  Owens  Corning   outside  the  NSP.  This  compares  to
approximately 25,800 and 25,300 such claims pending on September 30 and December
31, 1999,  respectively.  The  information  needed for a critical  evaluation of
pending  claims,  including  the nature and  severity of disease and  definitive
identifying  information  concerning the claimant,  typically  becomes available
only through the discovery  process or as a result of  settlement  negotiations,
often not  occurring  until  years  after  the  claim is  filed.  In view of the
indefiniteness of the available information, the actual number of pending claims
may vary from the numbers indicated.

As a result of the Filing, there is substantial additional uncertainty as to the
number of non-NSP claims that will be made.

Owens Corning resolved (by settlement or otherwise) approximately 4,800 asbestos
personal  injury claims outside the NSP during 1999 and 3,000 such claims during
the first three quarters of 2000, of which 1,700 claims were resolved during the
third quarter of 2000. The average cost of resolution was approximately  $34,600
per claim for claims resolved during 1999, $45,600 per claim for claims resolved
during  the first  three  quarters  of 2000,  and  $18,200  per claim for claims
resolved during the third quarter of 2000. As a rule,  these claims were settled
as they were  scheduled  for trial,  and they  typically  involved  more serious
injuries and  diseases.  Consequently,  Owens  Corning does not believe that the
average costs of resolution  indicated above are  representative of the value of
non-NSP claims generally.

During  the  implementation  of the  NSP,  Owens  Corning  attempted  to  settle
individual non-NSP claims for amounts generally  consistent with payments to NSP
claimants.  Such settlements were preferable to trials, provided that the agreed
settlement  was fair in relation to similarly  situated NSP  claimants,  because
both the timing and amount of such payments were more predictable.  Beginning in
late 1999,  Owens Corning  received a number of settlement  demands from non-NSP
plaintiffs'  counsel which exceeded  historical  settlement averages for similar
cases and were higher than the  settlement  values of such cases within the NSP.
In  addition,  during  the third  quarter  of 2000  Owens  Corning  began to see
evidence that a higher than anticipated number of new  asbestos-related  claims,
particularly  higher value claims,  was being filed by non-NSP firms,  including
new firms without prior asbestos litigation experience.

<PAGE>


                                     - 21 -

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

12.  CONTINGENT LIABILITIES

ITEM A. - OWENS CORNING (EXCLUDING FIBREBOARD)  (continued)

Asbestos-Related Payments
-------------------------

In the third quarter of 2000,  Owens Corning made  approximately  $70 million of
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.

Payments for asbestos-related  liabilities during 1999, the first three quarters
of 2000,  and the third  quarter of 2000 fell within  these four  categories  as
follows:
<TABLE>
<S>                                                            <C>                     <C>                   <C>
                                                                             (In millions of dollars)
                                                                                2000 (through
                                                               1999             September 30)            3rd Quarter
                                                               ----             -------------            -----------
Pre-NSP Settlements                                          $   170                 $    51               $     6
NSP Settlements                                                  570                     538                    27
Non-NSP Settlements                                               30                      42                    12
Defense, Claims Processing and
  Administrative Expenses                                         90                      53                    25
                                                             -------                  ------               -------
                                                             $   860                 $   684               $    70
                                                             =======                 =======               =======
</TABLE>

Owens Corning has  deposited  certain  amounts in escrow  accounts to facilitate
claims processing under the NSP ("Administrative  Deposits").  Amounts deposited
into escrow in Administrative Deposits during a reporting period are included in
the payments shown for NSP Settlements during the period. At September 30, 2000,
approximately $144 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") and have not been subtracted  from Owens  Corning's  reserve for asbestos
personal injury claims (discussed below).

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

Asbestos Legislation
--------------------

In the fall of 1999, both the United States Senate and House of  Representatives
held hearings on proposed  legislation  (S 758 and HR 1283)  intended to address
the problem of  asbestos  litigation.  Although  the  original  House and Senate
proposals  were  virtually  identical,  the  House  was  active  in  considering
revisions  to HR 1283.  In the  first  quarter  of  2000,  the  House  Judiciary
Committee  approved HR 1283,  amended to protect private settlement plans and to
make such plans enforceable. During the summer, the bill was reported out of the
Committee but no further  action has been taken.  While  Congress is expected to
return for an  extended  lame-duck  session  after  election  day,  no action is
currently expected on this bill.  Despite the failure to enact  asbestos-related
legislation  during 2000, the action taken on HR 1283 reflects  ongoing interest
in this matter and the Company  believes it is likely that such legislation will
receive further consideration when the 107th Congress convenes in 2001. However,
there can be no assurance that any such legislation will be enacted.

<PAGE>


                                     - 22 -

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

12.  CONTINGENT LIABILITIES

ITEM A. - OWENS CORNING (EXCLUDING FIBREBOARD)  (continued)

Tax Legislation
---------------

In the spring of 2000,  the United  States House of  Representatives  introduced
proposed legislation (HR 4543) which would exempt investment income earned by an
asbestos-related  trust  from  federal  income  tax,  and 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 exemption of
investment  income would  benefit the  Fibreboard  Settlement  Trust  (described
below) by  having  the  effect  of  enlarging  the  corpus of the trust  through
tax-free interest accumulation.  The bill has received strong bipartisan support
in the form of 92  cosponsors,  including  25  members  of the  Ways  and  Means
Committee.  A  year-end  comprehensive  tax bill,  to which it was hoped HR 4543
would be  attached,  has been set  aside in light of a  threatened  Presidential
veto. Given the broad bipartisan support for HR 4543, the Company believes it is
likely that asbestos tax  legislation  will receive  further  attention when the
current or next Congress reconsiders a comprehensive tax package. However, there
can be no assurance that any such legislation will be enacted.

Other Asbestos-Related Litigation
---------------------------------

As previously  reported,  Owens Corning  believes that it has spent  significant
amounts to resolve  claims of asbestos  claimants  whose injuries were caused or
exacerbated by cigarette smoking.  Owens Corning is 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.

In October 1998,  the Circuit Court for Jefferson  County,  Mississippi  granted
leave to file an amended  complaint in an existing action to add claims by Owens
Corning  against  seven tobacco  companies  and several  other tobacco  industry
defendants.  The court has set a February  2001 trial date for this  action.  In
addition to the Mississippi lawsuit, a lawsuit brought in December 1997 by Owens
Corning and  Fibreboard  is pending in the  Superior  Court for Alameda  County,
California against the same tobacco companies.

As a result of the Filing,  the  defendants  in these cases removed each case to
Federal District Court.  Upon motion by Owens Corning,  the U.S.  District Court
for the Northern  District of California has remanded the California  proceeding
back to the state  court.  A similar  motion is pending  with the U.S.  District
Court for the Southern  District of  Mississippi  for remand of the  Mississippi
proceeding.

Insurance
---------

As of September  30, 2000,  Owens  Corning's  financial  statements  reflect $92
million in unexhausted  insurance  coverage (net of deductibles and self-insured
retentions)  under its  liability  insurance  policies  applicable  to  asbestos
personal injury claims.  Most of this amount  represents  unconfirmed  potential
non-products  coverage with excess level insurance  carriers,  as to which Owens
Corning  has  estimated  its  probable  recoveries.  Owens  Corning  also  has a
significant  amount of other unconfirmed  potential  non-products  coverage with
excess level carriers. Owens Corning is actively pursuing non-products insurance
recoveries under these policies. The amount and timing of recoveries from excess
level policies will depend on subsequent negotiations and/or proceedings.



