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    OWENS CORNING  07_At_a_Glance OWENS CORNING 07_At_a_Glance Document Transcript

    • 2007 AT A GLANCE Positioned to Perform
    • OWENS CORNING Founded in 1938, Owens Corning is a market-leading innovator of glass fiber technology with sales of $5 billion in 2007 and 18,000 employees in 26 countries on five continents. Welcome to the Owens Corning 2007 At a Glance report, which profiles Owens Corning’s core business groups, business performance in 2007 and growth objectives for 2008. As a global leader in building materials and glass fiber reinforcements, we are committed to winning in the marketplace with our customers. Owens Corning took strategic actions in 2007 that position the company to perform. Most notably, we completed a large composites acquisition, further globalizing the business and transforming the footprint of the company. We also completed a $100 million cost-reduction program and successfully divested the vinyl siding business unit. In addition to our growth in composites, energy efficiency continues to present a growing market opportunity for our building materials businesses. The strength of our composites business and our excellent market position in building materials will position the company to perform through an otherwise weak U.S. housing market in 2008. We greatly appreciate your interest in Owens Corning. Michael H. Thaman Chairman and Chief Executive Officer Financial HIGHLIGHTS Successor Combined Successor Predecessor 12 months ended 2 months ended 10 months ended 12 months ended (in millions) 2007 2006 Dec. 31, 2006 Oct. 31, 2006 2005 2004 2003 Net sales $4,978 $5,399 $772 $4,627 $5,177 $4,626 $4,061 Gross margin 777 1,002 116 886 1,070 928 757 Gross margin percentage 15.6% 18.6% 15.0% 19.1% 20.7% 20.1% 18.6% Marketing, administrative & 498 494 86 408 521 490 422 other expenses Marketing, administrative & other expenses as a percentage of sales 10.0% 9.1% 11.1% 8.8% 10.1% 10.6% 10.4% Science & technology expenses 63 78 30 48 56 44 41 Adjusted earnings before interest and income taxes 344 529 73 456 486 391 308 Net cash flow provided by (used for) operating activities 182 (1,888) 15 (1,903) 746 449 295 Additions to plant and equipment 247 361 77 284 288 232 208 Total assets $7,872 $8,470 $8,470 $8,714 $8,735 $7,639 $7,358 1
    • BUSINESS OVERVIEW COMPOSITE SOLUTIONS Owens Corning’s composites business provides high-performance materials for a broad range of markets including transportation, wind energy, infrastructure and aerospace. The composite 29% U.S. & Canada materials market is expected to continue to grow at about twice the Commercial & Industrial rate of the global gross domestic product (GDP). Glass-reinforced composites are a durable, light-weight, corrosion-resistant solution to 61% International traditional materials like aluminum, wood or steel. 10% U.S. & Canada • World’s leading producer of glass fiber composites Residential Construction • One of the largest acquisitions in Owens Corning’s history in 2007 changed the company’s global footprint • Synergies of $100 million by 2011; $30 million expected in 2008 INSULATING SYSTEMS 40% U.S. & Canada Market opportunity exists in re-insulation. Insulating Systems is New Residential meeting market demand for increased energy efficiency and Construction greenhouse gas reduction in the midst of a weak U.S. housing market. Buildings are the single largest opportunity in these areas. 20% U.S. & Canada Repair & Remodel •The leading producer of residential insulation in North America • The leading producer of commercial and 29% U.S. & Canada industrial insulation in North America Commercial & Industrial 11% International • Insulation recognized as the single, most cost-effective greenhouse gas abatement measure ROOFING AND ASPHALT 25% U.S. & Canada The Duration Series Shingle with SureNail® technology is a ® New Residential roofing innovation that completed its rollout six months Construction ahead of schedule in the U.S. in 2007. The new product is leading the market in its transition to higher-margin, laminated shingles. 64% U.S. & Canada Repair & Remodel • A leading producer of residential shingles in North America 11% U.S. & Canada • The leading producer of roofing asphalts in North America Commercial & Industrial • Roofing essentials offers a market opportunity for growth in 2008 OTHER BUILDING MATERIALS AND SERVICES 52% U.S. & Canada Owens Corning strengthened this business segment in 2007 New Residential Construction with the divestiture of its vinyl siding business unit and the complete closure of its HOMExpertsTM service line. The segment is now comprised of the company’s masonry 19% U.S. & Canada Repair & Remodel products and construction services businesses. 19% U.S. & Canada • Expanded its masonry product line with the addition Commercial & Industrial of ProStone,TM an entry-level brand 10% International • Basement Finishing SystemTM availability extended into Canada 2
