SECURITIES AND EXCHANGE COMMISSION

                             Washington, D. C. 20549


                                    FORM 10-Q

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

                      For the Quarter Ended March 31, 2001

                           Commission File No. 1-3660

                                  Owens Corning

                            One Owens Corning Parkway

                               Toledo, Ohio 43659

                            Area Code (419) 248-8000

                             A Delaware Corporation

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


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

                                Yes / X / No / /

 Shares of common stock, par value $.10 per share, outstanding at March 31, 2001

                                   55,362,424


<PAGE>


                                      - 2 -

                          PART I. FINANCIAL INFORMATION
                          ITEM 1. FINANCIAL STATEMENTS

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

                                                                                          Quarter Ended
                                                                                             March 31,
                                                                                             ---------
                                                                                    2001                2000
                                                                                    ----                ----
                                                                                     (In millions of dollars,
                                                                                        except share data)
NET SALES                                                                     $      1,067         $     1,257
COST OF SALES                                                                          896                 971
                                                                              ------------        -------------
    Gross margin                                                                       171                 286
                                                                              ------------        -------------

OPERATING EXPENSES
  Marketing and administrative expenses                                                127                 148
  Science and technology expenses                                                       10                  15
  Restructure costs (Note 4)                                                             9                   -
  Chapter 11 related reorganization items (Note 1)                                      21                   -
  Other                                                                                 21                  18
                                                                              ------------        -------------
     Total operating expenses                                                          188                 181
                                                                              ------------        -------------

INCOME (LOSS) FROM OPERATIONS                                                          (17)                105

OTHER
  Cost of borrowed funds (Note 1)                                                        4                  42
  Other                                                                                 (4)                  -
                                                                              -------------       -------------

INCOME (LOSS) BEFORE PROVISION (CREDIT) FOR
  INCOME TAXES                                                                         (17)                 63

Provision (credit) for income taxes (Note 6)                                            (5)                 13
                                                                              -------------       -------------

INCOME (LOSS) BEFORE MINORITY INTEREST AND
  EQUITY IN NET INCOME (LOSS) OF AFFILIATES                                            (12)                 50

Minority interest                                                                        -                  (2)

Equity in net income of affiliates                                                       2                   -
                                                                              ------------        ------------

NET INCOME (LOSS)                                                             $        (10)       $         48
                                                                              =============       ============

NET INCOME (LOSS) PER COMMON SHARE

Basic net income (loss) per share                                             $       (.19)       $        .88
                                                                              -------------       ------------
Diluted net income (loss) per share                                           $       (.19)       $        .84
                                                                              =============       ============
Weighted average number of common shares outstanding and
  common equivalent shares during the period (in millions)

Basic                                                                                 55.0               54.6
Diluted                                                                               55.0               59.8

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



<PAGE>


                                      - 3 -

                         OWENS CORNING AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                                   (unaudited)
<TABLE>
<S>                                                                                    <C>                <C>
                                                                                    March 31,       December 31,
                                                                                      2001              2000
                                                                                      ----              ----
ASSETS                                                                                (In millions of dollars)
------

CURRENT
Cash and cash equivalents                                                          $      454         $       550
Receivables                                                                               597                 488
Inventories (Note 7)                                                                      510                 469
Deferred income taxes                                                                       5                   6
Income tax receivable                                                                       5                  31
Other current assets                                                                       24                  20
                                                                                   -----------        -----------

  Total current                                                                         1,595               1,564
                                                                                   ----------         -----------

OTHER
Insurance for asbestos litigation claims (Note 12)                                         59                  59
Restricted cash and other - asbestos related (Note 12)                                    115                 164
Restricted cash, securities and other - Fibreboard (Notes 12 and 13)                    1,259               1,274
Deferred income taxes                                                                   1,063               1,075
Goodwill                                                                                  628                 636
Investments in affiliates                                                                  51                  62
Other noncurrent assets                                                                   252                 257
                                                                                   ----------          ----------

  Total other                                                                           3,427               3,527
                                                                                   ----------          ----------

PLANT AND EQUIPMENT, at cost
Land                                                                                       66                  60
Buildings and leasehold improvements                                                      661                 663
Machinery and equipment                                                                 2,764               2,717
Construction in progress                                                                  239                 327
                                                                                   ----------          ----------
                                                                                        3,730               3,767

Less:  Accumulated depreciation                                                        (1,942)             (1,946)
                                                                                   ----------          -----------

  Net plant and equipment                                                               1,788               1,821
                                                                                   ----------          ----------

TOTAL ASSETS                                                                       $    6,810          $    6,912
                                                                                   ==========          ==========

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


<PAGE>


                                      - 4 -

                         OWENS CORNING AND SUBSIDIARIES
                     CONSOLIDATED BALANCE SHEET (continued)
                                   (unaudited)
<TABLE>
<S>                                                                                <C>                 <C>
                                                                              March 31,           December 31,
                                                                                2001                   2000
                                                                                ----                   ----
LIABILITIES AND STOCKHOLDERS' EQUITY                                               (In millions of dollars)
------------------------------------

CURRENT
Accounts payable and accrued liabilities                                     $        533     $        491
Short-term debt                                                                        48               50
Long-term debt - current portion                                                       67               68
                                                                              -----------      -----------

   Total current                                                                      648              609
                                                                              -----------      -----------

LONG-TERM DEBT                                                                          7                7
                                                                              -----------      -----------

OTHER
Other employee benefits liability                                                     324              322
Pension plan liability                                                                 79               75
Other                                                                                 138              124
                                                                              -----------      -----------

  Total other                                                                         541              521
                                                                              -----------      -----------

LIABILITIES SUBJECT TO COMPROMISE (Note 1)                                          6,812            6,935
                                                                              -----------      -----------

COMMITMENTS AND CONTINGENCIES

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

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

STOCKHOLDERS' EQUITY
Preferred stock                                                                         -                -
Common stock                                                                          698              699
Deficit                                                                            (2,006)          (1,996)
Accumulated other comprehensive loss                                                 (126)             (97)
Other                                                                                  (3)              (5)
                                                                              ------------     ------------

    Total stockholders' equity                                                     (1,437)          (1,399)
                                                                              ------------     ------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                    $     6,810      $     6,912
                                                                              ===========      ===========

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

<PAGE>


                                      - 5 -

                         OWENS CORNING AND SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                   (unaudited)
<TABLE>
<S>                                                                                     <C>                 <C>
                                                                                             Quarter Ended
                                                                                               March 31,
                                                                                               ---------
                                                                                        2001              2000
                                                                                        ----              ----
                                                                                       (In millions of dollars)
NET CASH FLOW FROM OPERATIONS

  Net income (loss)                                                               $        (10)     $        48

  Reconciliation of net cash provided by operating activities:

     Noncash items:
       Provision for depreciation and amortization                                         54                48
       Provision (credit) for deferred income taxes                                        12                 4
       Other                                                                               23               (13)
  (Increase) decrease in receivables                                                     (127)             (181)
  (Increase) decrease in inventories                                                      (51)              (57)
   Increase (decrease) in accounts payable and accrued liabilities                         28               (80)
  (Increase) decrease in restricted cash and other - asbestos related
     (Note 12)                                                                             49              (256)
   Change in liabilities subject to compromise (Note 1)                                   (82)                -
   Proceeds from insurance for asbestos litigation claims, excluding
     Fibreboard (Note 12)                                                                   -                12
   Payments for asbestos litigation claims, excluding Fibreboard
     (Note 12)                                                                              -              (223)
   Other                                                                                   31                19
                                                                                  -----------       -----------

      Net cash flow from operations                                               $       (73)      $      (679)
                                                                                  ------------      ------------

NET CASH FLOW FROM INVESTING

  Additions to plant and equipment                                                $       (42)      $       (68)
  Investment in subsidiaries, net of cash acquired                                          -                (4)
  Proceeds from the sale of affiliate or business (Note 5)                                 20                50
  Other                                                                                     5                (2)
                                                                                  -----------       ------------

      Net cash flow from investing                                                $       (17)      $       (24)
                                                                                  ------------      ------------


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



<PAGE>


                                      - 6 -

                         OWENS CORNING AND SUBSIDIARIES
                CONSOLIDATED STATEMENT OF CASH FLOWS (continued)
                                   (unaudited)
<TABLE>
<S>                                                                                 <C>                   <C>
                                                                                         Quarter Ended
                                                                                           March 31,
                                                                                    2001                2000
                                                                                    ----                ----
                                                                                    (In millions of dollars)

NET CASH FLOW FROM FINANCING

  Net additions to long-term credit facilities                               $         -         $       655
  Other reductions to long-term debt                                                  (1)                (11)
  Net increase (decrease) in short-term debt                                          (2)                 35
  Dividends paid                                                                       -                  (4)
  Other                                                                               (1)                  -
                                                                             ------------        -----------

    Net cash flow from financing                                             $        (4)        $       675
                                                                             ------------        -----------
Effect of exchange rate changes on cash                                               (2)                 (1)
                                                                             ------------        -----------

Net decrease in cash and cash equivalents                                            (96)                (29)

Cash and cash equivalents at beginning of period                                     550                  70
                                                                             -----------         -----------

Cash and cash equivalents at end of period                                   $       454         $        41
                                                                             ===========         ===========


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


<PAGE>


                                      - 7 -

                         OWENS CORNING AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.       VOLUNTARY PETITION FOR RELIEF UNDER CHAPTER 11

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

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

The Debtors filed for relief under Chapter 11 to address the growing  demands on
Owens  Corning's  cash flow  resulting from its  multi-billion  dollar  asbestos
liability.  This  liability  is  discussed  in greater  detail in Note 12 to the
Consolidated Financial Statements.

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

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

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

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

<PAGE>


                                      - 8 -

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

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

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

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

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

The  Bankruptcy  Court may  confirm a plan of  reorganization  only upon  making
certain  findings  required by the Bankruptcy  Code, and a plan may be confirmed
over the  dissent of  non-accepting  creditors  and equity  security  holders if
certain  requirements  of the  Bankruptcy  Code are met. The payment  rights and
other  entitlements of pre-petition  creditors and Owens Corning's  shareholders
may be substantially altered by any plan or plans of reorganization confirmed in
the Chapter 11 Cases. There is no assurance that there will be sufficient assets
to satisfy the Debtors'  pre-petition  liabilities  in whole or in part, and the
pre-petition  creditors of some Debtors may be treated differently than those of
other Debtors.
<PAGE>


                                      - 9 -

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

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

Pre-petition  creditors  may receive under a plan or plans less than 100% of the
face value of their claims, and the interests of Owens Corning's equity security
holders may be substantially  diluted or cancelled in whole or in part. As noted
above,  it is not possible at this time to predict the outcome of the Chapter 11
Cases, the terms and provisions of any plan or plans of  reorganization,  or the
effect of the Chapter 11  reorganization  process on the claims of the creditors
of the Debtors or the interests of Owens Corning's equity security holders.