<PAGE>


                                     - 23 -

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

12.  CONTINGENT LIABILITIES

ITEM A. - OWENS CORNING (EXCLUDING FIBREBOARD) (continued)

Reserve
-------

As of September 30, 2000,  Owens Corning  estimated a reserve in accordance with
generally accepted accounting principles to reflect asbestos-related liabilities
that had been asserted or were probable of assertion,  in which liabilities were
probable  and  reasonably  estimable.  This  reserve was  established  initially
through a charge to income in 1991,  with  additional  charges to income of $1.1
billion  in 1996,  $1.4  billion  in 1998,  and $1.0  billion  during the second
quarter of 2000.

The approximate  balances of the components of the reserve at September 30, 2000
were:
<TABLE>
<S>                                                                  <C>
                                                                   Balance
                                                                   -------
                                                            (In billions of dollars)
NSP backlog                                                          1.1
Non-NSP backlog                                                      0.3
Future claims                                                        0.7
Defense, claims processing and administrative expenses               0.1
</TABLE>


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

o    The "NSP backlog"  component  represented  the remaining  estimated cost of
     resolving Initial Claims (as of September 30, 2000) under the NSP.

o    The "Non-NSP backlog" component represented the estimated cost of resolving
     asbestos  personal  injury claims pending against Owens Corning outside the
     NSP as of September 30, 2000.

o    The "Future claims"  component  represented the estimated cost of resolving
     (i)  Future  Claims  under  the NSP and  (ii)  non-NSP  claims  made  after
     September 30, 2000.

o    The reserve as a whole reflected $144 million of Undistributed
     Administrative Deposits.

Owens  Corning  cautions  that its 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.  Such  variables  include,  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 are covered by an NSP Agreement;  the extent,  if any, to which
individual  claimants  exercise  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 that are not bound by an NSP Agreement  undertake the  representation of
asbestos personal injury plaintiffs  against Owens Corning;  the extent, if any,
to which Owens Corning would  exercise its right to terminate one or more of the
NSP  Agreements  due to  excessive  opt-outs  or for  other  reasons;  and Owens
Corning's success in controlling the costs of resolving future non-NSP claims.

The Filing could affect the number of asbestos-related  claims received by Owens
Corning.  In addition,  because  Owens  Corning  expects that all claims will be
resolved in accordance with a plan of reorganization  approved by the Bankruptcy
Court,  future  asbestos  liabilities  will  likely be  affected  by the plan of
reorganization.


<PAGE>


                                     - 24 -

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

12.  CONTINGENT LIABILITIES

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  10,000 asbestos personal injury claims during the third
quarter of 2000 and  approximately  19,000  such  claims  during the first three
quarters of 2000. Prior to the Filing, 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 claims against the Debtors have
been stayed (see Note 1).

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 September
30, 2000, Fibreboard had settled, through the NSP, approximately 212,000 Initial
Claims. As of that date,  Fibreboard had paid more than $650 million  (including
Administrative  Deposits) of the estimated $1.3 billion total settlement amounts
payable under the NSP in connection with the resolution of these Initial Claims.
The NSP  Agreements  also provided for the  resolution of Future Claims  against
Fibreboard through the administrative  processing  arrangement described in Item
A. Through September 2000,  Fibreboard had received  approximately  3,800 Future
Claims under the NSP,  approximately  2,600 of which were  received in the third
quarter of 2000.  The timing of payments for Initial and Future  Claims  against
Fibreboard  were to be  generally  consistent  with the timing of Owens  Corning
payments, described in Item A.

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

As of September 30, 2000,  approximately  8,000 asbestos  personal injury claims
were pending against  Fibreboard outside the NSP. This compares to approximately
1,000  such  claims  pending on  December  31,  1999.  Fibreboard  resolved  (by
settlement or otherwise)  approximately  2,000 asbestos  personal  injury claims
outside  the NSP during the first three  quarters  of 2000,  of which 600 claims
were resolved  during the third quarter of 2000.  The average cost of resolution
was  approximately  $48,000 per claim for claims resolved during the first three
quarters of 2000,  and $33,000  per claim for claims  resolved  during the third
quarter of 2000. As a rule, these claims were settled as they were scheduled for
trial,  and  they  typically   involved  more  serious  injuries  and  diseases.
Consequently,  Owens  Corning  does  not  believe  that  the  average  costs  of
resolution  indicated  above are  representative  of the value of non-NSP claims
generally.

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 and is final and not subject to appeal.


<PAGE>


                                     - 25 -

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

12.  CONTINGENT LIABILITIES

ITEM B. - FIBREBOARD (EXCLUDING OWENS CORNING) (continued)

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 Fibreboard's costs of resolving pending and future asbestos claims,
whether under the NSP, in the tort system, or otherwise.

As of  September  30,  2000,  the  Insurance  Settlement  funds were held in and
invested  by the  Fibreboard  Settlement  Trust and were  available  to  satisfy
Fibreboard's pending and future asbestos-related  liabilities.  As of that date,
$1,085  million  (net  of  outstanding  payables)  was  held  in the  Fibreboard
Settlement  Trust  and $160  million  was held in  Undistributed  Administrative
Deposits on behalf of  Fibreboard.  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's asbestos-related liabilities. Under the terms
of the  Trust,  any of  such  assets  that  ultimately  are  not  used  to  fund
Fibreboard's asbestos-related liabilities must be distributed to charity.

Funds held in the Fibreboard  Settlement  Trust and  Fibreboard's  Undistributed
Administrative  Deposits are reflected on Owens Corning's  consolidated  balance
sheet as restricted  assets.  At September 30, 2000, these assets were reflected
as current assets or other assets,  with each category denoted  "Restricted cash
and securities - Fibreboard".  See Note 13 for additional information concerning
the Fibreboard Settlement Trust.

Reserve
-------

As of September 30, 2000,  Owens Corning  estimated a reserve for  Fibreboard in
accordance   with   generally   accepted   accounting   principles   to  reflect
asbestos-related  liabilities.  These liabilities  (denoted as "Asbestos-related
liabilities  -  Fibreboard")  are  reflected  as current  or other  liabilities,
depending on the period in which payment was  expected.  These  liabilities  are
always  at  least  equal  to the  funds  held  in  the  Trust  and  Fibreboard's
Undistributed  Administrative Deposits since 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 13).

At September 30, 2000,  Owens Corning  estimated  Fibreboard's  asbestos-related
liabilities at $1.240  billion.  This amount includes an increase of $51 million
during the third quarter of 2000 as the result of Owens Corning's ongoing review
of Fibreboard's asbestos-related liabilities.

