UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September~~June 30, ~~2020~~2021

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 1-33100

Owens Corning

(Exact name of registrant as specified in its charter)

Delaware

43-2109021

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

One Owens Corning Parkway,

Toledo,

43659

(Address of principal executive offices)

(Zip Code)

(419) 248-8000

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, par value $0.01 per share	OC	New York Stock Exchange

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 þ No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:


Large Accelerated Filer	þ	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes ☐ No þ

As of ~~October~~July 23, ~~2020, 108,233,247~~2021, 103,129,937 shares of registrant’s common stock, par value $0.01 per share, were outstanding.

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			Contents

Cover Page				1

PART I – FINANCIAL INFORMATION (unaudited)

	Item 1.	Financial Statements
		Consolidated Statements of Earnings (Loss)	4
		Consolidated Statements of Comprehensive Earnings (Loss)	5
		Consolidated Balance Sheets	6
		Consolidated Statements of Stockholders' Equity	7
		Consolidated Statements of Cash Flows	9
		Notes to Consolidated Financial Statements
		1. General	10
		2. Segment Information	1211

		3. ~~Revenue~~Inventories	13
		4. ~~Inventories~~Derivative Financial Instruments	14
		5. ~~Derivative Financial Instruments~~	15
		6. Goodwill and Other Intangible Assets	1817
		7.6. Property, Plant and Equipment	2118



		8.7. Warranties	2119
		8. Restructuring and Acquisition-Related Costs	19
		9.~~Restructuring and Acquisition-Related Costs~~ Debt	21
		10. ~~Debt~~	23
		~~11.~~ Pension Plans and Other Postretirement Benefits	2624
		11. Contingent Liabilities and Other Matters	25
		12. ~~Contingent Liabilities and Other Matters~~Stock Compensation	27
		13. ~~Stock Compensation~~Earnings per Share	2830
		14. ~~Earnings per Share~~Income Taxes	31
		15. Changes in Accumulated Other Comprehensive Deficit	32
		~~15. Income Taxes~~16. Subsequent Events	33
		~~16. Changes in Accumulated Other Comprehensive Deficit~~	34

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	3534

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	5146

	Item 4.	Controls and Procedures	5146

PART II – OTHER INFORMATION

	Item 1.	Legal Proceedings	5247

	Item 1A.	Risk Factors	5247

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	5347

	Item 3.	Defaults Upon Senior Securities	5347

	Item 4.	Mine Safety Disclosures	5347

	Item 5.	Other Information	5448

	Item 6.	Exhibits	5549

		Signatures	5650

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PART I

ITEM 1. FINANCIAL STATEMENTS

OWENS CORNING AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS (LOSS)

(unaudited)

(in millions, except per share amounts)

Three Months Ended
September 30, Nine Months Ended
September 30,

2020 2019 2020 2019
NET SALES $ 1,904 $ 1,883 $ 5,130 $ 5,468
COST OF SALES 1,427 1,422 4,004 4,242
Gross margin 477 461 1,126 1,226
OPERATING EXPENSES
Marketing and administrative expenses 163 164 493 527
Science and technology expenses 20 21 59 65
Goodwill impairment charge 0 0 944 0
Other expenses, net 2 1 40 16
Total operating expenses 185 186 1,536 608
OPERATING INCOME (LOSS) 292 275 (410) 618
Non-operating income (4) (2) (11) (7)
EARNINGS (LOSS) BEFORE INTEREST AND TAXES 296 277 (399) 625
Interest expense, net 35 33 98 101
Loss on extinguishment of debt 0 32 0 32
EARNINGS (LOSS) BEFORE TAXES 261 212 (497) 492
Income tax expense 56 61 119 159
Equity in net earnings of affiliates 1 0 1 0
NET EARNINGS (LOSS) 206 151 (615) 333
Net earnings attributable to noncontrolling interests 0 1 0 1
NET EARNINGS (LOSS) ATTRIBUTABLE TO OWENS CORNING $ 206 $ 150 $ (615) $ 332
EARNINGS (LOSS) PER COMMON SHARE ATTRIBUTABLE TO OWENS CORNING COMMON STOCKHOLDERS
Basic $ 1.89 $ 1.37 $ (5.66) $ 3.04
Diluted $ 1.88 $ 1.36 $ (5.66) $ 3.02
WEIGHTED AVERAGE COMMON SHARES
Basic 108.8 109.2 108.7 109.2
Diluted 109.5 110.0 108.7 110.0


	Three Months Ended June 30,				Six Months Ended June 30,

	2021		2020		2021		2020
NET SALES	$	2,239	$	1,625	$	4,154	$	3,226
COST OF SALES	1,621		1,282		3,092		2,577
Gross margin	618		343		1,062		649
OPERATING EXPENSES
Marketing and administrative expenses	188		151		362		330
Science and technology expenses	22		18		42		39

Goodwill impairment charge	0		0		0		944
Other (income) expenses, net	(17)		6		(65)		38
Total operating expenses	193		175		339		1,351
OPERATING INCOME (LOSS)	425		168		723		(702)
Non-operating income	(3)		(3)		(6)		(7)
EARNINGS (LOSS) BEFORE INTEREST AND TAXES	428		171		729		(695)
Interest expense, net	33		36		66		63

EARNINGS (LOSS) BEFORE TAXES	395		135		663		(758)
Income tax expense	97		39		156		63
Equity in net (loss) earnings of affiliates	0		(1)		1		0
NET EARNINGS (LOSS)	298		95		508		(821)
Net loss attributable to noncontrolling interests	0		(1)		0		0
NET EARNINGS (LOSS) ATTRIBUTABLE TO OWENS CORNING	$	298	$	96	$	508	$	(821)
EARNINGS (LOSS) PER COMMON SHARE ATTRIBUTABLE TO OWENS CORNING COMMON STOCKHOLDERS
Basic	$	2.85	$	0.88	$	4.84	$	(7.55)
Diluted	$	2.82	$	0.88	$	4.80	$	(7.55)

WEIGHTED AVERAGE COMMON SHARES
Basic	104.6		108.6		105.0		108.7
Diluted	105.5		108.9		105.9		108.7

The accompanying Notes to the Consolidated Financial Statements are an integral part of this Statement.

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OWENS CORNING AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS (LOSS)

(unaudited)

(in millions)

Three Months Ended
September 30, Nine Months Ended
September 30,

2020 2019 2020 2019
NET EARNINGS (LOSS) $ 206 $ 151 $ (615) $ 333
Currency translation adjustment (net of tax of $3 and $(6) for the three months ended September 30, 2020 and 2019, respectively, and $(7) for both the nine months ended September 30, 2020 and 2019) 37 (57) (32) (36)
Pension and other postretirement adjustment (net of tax of $0 for both the three months ended September 30, 2020 and 2019, and $0 for both the nine months ended September 30, 2020 and 2019) (3) (2) 2 (1)
Hedging adjustment (net of tax of $(1) for both the three months ended September 30, 2020 and 2019, and $(1) and $0 for the nine months ended September 30, 2020 and 2019, respectively) 3 1 2 0
COMPREHENSIVE EARNINGS (LOSS) 243 93 (643) 296
Comprehensive earnings attributable to noncontrolling interests 0 1 0 1
COMPREHENSIVE EARNINGS (LOSS) ATTRIBUTABLE TO OWENS CORNING $ 243 $ 92 $ (643) $ 295


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
NET EARNINGS (LOSS)	$	298	$	95	$	508	$	(821)
Currency translation adjustment (net of tax of $0 and $1 for the three months ended June 30, 2021 and 2020, respectively, and $(1) and $(9) for the six months ended June 30, 2021 and 2020, respectively)	32		53		(13)		(69)
Pension and other postretirement adjustment (net of tax of $0 for both the three months ended June 30, 2021 and 2020, and $0 for both the six months ended June 30, 2021 and 2020)	(3)		(2)		(2)		5
Hedging adjustment (net of tax of $1 and $0 for the three months ended June 30, 2021 and 2020, respectively, and $(3) and $0 for the six months ended June 30, 2021 and 2020, respectively)	(2)		0		10		(1)
COMPREHENSIVE EARNINGS (LOSS)	325		146		503		(886)
Comprehensive earnings (loss) attributable to noncontrolling interests	0		(1)		0		0
COMPREHENSIVE EARNINGS (LOSS) ATTRIBUTABLE TO OWENS CORNING	$	325	$	147	$	503	$	(886)

The accompanying Notes to the Consolidated Financial Statements are an integral part of this Statement.

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OWENS CORNING AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(unaudited)

(in millions, except per share amounts)

ASSETS September 30,
2020 December 31,
2019
CURRENT ASSETS
Cash and cash equivalents $ 647 $ 172
Receivables, less allowances of $10 at September 30, 2020 and $11 at December 31, 2019 1,016 770
Inventories 886 1,033
Other current assets 84 86
Total current assets 2,633 2,061
Property, plant and equipment, net 3,717 3,855
Operating lease right-of-use assets 160 203
Goodwill 976 1,932
Intangible assets 1,655 1,721
Deferred income taxes 33 46
Other non-current assets 224 188
TOTAL ASSETS $ 9,398 $ 10,006
LIABILITIES AND EQUITY
Current liabilities $ 1,351 $ 1,329
Long-term debt, net of current portion 3,126 2,986
Pension plan liability 200 231
Other employee benefits liability 173 179
Non-current operating lease liabilities 106 138
Deferred income taxes 342 272
Other liabilities 208 200
OWENS CORNING STOCKHOLDERS’ EQUITY
Preferred stock, par value $0.01 per share (a) 0 0
Common stock, par value $0.01 per share (b) 1 1
Additional paid in capital 4,064 4,051
Accumulated earnings 1,625 2,319
Accumulated other comprehensive deficit (638) (610)
Cost of common stock in treasury (c) (1,200) (1,130)
Total Owens Corning stockholders’ equity 3,852 4,631
Noncontrolling interests 40 40
Total equity 3,892 4,671
TOTAL LIABILITIES AND EQUITY $ 9,398 $ 10,006


ASSETS	June 30, 2021		December 31, 2020
CURRENT ASSETS
Cash and cash equivalents	$	888	$	717
Receivables, less allowance of $10 at both June 30, 2021 and December 31, 2020	1,226		919
Inventories	887		855