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

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

Substantially  all of the Company's  pre-petition  debt is now in default due to
the  Filing.  As  described  below,  the  accompanying   Consolidated  Financial
Statements present the Debtors' pre-petition debt under the caption "Liabilities
Subject  to  Compromise."  This  includes  debt  under the  Pre-Petition  Credit
Facility and  approximately  $1.4 billion of other outstanding debt. As required
by SOP 90-7, the Company,  beginning in the fourth quarter of 2000, recorded the
Debtors'  pre-petition debt instruments at the allowed amount, as defined by SOP
90-7.

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

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

The Debtors have received approval from the Bankruptcy Court to pay or otherwise
honor  certain of their  pre-petition  obligations,  including  employee  wages,

<PAGE>


                                     - 10 -

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

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

salaries,  benefits  and  other  employee  obligations,  pre-petition  claims of
critical  vendors,  and certain  other  pre-petition  claims  including  certain
customer program and warranty claims.

Since the Petition Date, contractual interest expense not accrued or recorded on
pre-petition  debt totaled  $102  million,  of which $50 million  relates to the
quarter ended March 31, 2001.

At March 31, 2001, the Company had $454 million of Cash and Cash Equivalents (of
which  approximately $42 million is subject to an administrative  freeze pending
the resolution of certain  alleged  set-off  rights which,  upon approval of the
Bankruptcy  Court,  may  be  exercised  by  certain  pre-petition  lenders).  In
addition,  in connection  with the Filing,  the Debtors  obtained a $500 million
debtor-in-possession  credit  facility  from a group of  lenders  led by Bank of
America,  N.A. (the "DIP  Financing").  At March 31, 2001, this facility had not
been utilized except for  approximately $18 million of standby letters of credit
and similar uses.

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

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

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

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

<PAGE>


                                     - 11 -

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

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

                         OWENS CORNING AND SUBSIDIARIES
                 DEBTOR-IN-POSSESSION STATEMENT OF INCOME (LOSS)
                      FOR THE QUARTER ENDED MARCH 31, 2001
<TABLE>
<S>                                                                                                    <C>


                                                                                                       2001
                                                                                                       ----
                                                                                             (In millions of dollars)

NET SALES                                                                                           $      916
COST OF SALES                                                                                              794
                                                                                                   -----------
     Gross margin                                                                                          122
                                                                                                   -----------

OPERATING EXPENSES
     Marketing and administrative expenses                                                                 111
     Science and technology expenses                                                                         9
     Restructure costs (Note 4)                                                                              3
     Chapter 11 reorganization items (Note 1)                                                               21
     Other (Including interest income from non-Debtors $14 million)                                         13
                                                                                                  ------------

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

LOSS FROM OPERATIONS                                                                                       (35)

OTHER
     Cost of borrowed funds                                                                                  6
     Other (Note 13)                                                                                        (4)
                                                                                                  -------------

LOSS BEFORE CREDIT FOR INCOME TAXES                                                                        (37)

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

LOSS BEFORE EQUITY IN NET INCOME OF AFFILIATES                                                             (25)

Equity in net income of affiliates                                                                           2
                                                                                                  ------------

NET LOSS                                                                                            $      (23)
                                                                                                    ===========


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


<PAGE>


                                     - 12 -

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

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

                         OWENS CORNING AND SUBSIDIARIES
                       DEBTOR-IN-POSSESSION BALACNE SHEET
<TABLE>
<S>                                                                                  <C>                     <C>
                                                                                    March 31,             December 31,
                                                                                       2001                   2000
                                                                                       ----                   ----
                                                                                        (In millions of dollars)
ASSETS
------

CURRENT
     Cash and cash equivalents                                                        $      374             $    461
     Receivables, net                                                                        444                  338
     Receivables - non-debtors                                                               680                  672
     Inventories                                                                             387                  347
     Deferred income taxes                                                                     4                    4
     Income tax receivable                                                                     4                   31
     Other current assets                                                                     23                   18
                                                                                    ------------           ----------

           Total current                                                                   1,916                1,871
                                                                                      ----------              -------

OTHER
     Insurance for asbestos litigation claims (Note 12)                                       59                   59
     Restricted cash and other - asbestos related (Note 12)                                  115                  164
     Restricted cash, securities and other - Fibreboard (Notes 12
       and 13)                                                                             1,259                1,274
     Deferred income taxes                                                                 1,052                1,058
     Goodwill, net                                                                           528                  530
     Investments in affiliates                                                                22                   38
     Investments in non-debtor subsidiaries                                                  739                  745
     Other noncurrent assets                                                                 213                  209
                                                                                     -----------            ---------

           Total other                                                                     3,987                4,077
                                                                                      ----------              -------

PLANT AND EQUIPMENT, at cost
     Land                                                                                     40                   34
     Buildings and leasehold improvements                                                    524                  522
     Machinery and equipment                                                               2,100                2,078
     Construction in progress                                                                230                  259
                                                                                     -----------            ---------
                                                                                           2,894                2,893

  Less:  Accumulated depreciation                                                         (1,508)              (1,502)
                                                                                      -----------             -------

      Net plant and equipment                                                              1,386                1,391
                                                                                      ----------             --------

TOTAL ASSETS                                                                           $   7,289              $ 7,339
                                                                                       =========              =======



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


<PAGE>


                                     - 13 -

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

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

                         OWENS CORNING AND SUBSIDIARIES
                       DEBTOR-IN-POSSESSION BALANCE SHEET
<TABLE>
<S>                                                                               <C>                     <C>
                                                                                 March 31,            December 31,
                                                                                    2001                  2000
                                                                                    ----                  ----
LIABILITIES AND STOCKHOLDERS' EQUITY                                                 (In millions of dollars)
------------------------------------

CURRENT
     Accounts payable and accrued liabilities                                   $     393                $    320
     Accounts payable and accrued liabilities - non-debtors                            47                      46
     Long-term debt - current portion                                                   -                       1
                                                                             ------------             -----------

        Total current                                                                 440                     367
                                                                                ---------               ---------

OTHER
  Other employee benefits liability                                                   311                     308
  Pension plan liability                                                               70                      68
  Other                                                                               113                      96
                                                                                ---------              ----------

        Total other                                                                   494                     472
                                                                                ---------               ---------

LIABILITIES SUBJECT TO COMPROMISE                                                   7,495                   7,623

STOCKHOLDERS' EQUITY
  Common stock                                                                        698                     699
  Deficit                                                                          (1,824)                 (1,807)
  Accumulated other comprehensive loss                                                (12)                    (12)
  Other                                                                                (2)                     (3)
                                                                              ------------             ----------

        Total stockholders' equity                                                 (1,140)                 (1,123)
                                                                                 ---------                -------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                       $  7,289                 $ 7,339
                                                                                 ========                 =======


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


<PAGE>


                                     - 14 -

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

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

                         OWENS CORNING AND SUBSIDIARIES
                  DEBTOR-IN-POSSESSION STATEMENT OF CASH FLOWS
                      FOR THE QUARTER ENDED MARCH 31, 2001
<TABLE>
<S>                                                                                                <C>
                                                                                                   2001
                                                                                                   ----
                                                                                         (In millions of dollars)

NET CASH FLOW FROM OPERATIONS

Net loss                                                                                       $     (23)
  Reconciliation of net cash provided by operating activities
        Noncash items:
            Provision for depreciation and amortization                                               38
            Credit for deferred income taxes                                                          12
            Other                                                                                     35
        Increase in receivables                                                                     (116)
        Increase in inventories                                                                      (41)
        Increase in accounts payable and accrued liabilities                                          50
        Decrease in restricted cash and other - asbestos related                                      49
        Decrease in restricted cash, securities and other - Fibreboard                                35
        Change in liabilities subject to compromise                                                 (117)
        Other                                                                                         29
                                                                                              ----------

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

NET CASH FLOW FROM INVESTING

        Additions to plant and equipment                                                       $     (42)
        Other                                                                                          5
                                                                                             -----------

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


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



<PAGE>


                                     - 15 -

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

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

                         OWENS CORNING AND SUBSIDIARIES
                  DEBTOR-IN-POSSESSION STATEMENT OF CASH FLOWS
                      FOR THE YEAR ENDED DECEMBER 31, 2000
<TABLE>
<S>                                                                                               <C>
                                                                                                  2001
                                                                                                  ----
                                                                                        (In millions of dollars)

NET CASH FLOW FROM FINANCING

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

Net decrease in cash and cash equivalents                                                    $     (87)

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

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


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

<TABLE>
<S>                                                                                <C>                   <C>
                                                                                 March 31,          December 31,
                                                                                    2001                2000
                                                                                    ----                ----
                                                                                      (amounts in millions)

  Accounts payable                                                              $      212          $      255
  Accrued interest payable                                                              40                  39
  Accrued liabilities                                                                   65                  74
  Debt                                                                               2,827               2,832
  Income taxes payable                                                                 209                 212
  Reserve for asbestos litigation claims - Owens Corning (Note 12)                   2,200               2,249
  Reserve for asbestos litigation claims - Fibreboard
    (Notes 12 and 13)                                                                1,259               1,274
                                                                                ----------           ---------

         Total consolidated                                                          6,812               6,935

         Payables to non-debtors                                                       683                 688
                                                                               -----------          ----------

         Total debtor                                                            $   7,495            $  7,623
                                                                                 =========            ========
</TABLE>


The amounts for reorganizational items in the Consolidated and
Debtor-in-Possession Income Statements consist of the following for the quarter
ended March 31:
<TABLE>
<S>                                                                                         <C>
                                                                                           2001
                                                                                           ----
                                                                                (amounts in millions)

Professional fees                                                                       $    18
Payroll and compensation                                                                      7
Interest income                                                                              (5)
Litigation related expenses and other                                                         1
                                                                                        -------

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




<PAGE>


                                     - 16 -

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

2.   SEGMENT DATA

During 2000, the Company realigned its internal  operating  segments.  Following
this realignment,  the Company reviewed its segments in accordance with SFAS 131
and concluded that the aggregation of its operating segments into two reportable
segments was still  appropriate.  As a result of this realignment,  intersegment
transactions no longer exist between reportable  segments.  Net sales and income
from  operations  have been  restated for all periods  presented to reflect this
change.
<TABLE>
<S>                                                                                         <C>
                                                                                        Quarter Ended
                                                                                          March 31,
                                                                                          ---------
NET SALES                                                                          2001               2000
                                                                                   ----               ----
                                                                                  (In millions of dollars)
Reportable Operating Segments
-----------------------------

  Building Materials Systems
     United States                                                          $       785         $       929
     Europe                                                                           2                  57
     Canada and other                                                                36                  42
                                                                            -----------         -----------

        Total Building Materials Systems                                    $       823         $     1,028
                                                                            -----------         -----------

  Composite Systems
     United States                                                                  101                 100
     Europe                                                                         100                  85
     Canada and other                                                                43                  44
                                                                            -----------         -----------

        Total Composite Systems                                                     244                 229
                                                                            -----------         -----------