The approximate  balances of the components of the reserve at September 30, 2000
were:
<TABLE>
<S>                                                                <C>
                                                                 Balance
                                                                 -------
                                                         (In billions of dollars)
  NSP backlog                                                      .80
  Non-NSP backlog                                                  .10
  Future claims                                                    .30
  Defense, claims processing and administrative expenses           .05
</TABLE>


<PAGE>


                                     - 26 -

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

12.  CONTINGENT LIABILITIES

ITEM B. - FIBREBOARD (EXCLUDING OWENS CORNING) (continued)

The Filing  could  affect  the number of  asbestos-related  claims  received  by
Fibreboard.  In addition,  because Owens Corning expects that all claims will be
resolved in accordance with a plan of reorganization  approved by the Bankruptcy
Court,  future  asbestos  liabilities  will  likely be  affected  by the plan of
reorganization.

Asbestos-Related Payments
-------------------------

In the third quarter of 2000, gross payments for asbestos-related claims against
Fibreboard were approximately $186 million, all of which were paid/reimbursed by
the Fibreboard  Settlement  Trust.  Gross payments for  asbestos-related  claims
against Fibreboard during the first three quarters of 2000 and the third quarter
of 2000 fell within four major categories, as follows:
<TABLE>
<S>                                                                             <C>                      <C>
                                                                                (In millions of dollars)
                                                                              2000
                                                                      (through September 30)         3rd Quarter
                                                                      ----------------------         -----------
Pre-1993 and Interim Claims                                                  $    29                  $    11
NSP Settlements                                                                  705                      150
Non-NSP Settlements                                                               41                        9
Defense, Claims Processing and Administrative Expenses                            45                       16
                                                                             -------                  -------
                                                                             $   820                  $   186
                                                                             =======                  =======
</TABLE>


The payments for NSP  Settlements  include  Administrative  Deposits  during the
quarter on behalf of Fibreboard. At September 30, 2000, there were approximately
$160  million  of  Undistributed  Administrative  Deposits  made  on  behalf  of
Fibreboard. As described above, these Undistributed  Administrative Deposits are
included as restricted assets (under the caption "Restricted cash and securities
- Fibreboard") on Owens Corning's consolidated balance sheet.


<PAGE>


                                     - 27 -

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

13.  FIBREBOARD SETTLEMENT TRUST

Under  the  Insurance  Settlement  described  in Note  12,  two of  Fibreboard's
insurers  provided  $1.873  billion  during the  fourth  quarter of 1999 to fund
Fibreboard's  costs of  resolving  pending  and future  asbestos  claims.  As of
September 30, 2000, the Insurance  Settlement funds were held in and invested by
the  Fibreboard  Settlement  Trust (the  "Trust") and were  available to satisfy
Fibreboard's  pending  and future  asbestos-related  liabilities.  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's  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.

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

The  assets  of the  Trust  are  comprised  of cash  and  marketable  securities
(collectively,   the  "Trust  Assets")  and,  with  Fibreboard's   Undistributed
Administrative  Deposits,  are reflected on Owens Corning's consolidated balance
sheet as restricted  assets.  At September 30, 2000, these assets were reflected
as current assets or other assets (with each category  denoted  "Restricted cash
and securities - Fibreboard"). As of September 30, 2000, Owens Corning estimated
a reserve for  Fibreboard  in  accordance  with  generally  accepted  accounting
principles to reflect asbestos-related  liabilities.  These liabilities (denoted
as  "Asbestos-related  liabilities  -  Fibreboard")  are reflected as current or
other liabilities,  depending on the period in which payment was expected. These
liabilities  are  always  at least  equal to the  funds  held in the  Trust  and
Fibreboard's  Undistributed  Administrative Deposits since 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.  At September 30, 2000, Owens Corning  estimated  Fibreboard's
asbestos-related  liabilities at $1.240 billion,  with a residual  obligation to
charity of $5 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  Company's
Consolidated  Financial  Statements in accordance with SFAS No. 115, "Accounting
for Certain Investments in Debt and Equity Securities." Accordingly,  marketable
securities  classified  as available  for sale are recorded at fair market value
and  marketable  securities  designated  as held to  maturity  are  recorded  at
amortized cost.

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


<PAGE>


                                     - 28 -

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

13.  FIBREBOARD SETTLEMENT TRUST (continued)

The residual liability to 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.

Adjustments
-----------

Periodically,  the Company evaluates the amount of Fibreboard's asbestos-related
liabilities.  During the third  quarter of 2000,  the  Company  determined  that
Fibreboard's  asbestos-related  liabilities  required an increase of $51 million
(see Note 12). Accordingly, the Company increased Fibreboard's  asbestos-related
liabilities  and reduced the amount payable to charity by this amount during the
third quarter of 2000.

Results for the Period Ending September 30, 2000
------------------------------------------------

Trust Assets generated  interest/dividend  earnings of approximately $15 million
in the third  quarter  of 2000 and $53  million  year to date,  which  have been
recorded as an increase in the carrying  amount of the assets on Owens Corning's
consolidated balance sheet and as other income on the consolidated  statement of
income.  This  income,  however,  has been  offset  by an equal  charge to other
expense,  which represents the increase in the residual  liability to be paid to
charity.

Payments for  asbestos-related  claims from the Trust (including  Administrative
Deposits) during the third quarter of 2000 were  approximately  $186 million and
total $820 million  year-to-date.  Such payments were funded by existing cash in
the  Trust  or  proceeds  from the sale of  securities.  The sale of  securities
resulted in a net realized  gain of  approximately  $1 million  during the third
quarter of 2000 and  approximately  $2 million year to date.  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.

During  2000,  fair  market  value  adjustments  for  securities  designated  as
available  for sale have resulted in a net  unrealized  gain of $1 million since
their  valuation at December 31, 1999. As the investments had an unrealized loss
of  approximately  $1 million at December 31, 1999,  there is no net  unrealized
gain or loss on these investments at September 30, 2000. The gain in the current
year  has been  reflected  in the  Company's  consolidated  balance  sheet as an
increase  to  the  carrying  amount  of  the  asset  and an  increase  to  other
comprehensive  income.  This gain has also been  reflected as an increase to the
charity liability, with a corresponding decrease to other comprehensive income.

At September 30, 2000, the fair value of Trust Assets was $1.245 billion and was
comprised of $1.032 billion of marketable  securities,  $71 million of cash, $18
million of  outstanding  payables,  and $160  million of  restricted  cash.  The
restricted cash represents  Undistributed  Administrative Deposits. $850 million
of the Trust Assets have been  classified as a current asset while the remaining
securities have been classified as noncurrent assets.