Other current assets	123		115
Total current assets	3,124		2,606
Property, plant and equipment, net	3,791		3,809
Operating lease right-of-use assets	145		154
Goodwill	985		989
Intangible assets	1,634		1,667
Deferred income taxes	33		28
Other non-current assets	265		228
TOTAL ASSETS	$	9,977	$	9,481
LIABILITIES AND EQUITY
CURRENT LIABILITIES



Current operating lease liabilities	$	53	$	55

Other current liabilities	1,584		1,385
Total current liabilities	1,637		1,440
Long-term debt, net of current portion	3,144		3,126
Pension plan liability	153		159
Other employee benefits liability	169		171
Non-current operating lease liabilities	92		99
Deferred income taxes	370		332
Other liabilities	256		213

OWENS CORNING STOCKHOLDERS’ EQUITY
Preferred stock, par value $0.01 per share (a)	0		0
Common stock, par value $0.01 per share (b)	1		1
Additional paid in capital	4,064		4,059
Accumulated earnings	2,282		1,829
Accumulated other comprehensive deficit	(593)		(588)
Cost of common stock in treasury (c)	(1,637)		(1,400)
Total Owens Corning stockholders’ equity	4,117		3,901
Noncontrolling interests	39		40
Total equity	4,156		3,941
TOTAL LIABILITIES AND EQUITY	$	9,977	$	9,481

(a)10 shares authorized; ~~none~~NaN issued or outstanding at ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019~~2020

(b)400 shares authorized; 135.5 issued and ~~108.0~~103.3 outstanding at ~~September~~June 30, ~~2020;~~2021; 135.5 issued and ~~109.0~~105.6 outstanding at December 31, ~~2019~~2020

(c)~~27.5~~32.2 shares at ~~September~~June 30, ~~2020~~2021 and ~~26.5~~29.9 shares at December 31, ~~2019~~2020

The accompanying Notes to the Consolidated Financial Statements are an integral part of this Statement.

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OWENS CORNING AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(unaudited)

(in millions)


	Common Stock Outstanding			Treasury Stock			APIC (a)		Accumulated Earnings		AOCI (b)		NCI (c)		Total
	Shares	Par Value		Shares	Cost
Balance at December 31, 2020	105.6	$	1	29.9	$	(1,400)	$	4,059	$	1,829	$	(588)	$	40	$	3,941
Net earnings attributable to Owens Corning	—	—		—	—		—		210		—		0		210

Currency translation adjustment	—	—		—	—		—		—		(45)		(1)		(46)
Pension and other postretirement adjustment (net of tax)	—	—		—	—		—		—		1		—		1
Deferred gain on hedging transactions (net of tax)	—	—		—	—		—		—		12		—		12

Issuance of common stock under share-based payment plans	0.5	—		(0.5)	22		(15)		—		—		—		7
Purchases of treasury stock	(1.8)	—		1.8	(142)		—		—		—		—		(142)
Stock-based compensation expense	—	—		—	—		12		—		—		—		12

Dividends declared (d)	—	—		—	—		—		(28)		—		—		(28)
Balance at March 31, 2021	104.3	$	1	31.2	$	(1,520)	$	4,056	$	2,011	$	(620)	$	39	$	3,967
Net earnings attributable to Owens Corning	—	—		—	—		—		298		—		0		298

Currency translation adjustment	—	—		—	—		—		—		32		0		32
Pension and other postretirement adjustment (net of tax)	—	—		—	—		—		—		(3)		—		(3)
Deferred loss on hedging transactions (net of tax)	—	—		—	—		—		—		(2)		—		(2)

Issuance of common stock under share-based payment plans	0.3	—		(0.3)	14		(4)		—		—		—		10
Purchases of treasury stock	(1.3)	—		1.3	(131)		—		—		—		—		(131)
Stock-based compensation expense	—	—		—	—		12		—		—		—		12

Dividends declared (d)	—	—		—	—		—		(27)		—		—		(27)
Balance at June 30, 2021	103.3	$	1	32.2	$	(1,637)	$	4,064	$	2,282	$	(593)	$	39	$	4,156

Common Stock
Outstanding Treasury
Stock APIC (a) Accumulated
Earnings AOCI (b) NCI (c) Total
Shares Par Value Shares Cost
Balance at December 31, 2019 109.0 $ 1 26.5 $ (1,130) $ 4,051 $ 2,319 $ (610) $ 40 $ 4,671
Net loss attributable to Owens Corning — — — — — (917) — 0 (917)
Net earnings attributable to noncontrolling interests — — — — — — — 1 1
Currency translation adjustment — — — — — — (122) (2) (124)
Pension and other postretirement adjustment (net of tax) — — — — — — 7 — 7
Deferred loss on hedging transactions (net of tax) — — — — — — (1) — (1)
Issuance of common stock under share-based payment plans 0.4 — (0.4) 16 (16) — — — 0
Purchases of treasury stock (1.6) — 1.6 (96) — — — — (96)
Stock-based compensation expense — — — — 11 — — — 11
Dividends declared (d) — — — — — (26) — — (26)
Balance at March 31, 2020 107.8 $ 1 27.7 $ (1,210) $ 4,046 $ 1,376 $ (726) $ 39 $ 3,526
Net earnings attributable to Owens Corning — — — — — 96 — 0 96
Net loss attributable to noncontrolling interests — — — — — — — (1) (1)
Currency translation adjustment — — — — — — 53 1 54
Pension and other postretirement adjustment (net of tax) — — — — — — (2) — (2)
Issuance of common stock under share-based payment plans 0.2 — (0.2) 9 (1) — — — 8
Stock-based compensation expense — — — — 9 — — — 9
Dividends declared (d) — — — — — (27) — — (27)
Balance at June 30, 2020 108.0 $ 1 27.5 $ (1,201) $ 4,054 $ 1,445 $ (675) $ 39 $ 3,663
Net earnings attributable to Owens Corning — — — — — 206 — 0 206
Currency translation adjustment — — — — — — 37 1 38
Pension and other postretirement adjustment (net of tax) — — — — — — (3) — (3)
Deferred loss on hedging transactions (net of tax) — — — — — — 3 — 3
Issuance of common stock under share-based payment plans 0 — 0 1 (1) — — — 0
Stock-based compensation expense — — — — 11 — — — 11
Dividends declared (d) — — — — — (26) — — (26)
Balance at September 30, 2020 108.0 $ 1 27.5 $ (1,200) $ 4,064 $ 1,625 $ (638) $ 40 $ 3,892
(a)Additional Paid in Capital (APIC)

(b)Accumulated Other Comprehensive Earnings (Deficit) (“AOCI”)

(c)Noncontrolling Interest (“NCI”)

(d)Quarterly dividend declarations of $0.26 per share as of June 30, 2021 and March 31, 2021

The accompanying Notes to the Consolidated Financial Statements are an integral part of this Statement.

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OWENS CORNING AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(unaudited)

(in millions)


	Common Stock Outstanding			Treasury Stock			APIC (a)		Accumulated Earnings		AOCI (b)		NCI (c)		Total
	Shares	Par Value		Shares	Cost
Balance at December 31, 2019	109.0	$	1	26.5	$	(1,130)	$	4,051	$	2,319	$	(610)	$	40	$	4,671
Net loss attributable to Owens Corning	—	—		—	—		—		(917)		—		—		(917)
Net earnings attributable to noncontrolling interests	—	—		—	—		—		—		—		1		1
Currency translation adjustment	—	—		—	—		—		—		(122)		(2)		(124)
Pension and other postretirement adjustment (net of tax)	—	—		—	—		—		—		7		—		7
Deferred loss on hedging transactions (net of tax)	—	—		—	—		—		—		(1)		—		(1)

Issuance of common stock under share-based payment plans	0.4	—		(0.4)	16		(16)		—		—		—		0
Purchases of treasury stock	(1.6)	—		1.6	(96)		—		—		—		—		(96)
Stock-based compensation expense	—	—		—	—		11		—		—		—		11

Dividends declared (d)	—	—		—	—		—		(26)		—		—		(26)
Balance at March 31, 2020	107.8	$	1	27.7	$	(1,210)	$	4,046	$	1,376	$	(726)	$	39	$	3,526
Net earnings attributable to Owens Corning	—	—		—	—		—		96		—		—		96
Net loss attributable to noncontrolling interests	—	—		—	—		—		—		—		(1)		(1)
Currency translation adjustment	—	—		—	—		—		—		53		1		54
Pension and other postretirement adjustment (net of tax)	—	—		—	—		—		—		(2)		—		(2)


Issuance of common stock under share-based payment plans	0.2	—		(0.2)	9		(1)		—		—		—		8

Stock-based compensation expense	—	—		—	—		9		—		—		—		9

Dividends declared (d)	—	—		—	—		—		(27)		—		0		(27)
Balance at June 30, 2020	108.0	$	1	27.5	$	(1,201)	$	4,054	$	1,445	$	(675)	$	39	$	3,663

(a)Additional Paid in Capital (APIC)

(b)Accumulated Other Comprehensive Earnings (Deficit) (“AOCI”)

(c)Noncontrolling Interest (“NCI”)

(d)Quarterly dividend declarations of $0.24 per share as of ~~September 30, 2020,~~ June 30, 2020 and March 31, 2020

~~The accompanying Notes to the Consolidated Financial Statements are an integral part of this Statement.~~