        Total Reportable Operating Segments                                 $     1,067         $     1,257
                                                                            ===========         ===========

External Customer Sales by Geographic Region
--------------------------------------------
     United States                                                          $       886         $     1,029
     Europe                                                                         102                 142
     Canada and other                                                                79                  86
                                                                            -----------         -----------

     Net Sales                                                              $     1,067         $     1,257
                                                                            ===========         ===========
</TABLE>


<PAGE>


                                     - 17 -

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

2. SEGMENT DATA (continued)
<TABLE>
<S>                                                                             <C>                <C>
                                                                                    Quarter Ended
                                                                                      March 31,
                                                                                      ---------
INCOME (LOSS) FROM OPERATIONS                                                  2001               2000
                                                                               ----               ----
                                                                              (In millions of dollars)
Reportable Operating Segments
-----------------------------

  Building Materials Systems
     United States                                                      $        22           $       91
     Europe                                                                       -                    1
     Canada and other                                                             1                    4
                                                                        -----------           ----------

        Total Building Materials Systems                                         23                   96
                                                                        -----------           ----------

  Composite Systems
     United States                                                               17                   29
     Europe                                                                      13                    -
     Canada and other                                                             5                    6
                                                                        -----------           ----------

        Total Composite Systems                                                  35                   35
                                                                        -----------           ----------

        Total Reportable Operating Segments                             $        58           $      131
                                                                        ===========           ==========

Geographic Regions
------------------
  United States                                                         $        39           $      120
  Europe                                                                         13                    1
  Canada and other                                                                6                   10
                                                                        -----------           ----------

     Total Reportable Operating Segments                                $        58           $      131
                                                                        ===========           ==========

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

  Restructuring and other charges                                               (42)                 (11)
  Chapter 11 related reorganization items                                       (21)                   -
  Loss on sale of affiliate or business                                           -                   (5)
  General corporate expense                                                     (12)                 (10)
  Cost of borrowed funds                                                         (4)                 (42)
  Other                                                                           4                    -
                                                                        -----------           ----------

Consolidated Income (Loss) Before Provision (Credit)
  for Income Taxes                                                      $       (17)          $       63
                                                                        ============          ==========
</TABLE>



<PAGE>


                                     - 18 -

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

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

In connection with the condensed financial statements and notes included in this
Report,  reference  is  made  to the  financial  statements  and  notes  thereto
contained in the  Company's  2000 Annual  Report on Form 10-K, as filed with the
Securities and Exchange Commission.

4.   RESTRUCTURING OF OPERATIONS AND OTHER CHARGES

During the first quarter of 2001, the Company continued to experience the impact
of a soft overall economy, primarily in the building materials industries, which
resulted in a continued review of overhead and other related cost structures. As
a result of this review,  the Company  recorded $42 million in pretax charges to
income from  operations for  restructuring  and other  charges.  This charge was
comprised of a $9 million pretax restructure charge, $2 million pretax loss from
assets held for sale,  and $31 million in other pretax  charges.  The $9 million
restructure  charge has been  classified  as a separate  component  of operating
expenses  on  the  Company's   Consolidated   Statement  of  Income  (Loss)  and
represented severance costs associated with the elimination of approximately 130
positions,   primarily  in  the  U.S.  The  primary  groups  affected   included
manufacturing and administrative  personnel. As of March 31, 2001, approximately
$1  million  has  been  paid and  charged  against  the  reserve  for  personnel
reductions. The $2 million pretax loss from assets held for sale represented the
results of operations  for the Company's  investments in its Pipe joint ventures
and  subsidiaries on a  held-for-sale  basis for the first quarter of 2001. This
sale was completed in February 2001,  subject to final regulatory  approval (see
Note 5).

The $31 million in other  pretax  charges was  comprised of $10 million of asset
impairments,  principally the write-down of equipment,  $4 million to write down
inventory to reflect updated  estimates of the net realizable value and carrying
amounts of certain inventories, $4 million of payroll-related charges associated
with the realignment of the Newark,  Ohio  manufacturing  facility,  and various
other charges totaling $13 million. This $31 million pretax charge was accounted
for as an $18 million  charge to cost of sales and a $13 million charge to other
operating expenses.

During  2000,  the  Company   recorded   pretax  charges  of  $229  million  for
restructuring  and other  activities as a result of its reassessment of business
strategies  with respect to  investments  in certain  ventures,  facilities  and
overhead  expenditures.  The $229 million  pretax  charge was comprised of a $32
million  charge  associated  with the  restructuring  of the Company's  business
segments and $197 million of other  charges,  the majority of which  represented
impairments of long-lived assets. In addition, the Company recorded a $6 million
pretax  credit  to  minority  interest  resulting  from  charges  related  to  a
majority-owned  consolidated  subsidiary.  The  components of the  restructuring
charge  include  $16  million  for  personnel  reductions,  $10  million for the
divestiture of non-strategic businesses and facilities, and $6 million for asset
impairments associated with the planned closing of two lines at the Newark, Ohio
manufacturing  facility.  This represented the first phase of the Company's plan
to realign operations at the Newark facility.

The  $197  million  of other  charges  was  comprised  of $95  million  of asset
impairments,  a $6 million charge for a settlement  loss  associated with one of


<PAGE>


                                     - 19 -

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

4.   RESTRUCTURING OF OPERATIONS AND OTHER CHARGES (continued)

our U.S. pension plans, and $96 million of charges focused on improving business
operations.  The $95 million of asset  impairments  included:  1) $54 million to
write-down the Company's investment and related assets in Alcopor Owens Corning,
a building  materials joint venture in Europe, to estimated fair value on a held
for sale basis;  2) $12 million to write-down  the  Company's  investment in the
majority owned,  consolidated  venture in South Africa,  on a held-in-use  basis
based upon  management's  analysis  of current  and  expected  future  financial
results and  constraints  on the  Company's  ability to fund future  significant
capital  investments  in this  subsidiary  as a  consequence  of the  bankruptcy
filing.  The $12 million  charge was offset by a $6 million credit to record the
minority  owner's  share,   recorded  in  the  minority  interest  line  on  the
Consolidated  Statement of Income  (Loss);  3) $8 million to  write-down to fair
value the Company's investments in its Pipe joint ventures and subsidiaries on a
held for sale basis.  The sale of a majority of the investments and subsidiaries
held for sale was  completed  in  February  2001,  subject  to final  regulatory
approval; 4) $10 million to write-down the equity investment in ImproveNet,  due
to a  significant  decrease in market value which  management  believes is other
than temporary;  and 5) $11 million associated with asset impairments within our
Cultured Stone and other businesses.

The $96 million  charge  consisted of $43 million to write-down  inventory  made
obsolete by changes in the Company's manufacturing and marketing strategies; $19
million to  write-down  equipment  and  receivables;  $15  million  to  increase
warranty  reserves  due to general  changes in estimates  associated  with these
reserves;  and various  other  charges  totaling  $19 million  recorded as other
operating expenses. As of March 31, 2001, approximately $9 million has been paid
and charged against the reserve for personnel reductions.

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

The $386 million pretax charge was comprised of a $185 million charge associated
with the  restructuring  of the Company's  business  segments and a $201 million
charge  associated  with asset  impairments,  including  investments  in certain
affiliates.  The components of the restructuring charge include $115 million for
personnel   reductions;   $68  million  for  the  divestiture  of  non-strategic
businesses  and  facilities,  of which $52 million  represented  non-cash  asset
revaluations and $16 million  represented exit cost  liabilities,  primarily for
leased  warehouse and office  facilities  that were vacated;  and $2 million for
other  actions.  The  divestiture  of  non-strategic  businesses  and facilities
included the closure of the Candiac, Quebec manufacturing  facility.  During the
second  quarter of 1999,  the Candiac  manufacturing  facility was  re-opened in
order to meet market demands.  As of March 31, 2001,  approximately $104 million
has been  paid  and  charged  against  the  reserve  for  personnel  reductions,
representing the elimination of approximately  2,450 employees,  the majority of
whose  severance  payments  were  made over the  course  of 1998 and  1999,  and
approximately $13 million has been charged against exit cost liabilities.

The following  table  summarizes  the status of the  liabilities  from the 1997,
1998, 2000 and 2001 restructure  program described above,  including  cumulative
spending and adjustments and the remaining balance as of March 31, 2001:

<PAGE>


                                     - 20 -

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

4.   RESTRUCTURING OF OPERATIONS AND OTHER CHARGES (continued)
<TABLE>
<S>                                                     <C>                  <C>                  <C>
                                                                                           Liability at
                                                      Original              Total            March 31,
                                                      Liability           Payments             2001
                                                      ---------           --------             ----
       (In millions of dollars)
       Personnel costs                                 $   140           $   (114)          $      26
       Facility and business exit costs                     20                (14)                  6
       Other                                                 2                 (2)                  -
                                                       -------           ---------          ---------

       Total                                           $   162           $   (130)          $      32
                                                       =======           =========          =========
</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

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

During the 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 transaction costs. This net loss was recorded
as other operating expenses on the consolidated statement of income.

6.   INCOME TAXES

The  reconciliation  between the U.S.  federal  statutory rate and the Company's
effective income tax rate is:
<TABLE>
<S>                                                             <C>                        <C>
                                                                    Quarter Ended March 31,
                                                               2001                      2000
                                                               ----                      ----

      U.S. federal statutory rate                                 (35)%                     35%
      State and local income taxes                                 (5)                       2
      Special tax election (a)                                      -                      (18)
      Interest                                                      6                        -
      Foreign tax rate differences                                  -                        1
      Other                                                         2                        -
                                                               --------                 -------

      Effective tax rate                                          (32)%                     20%
                                                               ========                 =======


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


<PAGE>


                                     - 21 -

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

7.   INVENTORIES

Inventories are summarized as follows:
<TABLE>
<S>                                                                      <C>                  <C>
                                                                       March 31,          December 31,
                                                                         2001                 2000
                                                                         ----                 ----
                                                                          (In millions of dollars)
  Finished goods                                                       $    436           $      397
  Materials and supplies                                                    168                  165
                                                                      ---------           ----------
  FIFO inventory                                                            604                  562
  Less:  reduction to LIFO basis                                            (94)                 (93)
                                                                      ----------         ------------
    Total inventory                                                    $    510           $      469
                                                                       ========           ==========
</TABLE>


Approximately $192 million and $300 million of total inventories were valued
using the LIFO method at March 31, 2001 and December 31, 2000, respectively.

8.   CONSOLIDATED STATEMENT OF CASH FLOWS

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

                                                       Quarter Ended March 31,
                                                     2001                  2000
                                                     ----                  ----
                                                      (In millions of dollars)

Income taxes                                         $(38)                 $(44)
Cost of borrowed funds (Note 1)                         2                    41

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

9.   COMPREHENSIVE INCOME

The  Company's  comprehensive  income for the quarters  ended March 31, 2001 and
2000 was a loss of $37  million  and income of $34  million,  respectively.  The
Company's   comprehensive  income  includes  net  income,  currency  translation
adjustments,  and deferred gains and losses on certain  hedging  transactions to
record at fair value.