<PAGE>


                                     - 29 -

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

13.  FIBREBOARD SETTLEMENT TRUST (continued)

The amortized cost, gross unrealized  holding gains and losses and fair value of
the investment  securities available for sale at September 30, 2000 and December
31, 1999 are as follows:
<TABLE>
<S>                                      <C>                    <C>                     <C>                 <C>
                                                                  September 30, 2000
                                                                  ------------------
                                  Amortized           Gross Unrealized       Gross Unrealized
                                     Cost                    Gain                   Loss              Fair Value
                                  ---------           ----------------       ----------------         ----------
                                                               (In millions of dollars)

Corporate Bonds                     $      32              $         -            $         -         $      32
Corporate Notes                           473                        -                      -               473
Municipal Bonds                           272                        -                      -               272
Mutual Funds                               56                        -                      -                56
Time Deposits                              43                        -                      -                43
US Government Bonds                       156                        -                      -               156
                                    ---------              -----------            -----------         ---------

Total                               $   1,032              $         -            $         -         $   1,032

</TABLE>


<TABLE>
<S>                                    <C>                 <C>                   <C>                   <C>
                                                                  December 31, 1999
                                                                  -----------------
                                  Amortized         Gross Unrealized       Gross Unrealized
                                     Cost                  Gain                   Loss              Fair Value
                                  ---------         ----------------       ----------------         ----------
                                                              (In millions of dollars)

Corporate Bonds                     $      85           $       -              $       -            $      85
Corporate Notes                         1,334                   -                     (1)               1,333
Municipal Bonds                           199                   -                      -                  199
US Government Bonds                       221                   -                      -                  221
                                    ---------           ---------              ---------            ---------

Total                               $   1,839           $       -              $      (1)           $   1,838


Maturities  of  investment  securities  classified  as  available  for  sale  at September  30, 2000 and  December  31,
1999 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>


<TABLE>
<S>                                                      <C>              <C>              <C>             <C>
                                                           September 30, 2000               December 31, 1999
                                                           ------------------               -----------------
                                                       Amortized                        Amortized
                                                         Cost          Fair Value          Cost        Fair Value
                                                         ----          ----------          ----        ----------
                                                                        (In millions of dollars)
Due within one year                                    $     527         $    527         $  1,152       $  1,152
Due after one year through five years                         75               75               72             72
Due after five years through ten years                        46               46               87             87
Due after ten years                                          384              384              528            527
                                                       ---------         --------         --------       --------
Total                                                  $   1,032         $  1,032         $  1,839       $  1,838
</TABLE>


<PAGE>


                                     - 30 -

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

13.  FIBREBOARD SETTLEMENT TRUST (continued)

The table below summarizes Trust and  Administrative  Deposits  activity for the
period ended September 30, 2000:
<TABLE>
<S>                     <C>         <C>         <C>         <C>          <C>             <C>          <C>         <C>         <C>
                                 Interest    Unrealized     Sale       Realized
                      Balance       and        Gain/         of          Gain/                                              Balance
                      12/31/99   Dividends    (Loss)     Securities     (Loss)      Adjustments      Other      Payments    9/30/00
                      --------   ---------    ------     ----------     ------      -----------      -----      --------    -------
Assets
------
Cash
 (Note 12)            $    -      $     -     $    -      $   873       $    -       $      -        $   -      $  (820)    $    53
Restricted
 Cash (Note 12)            -            -          -            -            -              -          160            -         160
Marketable
 Securities:
  Available
  for Sale             1,838           53          1         (873)           2              -           11            -       1,032
                      --------    -------     ------     ---------     -------      ---------        -----      -------      ------

Total Assets          $1,838      $    53     $    1      $     -       $    2       $      -        $ 171      $  (820)     $1,245
                      ========    =======     ======     =========     =======      =========        =====      =======      ======

Liabilities
-----------
Asbestos Litigation
  Claims
  (Note 12)           $1,750      $     -     $    -      $     -       $    -       $   150         $ 160      $  (820)     $1,240
Charity                   88           53          1            -            2          (150)           11            -           5
                      --------    --------    ------      --------      -------      -------         -----      -------      ------

Total
 Liabilities          $1,838      $    53     $    1      $     -       $    2       $     -         $ 171      $  (820)     $1,245
                      ========    ========    ======      ========      =======      =======         =====      =======      ======

</TABLE>


<PAGE>


                                     - 31 -

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,  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,  Owens  Corning  and 17 of its United  States  subsidiaries,
including Fibreboard Corporation (collectively,  the "Debtors"), filed voluntary
petitions  for relief  (the  "Filing")  under  Chapter  11 of the United  States
Bankruptcy Code (the  "Bankruptcy  Code") in the United States  Bankruptcy Court
for the  District  of  Delaware  (the  "Bankruptcy  Court")  and  are  currently
operating their  respective  businesses as  debtors-in-possession  in accordance
with provisions of the Bankruptcy  Code. The Chapter 11 cases of the Debtors are
being jointly administered under Case No. 00-3837 (MFW).

Owens Corning  filed for relief under Chapter 11 to address the growing  demands
on its cash flow resulting from its  multi-billion  dollar  asbestos  liability.
This  liability is discussed  in greater  detail in Note 12 to the  Consolidated
Financial Statements.  Based upon the recent developments discussed below, Owens
Corning  believes  that the Filing offers the only viable legal process by which
it and its subsidiaries  will achieve a comprehensive  resolution of its current
and future asbestos-related liabilities.

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

As a consequence of the Filing,  all pending  litigation  against the Debtors is
stayed and no party may take any action to  realize on its  pre-petition  claims
except  pursuant to further  order of the  Bankruptcy  Court.  In addition,  the
Debtors  may  reject  pre-petition   executory  contracts  and  unexpired  lease
obligations,  and parties  affected by these rejections may file claims with the
Bankruptcy Court. The Company  anticipates that substantially all liabilities as
of the  date of the  Filing  will be  dealt  with in  accordance  with a plan of
reorganization  which  will be  proposed  and  voted on in  accordance  with the
provisions of the Bankruptcy Code. Two creditors'  committees,  one representing
asbestos claimants and the other representing  other unsecured  creditors,  have
been formed and, in accordance with the provisions of the Bankruptcy  Code, will
have the right to be heard on all matters that come before the Bankruptcy Court.
Owens Corning expects that the  committees,  together with a  representative  of
future asbestos  claimants to be appointed by the Bankruptcy  Court, will be the
primary  entities  with which the Company will  negotiate the terms of a plan of
reorganization.



<PAGE>


                                     - 32 -

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

The accompanying Consolidated Financial Statements have been prepared on a going
concern  basis,  which  contemplates  continuity of  operations,  realization of
assets and  liquidation  of  liabilities  in the  ordinary  course of  business.
However,  as a result of the Filing,  such realization of assets and liquidation
of   liabilities    are   subject   to    uncertainty.    While   operating   as
debtors-in-possession under the protection of Chapter 11 of the Bankruptcy Code,
and subject to Bankruptcy Court approval or otherwise as permitted in the normal
course of  business,  the  Company 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,  which do not give effect to any adjustments to
the carrying value of assets or amounts of  liabilities  that might be necessary
as a consequence of a plan of reorganization.

Substantially  all of the Company's  pre-petition  debt is now in default due to
the Filing. Although the Filing occurred after the end of the third quarter, the
accompanying  Consolidated  Financial  Statements  reflect the classification of
most of the  Company's  pre-petition  debt as current.  This includes debt under
Owens  Corning's  $1.8 billion bank credit  facility,  which was in default as a
result of a breach of  covenant  on October 1, 2000,  as  described  below,  and
approximately  $1.4 billion of other  outstanding  debt, which is expected to be
subject to cross-default provisions at some point during the next twelve months.
As required by Statement of Position  90-7 (SOP 90-7),  "Financial  Reporting by
Entities in Reorganization under the Bankruptcy Code," the Company, beginning in
the fourth quarter of 2000,  will be required to record its debt  instruments at
the  allowed  amount,  as defined by SOP 90-7.  Accordingly,  the  Company  will
accelerate  the  amortization  of its  debt-related  costs  attributable  to the
Debtors and record a pretax expense of approximately  $29 million during October
2000. This expense will be classified as a Reorganization  Cost and is comprised
of a $27 million charge for unamortized  financing  costs,  including $5 million
associated with the Monthly Income Preferred  Securities  (MIPS), and $2 million
for unamortized discounts.