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~~- 8 -~~

~~OWENS CORNING AND SUBSIDIARIES~~

~~CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY~~

~~(unaudited)~~

~~(in millions)~~

Common Stock
Outstanding Treasury
Stock APIC (a) Accumulated
Earnings AOCI (b) NCI (c) Total
Shares Par Value Shares Cost
Balance at December 31, 2018 109.5 $ 1 26.0 $ (1,103) $ 4,028 $ 2,013 $ (656) $ 41 $ 4,324
Net earnings attributable to Owens Corning — — — — — 44 — — 44
Currency translation adjustment — — — — — — 11 (1) 10
Pension and other postretirement adjustment (net of tax) — — — — — — (1) — (1)
Deferred loss on hedging transactions (net of tax) — — — — — — (1) — (1)
Issuance of common stock under share-based payment plans 0.4 — (0.4) 14 (14) — — — 0
Purchases of treasury stock (1.3) — 1.3 (61) — — — — (61)
Stock-based compensation expense — — — — 11 — — — 11
Dividends declared (d) — — — — — (24) — — (24)
Balance at March 31, 2019 108.6 $ 1 26.9 $ (1,150) $ 4,025 $ 2,033 $ (647) $ 40 $ 4,302
Net earnings attributable to Owens Corning — — — — — 138 — — 138
Currency translation adjustment — — — — — — 10 0 10
Pension and other postretirement adjustment (net of tax) — — — — — — 2 — 2
Issuance of common stock under share-based payment plans 0.2 — (0.2) 9 (1) — — — 8
Stock-based compensation expense — — — — 10 — — — 10
Dividends declared (d) — — — — — (25) — 0 (25)
Balance at June 30, 2019 108.8 $ 1 26.7 $ (1,141) $ 4,034 $ 2,146 $ (635) $ 40 $ 4,445
Net earnings attributable to Owens Corning — — — — — 150 — — 150
Net earnings attributable to noncontrolling interests — — — — — — — 1 1
Currency translation adjustment — — — — — — (57) (2) (59)
Pension and other postretirement adjustment (net of tax) — — — — — — (2) — (2)
Deferred loss on hedging transactions (net of tax) — — — — — — 1 — 1
Issuance of common stock under share-based payment plans 0 — 0 1 (1) — — — 0
Stock-based compensation expense — — — — 10 — — — 10
Dividends declared (d) — — — — — (24) — (24)
Balance at September 30, 2019 108.8 $ 1 26.7 $ (1,140) $ 4,043 $ 2,272 $ (693) $ 39 $ 4,522

~~(a)Additional Paid in Capital (APIC)~~

~~(b)Accumulated Other Comprehensive Earnings (Deficit) (“AOCI”)~~

~~(c)Noncontrolling Interest (“NCI”)~~

~~(d)Quarterly dividend declarations of $0.22 per share as of September 30, 2019, June 30, 2019 and March 31, 2019~~

The accompanying Notes to the Consolidated Financial Statements are an integral part of this Statement.

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OWENS CORNING AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(in millions)

Nine Months Ended
September 30,

2020 2019
NET CASH FLOW PROVIDED BY OPERATING ACTIVITIES
Net earnings (loss) $ (615) $ 333
Adjustments to reconcile net earnings (loss) to cash provided by operating activities:
Depreciation and amortization 352 337
Deferred income taxes 95 118
Provision for pension and other employee benefits liabilities (2) 0
Stock-based compensation expense 31 31
Goodwill impairment charge 944 0
Intangible assets impairment charge 43 0
Other adjustments to reconcile net earnings (loss) to cash provided by operating activities (41) 8
       Loss on extinguishment of debt 0 32
Changes in operating assets and liabilities (53) (211)
Pension fund contribution (20) (34)
Payments for other employee benefits liabilities (10) (13)
Other (7) (5)
Net cash flow provided by operating activities 717 596
NET CASH FLOW USED FOR INVESTING ACTIVITIES
Cash paid for property, plant, and equipment (203) (314)
Proceeds from the sale of assets or affiliates 50 1
Derivative settlements 49 28
Net cash flow used for investing activities (104) (285)
NET CASH FLOW USED FOR FINANCING ACTIVITIES
Proceeds from long-term debt 297 445
Payments on long-term debt 0 (484)
Proceeds from senior revolving credit and receivables securitization facilities 876 1,701
Payments on senior revolving credit and receivables securitization facilities (876) (1,683)
Payments on term loan borrowing (200) (200)
Net decrease in short-term debt (20) (13)
Dividends paid (78) (72)
Purchases of treasury stock (96) (61)
Other (9) (3)
Net cash flow used for financing activities (106) (370)
Effect of exchange rate changes on cash (32) 16
Net increase (decrease) in cash, cash equivalents, and restricted cash 475 (43)
Cash, cash equivalents and restricted cash at beginning of period 179 85
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD $ 654 $ 42


	Six Months Ended June 30,
	2021		2020
NET CASH FLOW PROVIDED BY OPERATING ACTIVITIES
Net earnings (loss)	$	508	$	(821)
Adjustments to reconcile net earnings (loss) to cash provided by operating activities:
Depreciation and amortization	241		232


Deferred income taxes	35		48
Provision for pension and other employee benefits liabilities	0		(1)
Stock-based compensation expense	24		20
Goodwill impairment charge	0		944
Intangible assets impairment charge	0		43
Other adjustments to reconcile net earnings (loss) to cash provided by operating activities	(32)		(20)

Changes in operating assets and liabilities	(62)		(191)
Pension fund contribution	(3)		(12)
Payments for other employee benefits liabilities	(6)		(7)
Other	(3)		(6)
Net cash flow provided by operating activities	702		229
NET CASH FLOW USED FOR INVESTING ACTIVITIES
Cash paid for property, plant, and equipment	(177)		(140)

Proceeds from the sale of assets or affiliates	1		38


Derivative settlements	(32)		48


Other	(5)		0
Net cash flow used for investing activities	(213)		(54)
NET CASH FLOW (USED FOR) PROVIDED BY FINANCING ACTIVITIES
Proceeds from long-term debt	0		297

Proceeds from senior revolving credit and receivables securitization facilities	0		736
Payments on senior revolving credit and receivables securitization facilities	0		(546)

Payments on term loan borrowing	0		(50)
Net decrease in short-term debt	0		(17)
Dividends paid	(55)		(52)
Purchases of treasury stock	(263)		(96)
Other	(2)		(7)
Net cash flow (used for) provided by financing activities	(320)		265
Effect of exchange rate changes on cash	2		(30)
Net increase in cash, cash equivalents, and restricted cash	171		410
Cash, cash equivalents and restricted cash at beginning of period	724		179
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD	$	895	$	589

The accompanying Notes to the Consolidated Financial Statements are an integral part of this Statement.

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OWENS CORNING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. GENERAL

Unless the context requires otherwise, the terms “Owens Corning,” “Company,” “we” and “our” in this report refer to Owens Corning, a Delaware corporation, and its subsidiaries.

The Consolidated Financial Statements included in this report are unaudited, pursuant to certain rules and regulations of the Securities and Exchange Commission, and include, in the opinion of the Company, normal recurring 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. The December 31, ~~2019~~2020 balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States ("U.S."). In connection with the Consolidated Financial Statements and Notes included in this report, reference is made to the Consolidated Financial Statements and Notes contained in the Company’s Form 10-K for the year ended December 31, ~~2019~~2020 (the ~~"2019~~"2020 Form 10-K"). Certain reclassifications have been made to the periods presented for ~~2019~~2020 to conform to the classifications used in the periods presented for ~~2020.~~2021.

Revenue Recognition

As of December 31, 2020, our contract liability balances (for extended warranties, down payments and deposits, collectively) totaled $66 million, of which $14 million was recognized as revenue in the first six months of 2021. As of June 30, 2021, our contract liability balances totaled $69 million.

Cash, Cash Equivalents and Restricted Cash

On the Consolidated Statements of Cash Flows, the total of Cash, cash equivalents and restricted cash includes restricted cash of $7 million as of ~~September~~June 30, ~~2020,~~2021, December 31, ~~2019, September~~2020, June 30, ~~2019~~2020 and December 31, ~~2018.~~2019. Restricted cash primarily represents amounts received from a counterparty related to its performance assurance on an executory contract, which is included in Other current assets on the Consolidated Balance Sheets. These amounts are contractually required to be set aside, and the counterparty can exchange the cash for another form of performance assurance at its discretion.

~~Accounts Receivable~~Related Party Transactions

~~Trade accounts receivable are recorded at~~In the ~~invoiced amount and do not bear interest. Consistent with the requirements~~first quarter of ~~ASU 2016-13, "Financial Instruments - Credit Losses (Topic 236)," the allowance for doubtful accounts is based on~~2021, a related party relationship was established as a result of a member of the Company’s ~~assessment~~Board of Directors being named an executive officer of one of the ~~collectability of customer accounts.~~Company’s preexisting suppliers. The ~~Company regularly reviews the allowance by considering factors such as historical experience, credit quality, the age~~related party transactions with this supplier consist of the ~~accounts receivable balances,~~purchase of raw materials. Purchases from the related party supplier were $27 million and ~~current economic conditions that may affect a customer’s ability~~$47 million for the three and six months ended June 30, 2021, respectively. As of June 30, 2021, amounts due to ~~pay. Account balances are charged off against~~ the ~~allowance when the Company believes it is probable the receivable will not be recovered.~~related party supplier were $7 million.

~~Table of Contents~~

~~- 11 -~~

~~OWENS CORNING AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(unaudited)~~Leases

~~1. GENERAL (continued)~~

During the first quarter of 2021, the Company entered into a lease for a warehouse located near our manufacturing facility in Fort Smith, Arkansas that is expected to commence in 2022. The lease is for a to-be-constructed warehouse where the Company will serve as the construction agent for the landlord. At no point during the construction period will the Company control the underlying asset as defined in ASC 842 (Leases). This lease will result in finance lease right-of-use assets and corresponding lease liabilities of approximately $35 million at the time of lease commencement.

Accounting Pronouncements

The following table summarizes recent ASU's issued by the Financial Accounting Standards Board (FASB) that ~~could have~~had an impact on the Company's Consolidated Financial Statements:


Standard	Description	Effective Date for Company	Effect on the Consolidated Financial Statements
Recently adopted standards:
~~ASU 2016-13 "Financial Instruments - Credit Losses (Topic 326)," as amended by ASU 2018-19, 2019-04, 2019-05, 2019-10, 2019-11, and 2020-02~~	This standard replaces the incurred loss methodology for recognizing credit losses with a current expected credit losses model and applies to all financial assets, including trade receivables. Entities will adopt the standard using a modified-retrospective approach.	~~January 1, 2020~~	We adopted this standard using the modified-retrospective approach in the first quarter of 2020. The adoption of this standard did not have a material impact on our Consolidated Financial Statements. Please refer to the Accounts Receivable paragraph above in Note 1 of the Consolidated Financial Statements for additional detail on our accounting policy.
~~ASU 2017-04 "Intangibles - Goodwill and Other (Topic 350)"~~	This standard simplifies the test for goodwill impairment by eliminating Step 2 of the impairment test. If the carrying amount of a reporting unit exceeds its fair value, an impairment loss shall be recognized in an amount equal to that excess, limited to the total amount of goodwill allocated to that reporting unit. Entities will adopt the standard using a prospective approach.	~~January 1, 2020~~	We adopted this standard using the prospective approach for our interim impairment test conducted in the first quarter of 2020. The goodwill impairment charge of $944 million recorded for the nine months ended September 30, 2020, was calculated in accordance with this standard. Please refer to Note 6 of the Consolidated Financial Statements for additional detail on this adoption.