<PAGE>


                                     - 22 -

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

10.   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
(loss) and weighted  average number of shares used to compute  diluted  earnings
per share.

<TABLE>
<S>                                                                               <C>                    <C>
                                                                                   Quarter Ended March 31,
                                                                                 2001                       2000
                                                                                 ----                       ----
                                                                          (In millions of dollars, except share data)

Net income (loss) used for basic earnings per share                          $       (10)          $          48
Net income effect of assumed conversion of
  preferred securities                                                                 -                       2
                                                                             -----------           -------------

Net income (loss) used for diluted earnings per share                        $       (10)          $          50
                                                                             ============          =============

Weighted average number of shares outstanding
  used for basic earnings per share (thousands)                                   55,042                  54,590
Deferred awards and stock options                                                      -                     598
Shares from assumed conversion of preferred
  securities                                                                           -                   4,566
                                                                             ------------          -------------

Weighted average number of shares outstanding
  and common equivalent shares used for diluted
  earnings per share (thousands)                                                  55,042                  59,754
                                                                             ============          =============
</TABLE>


11.   DERIVATIVE FINANCIAL INSTRUMENTS

Effective  January 1, 2001,  the  Company  implemented  Statement  of  Financial
Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities"  (SFAS  133).  This  statement  and  its  interpretations  establish
accounting and reporting standards requiring derivative  instruments  (including
certain  derivative  instruments  embedded in other contracts) to be recorded in
the balance  sheet as either an asset or  liability  measured at its fair value.
The impact of adoption at January 1, 2001 did not have a material  effect in the
Consolidated  Statement  of Income  (Loss) and  resulted in other  comprehensive
income of approximately $1 million.

12.   CONTINGENT LIABILITIES

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

ITEM A. - OWENS CORNING (EXCLUDING FIBREBOARD)

Numerous  claims have been  asserted  against Owens  Corning  alleging  personal
injuries  arising from  inhalation  of asbestos  fibers.  Virtually all of these
claims  arise  out  of  Owens  Corning's  manufacture,   distribution,  sale  or
installation  of  an  asbestos-containing  calcium  silicate,  high  temperature
insulation  product,  the manufacture and distribution of which was discontinued
in 1972. Owens Corning received  approximately  18,000 asbestos  personal injury
claims   during  2000,   approximately   32,000  such  claims  during  1999  and
approximately 69,000 such claims during 1998.


<PAGE>


                                     - 23 -

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

12.   CONTINGENT LIABILITIES (continued)

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

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

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

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

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

Settlement  amounts for both Initial  Claims and Future  Claims were  negotiated
with each firm  participating  in the NSP, and each firm was to communicate with
its respective clients to obtain authority to settle individual claims. Payments
to individual claimants were to vary based on a number of factors, including the
type and severity of disease, age and occupation. All such payments were subject
to delivery of  satisfactory  evidence of a  qualifying  medical  condition  and
exposure to Owens Corning's and/or Fibreboard's products,  delivery of customary
releases by each claimant,  and other  conditions.  Certain  claimants  settling
non-malignancy  claims with Owens Corning and/or  Fibreboard were entitled to an
agreed pre-determined amount of additional  compensation if they later developed
a more severe asbestos-related medical condition.

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


<PAGE>


                                     - 24 -

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

12.   CONTINGENT LIABILITIES (continued)

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

As of the Petition Date, the NSP covered  approximately  240,000 Initial Claims,
approximately 147,000 of which had satisfied all conditions to final settlement,
including  receipt of executed  releases,  or other  resolution  (the "Final NSP
Settlements")  at an average cost per claim of approximately  $9,000.  As of the
Petition Date,  approximately 83,000 of such Final NSP Settlements had been paid
in full or otherwise resolved,  and approximately 64,000 were unpaid in whole or
in part. As of such date, the remaining  balance payable under NSP Agreements in
connection  with these  unpaid  Final NSP  Settlements  was  approximately  $560
million.  Through the Petition  Date,  Owens Corning had received  approximately
3,800 Future Claims under the NSP.

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

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

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

Owens  Corning  resolved  (by  settlement  or  otherwise)  approximately  10,200
asbestos  personal injury claims outside the NSP during 1998,  4,800 such claims
during 1999 and 3,100 such claims  during 2000 prior to the Petition  Date.  The
average  cost of  resolution  was  approximately  $35,900  per claim for  claims
resolved  during 1998,  $34,600 per claim for claims  resolved  during 1999, and
$44,800 per claim for claims resolved during 2000 prior to the Petition Date. As
a rule,  these claims were settled as they were  scheduled  for trial,  and they
typically  involved  more serious  injuries  and  diseases.  Accordingly,  Owens
Corning   does  not  believe  that  such  average   costs  of   resolution   are
representative  of the value of the  non-NSP  claims  then  pending  against the
Company.

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

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

As a result  of the  Filing,  Owens  Corning  has not made any  asbestos-related
payments  since the Petition  Date.  During 1999 and 2000 (prior to the Petition
Date),  Owens Corning  (excluding  Fibreboard)  made  asbestos-related  payments
falling within four major categories: (1) Settlements in respect of verdicts
<PAGE>


                                     - 25 -

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

12.   CONTINGENT LIABILITIES (continued)

incurred or claims  resolved  prior to the  implementation  of the NSP ("Pre-NSP
Settlements");  (2) NSP settlements;  (3) Non-NSP settlements covering cases not
resolved by the NSP;  and (4)  Defense,  claims  processing  and  administrative
expenses,  as follows:
<TABLE>
<S>                                                                           <C>                        <C>
                                                                                   (In millions of dollars)
                                                                                                   2000  (through
                                                                              1999                October 4, 2000)
                                                                              ----                ----------------

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


Prior to the Petition Date,  Owens Corning  deposited  certain amounts in escrow
accounts  to  facilitate  claims  processing  under  the  NSP   ("Administrative
Deposits").  Amounts deposited into escrow in  Administrative  Deposits during a
reporting  period are included in the payments shown for NSP Settlements  during
the period.  At March 31, 2001,  approximately  $115  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 other - asbestos related") and have not
been subtracted from Owens Corning's reserve for asbestos personal injury claims
(discussed  below).  At this time,  Owens  Corning is unable to predict what the
treatment of funds held in Undistributed  Administrative  Deposits will be under
the terms of any plan or plans of reorganization.

Owens Corning notes that its  Undistributed  Administrative  Deposits (and Owens
Corning's  reserve  for  asbestos  personal  injury  claims) at March 31,  2001,
reflect a reduction  of $49 million  from the amounts  reported at December  31,
2000. The reduction is attributable to information received during 2001 from the
holders of Administrative  Deposits concerning  distributions from such Deposits
prior to the Petition Date.

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

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

On April 4, 2001, the United States House of Representatives introduced proposed
legislation  (HR 1412,  also known as the Asbestos  Tax Fairness  Act) to exempt
income  earned  by  qualifying   asbestos-related  settlement  funds,  including
qualifying trusts  established under Section 524(g) of the Bankruptcy Code, from
federal  income tax. The exemption  from income tax would benefit the Fibreboard
Settlement Trust (described  below) by having the effect of enlarging the corpus
of the trust through tax-free income accumulation.  In addition, the legislation
would allow  asbestos  defendants to carry-back  net operating  losses  ("NOLs")
created  by  asbestos  payments  to the years in which the  products  containing
asbestos were produced or distributed  (and to each subsequent year) in order to
obtain a refund of federal  income taxes paid in those  periods.  In the case of
Owens  Corning,  this would  entitle the Company to  carry-back  its NOLs to the
early 1950s. The bill has strong  bipartisan  support in the form of 72 original
cosponsors,  including  a  majority  of the  members of the House Ways and Means


<PAGE>


                                     - 26 -

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

12.   CONTINGENT LIABILITIES (continued)

Committee.  However, there can be no assurance that any such legislation will be
ultimately enacted.  Moreover,  as a result of the Filing,  there is uncertainty
regarding the impact of the proposed tax legislation on the Debtors'  respective
estates.

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

As  previously  reported,  the Company  believes  that it has spent  significant
amounts to resolve  claims of asbestos  claimants  whose injuries were caused or
exacerbated  by cigarette  smoking.  Owens Corning and  Fibreboard  are pursuing
litigation  against  tobacco  companies  (discussed  below) to obtain payment of
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 June 2001 trial date  previously  set for this  action has been
continued  indefinitely by the court. See Part II, Item 5, below. In addition to
the Mississippi lawsuit, a lawsuit brought in December 1997 by Owens Corning and
Fibreboard  is pending in the  Superior  Court for  Alameda  County,  California
against the same tobacco companies.  The July 2001 trial date previously set for
this action has been continued indefinitely at the request of the Company. There
can be no assurance that either case will go to trial or be successful.

Insurance
---------

As of March 31, 2001, Owens Corning's  financial  statements reflect $59 million
in  unexhausted   insurance   coverage  (net  of  deductibles  and  self-insured
retentions)  under its  liability  insurance  policies  applicable  to  asbestos
personal injury claims.  Most of this amount  represents  unconfirmed  potential
non-products  coverage with excess level insurance  carriers,  as to which Owens
Corning  has  estimated  its  probable  recoveries.  Owens  Corning  also  has a
significant  amount of other unconfirmed  potential  non-products  coverage with
excess level carriers. Owens Corning is actively pursuing non-products insurance
recoveries under these policies. The amount and timing of recoveries from excess
level policies will depend on subsequent negotiations and/or proceedings.

Reserve
-------

Owens  Corning  estimates  a  reserve  in  accordance  with  generally  accepted
accounting  principles to reflect  asbestos-related  liabilities  that have been
asserted or are probable of  assertion,  in which  liabilities  are probable and
reasonably estimable. This reserve was established initially through a charge to
income in 1991, with additional  charges to income of $1.1 billion in 1996, $1.4
billion in 1998, and $1.0 billion in 2000.

As of March 31,  2001,  a reserve of  approximately  $2.2  billion in respect of
Owens  Corning's  asbestos-related  liabilities was one of the items included in
Owens  Corning's  consolidated  balance  sheet under the  category  "Liabilities
Subject  to  Compromise."   For  periods  prior  to  the  Petition  Date,  these
liabilities  were  reflected as current or other  liabilities  (depending on the
period in which payment was expected)  under the category  "Reserve for asbestos
litigation claims."