    • COMPOSITES A composite is a reinforcing material like glass fiber that is combined with a polymer to produce structural or functional properties that enhance performance in a variety of end-use applications. INVESTING IN GLOBAL GROWTH Growth in Emerging Markets Owens Corning completed Russia, India, Mexico and Brazil, the most significant acquisition while profitably growing its Owens Corning expects in its history in 2007 with the revenue from international, composites growth in Asia purchase of Saint-Gobain’s commercial and industrial to continue to exceed reinforcements and composite sources. As a result, the global growth rates. The fabrics businesses. The acquisition positions the composites market in China acquisition further extends Owens Corning brand in and India alone are projected Owens Corning’s position as global markets where the to grow by double-digits in the market leader in an industry company does not have a 2008. Today, 25 percent of that continues to grow at about building materials presence. the company’s composite twice the rate of the global In 2007, more than 60 percent manufacturing capacity gross domestic product (GDP). of sales in the composites is located in developing business came from outside countries around the world to The acquisition transformed of the United States. meet that customer demand. the footprint of Owens Corning by further globalizing its Owens Corning expects that Newly Acquired Facilities composites business, and the acquisition will deliver tripling the size of its composite cost synergies of more than Alcala, Spain fabrics business to serve the $100 million by 2011, with at Bangpakong, Thailand wind energy market. The newly least $30 million in synergies combined business increases achieved in 2008. Synergies Besana, Italy Owens Corning’s presence in will come primarily from Brunswick, Maine, U.S. fast-growing emerging markets reduced operating costs, Capivari, Brazil around the world like China, improved energy efficiency, and reduced shipping costs. Chambéry, France Changzhou, China Doudian (Beijing), China Gous-Khroustalny, Russia Gunsan, Korea Hangzhou, China Geert De Landsheer Jiading, China VP & Managing Director, Global Technical Fabrics Thimmapur, India Marcio Sandri Tsu, Japan VP & Managing Director, Americas Vado Ligure, Italy Vendome, France Vercelli, Italy Wichita Falls, Texas, U.S. Steven Vermeulen Zele, Belgium VP & Managing Director, Non-Woven Technologies Arnaud Genis VP & Managing Director, Europe, Global Technical Fabrics and Specialties The Owens Corning composites business is managed by a global team that is based around the world to be closer to the customer. Sangkyoo Han 3 4 VP & Managing Director, Asia-Pacific
    • A COMMON HERITAGE Global Integration Energy Intensity Reduction For more than 70 years, Owens Corning Owens Corning is quickly In 2007, Owens Corning’s and Saint-Gobain Vetrotex played key capitalizing on its newly composites business made roles in the development and global use acquired composites assets significant improvements in of composite materials. Owens Corning’s to better serve customers, reducing the energy intensity, acquisition of Saint-Gobain’s reinforcement drive global growth and or energy usage, of its and composite fabrics businesses in 2007 realize synergies. operations to optimize combines a common heritage that serves manufacturing productivity. as a foundation to a dynamic future. The company is investing Facilities in Fort Smith, Ark., 1930s – 1940s in its composites facilities United States, and Rio Claro, • Owens Corning produces the first to meet demand in fast- Brazil, reduced their energy continuous glass filament material growing regions of the use by double-digit percentages world. Beginning in 2008, following capital improvement • Saint-Gobain acquires glass the company announced projects completed in 2006. fiber patents in Europe that it is working to expand The company is implementing • Owens Corning develops fiberglass- its glass reinforcements and similar changes at production reinforced plastic laminates for use composite fabrics production facilities around the world in aircraft parts and boat hulls capabilities in China and and tracking the impact of Russia within the next these changes on its global 1950s – 1960s two years to support energy footprint. • Owens Corning develops composite market growth in Asia materials for auto body applications and Eastern Europe. Owens Corning is expanding the use of its most advanced • Saint-Gobain’s facility in The expansion will position technologies for energy Chambéry, France, begins the company’s composites intensity reduction. These production of composite textiles organization to serve a technologies bring world-class • Owens Corning develops growing and diverse customer energy efficiency and emissions high-strength glass reinforcements base in Asia and Eastern control, while providing Europe with industry-leading customers with unique product 1970s – 1980s products for key markets such benefits including corrosion • Owens Corning develops as infrastructure, construction, resistance and high strength. composite material for large automotive, wind energy and diameter pipe applications consumer goods. Advanced Glass Melting (AGM) is a technology • Saint-Gobain expands in Italy Owens Corning is where innovative furnace and Spain through acquisition accelerating its plan to design allows for more efficient • Owens Corning introduces achieve synergies from its heat transfer in glass batch composite materials for auto recent composites acquisition melting processes, saving components and armor where possible. As part significant energy while of its global integration reducing environmental 1990s – 2000s strategy, Owens Corning is emissions. This advanced • Owens Corning introduces consolidating its composite technology, which combines Advantex® glass fiber material fabrics manufacturing in oxygen with natural gas North America from four to create a more efficient • Saint-Gobain introduces to two facilities in 2008. This combustion process, can TWINTEX® reinforcement enables the company to save more than 40 percent material serve its composite fabrics of natural gas costs in • Owens Corning develops customers more efficiently glass reinforcement new high-performance with the increased capabilities manufacturing. To learn reinforcements platform of its newly acquired facilities. more, see Owens Corning’s sustainability report at www. owenscorning.com/sustainability. 4