~~Recently issued standard:~~
ASU 2019-12 "Income Taxes (Topic 740)"	This standard simplifies accounting for income taxes including such topics as intraperiod tax allocations, franchise taxes and separate company financial statements.	January 1, 2021	~~We are currently assessing the impact~~The adoption of this standard ~~will~~did not have a material effect on our ~~Consolidated Financial Statements.~~consolidated financial statements.

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OWENS CORNING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

2. SEGMENT INFORMATION

The Company has 3 reportable segments: Composites, Insulation and Roofing. Accounting policies for the segments are the same as those for the Company. The Company’s 3 reportable segments are defined as follows:

Composites – The Company manufactures, fabricates and sells glass reinforcements in the form of fiber. Glass reinforcement materials are also used downstream by the Composites segment to manufacture and sell glass fiber products in the form of fabrics, non-wovens and other specialized products.

Insulation – Within our Insulation segment, the Company manufactures and sells fiberglass insulation into residential, commercial, industrial and other markets for both thermal and acoustical applications. It also manufactures and sells glass fiber pipe insulation, flexible duct media, bonded and granulated mineral wool insulation, cellular glass insulation and foam insulation used in above- and below-grade construction applications.

Roofing – Within our Roofing segment, the Company manufactures and sells residential roofing shingles, oxidized asphalt materials, roofing components used in residential and commercial construction and specialty applications, and synthetic packaging materials.

NET SALES

The following table summarizes our Net sales by segment and geographic region (in millions). Corporate eliminations (shown below) largely reflect intercompany sales from Composites to Roofing. External customer sales are attributed to geographic region based upon the location from which the product is sold to the external customer.

Three Months Ended
September 30, Nine Months Ended
September 30,

2020 2019 2020 2019
Reportable Segments
Composites $ 521 $ 531 $ 1,413 $ 1,579
Insulation 681 693 1,879 1,945
Roofing 761 713 1,993 2,105
Total reportable segments 1,963 1,937 5,285 5,629
Corporate eliminations (59) (54) (155) (161)
NET SALES $ 1,904 $ 1,883 $ 5,130 $ 5,468


	For the three months ended June 30, 2021
Reportable Segments	Composites		Insulation		Roofing		Eliminations		Consolidated
Disaggregation Categories
U.S. residential	$	83	$	285	$	847	$	(66)	$	1,149
U.S. commercial and industrial	162		177		33		0		372
Total United States	245		462		880		(66)		1,521
Europe	164		194		5		(1)		362
Asia-Pacific	129		53		2		0		184
Rest of world	45		97		30		0		172
NET SALES	$	583	$	806	$	917	$	(67)	$	2,239

External Customer Sales by Geographic Region
United States $ 1,294 $ 1,273 $ 3,482 $ 3,670
Europe 289 310 832 920
Asia-Pacific 187 169 461 492
Rest of world 134 131 355 386
NET SALES $ 1,904 $ 1,883 $ 5,130 $ 5,468


	For the three months ended June 30, 2020
Reportable Segments	Composites		Insulation		Roofing		Eliminations		Consolidated
Disaggregation Categories
U.S. residential	$	58	$	215	$	615	$	(45)	$	843
U.S. commercial and industrial	110		136		39		0		285
Total United States	168		351		654		(45)		1,128
Europe	107		146		3		0		256
Asia-Pacific	100		44		2		0		146
Rest of world	23		54		18		—		95
NET SALES	$	398	$	595	$	677	$	(45)	$	1,625

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- 1312 -

OWENS CORNING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

2. SEGMENT INFORMATION (continued)


	For the six months ended June 30, 2021
Reportable Segments	Composites		Insulation		Roofing		Eliminations		Consolidated
Disaggregation Categories
U.S. residential	$	158	$	548	$	1,506	$	(121)	$	2,091
U.S. commercial and industrial	308		339		55		0		702
Total United States	466		887		1,561		(121)		2,793
Europe	323		347		8		(1)		677
Asia-Pacific	267		89		5		0		361
Rest of world	86		183		54		0		323
NET SALES	$	1,142	$	1,506	$	1,628	$	(122)	$	4,154


	For the six months ended June 30, 2020
Reportable Segments	Composites		Insulation		Roofing		Eliminations		Consolidated
Disaggregation Categories
U.S. residential	$	124	$	426	$	1,107	$	(95)	$	1,562
U.S. commercial and industrial	261		298		67		0		626
Total United States	385		724		1,174		(95)		2,188
Europe	248		289		7		(1)		543
Asia-Pacific	205		64		5		0		274
Rest of world	54		121		46		0		221
NET SALES	$	892	$	1,198	$	1,232	$	(96)	$	3,226

EARNINGS BEFORE INTEREST AND TAXES

Earnings before interest and taxes (EBIT) by segment consist of net sales less related costs and expenses and are presented on a basis that is used internally for evaluating segment performance. Certain items, such as general corporate expenses or income and certain other expense or income items, are excluded from the internal evaluation of segment performance. Accordingly, these items are not reflected in EBIT for our reportable segments and are included within Corporate, Other and Eliminations.

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- 13 -

OWENS CORNING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

2. SEGMENT INFORMATION (continued)

The following table summarizes EBIT by segment (in millions):

Three Months Ended
September 30, Nine Months Ended
September 30,

2020 2019 2020 2019
Reportable Segments
Composites $ 55 $ 67 $ 105 $ 191
Insulation 73 84 144 141
Roofing 196 143 408 368
Total reportable segments 324 294 657 700
Restructuring (costs) / gains 0 0 (10) 1
Gains on sale of certain precious metals 7 0 26 0
Goodwill impairment charge 0 0 (944) 0
Intangible assets impairment charge 0 0 (43) 0
General corporate expense and other (35) (17) (85) (76)
Total corporate, other and eliminations (28) (17) (1,056) (75)
EBIT $ 296 $ 277 $ (399) $ 625

~~TOTAL ASSETS~~

Total assets for the Insulation segment decreased following $987 million of non-cash impairment charges for goodwill and intangible assets in the first quarter of 2020. Please refer to Note 6, Goodwill and Other Intangible Assets, for information on these charges.


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Reportable Segments
Composites	$	98	$	6	$	177	$	50
Insulation	112		32		194		71
Roofing	234		148		390		212
Total reportable segments	444		186		761		333
Restructuring costs	(1)		(5)		(2)		(10)
Gains on sale of certain precious metals	21		9		41		19
Goodwill impairment charge	0		0		0		(944)
Intangible assets impairment charge	0		0		0		(43)

General corporate expense and other	(36)		(19)		(71)		(50)
Total corporate, other and eliminations	(16)		(15)		(32)		(1,028)
EBIT	$	428	$	171	$	729	$	(695)

3. ~~REVENUE~~INVENTORIES

~~The~~Inventories consist of the following ~~table shows a disaggregation of Net sales~~ (in millions):

For the three months ended September 30, 2020
Reportable Segments Composites Insulation Roofing Eliminations Consolidated
Disaggregation Categories
U.S. residential $ 76 $ 257 $ 691 $ (56) $ 968
U.S. commercial and industrial 136 150 43 (3) 326
Europe 131 155 3 0 289
Asia-Pacific 141 43 3 0 187
Rest of world 37 76 21 0 134
NET SALES $ 521 $ 681 $ 761 $ (59) $ 1,904


	June 30, 2021		December 31, 2020
Finished goods	$	513	$	532
Materials and supplies	374		323
Total inventories	$	887	$	855

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- 14 -

OWENS CORNING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

~~3. REVENUE (continued)~~

For the three months ended September 30, 2019
Reportable Segments Composites Insulation Roofing Eliminations Consolidated
Disaggregation Categories
U.S. residential $ 75 $ 237 $ 641 $ (53) $ 900
U.S. commercial and industrial 159 168 46 0 373
Europe 142 165 3 0 310
Asia-Pacific 120 46 4 (1) 169
Rest of world 35 77 19 0 131
NET SALES $ 531 $ 693 $ 713 $ (54) $ 1,883

For the nine months ended September 30, 2020
Reportable Segments Composites Insulation Roofing Eliminations Consolidated
Disaggregation Categories
U.S. residential $ 200 $ 683 $ 1,798 $ (151) $ 2,530
U.S. commercial and industrial 397 448 110 (3) 952
Europe 379 444 10 (1) 832
Asia-Pacific 346 107 8 0 461
Rest of world 91 197 67 0 355
NET SALES $ 1,413 $ 1,879 $ 1,993 $ (155) $ 5,130

For the nine months ended September 30, 2019
Reportable Segments Composites Insulation Roofing Eliminations Consolidated
Disaggregation Categories
U.S. residential $ 217 $ 649 $ 1,900 $ (156) $ 2,610
U.S. commercial and industrial 472 480 108 0 1060
Europe 442 469 10 (1) 920
Asia-Pacific 351 132 10 (1) 492
Rest of world 97 215 77 (3) 386
NET SALES $ 1,579 $ 1,945 $ 2,105 $ (161) $ 5,468

As of December 31, 2019, our contract liability balances (for extended warranties, down payments and deposits, collectively) totaled $60 million, of which $17 million was recognized as revenue in the first nine months of 2020. As of September 30, 2020, our contract liability balances totaled $63 million.

4. ~~INVENTORIES~~

~~Inventories consist of the following (in millions):~~

September 30, 2020 December 31, 2019
Finished goods $ 559 $ 715
Materials and supplies 327 318
Total inventories $ 886 $ 1,033

~~Table of Contents~~

~~- 15 -~~

~~OWENS CORNING AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(unaudited)~~

5. DERIVATIVE FINANCIAL INSTRUMENTS

The Company is exposed to, among other risks, the impact of changes in commodity prices, foreign currency exchange rates, and interest rates in the normal course of business. The Company’s risk management program is designed to manage the exposure and volatility arising from these risks, and utilizes derivative financial instruments to offset a portion of these risks. The Company uses derivative financial instruments only to the extent necessary to hedge identified business risks, and does not enter into such transactions for trading purposes.