<PAGE>


                                     - 27 -

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

12.   CONTINGENT LIABILITIES (continued)

The approximate balances of the components of the reserve at September 30, 2000
(the ending date of the last reporting period preceding the Petition Date) were:
<TABLE>
<S>                                                                                           <C>
                                                                                        September 30, 2000
                                                                                        ------------------
                                                                                     (In billions of dollars)
NSP backlog                                                                                   $     1.10
Non-NSP backlog                                                                                     0.30
Future Claims                                                                                       0.70
Defense, Claims Processing and Administrative Expenses                                              0.10
</TABLE>

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

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

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

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

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

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



<PAGE>


                                     - 28 -

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

12.   CONTINGENT LIABILITIES (continued)

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

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

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

-        As a result of the Filing, all of the holders of pre-petition asbestos
         claims against Owens Corning or Fibreboard will be required to comply
         with formal proof of claim requirements in order to have their claims
         taken into account as allowed claims. Moreover, the Filing, including
         the significant publicity associated with the Chapter 11 Cases and
         notices required by the Bankruptcy Code that must be given to creditors
         and other parties in interest, has significantly increased the inherent
         difficulties and uncertainties involved in estimating the number and
         cost of resolution of not only pre-petition claims but also additional
         claims that may be asserted in the course of the Chapter 11 Cases.
         Among other things, it is not possible to predict at this time how many
         proofs of claim will be timely filed, how many proofs of claim will
         represent allowed claims, or the aggregate value of such allowed
         claims.

-        Owens Corning anticipates that the number and estimated aggregate value
         of allowed future claims will be determined as a result of negotiations
         involving a legal representative for the class of future asbestos
         claimants and the other interested constituencies, or if necessary, by
         the Bankruptcy Court. It is not possible to predict the outcome of such
         negotiations at this time.

Ultimately,  Owens  Corning's (and  Fibreboard's)  total  liability for asbestos
claims  will be  determined  after a lengthy  period  of  negotiations  and,  if
necessary,  by the  Bankruptcy  Court  following the bar date for  submission of
proofs of claim,  taking  into  account  numerous  factors  not present in Owens
Corning's pre-petition environment. Such factors include the claims of competing
creditor groups as to the  appropriate  treatment of their allowed claims in the
plan or plans of reorganization,  the size of the total asbestos liability,  the
total number of present  asbestos  claims allowed and the total amount of future
asbestos claims allowed.

At March 31, 2001, as a result of the Filing and the  uncertainties  referred to
above,   the   approximate   balances  of  the  components  of  Owens  Corning's
asbestos-related reserve were:
<TABLE>
<S>                                                              <C>
                                                               Balance
                                                               -------
                                                       (In billions of dollars)
Unpaid Final Settlements (NSP and other)                      $    0.70
Other Pending and Future Claims                                    1.50
</TABLE>




<PAGE>


                                     - 29 -

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

12.   CONTINGENT LIABILITIES (continued)

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

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

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

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

ITEM B. - FIBREBOARD (EXCLUDING OWENS CORNING)

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

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

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

As of the Petition Date, the NSP covered  approximately  212,000  Initial Claims
against Fibreboard,  approximately 115,000 of which had satisfied all conditions


<PAGE>


                                     - 30 -

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

12.   CONTINGENT LIABILITIES (continued)

to final settlement, including receipt of executed releases, or other resolution
as Final NSP Settlements at an average cost per claim of  approximately  $7,500.
As of the Petition Date,  approximately 55,000 of such Final NSP Settlements had
been paid in full or otherwise resolved and approximately  60,000 were unpaid in
whole or in part.  As of such date,  the  remaining  balance  payable  under NSP
Agreements  in  connection   with  these  unpaid  Final  NSP   Settlements   was
approximately $380 million.  The NSP Agreements also provided for the resolution
of Future  Claims  against  Fibreboard  through  the  administrative  processing
arrangement  described  in Item A.  Through the Petition  Date,  Fibreboard  had
received approximately 3,800 Future Claims under the NSP.

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

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

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

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

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

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

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

As of March 31, 2001, the Insurance  Settlement  funds were held in and invested
by the  Fibreboard  Settlement  Trust.  As of that date,  $1,124 million (net of
outstanding  payables)  was held in the  Fibreboard  Settlement  Trust  and $135
million  was  held  in  Undistributed  Administrative  Deposits  in  respect  of
Fibreboard  claims.  On an  ongoing  basis,  the  funds  held in the  Fibreboard
Settlement  Trust  will be  subject to  investment  earnings/losses  and will be
reduced if and as applied to  satisfy  asbestos-related  liabilities.  Under the
terms of the Fibreboard Settlement Trust, any of such assets that ultimately are
not used to fund Fibreboard's  asbestos-related  liabilities must be distributed


<PAGE>


                                     - 31 -

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

12.      CONTINGENT LIABILITIES (continued)

to  charity.  It will not be known  whether  any such  assets  will  remain  for
distribution until the conclusion of the Chapter 11 Cases.

Funds held in the Fibreboard  Settlement  Trust and  Fibreboard's  Undistributed
Administrative  Deposits are reflected on Owens Corning's  consolidated  balance
sheet as restricted  assets.  At March 31, 2001,  these assets were reflected as
non-current   assets,   denoted   "Restricted  cash,   securities  and  other  -
Fibreboard."  See Note 13 for additional  information  concerning the Fibreboard
Settlement Trust.

Owens Corning notes that Fibreboard's Undistributed Administrative Deposits (and
Fibreboard's  reserve for asbestos personal injury claims (discussed  below)) at
March 31, 2001,  reflect a reduction of $35 million from the amounts reported at
December 31, 2000. The reduction is attributable to information  received during
2001 from the holders of Administrative  Deposits concerning  distributions from
such Deposits prior to the Petition Date.

At this time,  Owens  Corning is unable to predict  what the  treatment of funds
held in the  Fibreboard  Settlement  Trust and in  Undistributed  Administrative
Deposits in respect of Fibreboard  claims will be under the terms of any plan or
plans of reorganization.

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

As a result of the Filing, Fibreboard has not made any asbestos-related payments
since the  Petition  Date.  During  2000  (prior to the  Petition  Date),  gross
payments  for  asbestos-related  claims  against  Fibreboard,  all of which were
paid/reimbursed  by the  Fibreboard  Settlement  Trust,  fell  within four major
categories, as follows:
                                                    (In millions of dollars)
                                                  2000 (through October 4, 2000)
                                                  ------------------------------

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

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

Reserve
-------

Owens Corning  estimates a reserve for  Fibreboard in accordance  with generally
accepted accounting principles to reflect  asbestos-related  liabilities.  As of
March 31, 2001,  a reserve of  approximately  $1.25  billion in respect of these
liabilities  was one of the  items  included  in  Owens  Corning's  consolidated
balance  sheet  under the  category  "Liabilities  Subject to  Compromise."  For
periods  prior to the  Petition  Date,  they were  reflected as current or other
liabilities  (depending on the period in which  payment was expected)  under the
category   "Asbestos-related   liabilities  -  Fibreboard."   These  liabilities
(including any reserve for the  charitable  remainder) are always at least equal


<PAGE>


                                     - 32 -

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

12.   CONTINGENT LIABILITIES (continued)

to  the  funds  held  in  the  Fibreboard   Settlement  Trust  and  Fibreboard's
Undistributed  Administrative  Deposits since, under the terms of the Trust, the
funds held in the Trust must be expended either in connection with  Fibreboard's
asbestos-related  liabilities,  or to satisfy the obligation  under the Trust to
distribute  to  charity  the  assets,  if  any,  remaining  in the  Trust  after
satisfaction of all such liabilities (see Note 13).

The  approximate  balances of the components of the Fibreboard  asbestos-related
reserve at  September  30, 2000 (the ending  date of the last  reporting  period
preceding the Petition Date) were:
<TABLE>
<S>                                                                                          <C>
                                                                                     September 30, 2000
                                                                                     ------------------
                                                                                  (In billions of dollars)

  NSP backlog                                                                             $     0.80
  Non-NSP backlog                                                                               0.10
  Future Claims                                                                                 0.30
  Defense, Claims Processing and Administrative Expenses                                        0.05
</TABLE>



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

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

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

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

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

At March 31, 2001, as a result of the Filing and the  uncertainties  referred to
above,   the   approximate   balances  of  the   components  of  the  Fibreboard
asbestos-related reserve were:
<TABLE>
<S>                                                                                       <C>
                                                                                        Balance
                                                                                        -------
                                                                                (In billions of dollars)
Unpaid Final Settlements (NSP and other)                                                 $0.40
Other Pending and Future Claims                                                           0.85
</TABLE>


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



<PAGE>


                                     - 33 -

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

12.    CONTINGENT LIABILITIES (continued)

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

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

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

Non-Asbestos Litigation
-----------------------

On or about  April  30,  2001,  certain  of the  Company's  current  and  former
directors  and  officers,  as  well  as  certain  underwriters,  were  named  as
defendants in a lawsuit captioned John Hancock Life Insurance Company, et al. v.
Goldman,  Sachs & Co.,  et al.  in the  United  States  District  Court  for the
District of Massachusetts.  Owens Corning is not named in the lawsuit.  The suit
purports to be a  securities  class  action on behalf of  purchasers  of certain
unsecured debt securities of Owens Corning in an offering  occurring on or about
April 30, 1998. The complaint alleges that the registration  statement  pursuant
to which the offering was made  contained  untrue and  misleading  statements of
material  fact and omitted to state  material  facts  which were  required to be
stated  therein  and which were  necessary  to make the  statements  therein not
misleading,  in violation of sections 11,  12(a)(2) and 15 of the Securities Act
of 1933.  The  complaint  seeks an  unspecified  amount  of  damages  or,  where
appropriate,  rescission of the plaintiffs' purchases. The Company believes that
the claim is without merit.

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 the
costs of resolving pending and future asbestos claims. As of March 31, 2001, the
Insurance  Settlement  funds  were  held  in  and  invested  by  the  Fibreboard
Settlement Trust (the "Trust"). On an ongoing basis, the funds held in the Trust
will be  subject  to  investment  earnings/losses  and will be reduced if and as
applied to satisfy Fibreboard asbestos-related  liabilities.  Under the terms of
the Trust,  any Trust assets that  ultimately are not used to fund  Fibreboard's
asbestos-related liabilities must be distributed to charity.

The Trust is a qualified settlement fund for federal income tax purposes, and is
taxed  separately from Owens Corning on its net taxable income,  after deduction
for related  administrative  expenses.  While there can be no assurance that the
proposed  Asbestos  Tax  Fairness  Bill  discussed  in Note 12,  Item A, will be


<PAGE>


                                     - 34 -

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

13.   FIBREBOARD SETTLEMENT TRUST (continued)

enacted  by  Congress,  such  legislation  would  benefit  the Trust  during the
pendency of the Chapter 11 proceedings by eliminating the tax on income, thereby
enlarging the corpus of the Trust through tax-free income accumulation.

At this  time,  Owens  Corning is unable to predict  what the  treatment  of the
Fibreboard  Settlement  Trust  will be under  the  terms of any plan or plans of
reorganization.