    • INNOVATIVE CUSTOMER SOLUTIONS Global Growth in Wind Energy The increasing demand for renewable energy continues to drive the capacity expansion of the wind power market on a global scale. As a result, the demand for composite materials in wind power is expected to continue to see double- digit growth in 2008 and beyond. Owens Corning is the leading provider of glass reinforcements for wind turbine blades. Glass reinforcements enable wind blade fabricators to make longer blades, which makes wind a more attractive, cost-competitive energy resource. Owens Corning’s WindStrandTM is a new generation of high-performance reinforcements specifically developed for composite wind turbine applications. The product continues to capture market share by giving wind blade fabricators the ability to produce significantly stronger and lighter composite parts at a substantial cost savings. This is an example of how Owens Corning is delivering shareholder value by growing its customers’ businesses. Wind energy is estimated to be the fastest growing renewable energy source, but still accounts for only 1 percent of the world’s electricity consumption. Today, a typical wind blade measures 40 meters in length and contains 7 metric tons of glass fiber per blade. 6 5
    • HIGH PERFORMANCE SOLUTIONS Owens Corning high-performance reinforcements are meeting composite industry demand for large-volume production of high-strength glass. Large-volume reinforcement production allows composite manufacturers to favorably compete with traditional materials like wood, steel or aluminum. The innovative product platform is based on a patented technology designed to deliver superior mechanical properties with significantly higher thermal and corrosion resistance. In addition to WindStrand,TM these new reinforcements include FliteStrand,TM a light-weight, high- strength material for the aerospace industry; ShieldStrand,TM a high- strength material with significantly higher thermal resistance for armor Market Opportunity applications; and XStrand,TM a high- fatigue material with strong impact Despite consistent year-over-year growth, the composites industry performance for industrial, sports comprises a small percentage of the overall materials market – and recreation applications. representing a significant market opportunity. The per capita usage of composite materials around the world is seven times less than the amount consumed per capita in the United States today, while growing at a double-digit rate in developing countries. Composite materials are increasingly used in automotive, infrastructure, construction and other applications because of their durable, high-strength, light-weight characteristics. These mechanical properties bring innovative value to customers while helping the world reduce its environmental footprint. 6 7
    • UILDING MATERIALS ROOFING UNDERLAYMENT HIP AND RIDGE ROOFING ATTIC INSULATION ICE & WATER BARRIER MANUFACTURED STONE VENEER ATTIC RAFTER VENTS WALL INSULATION UNDER FLOOR INSULATION RIGID FOAM HOUSE WRAP INTERIOR INSULATION DUCT WORK NEARLY 80 MILLION HOMES INSULATED CONCRETE FORMS IN THE UNITED STATES ARE BASEMENT FINISHING SYSTEMTM UNDER-INSULATED The actual photograph has been modified to illustrate Owens Corning’s building materials product lines. Market Leadership MANAGING THROUGH THE CYCLE Owens Corning is an industry leader in building materials with leading market Financial results share in North America in residential, commercial and industrial insulation, masonry products and roofing asphalts. Owens Corning products can be found for Owens Corning’s throughout a residential home. According to a 2008 brand study from the publishers building materials of BUILDER magazine, builders selected Owens Corning PINK FiberglasTM insulation businesses in 2007 as the product they prefer. Builders also chose the company’s Cultured Stone® were in-line with product as the manufactured stone veneer most recognized and most used by the company’s builders. This same study voted Owens Corning as the most recognizable expectations during roofing brand in the market. one of the worst Creating a Re-Insulation Industry downturns in the Owens Corning is focused on developing a re-insulation industry in 2008. history of the U.S. Based on the United States Department of Energy and Nielsen Claritas housing market. studies, nearly 80 million homes in the United States are under-insulated – Owens Corning took a significant market opportunity to help existing homeowners save energy, save significant actions in money and reduce greenhouse gas emissions. Homeowners can save 20 percent on their heating and cooling costs by ensuring that the attic is properly insulated with 2007 that position a minimum of 15.5 inches of PINK insulation. the company to perform through the The U.S. Department of Energy estimates that as much as 45 percent of a home’s U.S. housing cycle. energy loss is through the attic. Owens Corning’s AttiCat® is a new system innovation As a result, the that is making it simple and practical for homeowners to properly insulate their attics. company is poised Owens Corning is also helping homeowners eliminate energy loss and reduce noise with to further profit fiberglass ducts, which are 75 percent more energy efficient than standard metal ducts. when the U.S. housing Helping top builders capitalize on this growth trend is an emerging market opportunity market strengthens. for Owens Corning.