The Company generally does not require collateral or other security with counterparties to these financial instruments and is therefore subject to credit risk in the event of nonperformance; however, the Company monitors credit risk and currently does not anticipate nonperformance by other parties. Contracts with counterparties generally contain right of offset provisions. These provisions effectively reduce the Company’s exposure to credit risk in situations where the Company has gain and loss positions outstanding with a single counterparty. It is the Company’s policy to offset on the Consolidated Balance Sheets the amounts recognized for derivative instruments with any cash collateral arising from derivative instruments executed with the same counterparty under a master netting agreement. As of ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, the Company did not have any amounts on deposit with any of its counterparties, nor did any of its counterparties have any amounts on deposit with the Company.

Derivative Fair Values

Our derivatives consist of natural gas forward swaps, cross-currency swaps, foreign exchange forward contracts and U.S. treasury rate lock agreements, all of which are over-the-counter and not traded through an exchange. The Company uses widely accepted valuation tools to determine fair value, such as discounting cash flows to calculate a present value for the derivatives. The models use Level 2 inputs, such as forward curves and other commonly quoted observable transactions and prices. The fair value of our derivatives and hedging instruments are all classified as Level 2 investments within the three-tier hierarchy.

The following table presents the fair value of derivatives and hedging instruments and the respective location on the Consolidated Balance Sheets (in millions):


			Fair Value at								Fair Value at
		Location	September 30, 2020		December 31, 2019			Location	June 30, 2021		December 31, 2020
Derivative assets designated as hedging instruments:	Derivative assets designated as hedging instruments:						Derivative assets designated as hedging instruments:
Net investment hedges:	Net investment hedges:						Net investment hedges:
Cross-currency swaps	Cross-currency swaps	Other current assets	$	5	$	12	Cross-currency swaps	Other current assets	$	5	$	5
Cross-currency swaps		Other non-current assets	$	1	$	1

Cash flow hedges:	Cash flow hedges:						Cash flow hedges:
Natural gas forward swaps	Natural gas forward swaps	Other current assets	$	1	$	—	Natural gas forward swaps	Other current assets	$	8	$	2

Treasury interest rate lock							Treasury interest rate lock	Other non-current assets	$	12	$	4
Derivative liabilities designated as hedging instruments:	Derivative liabilities designated as hedging instruments:						Derivative liabilities designated as hedging instruments:
Net investment hedges:	Net investment hedges:						Net investment hedges:

Cross-currency swaps	Cross-currency swaps	Other liabilities	$	0	$	4	Cross-currency swaps	Other liabilities	$	7	$	11

Cash flow hedges:	Cash flow hedges:						Cash flow hedges:
Natural gas forward swaps		Current liabilities	$	1	$	3
Treasury interest rate lock		Other liabilities	$	1	$	0

Foreign exchange forward contracts							Foreign exchange forward contracts	Other current liabilities	$	1	$	0
Derivative assets not designated as hedging instruments:	Derivative assets not designated as hedging instruments:						Derivative assets not designated as hedging instruments:

Foreign exchange forward contracts	Foreign exchange forward contracts	Other current assets	$	3	$	9	Foreign exchange forward contracts	Other current assets	$	10	$	2
Derivative liabilities not designated as hedging instruments:	Derivative liabilities not designated as hedging instruments:						Derivative liabilities not designated as hedging instruments:

Foreign exchange forward contracts	Foreign exchange forward contracts	Current liabilities	$	24	$	1	Foreign exchange forward contracts	Other current liabilities	$	2	$	45

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- 1615 -

OWENS CORNING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

5.4. DERIVATIVE FINANCIAL INSTRUMENTS (continued)

Consolidated Statements of Earnings (Loss) Activity

The following table presents the impact and respective location of derivative activities on the Consolidated Statements of Earnings (Loss) (in millions):


			Three Months Ended September 30,						Nine Months Ended September 30,								Three Months Ended June 30,				Six Months Ended June 30,
		Location	2020		2019		2020		2019			Location	2021		2020		2021		2020
Derivative activity designated as hedging instruments:	Derivative activity designated as hedging instruments:										Derivative activity designated as hedging instruments:
Natural gas cash flow hedges:	Natural gas cash flow hedges:										Natural gas cash flow hedges:
Amount of loss reclassified from AOCI (as defined below) into earnings (a)		Cost of sales	$	1	$	2	$	5	$	3
Amount of (gain)/loss reclassified from AOCI (as defined below) into earnings (a)											Amount of (gain)/loss reclassified from AOCI (as defined below) into earnings (a)	Cost of sales	$	(1)	$	2	$	(2)	$	4

Cross-currency swap net investment hedges:	Cross-currency swap net investment hedges:										Cross-currency swap net investment hedges:
Amount of gain recognized in earnings on derivative amounts excluded from effectiveness testing	Amount of gain recognized in earnings on derivative amounts excluded from effectiveness testing	Interest expense, net	$	(1)	$	(3)	$	(6)	$	(9)	Amount of gain recognized in earnings on derivative amounts excluded from effectiveness testing	Interest expense, net	$	(2)	$	(2)	$	(3)	$	(5)

Derivative activity not designated as hedging instruments:	Derivative activity not designated as hedging instruments:										Derivative activity not designated as hedging instruments:

Foreign currency:	Foreign currency:										Foreign currency:
Amount of loss/(gain) recognized in earnings (b)		Other expenses, net	$	29	$	(31)	$	20	$	(45)
Amount of gain recognized in earnings (b)											Amount of gain recognized in earnings (b)	Other (income) expenses, net	$	4	$	3	$	(16)	$	(9)

(a)Accumulated Other Comprehensive Earnings (Deficit) ("AOCI")

(b)Gains related to foreign currency derivatives were substantially offset by net revaluation impacts on foreign currency denominated balance sheet exposures, which were also recorded in Other (income) expenses, net. Please refer to the "Other Derivatives" section below for additional detail.

Consolidated Statements of Comprehensive Earnings (Loss) Activity

The following table presents the impact of derivative activities on the Consolidated Statements of Comprehensive Earnings (Loss) (in millions):


			Amount of Loss (Gain) Recognized in Comprehensive Earnings (Loss)																Amount of (Gain) Loss Recognized in Comprehensive Earnings (Loss)
			Three Months Ended September 30,						Nine Months Ended September 30,								Three Months Ended June 30,				Six Months Ended June 30,
Hedging Type	Hedging Type	Derivative Financial Instrument	2020		2019		2020		2019		Hedging Type	Derivative Financial Instrument	2021		2020		2021		2020
Net investment hedge	Net investment hedge	Cross-currency swaps	$	11	$	(27)	$	(27)	$	(30)	Net investment hedge	Cross-currency swaps	$	1	$	4	$	(4)	$	(38)
Cash flow hedge	Cash flow hedge	Natural gas forward swaps	$	(3)	$	(1)	$	(3)	$	1	Cash flow hedge	Natural gas forward swaps	$	(2)	$	0	$	(6)	$	0
Cash flow hedge	Cash flow hedge	Treasury interest rate lock	$	(1)	$	0	$	1	$	0	Cash flow hedge	Treasury interest rate lock	$	7	$	1	$	(8)	$	2
Cash flow hedge											Cash flow hedge	Foreign exchange forward contracts	$	1	$	0	$	1	$	0

Cash Flow Hedges

The Company uses a combination of derivative financial instruments, which qualify as cash flow hedges, and physical contracts to manage forecasted exposure to electricity and natural gas prices. As of ~~September~~June 30, ~~2020,~~2021, the notional amounts of these natural gas forward swaps was 42 million MMBtu (or MMBtu equivalent) based on ~~U.S. and~~ European indices.

In March 2020, the Company entered into a $175 million forward U.S. Treasury rate lock agreement to manage the U.S. Treasury portion of its interest rate risk associated with the anticipated issuance of certain 10-year fixed rate senior notes before the end of 2022. The Company intends to cash settle this agreement upon a future issuance of certain senior notes thereby effectively locking in the U.S. Treasury fixed interest rate in effect at the time the agreement was initiated. The locked fixed

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- 16 -

OWENS CORNING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

4. DERIVATIVE FINANCIAL INSTRUMENTS (continued)

rate of this agreement is 0.994%. The Company has designated this outstanding forward U.S. Treasury rate lock agreement, which expires on December 15, 2022, as a cash flow hedge.

~~Table~~In June 2021, the Company entered into five currency forward contracts with unrelated counterparties totaling $26 million to mitigate against unwanted or anticipated moves in the European Euro exchange rate against the U.S. Dollar, pertaining to forecasted Euro denominated invoices for capital expenditures. The Company has designated each of ~~Contents~~

~~- 17 -~~

~~OWENS CORNING AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(unaudited)~~

~~5. DERIVATIVE FINANCIAL INSTRUMENTS (continued)~~

the individual contracts as cash flow hedges, with the last hedge maturing no later than December 2023.

Net Investment Hedges

The Company has translation exposure resulting from translating the financial statements of foreign subsidiaries into U.S. Dollars, which is recognized in Currency translation adjustment (a component of AOCI). The Company uses cross-currency forward contracts to hedge ~~a portion~~portions of the net investment in foreign subsidiaries against fluctuations in foreign exchange rates. As of ~~September~~June 30, ~~2020,~~2021, the notional amount of these derivative financial instruments was $218 million related to the U.S. Dollar and European Euro. In the second quarter of 2020, the Company unwound certain net investment hedge contracts, resulting in cash proceeds of $30 million.

Other Derivatives

The Company uses forward currency exchange contracts to manage existing exposures to foreign exchange risk related to assets and liabilities recorded on the Consolidated Balance Sheets. As of ~~September~~June 30, ~~2020,~~2021, the Company had notional amounts of ~~$711~~$702 million for non-designated derivative financial instruments related to foreign currency exposures in U.S. Dollars primarily related to Brazilian Real, Chinese Yuan, European Euro, Hong Kong Dollar, Indian Rupee, and South Korean Won. In addition, the Company had notional amounts of ~~$137~~$109 million for non-designated derivative financial instruments related to foreign currency exposures in European Euro primarily related to the ~~Czech Koruna,~~ Polish Zloty and Russian Ruble.