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

The  assets  of the  Trust  are  comprised  of cash  and  marketable  securities
(collectively,   the  "Trust  Assets")  and,  with  Fibreboard's   Undistributed
Administrative  Deposits,  are reflected on Owens Corning's consolidated balance
sheet as restricted  assets.  At March 31, 2001,  these assets were reflected as
non-current   assets,   denoted   "Restricted  cash,   securities  and  other  -
Fibreboard." Owens Corning estimates a reserve for Fibreboard in accordance with
generally accepted accounting principles to reflect asbestos-related liabilities
(see Note 12, Part B). As of March 31, 2001,  these  liabilities were one of the
items included in Owens Corning's  consolidated balance sheet under the category
"Liabilities  Subject to  Compromise."  For periods prior to the Petition  Date,
they were reflected as current or other liabilities  (depending on the period in
which payment was expected) under the category  "Asbestos-related  liabilities -
Fibreboard."  These  liabilities  (including  any  reserve  for  the  charitable
remainder)  are  always  at  least  equal to the  funds  held in the  Trust  and
Fibreboard's Undistributed Administrative Deposits since, under the terms of the
Trust,  the funds held in the Trust must be expended  either in connection  with
Fibreboard's  asbestos-related  liabilities,  or to satisfy the obligation under
the Trust to  distribute to charity the assets,  if any,  remaining in the Trust
after  satisfaction  of all such  liabilities.  It will not be known whether any
such assets will remain for distribution  until the conclusion of the Chapter 11
Cases.  At  March  31,  2001,  the  Consolidated  Financial  Statements  reflect
Fibreboard's  asbestos-related  liabilities at $1.215  billion,  with a residual
obligation to charity of $44 million.

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

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

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

<PAGE>


                                     - 35 -

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

13.   FIBREBOARD SETTLEMENT TRUST (continued)

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

Results for the Period Ending March 31, 2001
--------------------------------------------

During the first quarter of 2001 and 2000  respectively,  Trust Assets generated
interest/dividend  earnings of approximately $16 million and $20 million,  which
have been recorded as an increase in the carrying  amount of the assets on Owens
Corning's  consolidated  balance  sheet and as other income on the  consolidated
statement of income. This income, however, has been offset by an equal charge to
other  expense,  which  represents  an increase  in the  residual  liability  to
charity.

Payments for asbestos  litigation claims from the Trust during the first quarter
of 2000, were approximately $385 million. As a result of the Filing,  there were
no  payments  from the Trust  during  the  first  quarter  of 2001.  The sale of
securities during the first quarter of 2001 and 2000 resulted in a realized gain
of  approximately  $4 million and less than $1 million,  respectively.  Realized
gains or losses  from the sale of  securities  are  reflected  on the  Company's
financial  statements  in the same  manner as actual  returns  on Trust  Assets,
described above.

At March  31,  2001 and  2000,  the  fair  market  value  adjustment  for  those
securities  designated as available  for sale resulted in an unrealized  gain of
less  than $1  million  and an  unrealized  gain of  approximately  $1  million,
respectively.  These amounts have been  reflected in the Company's  consolidated
balance  sheet as a change  to the  carrying  amount  of the  asset and to other
comprehensive  income. These amounts have also been reflected as a change to the
liability to charity, with a corresponding effect to other comprehensive income.

At March 31, 2001, the fair value of Trust Assets was $1.259 billion,  which was
comprised of $1.158 billion of marketable securities, $34 million of outstanding
payables and $135 million of restricted  cash,  which  represents  undistributed
administrative deposits.

The amortized cost, gross unrealized  holding gains and losses and fair value of
the investment  securities available for sale at March 31, 2001 and December 31,
2000 are as follows:
<TABLE>
<S>                                 <C>                   <C>                      <C>                 <C>
                                                                   March 31, 2001
                                                                   --------------
                                  Amortized         Gross Unrealized       Gross Unrealized
                                    Cost                   Gain                   Loss              Fair Value
                                  ---------         ----------------        ---------------         ----------
                                                              (In millions of dollars)

Corporate Bonds                    $        8          $           -             $        -         $        8
Corporate Notes                            16                      -                      -                 16
Municipal Bonds                         1,091                      -                      -              1,091
Mutual Funds                               30                      -                      -                 30
US Government Bonds                        13                      -                      -                 13
                                   ----------          -------------             ----------         ----------

Total                              $    1,158          $           -             $        -         $    1,158
                                   ==========          =============             ==========         ==========
</TABLE>


<PAGE>


                                     - 36 -

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

13.   FIBREBOARD SETTLEMENT TRUST (continued)
<TABLE>
<S>                                       <C>                <C>                        <C>                <C>
                                                                     December 31, 2000
                                                                     -----------------
                                       Amortized      Gross Unrealized         Gross Unrealized
                                         Cost                Gain                     Loss             Fair Value
                                       ---------      ----------------         ----------------        ----------
                                                                 (In millions of dollars)

Corporate Bonds                         $    148        $          -             $        -         $     148
Corporate Notes                              449                   1                      -               450
Municipal Bonds                              284                   -                      -               284
Mutual Funds                                 116                   -                      -               116
Time Deposits                                 37                   -                      -                37
US Government Bonds                           57                   -                      -                57
                                        --------        ------------             ----------         ---------

Total                                   $  1,091        $          1             $        -         $   1,092
                                        ========        ============             ==========         =========
</TABLE>


Maturities  of investment  securities  classified as available for sale at March
31, 2001 and December 31, 2000 by contractual maturity are shown below. Expected
maturities will differ from contractual  maturities  because  borrowers may have
the right to recall or prepay  obligations  with or without  call or  prepayment
penalties.
<TABLE>
<S>                                                      <C>               <C>            <C>            <C>
                                                             March 31, 2001                 December 31, 2000
                                                             --------------                 -----------------
                                                       Amortized                        Amortized
                                                         Cost          Fair Value          Cost        Fair Value
                                                         ----          ----------          ----        ----------
                                                                        (In millions of dollars)

Due within one year                                     $     48         $     48         $    656       $    656
Due after one year through five years                        428              428                2              2
Due after five years through ten years                       243              243               51             51
Due after ten years                                          439              439              382            383
                                                        --------         --------         --------       --------
Total                                                   $  1,158         $  1,158         $  1,091       $  1,092
                                                        ========         ========         ========       ========
</TABLE>

<PAGE>


                                     - 37 -

                         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
quarter ended March 31, 2001:
<TABLE>
<S>                         <C>         <C>         <C>       <C>          <C>           <C>         <C>         <C>          <C>
                                    Interest   Unrealized   Net Sales    Realized
                         Balance       and       Gain/        of          Gain/                                             Balance
                         12/31/00   Dividends   (Loss)     Securities    (Loss)      Adjustments    Other    Payments      03/31/01
                         --------   ---------   --------   ----------    ---------   -----------    -----    --------      --------
Assets
------
Cash                      $   12      $  -      $   -       $   (46)      $   -        $    -       $  -      $    -        $   (34)
Restricted Cash              170         -          -             -           -             -        (35)          -            135
Marketable Securities:
  Available for Sale       1,092        16          -            46           4             -          -           -          1,158
                          ------      -----     -----       -------       ------       ------       ----      ------        --------

Total Assets              $1,274      $ 16      $   -       $     -       $   4        $    -       $(35)     $    -        $ 1,259
                          ======      =====     =====       =======       ======       ======       ====      ======        ========

Liabilities
-----------
Asbestos Litigation
  Claims                  $1,250      $  -      $   -       $     -       $   -        $    -       $(35)     $    -        $ 1,215
Charity                       24        16          -             -           4             -          -           -             44
                          ------      -----     -----       -------       ------       ------       ----      ------        --------

Total Liabilities         $1,274      $ 16      $   -       $     -       $   4        $    -       $(35)     $    -        $ 1,259
                          ======      =====     =====       =======       ======       ======       ====      ======        =======
</TABLE>


<PAGE>


                                     - 38 -

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

(All per share information in Item 2 is on a diluted basis.)

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

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

GENERAL

Voluntary Petition for Relief Under Chapter 11
----------------------------------------------

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

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

The Debtors filed for relief under Chapter 11 to address the growing  demands on
Owens  Corning's  cash flow  resulting from its  multi-billion  dollar  asbestos
liability.  This  liability  is  discussed  in greater  detail in Note 12 to the
Consolidated Financial Statements.

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

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


<PAGE>


                                     - 39 -

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

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

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

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

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

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

Owens Corning is unable to predict at this time what  treatment will be accorded
under  any such  reorganization  plan or plans  to  inter-company  indebtedness,
licenses,   transfers  of  goods  and  services  and  other   inter-company  and
intra-company  arrangements,  transactions and  relationships  that were entered
into  prior  to  the  Petition  Date.  These   arrangements,   transactions  and
relationships  may be challenged by various  parties in the Chapter 11 Cases and
the outcome of those challenges,  if any, may have an impact on the treatment of
various claims under such plan or plans. For example, Owens Corning is unable to
predict  at this  time what the  treatment  will be under any such plan or plans
with respect to (1) the  guaranties  issued by certain of Owens  Corning's  U.S.
subsidiaries, including Owens-Corning Fiberglas Technology Inc.

<PAGE>


                                     - 40 -

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

("OCFT")  and IPM,  Inc.  ("IPM",  a  Non-Debtor  Subsidiary  that  holds  Owens
Corning's   ownership   interest  in  a  majority  of  Owens  Corning's  foreign
subsidiaries),  with respect to Owens Corning's $1.8 billion  pre-petition  bank
credit facility (the "Pre-Petition  Credit Facility" which is now in default) or
(2) OCFT's license  agreements with Owens Corning and Exterior Systems,  Inc., a
wholly-owned  subsidiary of Owens Corning  ("Exterior"),  pursuant to which OCFT
licenses intellectual property to Owens Corning and Exterior.

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

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

RESULTS OF OPERATIONS

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

Owens Corning is committed to continuing to invest in our businesses and provide
quality  products  to our  customers.  In  recent  years,  we  have  focused  on
increasing  sales and earnings by (i) achieving  productivity  improvements  and
cost  reductions  in existing and acquired  businesses,  (ii)  targeting  growth
markets and (iii) forming strategic alliances and partnerships to complement our
existing  businesses.  We are  committed to taking full  advantage of e-Business
opportunities.  We are also expanding our role as a service provider by offering
complementary  services  in order to meet all of our  consumers'  needs.  In the
Composite  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. This strategy resulted in
the sale of our  Engineered  Pipe  Business  during  the first  quarter of 2001,
subject to regulatory approval. In 2000, it included the sale of the Falcon Foam
business  in the U.S.  during  the first  quarter  and the sale of our  Building
Materials  business in Europe to an  unconsolidated  joint venture in the second
quarter. Please see Notes 2 and 5 to the Consolidated Financial Statements.

During  2000,  we  experienced  significant  increases  in certain of our costs,
particularly  roofing  and vinyl raw  material  costs,  due to higher  crude oil


<PAGE>


                                     - 41 -

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

prices and tight supply conditions for polyvinyl  chloride (PVC),  respectively.
Increased energy costs,  reflecting  changes in the availability of natural gas,
also contributed to cost increases during 2000. These increases,  coupled with a
fall in demand for  building  materials,  associated  with a weakening  economy,
significantly reduced our margins and income from operations for the second half
of the year.