    • THE LARGEST CONSUMER OF ENERGY IN THE UNITED STATES IS BUILDINGS The company expects to grow its re-insulation business by 10 percent in 2008. While this will not offset the significant impact of the current housing cycle, it will add to the company’s insulation sales in positioning this business for growth as the housing market begins to strengthen. PINK is GreenTM In a world of rapidly rising energy costs, energy efficiency is a growing market opportunity for Owens Corning. According to the U.S. Department of Energy, buildings consume 40 percent of energy in the United States and account for more than 43 percent of the country’s greenhouse gas emissions, more than industry and more than transportation. Owens Corning is leading the way in delivering product solutions to meet this market need. Building Materials Innovation Owens Corning is delivering innovations to the building materials market that help customers grow their businesses and provide a premium value to Owens Corning. One example is the company’s Duration® Series Shingle with SureNail® Technology. Owens Corning completed the national rollout of this industry-leading innovation in 2007, six months ahead of schedule. The laminate shingle product delivers premium productivity value to roofing contractors and high performance to homeowners. Owens Corning is driving profitable growth in its A 2007 McKinsey & Company Roofing and Asphalt business by expanding its Report on Greenhouse Gas roofing essentials product line in 2008, enabling contractors to create additional value for the Reduction identifies insulation homeowner. These roofing accessories as “the single most include ice and water barrier, roofing cost-effective greenhouse felt, ridge vents, and hip and ridge gas abatement measure.” shingles. The essentials product line combines with Owens Corning roofing shingles to create a complete roofing system for the homeowner. 8
    • MOST RECOGNIZED IN ROOFING AND MASONRY PRODUCTS Owens Corning is leading the industry with one of the broadest and most complete product lines of roofing shingles and masonry products. Aesthetic appeal and ease-of-application continue to make Owens Corning a preferred brand among building contractors. The company’s Cultured Stone® manufactured stone veneer product has long been recognized as the premium brand in the industry. In 2007, Owens Corning launched ProStone,TM a quality, entry-level product line that offers the true look and feel of stone at a value price. The additional product line gives Owens Corning broader access to the growing manufactured stone veneer market. International demand for Owens Corning’s Masonry Products grew at a faster rate than the U.S. market in 2007. The 2006 acquisition of the European leader in interior and exterior manufactured stone veneer continues to drive global growth. 9
    • LEADING WITH BEAUTY AND COMFORT Owens Corning’s Basement Finishing SystemTM continued to provide year-over-year growth through 2007. The system allows remodeling contractors to provide customers with a completely finished basement in just a few weeks. In 2007, the company expanded the product availability into Canada. The expansion in geographic reach positions the company for additional growth in building finishing products. In 2007, Owens Corning added SunSuitesTM sunrooms to its product portfolio, an energy-efficient, multi-season living space added to a home in just a few weeks. By 2008, Owens Corning further grew its product line to include Solace® windows, a fiberglass reinforced vinyl replacement window that provides thermal efficiency. 10
    • SUSTAINABILITY Is a Core Strategy of Owens Corning Greening our Operations Owens Corning Owens Corning is elevating its manufacturing performance by improving safety, defines sustainability reducing costs, and shrinking its resource use and emissions footprint around the world. as meeting the Since 2002, the company has improved the safety of its operations by 75 percent. needs of the The goal is to create a company of zero injuries. Today, the majority of its facilities are operating injury free. present without Owens Corning has reduced its global energy intensity by 16 percent during the compromising last 5 years, and has a 10-year goal to reduce the amount of energy required to make its products by 25 percent from its 2002 baseline. the world that we The employees of Owens Corning are engaged in hundreds of critical activities to leave to the future. meet similar aggressive goals across its