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OWENS CORNING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

6.5. GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill

The Company tests goodwill and indefinite-lived intangible assets for impairment during the fourth quarter of each year, or more frequently should circumstances change or events occur that would more likely than not reduce the fair value of a reporting unit below its carrying value.

~~First Quarter~~No testing was deemed necessary in the first six months of ~~2020 Impairment Charge~~2021. The changes in the net carrying value of goodwill by segment are as follows (in millions):


	Composites		Insulation		Roofing		Total
Balance at December 31, 2020	$	57	$	532	$	400	$	989


Additions	3		0		0		3
Foreign Currency Translation	(1)		(5)		(1)		(7)
Balance at June 30, 2021	$	59	$	527	$	399	$	985

During the first quarter of 2020, the Company’s significant share price reduction during the ~~ongoing~~ COVID-19 pandemic was determined to be an indicator of impairment under ASC 350. ~~As of the end of the first quarter, the~~The COVID-19 pandemic was expected to have a negative impact on results for the remainder of 2020 and create ~~near-term~~ uncertainty in our markets.

As of the most recent annual goodwill impairment testing date (October 1, 2019), testing indicated that the business enterprise value for the Insulation reporting unit exceeded its carrying value by approximately 10%. As described in our 2019 Form 10-K, there was uncertainty surrounding the macroeconomic factors impacting this reporting unit and a downturn in these factors or a change in the long-term revenue growth or profitability for this reporting unit could increase the likelihood of a future impairment.

In the first quarter of 2020, the Company performed its ongoing assessment to consider whether events or circumstances had occurred that could more likely than not reduce the fair value of a reporting unit below its carrying value. The ~~valuation limitation from the Company’s share price decline in the first quarter of 2020, the~~ narrow cushion on the Insulation reporting unit and the high level of ~~near-term~~ macroeconomic uncertainty caused the Company to perform an interim goodwill impairment test as of March 31, 2020 over the Insulation reporting unit. After evaluating and weighing all relevant events and circumstances, and considering the substantial excess fair values for the Roofing and Composites reporting units, we concluded that it was not more likely than not that the fair values of these reporting units were less than their carrying values. Consequently, we determined that it was not necessary to perform an interim impairment test for the Roofing and Composites reporting units.

Based on the results of this interim testing over the Insulation reporting unit, the Company recorded a $944 million pre-tax non-cash impairment charge in the first quarter of 2020. This charge was recorded in Goodwill impairment charge on the Consolidated Statements of Earnings (Loss), and was included in the Corporate, Other and Eliminations reporting category. Consistent with the Company’s adoption of ASU 2017-04 in the first quarter of 2020, the impairment charge was equal to the excess of the Insulation reporting unit’s carrying value over its fair value. The overall enterprise fair value of the Company was limited by the decline in our share price in the first quarter of 2020. The reduction in fair value for the Insulation reporting unit, and corresponding impairment charge, was primarily driven by an increase in the discount rate arising from higher equity risk premiums that reflect significant uncertainty surrounding the effect from the COVID-19 pandemic and a decrease in the reporting unit's forecasted near-term cash flows.

~~Table of Contents~~

~~- 19 -~~

~~OWENS CORNING AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(unaudited)~~

~~6. GOODWILL AND OTHER INTANGIBLE ASSETS (continued)~~

~~Ongoing 2020 Impairment Indicator Assessment~~

During the second and third quarters of 2020, the Company performed its quarterly assessment to identify potential indicators of impairment for each of its reporting units. Among qualitative and quantitative factors considered, management reviewed key assumptions and information, including updated macroeconomic indicators that impact the markets we serve, financial forecast information for each reporting unit, and recent performance of the Company’s share price to perform this assessment. The Company did not identify any impairment indicators for any of its reporting units during the second or third quarter of 2020 and determined that it was not more likely than not that the carrying value of any of its reporting units exceeded their respective fair values. ~~Consequently, we determined that it was not necessary to perform an interim impairment test for goodwill.~~ ~~We will continue to monitor the impacts of the COVID-19 pandemic on the Company and significant changes in other key assumptions that could result in future period impairment charges.~~

~~The changes in the net carrying value of goodwill by segment are as follows (in millions):~~

Composites Insulation Roofing Total
Balance at December 31, 2019 $ 57 $ 1,479 $ 396 $ 1,932
Impairment charge 0 (944) 0 (944)
Divestiture 0 (4) 0 (4)
Foreign currency translation (1) (9) 2 (8)
Balance at September 30, 2020 $ 56 $ 522 $ 398 $ 976

The remaining balance of goodwill for the Insulation reporting unit continues to be at risk for future impairment. There continues to be uncertainty surrounding the macroeconomic factors impacting this reporting unit, and a sustained downturn, significantly extended recovery, or a change in the long-term revenue growth or profitability for this reporting unit could increase the likelihood of an additional future impairment. Additionally, changes in market participant assumptions such as an increased discount rate or significant share price reductions could increase the likelihood of an additional future impairment.

Other Intangible Assets

The Company amortizes the cost of other intangible assets over their estimated useful lives which, individually, range up to 45 years. The Company's future cash flows are not materially impacted by its ability to extend or renew agreements related to its amortizable intangible assets.

~~First Quarter~~Other intangible assets consist of ~~2020 Impairment Charge~~the following (in millions):


	June 30, 2021						December 31, 2020
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Trademarks	$	1,104	$	—	$	1,104	$	1,109	$	—	$	1,109
Customer relationships	564		(209)		355		570		(200)		370
Technology	326		(186)		140		327		(172)		155
Other (a)	38		(3)		35		36		(3)		33
Total other intangible assets	$	2,032	$	(398)	$	1,634	$	2,042	$	(375)	$	1,667

(a) Other primarily includes emissions and quarry rights.

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OWENS CORNING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

5. GOODWILL AND OTHER INTANGIBLE ASSETS (continued)

In the first quarter of 2020, we performed an interim impairment test of certain indefinite-lived trademarks and trade names used by our Insulation segment, based on the macroeconomic conditions that precipitated the interim goodwill impairment test described above.

Based on the results of this testing, the Company recorded pre-tax non-cash impairment charges totaling $43 million in the first quarter of 2020 related to 2 of the Insulation trademarks and trade names. These charges were recorded in Other (income) expenses, net on the Consolidated Statements of Earnings (Loss), and were included in the Corporate, Other and Eliminations reporting category.

~~Fair values used in testing for potential~~Non-cash impairment of our trademarks are calculated using the relief-from-royalty method by applying an estimated market value royalty rate to the forecasted revenues of the businesses that utilize those assets. The assumed cash flows from this calculation are discounted atcharges included a ~~rate based on a market participant discount rate.~~

~~Table of Contents~~

~~- 20 -~~

~~OWENS CORNING AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(unaudited)~~

~~6. GOODWILL AND OTHER INTANGIBLE ASSETS (continued)~~

A pre-tax impairment charge of $34 million for a trade name used by our European building and technical insulation business, was recognized in the first quarter of 2020 due to the combined effect of lower expected sales following an immaterial divestiture in the first quarter of 2020, a decrease in the forecasted near-term cash flows, and a ~~higher discount rate associated with the economic impact and uncertainty from the COVID-19 pandemic. A~~ pre-tax impairment charge of $9 million related to a trademark used on global cellular glass insulation products was recorded in the first quarter of 2020 due to a slightly lower sales outlook and a similarly higher discount rate associated with the economic impact and uncertainty from the COVID-19 pandemic.

~~Ongoing 2020 Impairment Indicator Assessment~~

During the second and third quarters of 2020, the Company performed its quarterly assessment to identify potential indicators of impairment for each of its indefinite-lived intangible assets. Among the qualitative and quantitative factors considered, management reviewed key assumptions and information, including updated macroeconomic indicators that impact the markets we serve and financial forecast information for each reporting unit. ~~After evaluating and weighing all relevant events and circumstances, t~~he Company did not identify any impairment indicators for any of its indefinite-lived intangible assets during the second or third quarter of 2020 and determined that it was not more likely than not that the carrying value of any of its indefinite-lived intangible assets exceeded their respective fair values. ~~Consequently, we determined that it was not necessary to perform an interim impairment test for any indefinite-lived intangible assets.~~ ~~We will continue to monitor the impacts of the COVID-19 pandemic on the Company and significant changes in key assumptions that could result in future period impairment charges.~~

products.

There ~~are two indefinite-lived intangible assets~~is one trade name used by our European building and technical insulation business within our Insulation segment that ~~are~~is at an increased risk of ~~impairment, both of which are used by our Insulation segment and were partially impaired in the first quarter of 2020.~~impairment. A change in the estimated long-term revenue growth rate or increase in the discount rate assumption could increase the likelihood of a future ~~impairment. These~~impairment for this asset. The affected ~~assets~~asset had ~~an aggregate~~a carrying value of ~~$257~~$168 million as of ~~September~~June 30, ~~2020.~~

~~The Other category below primarily includes emissions and quarry rights. Other intangible assets consist of the following (in millions):~~

September 30, 2020 December 31, 2019
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
Gross
Carrying
Amount Accumulated
Amortization Net
Carrying
Amount
Trademarks $ 1,102 n/a $ 1,102 $ 1,139 n/a $ 1,139
Customer relationships 556 $ (190) 366 550 $ (167) 383
Technology 323 (167) 156 319 (152) 167
Other 34 (3) 31 67 (35) 32
Total other intangible assets $ 2,015 $ (360) $ 1,655 $ 2,075 $ (354) $ 1,721

2021.