As a result,  during  late 2000 we  implemented  the first  phase of a strategic
restructuring  program,  which  continues into 2001. The specific  objectives of
this program are discussed in  "Restructuring  of Operations  and Other Charges"
below and in Note 4 to the Consolidated Financial Statements.

Quarter Ended March 31, 2001
----------------------------

Sales and Profitability

Net sales for the quarter  ended March 31,  2001 were $1.067  billion,  down 15%
from the first quarter 2000 level of $1.257  billion,  principally  due to lower
revenue in the Building Materials business.  Adjusted for the disposition of the
Falcon Foam and Building  Materials Europe  businesses,  sales in 2001 reflect a
decrease of 11%  compared  to first  quarter  2000.  In the  Building  Materials
business,  sales during the first  quarter of 2001 reflect both volume and price
decreases  in the U.S.  insulation  and roofing  markets  accompanied  by volume
decreases  in  all  other  Building  Materials  businesses,  particularly  vinyl
products,  compared to the first  quarter of 2000. In the  Composites  business,
sales  reflect  price  increases  as well as  slight  volume  increases  in most
composites  markets during the first quarter of 2001. On a  consolidated  basis,
there  was  a  slightly   unfavorable   currency  translation  impact  on  sales
denominated in foreign  currencies  during the first quarter of 2001 compared to
the first  quarter  of 2000.  Please  see Note 2 to the  Consolidated  Financial
Statements.

Sales outside the U.S.  represented  17% of total sales during the first quarter
of 2001, compared to 18% during the first quarter of 2000. The slight decline in
non-U.S.  sales is primarily due to volume decreases in 2001 attributable to the
disposition of Building  Materials  Europe as well as declines in insulation and
vinyl products in the Canadian market.  Gross margin for the quarter ended March
31, 2001 was 16% of net sales,  down from 23% for the first quarter of 2000. The
decrease in gross margin  percentage  is  attributable  to the volume  decreases
discussed above. Marketing and administrative  expenses were $127 million during
the first  quarter of 2001,  compared  to $148  million in the first  quarter of
2000. The decrease is primarily attributable to cost cutting measures introduced
during the second half of 2000.

For the quarter ended March 31, 2001,  Owens Corning  reported a net loss of $10
million,  or $.19 per share,  compared to net income of $48 million, or $.84 per
share,  for the quarter ended March 31, 2000. On a pre-tax basis,  Owens Corning
reported a $17 million loss from  operations in the first quarter of 2001.  When
adjusted for the costs of restructuring and other charges and Chapter 11 related
expenditures,  Owens  Corning  generated  $46 million in income from  operations
compared to $105  million for the first  quarter of 2000.  The loss in the first
quarter of 2001 reflects the price and volume decreases  described above as well
as the impact of losses associated with the realignment of certain businesses in
the U.S.  as  described  below in  "restructuring  and other  charges."  Cost of
borrowed  funds  during the first  quarter of 2001 was $4  million,  $38 million
lower than the first  quarter  2000  level,  due to the  cessation  of  interest
(totaling $50 million during the quarter [please see Note 1 to the  Consolidated
Financial Statements]) on most debt as a result of the Filing.

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

In the Building Materials Systems segment, sales decreased 20%, to $823 million,


<PAGE>


                                     - 42 -

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

in the first quarter of 2001  compared to the first  quarter of 2000.  Excluding
the sales  related to the  divestiture  of Falcon  Foam and  Building  Materials
Europe,  sales  were down 15%.  This  downturn  in sales  resulted  mostly  from
decreased volume attributable to all U.S.  businesses,  particularly roofing and
vinyl  products.  Building  Materials  Systems  sales  also  reflect  the  price
decreases  in the U.S.  insulation  markets.  There was  virtually  no  currency
translation  impact on sales denominated in foreign  currencies during the first
quarter of 2001. Income from operations was $23 million during the first quarter
of 2001,  compared  to $96  million  in the same  period  in 2000.  Income  from
operations in the first quarter of 2001 reflects the volume and price  decreases
described above. Please see Note 2 to the Consolidated Financial Statements.

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

In the Composite Systems segment, sales were up 7%, to $244 million,  during the
first quarter of 2001  compared to the first  quarter of 2000,  due to price and
volume  increases.  Price increases were effected in all markets,  but were most
significant  in Europe.  Volume  increases  in Europe were  partially  offset by
decreases in the U.S. The currency  translation  impact on sales  denominated in
foreign  currencies  was slightly  favorable  during the first  quarter of 2001.
While income from  operations  was $35 million in the first quarter of both 2001
and 2000,  results in 2001  reflect  lower  income in the U.S.  offset by higher
income in Europe. Please see Note 2 to the Consolidated Financial Statements.

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

Effective  January 1, 2001,  we  implemented  Statement of Financial  Accounting
Standards  No.  133,   "Accounting   for  Derivative   Instruments  and  Hedging
Activities"  (SFAS  133).  This  statement  and  its  interpretations  establish
accounting and reporting standards requiring derivative  instruments  (including
certain  derivative  instruments  embedded in other contracts) to be recorded in
the balance  sheet as either an asset or  liability  measured at its fair value.
The impact of adoption at January 1, 2001 did not have a material  effect in the
Consolidated  Statement  of Income  (Loss) and  resulted in other  comprehensive
income of approximately $1 million.

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

During the first quarter of 2001, the Company continued to experience the impact
of a soft overall economy, primarily in the building materials industries, which
resulted in a continued review of overhead and other related cost structures. As
a result of this review,  the Company  recorded $42 million in pretax charges to
income from  operations for  restructuring  and other  charges.  This charge was
comprised of a $9 million pretax restructure charge, $2 million pretax loss from
assets held for sale,  and $31 million in other pretax  charges.  The $9 million
restructure  charge has been  classified  as a separate  component  of operating
expenses  on  the  Company's   Consolidated   Statement  of  Income  (Loss)  and
represented severance costs associated with the elimination of approximately 130
positions,   primarily  in  the  U.S.  The  primary  groups  affected   included
manufacturing and administrative  personnel. As of March 31, 2001, approximately
$1  million  has  been  paid and  charged  against  the  reserve  for  personnel
reductions. The $2 million pretax loss from assets held for sale represented the
results of operations  for the Company's  investments in its Pipe joint ventures
and  subsidiaries on a  held-for-sale  basis for the first quarter of 2001. This
sale was completed in February 2001,  subject to final regulatory  approval (see
Note 5).

The $31 million in other  pretax  charges was  comprised of $10 million of asset
impairments,  principally the write-down of equipment,  $4 million to write down
inventory to reflect updated  estimates of the net realizable value and carrying
amounts of certain inventories, $4 million of payroll-related charges associated

<PAGE>


                                     - 43 -

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

with the realignment of the Newark,  Ohio  manufacturing  facility,  and various
other charges totaling $13 million. This $31 million pretax charge was accounted
for as an $18 million  charge to cost of sales and a $13 million charge to other
operating expenses.

During  2000,  the  Company   recorded   pretax  charges  of  $229  million  for
restructuring  and other  activities as a result of its reassessment of business
strategies  with respect to  investments  in certain  ventures,  facilities  and
overhead  expenditures.  The $229 million  pretax  charge was comprised of a $32
million  charge  associated  with the  restructuring  of the Company's  business
segments and $197 million of other  charges,  the majority of which  represented
impairments of long-lived assets. In addition, the Company recorded a $6 million
pretax  credit  to  minority  interest  resulting  from  charges  related  to  a
majority-owned  consolidated  subsidiary.  The  components of the  restructuring
charge  include  $16  million  for  personnel  reductions,  $10  million for the
divestiture of non-strategic businesses and facilities, and $6 million for asset
impairments associated with the planned closing of two lines at the Newark, Ohio
manufacturing  facility.  This represented the first phase of the Company's plan
to realign operations at the Newark facility.

The  $197  million  of other  charges  was  comprised  of $95  million  of asset
impairments,  a $6 million charge for a settlement  loss  associated with one of
our U.S. pension plans, and $96 million of charges focused on improving business
operations.  The $95 million of asset  impairments  included:  1) $54 million to
write-down the Company's investment and related assets in Alcopor Owens Corning,
a building  materials joint venture in Europe, to estimated fair value on a held
for sale basis;  2) $12 million to write-down  the  Company's  investment in the
majority owned,  consolidated  venture in South Africa,  on a held-in-use  basis
based upon  management's  analysis  of current  and  expected  future  financial
results and  constraints  on the  Company's  ability to fund future  significant
capital  investments  in this  subsidiary  as a  consequence  of the  bankruptcy
filing.  The $12 million  charge was offset by a $6 million credit to record the
minority  owner's  share,   recorded  in  the  minority  interest  line  on  the
Consolidated  Statement of Income  (Loss);  3) $8 million to  write-down to fair
value the Company's investments in its Pipe joint ventures and subsidiaries on a
held for sale basis.  The sale of a majority of the investments and subsidiaries
held for sale was  completed  in  February  2001,  subject  to final  regulatory
approval; 4) $10 million to write-down the equity investment in ImproveNet,  due
to a  significant  decrease in market value which  management  believes is other
than temporary;  and 5) $11 million associated with asset impairments within our
Cultured Stone and other businesses.

The $96 million  charge  consisted of $43 million to write-down  inventory  made
obsolete by changes in the Company's manufacturing and marketing strategies; $19
million to  write-down  equipment  and  receivables;  $15  million  to  increase
warranty  reserves  due to general  changes in estimates  associated  with these
reserves;  and various  other  charges  totaling  $19 million  recorded as other
operating expenses. As of March 31, 2001, approximately $9 million has been paid
and charged against the reserve for personnel reductions.

During 1997 and 1998, the Company  recorded pretax charges totaling $386 million
for   restructuring   and  other   actions  to  implement  a  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


<PAGE>


                                     - 44 -

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

revaluations and $16 million  represented exit cost  liabilities,  primarily for
leased  warehouse and office  facilities  that were vacated;  and $2 million for
other  actions.  The  divestiture  of  non-strategic  businesses  and facilities
included the closure of the Candiac, Quebec manufacturing  facility.  During the
second  quarter of 1999,  the Candiac  manufacturing  facility was  re-opened in
order to meet market demands.  As of March 31, 2001,  approximately $104 million
has been  paid  and  charged  against  the  reserve  for  personnel  reductions,
representing the elimination of approximately  2,450 employees,  the majority of
whose  severance  payments  were  made over the  course  of 1998 and  1999,  and
approximately $13 million has been charged against exit cost liabilities.