entire environmental footprint. This approach to Greening our Products Owens Corning’s products have a significant positive impact on the environment. business energizes During their installed life, the products that Owens Corning produces each year result in the prevention of 1 billion tons of greenhouse gas emissions, equivalent our people, creates to 200 million passenger cars not being driven for a year, or not using 2 billion barrels of oil. growth opportunities The company is focused on the continuous life-cycle improvement or “greening” of for our customers, its products. Building insulation, for example, is one of the most cost-effective energy and greenhouse-gas reduction technologies in the world. Owens Corning is also the and drives value for world’s largest supplier of glass reinforcements for wind turbine blades – a growing source of renewable energy. our shareholders. Accelerating Energy Efficiency in the Built Environment Owens Corning has amplified its commitment to sustainability with additional organizational structure and focus, working closely with customers and partners to drive the market demand for energy efficiency and a greener built environment. 11
    • Consolidated Statement of Earnings (Loss) Successor Predecessor Twelve Months Two Months Ten Months Twelve Months Ended Ended Ended Ended December 31, December 31, October 31, December 31, 2007 2006 2006 2005 (in millions) Net sales $4,978 $772 $4,627 $5177 Cost of sales 4,201 656 3,741 4,107 Gross margin 777 116 886 1,070 Operating expenses Marketing and administrative expenses 498 86 408 521 Science and technology expenses 63 30 48 56 Restructure costs 28 20 12 – Chapter 11 related reorganization items – 10 45 45 Provision (credit) for asbestos litigation claims (recoveries) – – (13) 4,267 Employee emergence equity program 37 6 – – (Gain) loss on sale of fixed assets and other 6 8 (65) (18) Total operating expenses $632 $160 $435 $4,871 Earnings (loss) from continuing operations before interest and taxes 145 (44) 451 (3,801) Interest expense, net 122 29 241 740 Gain on settlement of liabilities subject to compromise – – (5,864) – Fresh-start accounting adjustments – – (2,919) – Earnings (loss) from continuing operations before taxes 23 (73) 8,993 (4,541) Income tax expense (benefit) (8) (23) 980 (411) Earnings (loss) from continuing operations before minority interest and equity in net earnings (loss) of affiliates 31 (50) 8,013 (4,130) Minority interest and equity in net (loss) of affiliates (4) (4) – (4) Earnings (loss) from continuing operations 27 (54) 8,013 (4,134) Discontinued operations: Earnings (loss) from discontinued operations, net of tax of $5, $(5), $45, and $24, respectively 9 (11) 127 35 Gain on sale of discontinued operations, net of tax of $40, $0, $0, and $0, respectively 60 – – – Total earnings (loss) from discontinued operations 69 (11) 127 35 Net earnings (loss) $96 $(65) $8,140 $(4,099) Basic earnings (loss) per common share Earnings (loss) from continuing operations $0.21 $(0.42) $144.90 $(74.73) Earnings (loss) from discontinued operations $0.54 $(0.09) $2.30 $0.65 Diluted earnings (loss) per common share Earnings (loss) from continuing operations $0.21 $(0.42) $133.77 $(74.73) Earnings (loss) from discontinued operations $0.54 $(0.09) $2.12 $0.65 Weighted average common shares Basic 128.1 128.1 55.3 55.3 Diluted 128.8 128.1 59.9 55.3 12 13
    • Consolidated Statements of Cash Flows Successor Predecessor Twelve Months Two Months Ten Months Twelve Months Ended Ended Ended Ended December 31, December 31, October 31, December 31, 2007 2006 2006 2005 (in millions) Net cash flow provided by (used for) operating activities Net earnings (loss) $96 $(65) $8,140 $(4,099) Adjustments to reconcile net earnings (loss) to cash provided by (used for) operating activities Provision for asbestos litigation claims – – 21 4,277 Depreciation and amortization 343 69 209 234 Gain on sale of businesses and fixed assets (104) – (61) (14) Impairment of fixed and intangible assets and investments in 76 – 2 8 affiliates Deferred income taxes – (48) 208 (467) Provision for pension and other employee benefit liabilities 45 8 83 113 Provision for post-petition interest/fees on pre-petition debt – – 247 735 Fresh-start accounting adjustments, net of tax – – (2,243) – Gain on settlement of liabilities subject to compromise – – (5,864) – Employee emergence equity program 37 6 – – Stock based compensation expense 5 – – – Restricted cash 52 (85) – – Payments related to Chapter 11 