The Company has negotiated a debtor-in-possession revolving credit facility with
Bank of America,  N.A. in the aggregate amount of $500 million,  which financing
is subject, among other conditions, to approval by the Bankruptcy Court.

The Company has received  approval from the Bankruptcy Court to pay or otherwise
honor  certain of its  pre-petition  obligations,  including  claims of critical
vendors and employee wages and benefits in the ordinary course of business.

Background of Filing
--------------------

Since the  adoption of its  National  Settlement  Program  ("NSP") in the fourth
quarter of 1998, Owens Corning's  strategy has been to use that program to avoid
the costly and unpredictable  traditional tort system and to quantify the amount
of payments to asbestos  claimants  and control the timing of those  payments to
match the Company's ability to make such payments.  The NSP achieved these goals
in many  respects  and also  facilitated  the  negotiation  of the  deferral  of
payments to NSP  participants  earlier  this year.  As  discussed in more detail
below,  however,  Owens  Corning's  inability  to obtain  ongoing  financing  on
acceptable  terms,  the lack of support for additional  payment  deferrals,  the
higher than  anticipated  number of  asbestos-related  claims  (which  adversely
affected the Company's  estimated  liquidity needs through 2004), and the recent
deterioration of Owens Corning's  operations,  resulted in the decision by Owens
Corning to make the Filing.

<PAGE>



                                     - 33 -

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

Refinancing.   As  previously  disclosed,  Owens  Corning  had  agreed  to  make
------------
substantial  payments for  asbestos-related  liabilities  through at least 2004;
those payments were expected to require the dedication of a significant  portion
of Owens Corning's  sources of liquidity  during the period;  and,  depending on
operational  cash flow and other  sources of cash,  Owens  Corning might require
additional  financing.  During the third quarter of 2000, Owens Corning met on a
number of occasions  with the agent for its bank group to discuss a  refinancing
of its $1.8 billion bank credit facility,  which was scheduled to expire in June
2002 (the  "Refinancing").  Owens Corning requested that the Refinancing  extend
into  2005  and be  increased  to an  amount  sufficient  to meet  its  expected
liquidity  needs,  including  the  repayment  on  maturity  of $300  million  of
debentures in 2005. Following extended negotiations,  Owens Corning concluded at
the end of the third quarter that its lenders would not be willing to agree to a
Refinancing  that  would  meet the  Company's  needs.  Moreover,  Owens  Corning
concluded  that the lenders would  require  that, as a part of any  Refinancing,
Owens  Corning  pledge  its  assets to  secure  the loans and agree to limits on
payments  for  asbestos   liabilities  that  would  be  inconsistent   with  its
anticipated asbestos payment obligations.

Support for Payment Deferrals.  During the course of the third quarter,  support
------------------------------
for asbestos payment deferrals was adversely impacted by several factors. First,
as a result of the downturn in the Company's  operations in the third quarter of
2000 (discussed  below),  Owens Corning  approached certain NSP firms to request
additional  payment  deferrals.  Based  on  those  discussions,   Owens  Corning
determined that it would not be feasible to obtain additional  payment deferrals
and that the likely terms of the  Refinancing  would be  unacceptable to the NSP
participants.  Second, the NSP Executive Committee and other participants in the
NSP declined to agree to any deferral in payments due from Fibreboard.  Finally,
several NSP firms  declined  to grant the  deferrals  previously  agreed upon in
principle  and  initiated  legal  proceedings  to  enforce  the  terms  of their
respective NSP Agreements.

Asbestos-Related Claims. Prior to the Filing, Owens Corning noted several trends
------------------------  which  indicated  that it would  likely be required to
defer  asbestos-related  payments in excess of deferrals  previously  negotiated
with law firms  participating  in the NSP.  First,  Owens  Corning  began to see
evidence that a higher than anticipated number of new  asbestos-related  claims,
particularly  higher value claims,  was being filed by non-NSP firms,  including
new firms (where the timing of resolution is uncertain and the amount and timing
of payments may be determined by the  traditional  tort system).  Second,  Owens
Corning noted a substantial  increase in the rate of claims filed,  particularly
during September 2000. Approximately 7,800 asbestos-related claims were received
by Owens  Corning  (excluding  Fibreboard)  during  the third  quarter  of 2000,
compared to  approximately  3,400 and 4,200 claims received during the first and
second quarters,  respectively.  While Owens Corning believes that this increase
in claims filings represented an acceleration of claims from future periods as a
result of the downgrading of Owens Corning's  credit rating in mid-2000,  rather
than an increase in the total number of asbestos-related  claims to be expected,
this trend  would have had the effect of  accelerating  the  related  settlement
payments  and  increasing  liquidity  needs  through  2004  and/or  the  need to
negotiate further deferrals of asbestos payments.

Downturn in  Operations.  Owens  Corning's  results of  operations  deteriorated
------------------------
significantly  in the third quarter of 2000, with  expectations  for the quarter
declining particularly during the last half of the period. As a result of, among
other factors,  the fall in demand for building  materials,  elevated energy and
raw materials  costs and the inability of Owens Corning to fully recapture these
costs in price  adjustments,  Owens Corning's margins and income from operations
were significantly  reduced. As a result, Owens Corning's ability to service its
ongoing  asbestos  payments  and  continue  to comply with its  pre-Filing  loan
covenants was  adversely  affected.  Owens  Corning  concluded at the end of the
third quarter of 2000 that, unless it used a substantial  portion of its cash to
repay a portion of its bank debt,  Owens  Corning  would be in  violation of the
leverage ratio covenant under its $1.8 billion bank credit

<PAGE>


                                     - 34 -

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

facility. Moreover, in view of reduced expectations concerning operating results
in the fourth  quarter and  beyond,  the Company  concluded  that its  long-term
liquidity needs (driven in large measure by asbestos payment  obligations) could
not  likely  be met by its cash  and  available  credit  under  its bank  credit
facility (which was limited by leverage ratio and other loan covenants).

Timing of Chapter 11 Filing
---------------------------

As a result of the above factors,  Owens Corning  management  determined late in
the third  quarter that it was unlikely that Owens Corning would be able to meet
its long-term  liquidity  needs,  including  agreed and other required  asbestos
payments  and  repayment  of debt on  maturity.  While Owens  Corning  held $378
million of Cash and Cash  Equivalents  at the end of the third  quarter of 2000,
and  Owens  Corning's  operations   (excluding  the  effects  of  asbestos)  are
traditionally  profitable  and generate  strong  positive cash flow,  management
determined  that a Chapter 11 filing in October would be in the best interest of
all Owens Corning stakeholders.