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

LIQUIDITY, CAPITAL RESOURCES AND OTHER RELATED MATTERS

Cash flow from  operations  was negative $73 million for the quarter ended March
31,  2001,  compared to negative  $679  million for the quarter  ended March 31,
2000.  The  improvement  in cash  flow  from  operations  in  2001 is  primarily
attributable to the stay of cash payments to asbestos  claimants  resulting from
the Filing.  These payments totaled $467 million (including amounts deposited in
escrow accounts  established to facilitate  claims  processing  ("Administrative
Deposits")), net of insurance receipts, in the first quarter of 2000. Additional
contributors  to the  increase  in cash flow  during  the first  quarter of 2001
compared  to the  first  quarter  of  2000  are  accounts  payable  and  accrued
liabilities.  Although  the normal  payment  pattern is for the balance of these
items to  decrease  during the  quarter,  the  balances  at the end of 2000 were
abnormally low as the result of the Filing. Consequently, the balances increased
during  the first  quarter of 2001 as they  built  toward  the  normal  seasonal
operating levels.

Inventories  at March 31, 2001  increased  by $41 million  from the December 31,
2000 level,  due largely to the seasonal  build of  inventories.  Receivables at
March 31, 2001 were $597 million,  a $109 million increase over the December 31,
2000 level,  attributable to the seasonal  increase in sales. At March 31, 2001,
Owens  Corning's net working  capital was $947 million and our current ratio was
2.46, compared to $955 million and 2.57, respectively,  at December 31, 2000 and
negative $235 million and .91,  respectively,  at March 31, 2000.  The change in
working  capital  and  current  ratio  compared  to March 31, 2000 is the direct
result of the Filing,  which reclassified all liabilities of Debtors outstanding
at the date of the Filing to Liabilities Subject to Compromise.  Please see Note
1 to the Consolidated Financial Statements.

At March 31, 2001, we had $2.827 billion of borrowings subject to compromise and
$74 million of other long-term  borrowings (of which $64 million were in default
as a  consequence  of the  Filing  and  therefore  classified  as current on the
Consolidated Balance Sheet).  Long-term borrowings outstanding at March 31, 2000
were $2.567 billion.

At March 31, 2001, the Company had $454 million of Cash and Cash Equivalents (of
which  approximately $42 million is subject to an administrative  freeze pending
the resolution of certain  alleged  set-off  rights which,  upon approval of the
Bankruptcy  Court,  may  be  exercised  by  certain  pre-petition  lenders).  In
addition,  in connection  with the Filing,  the Debtors  obtained a $500 million
debtor-in-possession  credit  facility  from a group of  lenders  led by Bank of
America,  N.A. (the "DIP  Financing").  At March 31, 2001, this facility had not
been utilized except for  approximately $18 million of standby letters of credit
and similar uses.

As a  consequence  of the Filing and the  impact of  certain  provisions  of the
Company's DIP Financing and in a cash management order entered by the Bankruptcy


<PAGE>


                                     - 45 -

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

Court, the Company and its subsidiaries are now subject to certain restrictions,
including  on their  ability to pay  dividends  and to  transfer  cash and other
assets to each other and to their affiliates.

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

Capital spending for property, plant and equipment,  excluding acquisitions, was
$42  million  in the first  quarter of 2001.  We  anticipate  that 2001  capital
spending,  exclusive of  acquisitions  and  investments in  affiliates,  will be
approximately $300 million, the majority of which is uncommitted. We expect that
funding  for  these  expenditures  will be from our  operations  and the  credit
availability from the DIP Financing.

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

The Company has been deemed by the Environmental Protection Agency (EPA) to be a
Potentially  Responsible  Party  (PRP) with  respect to certain  sites under the
Comprehensive   Environmental   Response,   Compensation   and   Liability   Act
(Superfund). The Company has also been deemed a PRP under similar state or local
laws. In other instances, other PRPs have brought suits against the Company as a
PRP for contribution  under such federal,  state or local laws. During the first
quarter of 2001, we were not designated as a PRP for any additional  sites,  and
no cases were closed  during this period.  At March 31, 2001, a total of 43 such
PRP  designations  remained  unresolved  by the  Company.  The  Company  is also
involved with  environmental  investigation  or remediation at a number of other
sites at which it has not been designated a PRP.

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

The 1990  Clean  Air Act  Amendments  (Act)  provide  that  the EPA  will  issue
regulations  on a  number  of air  pollutants  over a  period  of  years.  These
regulations will define the monitoring and control  technology  requirements for
new and existing facilities to which the specific standard applies.  The Company
has determined the following  regulations will apply and may potentially  impact
its operations. In June 1999, the EPA issued regulations for wool fiberglass and
mineral wool production with compliance dates in 2002.  During the first quarter
of  2000,  EPA  issued   regulations   for  secondary   aluminum   smelting  and
amino/phenolic  resin production with compliance dates in 2003. During 2000, EPA
proposed  regulations  for metal  coil  coating  and wet formed  fiberglass  mat


<PAGE>


                                     - 46 -

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

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

ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Owens Corning is exposed to the impact of changes in foreign  currency  exchange
rates and  interest  rates in the  normal  course of  business.  We manage  such
exposures  through  the  use  of  certain  financial  and  derivative  financial
instruments.  Our  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.

We enter 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.  We also enter into
certain  currency  and  interest  rate swaps to protect the  carrying  amount of
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.

Our policy is to use foreign  currency and interest  rate  derivative  financial
instruments only to the extent necessary to manage exposures as described above.
We do not enter into foreign  currency or interest rate derivative  transactions
for speculative purposes.

We use 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 we would expect from  adverse  changes in foreign  currency  exchange
rates or interest rates assuming a 95% confidence level:
<TABLE>
<S>                                                                      <C>                      <C>
                                                                      March 31,                December 31,
                                                                        2001                       2000
                                                                        ----                       ----
             Risk Category                                                  (In millions of dollars)
             -------------

             Foreign currency                                          $    -                     $   1
             Interest rate                                             $   10                     $   8

</TABLE>

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


<PAGE>


                                     - 47 -

                           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 (the "Petition Date"), Owens Corning and the 17 United States
subsidiaries  listed  below  (collectively,   the  "Debtors"),  filed  voluntary
petitions  for relief  (the  "Filing")  under  Chapter  11 of the United  States
Bankruptcy Code (the  "Bankruptcy  Code") in the United States  Bankruptcy Court
for the District of Delaware (the "Bankruptcy Court"). The Debtors are currently
operating  their   businesses  as   debtors-in-possession   in  accordance  with
provisions  of the  Bankruptcy  Code.  The  Chapter  11  cases  of  the  Debtors
(collectively, the "Chapter 11 Cases") are being jointly administered under Case
No.  00-3837 (JKF).  The subsidiary  Debtors that filed Chapter 11 petitions for
relief are:

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

The Company  anticipates that substantially all liabilities of the Debtors as of
the date of the Filing  will be resolved  under one or more  Chapter 11 plans of
reorganization to be proposed and voted on in the Chapter 11 Cases in accordance
with the provisions of the Bankruptcy Code. As a consequence of the Filing,  all
pending litigation against the Debtors is stayed automatically by section 362 of
the Bankruptcy Code and, absent further order of the Bankruptcy  Court, no party
may take action to recover on  pre-petition  claims against the Debtors.  Please
see Note 1 to the Consolidated Financial Statements.

ITEM 2.    CHANGES IN SECURITIES AND USE OF PROCEEDS

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

ITEM 3.    DEFAULTS UPON SENIOR SECURITIES

Substantially  all of the Company's  pre-petition  debt is now in default due to
the Filing. See Note 1, Voluntary Petition for Relief Under Chapter 11, to Owens
Corning's  Consolidated  Financial Statements above. As described in Note 1, the
Consolidated  Financial Statements present the Debtors'  pre-petition debt under
the caption  "Liabilities  Subject to Compromise."  This includes debt under the
Pre-Petition Credit Facility and approximately $1.4 billion of other outstanding
debt. As required by SOP 90-7,  the Company,  beginning in the fourth quarter of
2000, recorded the Debtors' pre-petition debt instruments at the allowed amount,
as defined by SOP 90-7.

<PAGE>


                                     - 48 -

                     PART II. OTHER INFORMATION (continued)

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

No matter was submitted to a vote of security  holders  during the quarter ended
March 31, 2001.

ITEM 5.       OTHER INFORMATION

On May 9,  2001,  the  Special  Master in the  Company's  suit  against  tobacco
companies  and  other  tobacco  industry  defendants  in the  Circuit  Court for
Jefferson  County,  Mississippi  ("Jefferson  Court")  submitted  a  Report  and
Recommendation  ("Report")  to the  Jefferson  Court  as to the  disposition  of
Defendants'  Motion  for  Summary  Judgment  Based  Upon  Improper   Aggregation
("Defendants' Motion"). The Report recommends that the Jefferson Court grant the
Defendants' Motion. A copy of the Report is included in this quarterly report on
Form 10-Q as Exhibit (99). The Jefferson Court has scheduled a "de novo" hearing
on the  Report for May 24,  2001.  If the  Jefferson  Court  adopts the  Special
Master's  recommendations,  Owens Corning's case would be dismissed,  subject to
appeal.

ITEM 6.       EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits.

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

(b)      Reports on Form 8-K.

          During the quarter ended March 31, 2001, Owens Corning filed the
          following current report on Form 8-K:

             - Dated January 30, 2001, under Item 5, "Other Events and
                Regulation FD Disclosure."

<PAGE>



                                     - 49 -

                                   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.
<TABLE>
<S>                                                               <C>

                                                                  OWENS CORNING

                                                                  Registrant


Date:  May 15, 2001                                            By:  /s/  Michael H. Thaman
    ---------------                                              -------------------------
                                                                  Michael H. Thaman
                                                                  Senior Vice President and
                                                                  Chief Financial Officer
                                                                  (as duly authorized officer)



Date:  May 15, 2001                                            By:  /s/  Deyonne F. Epperson
    ---------------                                              ---------------------------
                                                                  Deyonne F. Epperson
                                                                  Vice President and Controller
</TABLE>

<PAGE>


                                     - 50 -

                                  EXHIBIT INDEX

Exhibit
Number                     Document Description
-------                    --------------------

 (3)          Articles of Incorporation and By-Laws.

              (i)  Certificate of Incorporation of Owens Corning, as amended
                   (incorporated herein by reference to Exhibit (3) to Owens
                   Corning's quarterly report on Form 10-Q (File No. 1-3660)
                   for the quarter ended March 31, 1997).

              (ii) By-Laws of Owens Corning, as amended (incorporated herein by
                   reference to Exhibit (3) to Owens Corning's annual report on
                   Form 10-K (File No. 1-3660) for the year 1999).

(10)          Material Contracts.

              Owens Corning Senior Leader Emergence Incentive Plan (filed
                herewith).

              The following documents are incorporated herein by reference to
              Exhibit (4) to Owens Corning's annual report on Form 10-K (File
              No. 1-3660) for the year ended December 31, 2000:

              -    Standstill Agreement, dated as of January 30, 2001, between
                   Owens Corning and Owens-Corning Fiberglas Technology, Inc.

              -    Standstill  Agreement dated as of January 30, 2001,  between
                   Exterior Systems,  Inc. and Owens-Corning Fiberglas
                   Technology, Inc.

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

(99)          Additional Exhibits.

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

              Special Master's Report and Recommendation, dated May 9, 2001
                (filed herewith).