filings (109) (131) – – Payment of interest on pre-petition debt – (31) (944) – Payment to 524(g) Trust – – (1,250) – (Increase) decrease in receivables (9) 185 (78) (94) (Increase) decrease in inventories 3 97 (103) (42) (Increase) decrease in prepaid and other assets – 1 (36) 7 Increase (decrease) in accounts payable and accrued liabilities (106) 30 (107) 160 Proceeds from insurance for asbestos litigation claims, – – 18 10 excluding Fibreboard Pension fund contribution (121) (6) (43) (49) Payments for other employee benefits liabilities (25) (4) (23) (29) Increase in restricted cash – asbestos and Fibreboard – – (87) (16) Other (1) (11) 8 12 Net cash flow provided by (used for) operating activities 182 15 (1,903) 746 Net cash flow used for investing activities Additions to plant and equipment (247) (77) (284) (288) Investment in subsidiaries and affiliates, net of cash acquired (620) – (47) (14) Proceeds from the sale of assets or affiliates 437 – 82 19 Net cash flow used for investing activities (430) (77) (249) (283) Net cash flow provided by (used for) financing activities Payment of equity commitment fees – – (115) – Proceeds from long-term debt 617 5 21 9 Payments on long-term debt (85) (5) (13) (31) Proceeds from revolving credit facility 713 – – – Payments on revolving credit facility (573) – – – Payment of contingent note to 524(g) trust (1,390) – – – Net increase (decrease) in short-term debt (13) 1 3 (6) Payments to pre-petition lenders – (55) (1,461) – Proceeds from issuance of bonds – – 1,178 – Proceeds from issuance of new stock – – 2,187 – Debt issuance costs – – (10) – Net decrease in liabilities subject to compromise – – – (3) Other – – 2 1 Net cash flow provided by (used for) financing activities (731) 54 1,792 (30) Effect of exchange rate changes on cash 25 – 6 1 Net increase (decrease) in cash and cash equivalents (954) (116) (354) 434 Cash and cash equivalents at beginning of year 1,089 1,205 1,559 1,125 Cash and cash equivalents at end of period $135 $1,089 $1,205 $1,559 Disclosure of cash flow information Cash paid during the year for income taxes $40 $8 $50 $51 Cash paid during the year for interest expense $159 $35 $951 $6 13
    • Consolidated Balance Sheets Successor December 31, December 31, (in millions) 2007 2006 Assets Current assets Cash and cash equivalents $135 $1,089 Receivables, less allowances of $23 in 2007 and $26 in 2006 721 573 Inventories 821 749 Restricted cash-disputed distribution reserve 33 85 Assets held for sale – current 53 – Other current assets 89 56 Total current assets 1,852 2,552 Property, plant and equipment, net 2,772 2,521 Goodwill 1,174 1,313 Intangible assets 1,210 1,298 Deferred income taxes 487 549 Assets held for sale – non-current 178 – Other non-current assets 199 237 Total assets $7,872 $8,470 Liabilities and stockholders’ equity Current Liabilities Accounts payable and accrued liabilities $1,137 $1,081 Accrued interest 12 39 Short-term debt 47 1,401 Long-term debt – current portion 10 39 Liabilities held for sale – current 40 – Total current liabilities $1,246 $2,560 Long-term debt, net of current portion 1,993 1,296 Pension plan liability 146 312 Other employee benefits liability 293 325 Liabilities held for sale – non-current 8 – Other liabilities 161 247 Commitments and contingencies Minority interest 37 44 Stockholders’ equity Preferred stock, par value $0.01 per share 10 million shares authorized; none issued or outstanding at December 31, 2007 – – and December 31, 2006 Common stock, par value $0.01 per share 400 million shares authorized; 130.8 million issued and outstanding at December 31, 2007 and December 31, 2006 1 1 Additional paid in capital 3,783 3,733 Accumulated earnings (deficit) 31 (65) Accumulated other comprehensive earnings 173 17 Total stockholders’ equity 3,988 3,686 Total liabilities and stockholders’ equity $7,872 $8,470 14