RESULTS OF OPERATIONS

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

In spite of the  challenges  presented by our Filing,  which was made to resolve
asbestos liabilities  resulting from business activities more than 25 years ago,
we maintain our commitment to strengthen our core businesses and provide quality
products to our customers.  In recent years, we have focused on increasing sales
and earnings by (i) achieving  productivity  improvements and cost reductions in
existing  and  acquired  businesses,  (ii)  targeting  growth  markets and (iii)
forming  strategic   alliances  and  partnerships  to  complement  our  existing
businesses.  Our two major  initiatives,  the System  Thinking(TM)  strategy and
Advantage  2000,  have  favorably  impacted  sales and  productivity  across all
businesses.  We are also very  committed to taking full  advantage of e-Business
opportunities.  Through alliances with BuildNet and ImproveNet,  for example, we
are working directly with consumers to help them find solutions for their needs.
We are also expanding our role as a service  provider by offering  complementary
services in order to meet all of our consumers'  needs. In the Composite Systems
Business,  Owens Corning has partnered with end users,  OEMs,  systems suppliers
and other  players  within  the supply  chain for  development  of  substitution
opportunities for composite systems.

Owens  Corning's   strategy  also  includes  the  divestiture  of  non-strategic
businesses and the realignment of existing businesses.  During the third quarter
of 2000, we announced the intended  restructure of the Newark,  Ohio  insulation
manufacturing   facility.   This  will  include  moving  residential  insulation
production from this facility to other insulation  plants.  It will also include
shutting  down two  operating  lines that will become  obsolete and  redesigning
Newark  to  produce  more  industrial  insulation  products.   This  restructure
represents  the first phase of the Company's  plan to realign  operations at the
Newark  facility.  This  strategy  also  resulted in the sale of our Falcon Foam
business  in the  U.S.  during  the  first  quarter  of 2000 and the sale of our
Building  Materials  business in Europe during the second  quarter of 2000 to an
unconsolidated  joint  venture,  Alcopor Owens  Corning,  in which we have a 40%
ownership  interest.  The joint venture  partnership  with Alcopor enables us to
continue our  presence in the European  building  materials  market.  Please see
Notes 2 and 5 to the Consolidated Financial Statements.

During 1999, we realized the benefits of pricing improvements applicable to many
of our products and cost reductions  resulting from our strategic  restructuring
program and other profitability and

<PAGE>


                                     - 35 -

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

productivity  initiatives.  These cost reductions and pricing  improvements have
continued  into  2000.  However,  during  the  first  nine  months  of 2000,  we
experienced significant increases in certain of our costs,  particularly roofing
and vinyl raw  material  costs,  due to higher crude oil prices and tight supply
conditions for polyvinyl chloride (PVC),  respectively.  Increased energy costs,
reflecting  changes in the availability of natural gas, also contributed to cost
increases during the quarter. These increases, coupled with a fall in demand for
building  materials,  have  significantly  reduced  our  margins and income from
operations, particularly during the third quarter of 2000.

Quarter and Nine Months Ended September 30, 2000
------------------------------------------------

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

Net sales for the  quarter  ended  September  30, 2000 were  $1.281  billion,  a
decline from the third  quarter 1999 level of $1.333  billion.  Adjusted for the
disposition of the Falcon Foam and Building Materials Europe  businesses,  sales
reflect an increase of  approximately 2 percent compared to the third quarter of
1999.  The sales  increase  reflects  the  benefits of volume  increases  in the
Composites business, most notably in Europe, and price increases in the Building
Materials  business,  primarily  in the U.S.  The  price  increases  in the U.S.
reflect,  in part,  the partial  pass-through  of raw material  cost  increases.
Partially  offsetting these increases was a significant decline in volume in the
U.S.  Building  Materials  business.  This downward trend appears to be industry
wide, as the housing market appears to be slowing, including declines in housing
starts and the remodeling  market.  The impact of currency  translation on sales
denominated  in foreign  currencies  was slightly  unfavorable  during the third
quarter of 2000,  compared to the third  quarter of 1999,  reflecting a stronger
U.S.  dollar  during  2000.  Please  see  Note 2 to the  Consolidated  Financial
Statements.

Gross margin in the third quarter of 2000 was 19% of net sales,  compared to 26%
in the third quarter of 1999. The decrease in gross margin  percentage  reflects
the increase in raw material  costs of  approximately  $60 million ($185 million
year-to-date),  approximately half of which was passed through to customers, and
increased  energy  costs  during  the third  quarter of 2000.  Lower  volumes in
Building   Materials,   along   with   production   inefficiencies   at  certain
manufacturing plants, also contributed to the decline in gross margin.

For the quarter ended September 30, 2000,  Owens Corning  reported net income of
$14 million, or $.25 per share,  compared to net income of $89 million, or $1.53
per share,  for the quarter ended  September  30, 1999.  Net income in the third
quarter of 2000 reflects the decrease in gross margin,  primarily reflecting the
adverse impact of increased raw material and energy costs,  as discussed  above.
Net income for the quarter ended  September 30, 2000 also includes the following
special  charges:  a $6 million pretax  restructure  charge  representing  asset
impairments associated with the planned closing of two lines at our Newark, Ohio
manufacturing  facility,  an $11 million  pretax  charge  associated  with asset
impairments within our Cultured Stone and other businesses,  a $6 million pretax
charge  representing a settlement loss  associated with one of our U.S.  pension
plans, and a $3 million pretax charge  representing  severance costs for certain
employees.  Please see Note 4 to the Consolidated Financial Statements.  Cost of
borrowed  funds during the third  quarter of 2000 was $55  million,  $15 million
higher than the third quarter of 1999, reflecting increased borrowings mostly to
support asbestos payments and higher rates on floating rate debt.

Marketing and administrative expenses were $143 million during the third quarter
of 2000,  compared to $155 million in the third quarter of 1999. The decrease is
primarily  attributable to cost-cutting  measures  introduced  during the second
quarter of 2000.

<PAGE>


                                     - 36 -

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

Net sales for the nine months  ended  September  30,  2000 were $3.833  billion,
compared to $3.773  billion for the first nine months of 1999.  Price  increases
across North American Building Materials markets, including partial pass-through
of raw material cost increases, and price and volume increases in the Composites
business resulted in the sales growth.

The net loss for the nine months ended  September 30, 2000 was $363 million,  or
$6.64 per share, compared to net income of $209 million, or $3.62 per share, for
the first nine  months of 1999.  Included  in the net loss  during  2000 are the
special items from the third quarter  discussed  above, as well as the following
items from the first six months: a $790 million pretax  asbestos-related  charge
($486  million  after-tax)  and a $5  million  pretax  gain  from  the  Building
Materials Europe transaction during the second quarter,  and a $5 million pretax
loss  from  the  sale  of  Falcon  Foam,  a $9  million  pretax  charge  for the
realignment  of our Fair Bluff,  North  Carolina  plant,  and an $11 million tax
benefit associated with one of our foreign subsidiaries during the first quarter
of 2000. Also  contributing is a $37 million increase in cost of borrowed funds,
due  to  increased  debt  supporting   payments  associated  with  the  National
Settlement  Program,  and higher  rates on  floating  rate debt.  As a result of
cost-cutting  measures  introduced  during 2000,  marketing  and  administrative
expenses  are down $9  million  year to date.  Additionally,  net income for the
period  ended  September  30,  2000  reflects a raw  material  increase  of $185
million,  approximately  half of which has been  passed  through  to  customers.
Please see Notes 4, 5 and 12 to the Consolidated Financial Statements.