The estimated amortization expense for intangible assets for the next five years is as follows (in millions):


Period	Period	Amortization		Period	Amortization
2021		$	49
2022	2022	$	46	2022	$	45
2023	2023	$	44	2023	$	43
2024	2024	$	40	2024	$	39
2025	2025	$	39	2025	$	38
2026				2026	$	38

~~Table of Contents~~

~~- 21 -~~

~~OWENS CORNING AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(unaudited)~~

7.6. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consist of the following (in millions):


		September 30, 2020		December 31, 2019			June 30, 2021		December 31, 2020
Land	Land	$	217	$	221	Land	$	221	$	222
Buildings and leasehold improvements	Buildings and leasehold improvements	1,217		1,186		Buildings and leasehold improvements	1,256		1,241
Machinery and equipment	Machinery and equipment	5,080		4,978		Machinery and equipment	5,271		5,155
Construction in progress	Construction in progress	222		310		Construction in progress	247		292
		6,736		6,695			6,995		6,910
Accumulated depreciation	Accumulated depreciation	(3,019)		(2,840)		Accumulated depreciation	(3,204)		(3,101)
Property, plant and equipment, net	Property, plant and equipment, net	$	3,717	$	3,855	Property, plant and equipment, net	$	3,791	$	3,809

Machinery and equipment includes certain precious metals used in our production tooling, which comprise approximately 10% of total machinery and equipment as of both ~~September~~June 30, ~~2020~~2021 and December 31, ~~2019.~~2020. Precious metals used in our production tooling are depleted as they are consumed during the production process, which typically represents an annual expense of about 3% of the outstanding carrying value.

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- 19 -

OWENS CORNING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

6. PROPERTY, PLANT AND EQUIPMENT (continued)

Our production tooling needs in our Composites segment are changing in response to economic and technological factors. As a result, we exchanged certain precious metals used in production tooling for certain other precious metals to be used in production tooling. During the three and six months ended June 30, 2021, these non-cash exchanges resulted in a net increase to Machinery and equipment of $21 million and $41 million, respectively, and gains totaling $21 million and $41 million, respectively, which are included in Other (income) expenses, net on the Consolidated Statements of Earnings (Loss) and are reflected in the Corporate, Other and Eliminations reporting category. These non-cash investing activities are not included in Net cash flow used for investing activities in the Consolidated Statements of Cash Flows. We do not expect these exchanges to materially impact our current or future capital expenditure requirements or rate of depletion.

8.7. WARRANTIES

The Company records a liability for warranty obligations at the date the related products are sold. Adjustments are made as new information becomes available. Please refer to Note 1 of our ~~2019~~2020 Form 10-K for information about our separately-priced extended warranty contracts. A reconciliation of the warranty liability is as follows (in millions):


		Nine Months Ended September 30,							Six Months Ended June 30,
		2020		2019			2021		2020
Beginning balance	Beginning balance	$	64	$	60	Beginning balance	$	72	$	64
Amounts accrued for current year	Amounts accrued for current year	16		17		Amounts accrued for current year	11		10
Settlements of warranty claims	Settlements of warranty claims	(10)		(13)		Settlements of warranty claims	(7)		(6)
Ending balance	Ending balance	$	70	$	64	Ending balance	$	76	$	68

9.8. RESTRUCTURING AND ACQUISITION-RELATED COSTS

The Company may incur restructuring, transaction and integration costs related to acquisitions, and may incur restructuring costs in connection with its global cost reduction and productivity initiatives.

2020 ~~Cost Reduction~~Insulation Restructuring Actions

During the ~~second~~fourth quarter of 2020, the Company took actions to avoid future capital outlays and reduce costs in its global Insulation segment, mainly through decisions to close certain manufacturing facilities in Shanghai, China and Fresno, Texas, and optimize a facility in Parainen, Finland. During the first six months of 2021, the Company recorded $2 million of charges related to accelerated depreciation. The Company expects to recognize less than $3 million of incremental charges throughout 2021 related to these actions.

2020 Composites Restructuring Actions

During 2020, the Company took actions to reduce costs throughout its global Composites segment primarily through global workforce ~~reductions. As a result~~reductions, closure of ~~these actions, the Company recorded $5 million of charges during the first nine months of 2020. The Company expects to recognize between $5 million~~manufacturing lines and ~~$10 million of incremental charges through the remainder of 2020.~~

~~Table of Contents~~

~~- 22 -~~

~~OWENS CORNING AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(unaudited)~~

~~9. RESTRUCTURING AND ACQUISITION-RELATED COSTS (continued)~~

~~Insulation Network Optimization Restructuring~~

In October 2019, the Company took actions to primarily restructure certain U.S. insulation operations and to reduce the cost structure throughout the Insulation network. Investments in productivity and process technologies enabled the Company to optimize its network and improve its cost position. During the first nine months of 2020, the Company recorded $5 million of charges.other asset write-offs. The Company does not expect to recognize significant incremental ~~charges~~costs related to these actions.

Acquisition-Related Restructuring

Following the acquisitions of Paroc Group Oy ("Paroc") and Pittsburgh Corning Corporation and Pittsburgh Corning Europe NV (collectively, "Pittsburgh Corning") into the Company's Insulation segment, the Company took actions to realize expected synergies from the newly acquired operations. The Company does not expect to recognize significant incremental costs related to these actions.

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- 20 -

OWENS CORNING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

8. RESTRUCTURING AND ACQUISITION-RELATED COSTS (continued)

Consolidated Statements of Earnings (Loss) Classification

The following table presents the impact and respective location of total restructuring costs on the Consolidated Statements of Earnings (Loss), which are included within Corporate, Other and Eliminations (in millions):


			Three Months Ended September 30,						Nine Months Ended September 30,								Three Months Ended June 30,				Six Months Ended June 30,
Type of cost	Type of cost	Location	2020		2019		2020		2019		Type of cost	Location	2021		2020		2021		2020
Accelerated depreciation	Accelerated depreciation	Cost of sales	$	0	$	0	$	1	$	0	Accelerated depreciation	Cost of sales	$	1	$	0	$	2	$	1
Other exit costs	Other exit costs	Cost of sales	0		0		3		2		Other exit costs	Cost of sales	0		1		0		3
Other exit costs											Other exit costs	Marketing and administrative expenses	1		0		1		0
Severance	Severance	Other expenses, net	0		0		5		0		Severance	Other (income) expenses, net	(2)		3		(2)		5
Other exit costs (gains)		Other expenses, net	0		0		1		(3)
Other exit costs											Other exit costs	Other (income) expenses, net	1		1		1		1

Total restructuring costs (gains)			$	0	$	0	$	10	$	(1)
Total restructuring costs											Total restructuring costs		$	1	$	5	$	2	$	10

Summary of Unpaid Liabilities

The following table summarizes the status of the unpaid liabilities from the Company's restructuring activities (in millions):

2020 Cost Reduction Actions Insulation Network Optimization Restructuring Acquisition-Related Restructuring
Balance at December 31, 2019 $ 0 $ 5 $ 11
Restructuring costs 5 5 0
Payments (3) (8) (4)
Non-cash items and reclassifications to other accounts 0 (2) 2
Balance at September 30, 2020 $ 2 $ 0 $ 9
Cumulative charges incurred $ 5 $ 29 $ 30


	2020 Insulation Restructuring Actions		2020 Composites Restructuring Actions		Acquisition-Related Restructuring
Balance at December 31, 2020	$	2	$	2	$	9
Restructuring costs/(gains)	2		0		(1)
Payments	(1)		(2)		(2)
Accelerated depreciation and other non-cash items	(2)		0		0


Balance at June 30, 2021	$	1	$	0	$	6
Cumulative charges incurred	$	25	$	13	$	28

As of ~~September~~June 30, ~~2020,~~2021, the remaining liability balance is comprised of ~~$11~~$7 million of severance, inclusive of $2 million of non-current severance and $9$5 million of severance the Company expects to pay over the next twelve months.

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- 2321 -

OWENS CORNING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

~~10.~~9. DEBT

Details of the Company’s outstanding long-term debt, as well as the fair values, are as follows (in millions):


		September 30, 2020						December 31, 2019							June 30, 2021					December 31, 2020
		Carrying Value		Fair Value		Carrying Value		Fair Value			Carrying Value		Fair Value			Carrying Value		Fair Value

4.200% senior notes, net of discount and financing fees, due 2022	4.200% senior notes, net of discount and financing fees, due 2022	$	184	105	%	$	183	104	%	4.200% senior notes, net of discount and financing fees, due 2022	$	184	104	%		$	184	106	%
4.200% senior notes, net of discount and financing fees, due 2024	4.200% senior notes, net of discount and financing fees, due 2024	395		111	%	395		106	%	4.200% senior notes, net of discount and financing fees, due 2024	396		110	%		396		111	%
3.400% senior notes, net of discount and financing fees, due 2026	3.400% senior notes, net of discount and financing fees, due 2026	397		108	%	396		101	%	3.400% senior notes, net of discount and financing fees, due 2026	397		109	%		397		111	%
3.950% senior notes, net of discount and financing fees, due 2029	3.950% senior notes, net of discount and financing fees, due 2029	445		114	%	445		104	%	3.950% senior notes, net of discount and financing fees, due 2029	445		113	%		445		115	%
3.875% senior notes, net of discount and financing fees, due 2030	3.875% senior notes, net of discount and financing fees, due 2030	297		113	%	—		—	%	3.875% senior notes, net of discount and financing fees, due 2030	297		112	%		297		115	%
7.000% senior notes, net of discount and financing fees, due 2036	7.000% senior notes, net of discount and financing fees, due 2036	368		134	%	367		126	%	7.000% senior notes, net of discount and financing fees, due 2036	368		144	%		368		142	%
4.300% senior notes, net of discount and financing fees, due 2047	4.300% senior notes, net of discount and financing fees, due 2047	588		110	%	588		95	%	4.300% senior notes, net of discount and financing fees, due 2047	589		116	%		588		120	%
4.400% senior notes, net of discount and financing fees, due 2048	4.400% senior notes, net of discount and financing fees, due 2048	390		113	%	390		97	%	4.400% senior notes, net of discount and financing fees, due 2048	390		118	%		390		121	%

Various finance leases, due through 2036 (a)	Various finance leases, due through 2036 (a)	78		100	%	26		100	%	Various finance leases, due through 2036 (a)	99		100	%		78		100	%
Term loan borrowing, maturing in 2021 (a)		0		0	%	200		100	%
Other	Other	2		n/a		3		n/a		Other	2		n/a			2		n/a
Total long-term debt	Total long-term debt	3,144		n/a		2,993		n/a		Total long-term debt	3,167		n/a			3,145		n/a
Less – current portion (a)	Less – current portion (a)	18		100	%	7		100	%	Less – current portion (a)	23		100	%		19		100	%
Long-term debt, net of current portion	Long-term debt, net of current portion	$	3,126	n/a		$	2,986	n/a		Long-term debt, net of current portion	$	3,144	n/a			$	3,126	n/a

(a) The Company determined that the book value of the above noted long-term debt instruments approximates fair value.