    • Five-Year Reconciliation of EARNINGS (LOSS) TO ADJUSTED EBIT Successor Combined Twelve months ended Twelve months ended December 31, December 31, (in millions) 2007 2006 Net sales $4,978 $5,399 Cost of sales 4,201 4,397 Gross margin 777 1,002 Operating expenses Marketing and administrative expenses 498 494 Science and technology expenses 63 78 Restructure costs 28 32 Chapter 11 related reorganization items 55 – Provision (credit) for asbestos litigation claims (13) – Employee emergence equity program 37 6 (Gain) loss on sale of fixed assets and other 6 (57) Total operating expenses 632 595 Earnings (loss) from continuing operations before interest and taxes 145 407 Interest expense, net 122 Gain on settlement of liabilities subject to compromise – Fresh-start accounting adjustments – Earnings (loss) from continuing operations before taxes 23 Income tax expense (benefit) (8) Minority interest and equity in net earnings (loss) of affiliates (4) Earnings (loss) from continuing operations 27 Earnings (loss) from discontinued operations, net of tax 9 Gain on sale of discontinued operations, net of tax 60 Net earnings (loss) $96 Reconciliation to adjusted earnings from continuing operations before interest and taxes Net earnings (loss) $96 Earnings (loss) from discontinued operations, net of tax 9 Gain on sale of discontinued operations, net of tax 60 Earnings (loss) from continuing operations 27 Minority interest and equity in net earnings (loss) of affiliates (4) Earnings (loss) from continuing operations before minority interest 31 and equity in net earnings (loss) of affiliates Income tax expense (benefit) (8) Earnings (loss) from continuing operations before taxes 23 Interest expense, net 122 Gain on settlement of liabilities subject to compromise – Fresh-start accounting adjustments – Earnings (loss) from continuing operations before interest and taxes 145 407 Adjustments to remove items impacting comparability: Chapter 11 related reorganization costs 55 – Provision (credit) for asbestos litigation claims (13) – Restructuring and other costs (credits) 54 (2) Impact of acquisition accounting 28 13 Acquisition, integration and transaction costs 13 – (Gains) losses on sales of assets and other 7 – Employee emergence equity program expense 37 6 Fresh-start accounting impact 63 – Asset impairments 60 – Total adjustments to remove comparability items 199 122 Adjusted earnings from continuing operations before interest and taxes $344 $529 15
    • Predecessor Successor Two months ended Ten months ended Twelve months ended Twelve months ended Twelve months ended December 31, October 31, December 31, December 31, December 31, 2006 2006 2005 2004 2003 $772 $4,627 $5,177 $4,626 $4,061 656 3,741 4,107 3,698 3,304 116 886 1,070 928 757 86 408 521 497 425 30 48 56 44 41 20 12 (2) – – 10 45 45 54 85 (13) 4,267 (24) (5) – 6 – – – – 8 (65) (18) (9) (16) 160 435 4,871 562 528 (44) 451 (3,801) 366 229 29 241 740 (12) 8 (5,864) – – – – (2,919) – – – – (73) 8,993 (4,541) 378 221 (23) 980 (411) 202 131 (4) (4) (8) 1 – (54) 8,013 (4,134) 168 91 (11) 127 35 36 24 – – – – – $(65) $8,140 $(4,099) $204 $115 $(65) $8,140 $(4,099) $204 $115 (11) 127 35 36 24 – – – – – (54) 8,013 (4,134) 168 91 (4) (4) (8) 1 – (50) 8,013 (4,130) 176 90 (23) 980 (411) 202 131 (73) 8,993 (4,541) 378 221 29 241 740 (12) 8 (5,864) – – – – (2,919) – – – – (44) 451 (3,801) 366 229 10 45 45 54 85 (13) 4,267 (24) (5) – 32 11 (18) (5) (1) 6 7 – – – – – – – – (45) (7) – – – 6 – – – – 63 – – – – – – – – – 117 5 4,287 25 79 $73 $456 $486 $391 $308 16
    • Business Segment Information Successor Predecessor Twelve Months Two Months Ten Months Twelve Months Ended Ended Ended Ended December 31, December 31, October 31, December 31, (in millions) 2007 2006 2006 2005 Net sales Reportable segments Insulating Systems $1,776 $331 $1,766 $1,976 Roofing and Asphalt 1,375 167 1,556 1,806 Other Building Materials and Services 301 60 317 318 Composite Solutions 1,695 227 1,155 1,265 Total reportable segments 5,147 785 4,794 5,365 Corporate Eliminations (1) (169) (13) (167) (188) Consolidated net sales $4,978 $772 $4,627 $5,177 External Customer Sales by Geographic Region United States $3,445 $541 $3,648 $4,171 Europe 601 84 358 399 Canada and other 932 147 621 607 Net sales $4,978 $772 $4,627 $5,177 Earnings (loss) from continuing operations before interest and taxes Reportable Segments Composite Solutions $126 $37 $72 $114 Insulating Systems 192 59 408 424 Roofing and Asphalt 27 (23) 95 139 Other Building Materials and Services 14 (1) 2 3 Total reportable segments $359 $72 $577 $680 Reconciliation to Consolidated Earnings (Loss) From Continuing Operations Before Interest and Taxes Chapter 11-related reorganization items – $(10) $(45) $(45) Asbestos litigation (claims) recoveries – – 13 (4,267) Restructuring and other (costs) credits (54) (32) (11) 18 Impact of acquisition accounting (13) – – – Acquisition integration and transaction costs (28) (6) (7) – Gains (losses) on sales of assets and other (7) – 45 7 Employee emergence equity program expense (37) (6) – – Fresh-start accounting impact – (63) – – Asset impairments (60) – – – General corporate expense (15) 1 (121) (194) Consolidated earnings (loss) from continuing $145 $(44) $451 $(3,801) operations before interest and taxes 17