Building Materials
------------------

In the Building  Materials  segment,  sales decreased 7% in the third quarter of
2000, compared to the third quarter of 1999,  resulting mostly from the Building
Materials  Europe  transaction.  There were also volume decreases in insulation,
roofing  and  vinyl  products,  only  partially  offset  by  price  improvements
attributable to U.S. roofing and vinyl siding products. The decrease in sales in
Building  Materials is associated with an overall  softness in the industry,  as
indicated by a decline in housing starts and the remodeling  market during 2000.
Income  from  operations  was $85  million  during  the third  quarter  of 2000,
compared  to $169  million  during  the  third  quarter  of  1999.  Income  from
operations  in 2000  reflects raw material and energy cost  increases and volume
decreases  slightly  offset by price  increases.  The roofing and vinyl  markets
suffered most from the raw material cost  increases,  with asphalt and PVC resin
increases of approximately  $55 million during the quarter ($165 million year to
date).  Due to the rapid rise in crude oil prices  and  significantly  increased
demand for PVC during 2000,  Owens Corning has been unable to fully pass through
to customers  the rapidly  rising costs of asphalt and PVC resin.  Actions taken
during the year to improve  productivity have partially narrowed the gap. Please
see Note 2 to the Consolidated Financial Statements.

Composite Materials
-------------------

In the Composite  Materials  segment,  sales were up 13%, to $233 million during
the third quarter of 2000,  compared to the third quarter of 1999,  due to price
improvements and significant  volume increases.  Price and volume increases were
seen across almost all markets,  especially in Europe. The translation impact of
sales  denominated in foreign  currencies was a decline of  approximately  6% of
total Composite  Materials sales during the third quarter of 2000,  reflecting a
stronger U.S. dollar during 2000.  Income from operations was $16 million in the
third  quarter  of  2000,  the same as in the  prior-year  period.  Income  from
operations reflects price and volume increases,  most notably in Europe,  offset
by unanticipated production  inefficiencies in the U.S. Please see Note 2 to the
Consolidated Financial Statements.


<PAGE>


                                     - 37 -

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

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

We are assessing the impact of SFAS 133 on our financial  statements and plan to
adopt this  accounting  change  effective  January 1, 2001. We have completed an
inventory of both our freestanding  derivatives,  including  forward  contracts,
option contracts,  currency swaps and interest rate swaps, and derivatives which
are  embedded in other  contracts.  We have  assessed  our  current  derivatives
position and have determined that adoption at October 1, 2000 would not have had
a material effect on net income or  comprehensive  income.  We are reviewing our
risk management  policies,  performing an information  systems  assessment,  and
modifying our business  processes as needed in order to comply with SFAS 133 and
to temper the volatility in earnings and other comprehensive income.

LIQUIDITY, CAPITAL RESOURCES AND OTHER RELATED MATTERS

Cash flow from  operations  was a negative $7 million  for the third  quarter of
2000 versus  positive  $139 million for the same period of 1999.  The decline in
cash flow from operations is largely due to the significant  decline in earnings
during the third quarter of 2000 compared to 1999. Additionally, compared to the
third quarter of 1999, cash flow from operations in 2000 reflects an increase in
payments for asbestos  litigation  claims,  net of  insurance.  During the third
quarter of 2000,  payments for asbestos  litigation claims were $176 million and
there  were no  proceeds  from  insurance,  compared  to $252  million  and $147
million,  respectively,  during  the third  quarter  of 1999.  Payments  for the
Company's  asbestos  litigation  claims  have been stayed due to the Filing and,
accordingly, the Company does not expect to make any payments for such claims in
the  near  term.  Please  see  Notes 1, 9 and 12 to the  Consolidated  Financial
Statements.  Also reducing cash flow from  operations was a decrease in accounts
payable and accrued  liabilities of approximately $52 million and an increase in
receivables of $30 million.  Partially  offsetting these cash outflows was a $44
million decrease resulting from a change in the level of inventories.

Inventories at September 30, 2000 were $532 million,  an increase of $66 million
from  the  December  31,  1999  level,  due  largely  to the  seasonal  build of
inventories. We have continued production at normal seasonal levels, but we have
felt the effect of  unexpected  reductions  in  product  demand,  especially  in
Building Materials.  Receivables at September 30, 2000 were $507 million, a $149
million increase over the December 31, 1999 level,  attributable to the seasonal
pattern of business  activity and high level of  collections at the end of 1999.
The decrease in accounts  payable and accrued  liabilities  from $839 million at
December 31, 1999 to $692 million at September 30, 2000 reflects typical payment
patterns as well as the payout of  approximately  $40 million of  incentive  and
other employee  performance  awards and other payments in the third quarter.  At
September  30, 2000,  the  Company's  net working  capital was  negative  $2.975
billion and its current  ratio was .47,  compared to negative  $828  million and
 .72,  respectively,  at December  31, 1999 and  negative  $489  million and .76,
respectively,   at  September   30,   1999.   This   calculation   reflects  the
reclassification as a current liability of approximately $2.7 billion of debt at
September 30, 2000,  including the $1.3 billion of outstanding  borrowings under
the  Company's  bank credit  facility due to the  violation of a leverage  ratio
covenant at October 1, 2000, and approximately $1.4 billion of other outstanding
debt, which is expected to be subject to cross-default  provisions at some point
during the next  twelve  months.  Please  see Notes 1 and 6 to the  Consolidated
Financial Statements. Cash and cash equivalents at September 30, 2000 reflect an
increase of $279 million compared to September 30, 1999.  Accounts receivable at
September  30, 2000  decreased by $77 million  compared to  September  30, 1999,
reflecting a slight  decline in sales during the third  quarter of 2000, as well
as the  sale of the  European  Building  Materials  business.  The  decrease  in
accounts  payable and accrued  liabilities of $88 million reflects the payout of
incentive and other employee performance awards and other payments.


<PAGE>


                                     - 38 -

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

The Company's total  borrowings at September 30, 2000 were $2.821 billion,  $830
million higher than at year-end 1999, reflecting increased payments for asbestos
litigation  claims and seasonal  working capital  increases.  As a result of the
Filing,  substantially  all of the lines of credit  formerly  available to Owens
Corning are no longer accessible.

Post-Filing Liquidity
---------------------

At  September  30,  2000,  Owens  Corning  had  $378  million  of Cash  and Cash
Equivalents.  In connection  with the Filing,  Owens Corning has obtained a $500
million  debtor-in-possession  financing  commitment from Bank of America,  N.A.
(the  "DIP  Financing"),  which  is  subject  to  certain  conditions  including
Bankruptcy Court approval.

The accounts receivable  securitization facility between Owens Corning,  certain
lenders,  and Owens Corning Funding  Corporation (a bankruptcy remote and wholly
owned  subsidiary of Owens  Corning),  scheduled to expire in October 2000,  has
been  terminated  due to the  Filing.  As of October 31,  2000,  all of the $125
million of receivables  sold to lenders under this facility have been settled as
collected.