    • BOARD OF DIRECTORS NORMAN P. BLAKE, JR. (66) DAVID J. LYON (35) Former Chairman, President and Chief Executive Vice President at D. E. Shaw & Co., L.P. Former Managing Officer of Comdisco, Inc. and served as the chief Director at The Cypress Group, LLC. Director since 2008. executive of several other major companies. Awarded the Ellis Island Medal of Honor. Director since 1992. JAMES J. MCMONAGLE (63) Of Counsel at Vorys, Sater, Seymour & Pease LLP. GASTON CAPERTON (68) Serves as a Director and Chairman for the Board President and Chief Executive Officer of The College of Selected Family Funds. Director since 2007. Board. Former Governor of the State of West Virginia. Serves as a Director of United Bankshares, Inc., Energy W. HOWARD MORRIS (47) Corporation of America, and Prudential Financial. Chief Investment Officer of Prairie & Tireman Capital Director since 1997. Management. Former Vice President and Senior Portfolio Manager of Comerica Asset Management. Director WILLIAM W. COLVILLE (73) since 2007. Retired, former Senior Vice President, General Counsel and Secretary of Owens Corning. JOSEPH F. NEELY (67) Serves as a Director of Nordson Corporation. Former Chief Executive Officer of GoldToe Brands, Inc. Director since 1995. Served as Senior Vice President of Sara Lee Corporation. Director since 2006. RALPH F. HAKE (59) Former Chairman and Chief Executive Officer of W. ANN REYNOLDS (70) the Maytag Corporation. Served as a Director for the Former President and Professor of Biology at The University National Association of Manufacturers and is a current of Alabama at Birmingham. Serves as a Director of Humana, Director of ITT Corporation. Director since 2006. Inc., Abbott Laboratories, Invitrogen Corporation and the News-Gazette, Champaign, Illinois. Director since 1993. F. PHILIP HANDY (63) Chief Executive Officer of Strategic Industries. ROBERT B. SMITH, JR. (70) Serves as a Director of Anixter International, Inc., Director of Virginia Environmental Endowment. and Rewards Network, Inc. Director since 2006. Member of Board of Managers of Kentucky River Properties. Formerly, Trustee of Dalkon Shield Claimants LANDON HILLIARD (68) Trust, and Chief Counsel and Staff Director U.S. Senate Partner with Brown Brothers Government Operations Committee. Director since 2004. Harriman & Co. Serves as a Director of Norfolk Southern Corporation, Western MICHAEL H. THAMAN (44) World Insurance Company and Russell Chairman and Chief Executive Officer of Owens Corning. Reynolds Associates, Inc. Director since 1989. Served as Chairman since 2002 and Chief Financial Officer from 2000-2006. Serves as a Director of Florida Power & ANN IVERSON (64) Light Group, Inc. Director since 2002. Chief Executive Officer of International Link. Serves as a Director of Shoe Pavillion. Former Chief Executive DANIEL K. TSEUNG (36) Officer of Laura Ashley Holdings, Kay-Bee Toy stores Managing Director of Sun Hung Kai Properties Direct and Mothercare plc. Awarded the Ellis Island Medal Investments Ltd. Serves as a Director of RCN Corporation of Honor. Director since 1996. and Chinacast Education Corporation. Director since 2006. CORPORATE OFFICERS • Michael H. Thaman, Chairman of the Board & Chief Executive Officer • Duncan Palmer, Chief Financial Officer • Joseph High, Senior Vice President, Human Resources • David Johns, Senior Vice President, Chief Information & Supply Chain Officer Governance and Nominating committee • Stephen Krull, Senior Vice President, General Counsel & Secretary • Sheree Bargabos, President, Roofing and Asphalt • Chuck Dana, President, Composite Solutions • Roy Dean, President, Insulating Systems • Bill LeBaron, President, Owens Corning Construction Services • Chuck Stein, President, Masonry Products & Chief Marketing Officer, Building Materials • Scott Deitz, Vice President, Investor Relations & Corporate Communications • John Hillenbrand, Vice President & Chief Innovation Officer • Frank O’Brien-Bernini, Vice President & Chief Sustainability Officer • Mark Mayer, Vice President & Chief Accounting Officer 18
    • OWENS CORNING ONE OWENS CORNING PARKWAY TOLEDO, OHIO, USA 43659 1-800- GET-PINK TM www.owenscorning.com Pub. No.10009997. Printed in U.S.A. August 2008. THE PINK PANTHER™ & © 1964 – 2008 Metro-Goldwyn-Mayer Studios Inc. All Rights Reserved. The color PINK is a registered trademark of Owens Corning. © 2008 Owens Corning.