Owens Corning expects that cash from operations (and, if concluded and approved,
the DIP Financing) will provide sufficient funds to allow it to continue its and
its  subsidiaries'  operating  activities and to meet its  post-Filing  debt and
capital  requirements for the foreseeable future, while a plan of reorganization
is developed and considered.

Capital spending for property, plant and equipment,  excluding acquisitions, was
$113 million in the third  quarter of 2000.  The Company  anticipates  that 2000
capital spending,  exclusive of acquisitions and investments in affiliates, will
be  approximately  $376 million,  most of which has been  expended.  The Company
expects  that  funding  for  these  expenditures  will  be  from  the  Company's
operations and the expected credit availability from the DIP Financing.

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

The Company has been deemed by the Environmental Protection Agency (EPA) to be a
Potentially  Responsible  Party  (PRP) with  respect to certain  sites under the
Comprehensive   Environmental   Response,   Compensation   and   Liability   Act
(Superfund). The Company has also been deemed a PRP under similar state or local
laws. In other  instances,  other PRPs have brought suits or claims  against the
Company as a PRP for  contribution  under  such  federal,  state or local  laws.
During the third  quarter of 2000,  the Company was not  designated as a PRP for
any additional sites. At September 30, 2000, a total of 43 such PRP designations
remained  unresolved  by  the  Company.   The  Company  is  also  involved  with
environmental  investigation  or remediation at a number of other sites at which
it has not been designated a PRP.

The Company has established a $28 million reserve for its Superfund (and similar
state, local and private action) contingent liabilities.  Based upon information
presently  available to the Company,  and without  regard to the  application of
insurance,   the  Company  believes  that,  considered  in  the  aggregate,  the
additional  costs  associated  with such contingent  liabilities,  including any
related  litigation  costs,  will not have a  materially  adverse  effect on the
Company's results of operations, financial condition or long-term liquidity.

The 1990  Clean  Air Act  Amendments  (Act)  provide  that  the EPA  will  issue
regulations on a number of air pollutants  over a period of years. In June 1999,
the EPA issued regulations for wool fiberglas and mineral wool. During the first
quarter of 2000,  EPA issued  regulations  for secondary  aluminum  smelting and
amino/phenolic resin production. During 2000, EPA proposed regulations for metal
coil

<PAGE>


                                     - 39 -

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

coating and wet formed  fiberglass mat production,  anticipating  final issue in
2001.  The Company  anticipates  that its other sources to be regulated  will be
asphalt processing and roofing, and open molded  fiber-reinforced  plastics. The
EPA's   currently   announced   schedule  is  to  issue   regulations   covering
fiber-reinforced plastics production and asphalt roofing and processing in 2002,
with  implementation as to existing sources up to three years thereafter.  Based
on information now known to the Company, including the nature and limited number
of regulated  materials it emits,  the Company does not expect the Act to have a
materially  adverse  effect on the Company's  results of  operations,  financial
condition or long-term liquidity.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

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

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

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

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

The amounts presented below represent the maximum potential one-day loss in fair
value that the Company  would  expect from adverse  changes in foreign  currency
exchange rates or interest rates assuming a 95% confidence level:
<TABLE>
<S>                                                 <C>                              <C>
                                               September 30,                     December 31,
          Risk Category                             2000                             1999
          -------------                             ----                             ----
                                                           (In millions of dollars)
          Foreign currency                         $   1                            $   -
          Interest rate                            $   5                            $   6

</TABLE>

Virtually  all of the  potential  loss  associated  with  interest  rate risk is
attributable to fixed-rate long-term debt instruments.


<PAGE>


                                     - 40 -

                           PART II. OTHER INFORMATION

ITEM 1.       LEGAL PROCEEDINGS

See Note 12, Contingent  Liabilities,  to Owens Corning's Consolidated Financial
Statements above, which is incorporated here by reference.

On October 5, 2000,  Owens  Corning  and 17 of its United  States  subsidiaries,
including Fibreboard Corporation (collectively,  the "Debtors"), filed voluntary
petitions for relief under Chapter 11 of the United States  Bankruptcy Code (the
"Bankruptcy  Code") in the United  States  Bankruptcy  Court for the District of
Delaware  and  are   currently   operating   their   respective   businesses  as
debtors-in-possession  in accordance with provisions of the Bankruptcy Code. The
Chapter 11 cases of the Debtors are being  jointly  administered  under Case No.
00-3837 (MFW). In this  proceeding,  the Debtors will seek approval of a Plan of
Reorganization  (the  "Plan") and intend to  implement  the Plan upon  obtaining
court  approval of the Plan.  Pursuant to the  automatic  stay  provision of the
Bankruptcy  Code,  all  pending  litigation  matters  against  the  Debtors  are
currently stayed. Please see Note 1 to the Consolidated Financial Statements.


ITEM 2.    CHANGES IN SECURITIES AND USE OF PROCEEDS

(a)  None of the constituent  instruments  defining the rights of the holders of
     any class of Owens Corning's registered  securities was materially modified
     in the quarter ended September 30, 2000.

(b)  None of the rights  evidenced  by any class of Owens  Corning's  registered
     securities  was  materially  limited  or  qualified  in the  quarter  ended
     September  30, 2000 by the issuance or  modification  of any other class of
     securities.


ITEM 3.       DEFAULTS UPON SENIOR SECURITIES

(a)  During the quarter ended September 30, 2000,  there was no material default
     in  the  payment  of   principal,   interest,   sinking  or  purchase  fund
     installments,  or any other material default not cured within 30 days, with
     respect to any  indebtedness  of Owens  Corning  or any of our  significant
     subsidiaries  exceeding 5 percent of the total assets of Owens  Corning and
     consolidated subsidiaries.

(b)  During the quarter ended  September 30, 2000, no material  arrearage in the
     payment of dividends occurred,  and there was no other material delinquency
     not cured within 30 days,  with respect to any class of preferred  stock of
     Owens  Corning  which is  registered  or which  ranks prior to any class of
     registered  securities,  or with respect to any class of preferred stock of
     any significant subsidiary of Owens Corning.

See Note 1, Subsequent  Event - Voluntary  Petition For Relief Under Chapter 11,
to Owens Corning's  Consolidated  Financial  Statements above for certain events
subsequent to September 30, 2000.


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

No matter was submitted to a vote of security  holders  during the quarter ended
September 30, 2000.

<PAGE>


                                     - 41 -

                     PART II. OTHER INFORMATION (continued)

ITEM 5.       OTHER INFORMATION

Owens Corning 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.

         The Company did not file any reports on Form 8-K during the quarter
         ended September 30, 2000.

<PAGE>

                                     - 42 -

                                   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:  November 14, 2000                  By:  /s/  Michael H. Thaman
    --------------------                    -------------------------
                                           Michael H. Thaman
                                           Senior Vice President and
                                           Chief Financial Officer
                                           (as duly authorized officer)



Date:  November 14, 2000                  By:  /s/  Deyonne F. Epperson
    --------------------                    ---------------------------
                                            Deyonne F. Epperson
                                            Vice President and Controller

<PAGE>


                                     - 43 -

                                  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).


(11)          Statement re Computation of Per Share Earnings (filed herewith).


(27)          Financial Data Schedule (filed herewith).


(99)          Additional Exhibits

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