The fair values of the Company's outstanding long-term debt instruments were estimated using market observable inputs, including quoted prices in active markets, market indices and interest rate measurements. Within the hierarchy of fair value measurements, these are Level 2 fair values.

Senior Notes

The Company issued $300 million of 2030 senior notes on May 12, ~~2020 subject to $3 million of discounts and issuance costs.~~2020. Interest on the notes is payable semiannually in arrears on June 1 and December 1 each year, beginning on December 1, 2020. The proceeds from these notes were used for general corporate purposes.

The Company issued $450 million of 2029 senior notes on August 12, 2019. Interest on the notes is payable semiannually in arrears on February 15 and August 15 each year, beginning on February 15, 2020. The proceeds from these notes were used to repay $416 million of our 2022 senior notes and $34 million of our 2036 senior notes.

The Company issued $400 million of 2048 senior notes on January 25, 2018. Interest on the notes is payable semiannually in arrears on January 30 and July 30 each year, beginning on July 30, 2018. The proceeds from these notes were used, along with borrowings on a $600 million term loan commitment and borrowings on the Receivables Securitization Facility (as defined below), to fund the purchase of Paroc in the first quarter of 2018.

The Company issued $600 million of 2047 senior notes on June 26, 2017. Interest on the notes is payable semiannually in arrears on January 15 and July 15 each year, beginning on January 15, 2018. A portion of the proceeds from these notes was used to fund the purchase of Pittsburgh Corning in 2017 and for general corporate purposes. The remaining proceeds were used to repay $144 million of our 2019 senior notes and $140 million of our 2036 senior notes.

~~Table of Contents~~

~~- 24 -~~

~~OWENS CORNING AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(unaudited)~~

~~10. DEBT (continued)~~

The Company issued $400 million of 2026 senior notes on August 8, 2016. Interest on the notes is payable semiannually in arrears on February 15 and August 15 each year, beginning on February 15, 2017. A portion of the proceeds from these notes was used to repay $158 million of our 2016 senior notes. The remaining proceeds were used to pay down portions of our Receivables Securitization Facility and for general corporate purposes.

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- 22 -

OWENS CORNING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

9. DEBT (continued)

The Company issued $400 million of 2024 senior notes on November 12, 2014. Interest on the notes is payable semiannually in arrears on June 1 and December 1 each year, beginning on June 1, 2015. A portion of the proceeds from these notes was used to repay $242 million of our 2016 senior notes and $105 million of our 2019 senior notes. The remaining proceeds were used to pay down our Senior Revolving Credit Facility (as defined below), finance general working capital needs, and for general corporate purposes.

The Company issued $600 million of 2022 senior notes on October 17, 2012. Interest on the notes is payable semiannually in arrears on June 15 and December 15 each year, beginning on June 15, 2013. The proceeds of these notes were used to repay $250 million of our 2016 senior notes and $100 million of our 2019 senior notes and pay down our Senior Revolving Credit Facility.

On October 31, 2006, the Company issued $550 million of 2036 senior notes. The proceeds of these notes were used to pay certain unsecured and administrative claims, finance general working capital needs and for general corporate purposes.

Collectively, the senior notes above are referred to as the “Senior Notes.” The Senior Notes are general unsecured obligations of the Company and rank pari passu with all existing and future senior unsecured indebtedness of the Company.

The Company has the option to redeem all or part of the Senior Notes at any time at a “make-whole” redemption price. The Company is subject to certain covenants in connection with the issuance of the Senior Notes that it believes are usual and customary. The Company was in compliance with these covenants as of ~~September~~June 30, ~~2020.~~2021.

Senior Revolving Credit Facility

The Company has an $800 million senior revolving credit facility (the "Senior Revolving Credit Facility") ~~with a maturity date in May 2024~~ that includes both borrowings and letters of credit. Borrowings under the Senior Revolving Credit Facility may be used for general corporate purposes and working capital. The Company has the discretion to borrow under multiple options, which provide for varying terms and interest rates including the United States prime rate, federal funds rate plus a spread or LIBOR plus a spread.

The Senior Revolving Credit Facility contains various covenants, including a maximum allowed leverage ratio and a minimum required interest expense coverage ratio, that the Company believes are usual and customary for a senior unsecured credit agreement. The Company was in compliance with these covenants as of ~~September~~June 30, ~~2020.~~2021. Please refer to the Credit Facility Utilization section below for liquidity information as of ~~September~~June 30, ~~2020.~~2021.

~~Term Loan Borrowing~~

In July 2021, the Senior Revolving Credit Facility was amended to extend the maturity date to July 2026. The ~~Company obtained~~new agreement also includes fallback language related to a ~~term loan commitment on October 27, 2017 for $600 million (the "Term Loan"). The Company entered into~~benchmark reference rate replacement, when a LIBOR transition occurs, and eliminates the Term Loan, in part, to pay a portion of the purchase price of the Paroc acquisition. In the first quarter of 2018, the Company borrowed on the Term Loan, along with borrowings on the Receivables Securitization Facility and the proceeds of the 2048 senior notes, to fund the purchase of Paroc. The Term Loan agreement contained partial quarterly principal repayments and full repayment by February 2021. The Term Loan contains various covenants, including a maximum allowed leverage ratio and a minimum required interest expense coverage ratio ~~that the Company believes are usual and customary for a term loan. In the third quarter of 2020, the Company repaid all outstanding borrowings on the Term Loan.~~covenant.

Receivables Securitization Facility

The Company has a Receivables Purchase Agreement (RPA) that is accounted for as secured borrowings in accordance with ASC 860, "Accounting for Transfers and Servicing." Owens Corning Sales, LLC and Owens Corning Receivables LLC, each a subsidiary of the Company, have a $280 million RPA with certain financial institutions. The Company has the ability to borrow at the lenders' cost of funds, which approximates A-1/P-1 commercial paper rates vs. LIBOR, plus a fixed spread. ~~The RPA has been~~In April 2021, the securitization facility (the "Receivables Securitization Facility") was amended ~~from time~~ to ~~time, with a~~extend the maturity date into April ~~2022.~~

~~Table of Contents~~

~~- 25 -~~

~~OWENS CORNING AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(unaudited)~~

~~10. DEBT (continued)~~

2024. The new agreement also includes fallback language related to a benchmark reference rate replacement, when a LIBOR transition occurs.

The RPA contains various covenants, including a maximum allowed leverage ratio and a minimum required interest expense coverage ratio that the Company believes are usual and customary for a securitization facility. The Company was in compliance with these covenants as of ~~September~~June 30, ~~2020.~~2021. Please refer to the Credit Facility Utilization section below for liquidity information as of ~~September~~June 30, ~~2020.~~2021.

Owens Corning Receivables LLC’s sole business consists of the purchase or acceptance through capital contributions of trade receivables and related rights from Owens Corning Sales, LLC and the subsequent retransfer of or granting of a security interest in such trade receivables and related rights to certain purchasers who are party to the RPA. Owens Corning Receivables LLC is a separate legal entity with its own separate creditors who will be entitled, upon its liquidation, to be satisfied out of Owens

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OWENS CORNING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

9. DEBT (continued)

Corning Receivables LLC’s assets prior to any assets or value in Owens Corning Receivables LLC becoming available to Owens Corning Receivables LLC’s equity holders. The assets of Owens Corning Receivables LLC are not available to pay creditors of the Company or any other affiliates of the Company or Owens Corning Sales, LLC.

Credit Facility Utilization

The following table shows how the Company utilized its primary sources of liquidity (in millions):


		Balance at September 30, 2020							Balance at June 30, 2021
		Senior Revolving Credit Facility		Receivables Securitization Facility			Senior Revolving Credit Facility		Receivables Securitization Facility
Facility size or borrowing limit	Facility size or borrowing limit	$	800	$	280	Facility size or borrowing limit	$	800	$	280
Collateral capacity limitation on availability	Collateral capacity limitation on availability	n/a		0		Collateral capacity limitation on availability	n/a		—
Outstanding borrowings	Outstanding borrowings	0		0		Outstanding borrowings	0		0
Outstanding letters of credit	Outstanding letters of credit	4		1		Outstanding letters of credit	4		1
Availability on facility	Availability on facility	$	796	$	279	Availability on facility	$	796	$	279

Short-Term Debt

~~The Company had no short-term borrowings as of September 30, 2020.~~ Short-term borrowings were ~~$20~~less than $1 million ~~as of~~at June 30, 2021 and $1 million at December 31, ~~2019.~~2020. The short-term borrowings consisted of various operating lines of ~~credit and working capital facilities. Certain of these borrowings are collateralized by receivables, inventories or property. The borrowing facilities are typically for one-year renewable terms.~~credit. The weighted average interest rate on all short-term borrowings was approximately ~~7.8%~~1.5% and 1.1% as of June 30, 2021 and December 31, ~~2019.~~2020, respectively.

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OWENS CORNING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

~~11.~~10. PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS

Pension Plans

The Company sponsors defined benefit pension plans. Under the plans, pension benefits are based on an employee’s years of service and, for certain categories of employees, qualifying compensation. Company contributions to these pension plans are determined by an independent actuary to meet or exceed minimum funding requirements. In our non-U.S. plans, the unrecognized cost of any retroactive amendments and actuarial gains and losses are amortized over the average future service period of plan participants expected to receive benefits. In our U.S. plans, the unrecognized cost of any retroactive amendments and actuarial gains and losses are amortized over the average remaining life expectancy of the inactive participants as substantially all of the plan participants are inactive.

The following ~~tables provide~~table provides information regarding pension expense recognized (in millions):


	Three Months Ended June 30,
	2021						2020
	U.S.		Non-U.S.		Total		U.S.		Non-U.S.		Total
Components of Net Periodic Pension Cost
Service cost	$	2	$	1	$	3	$	2	$	1	$	3
Interest cost	5		2		7		7		3		10
Expected return on plan assets	(9)		(4)		(13)		(12)		(4)		(16)

Amortization of actuarial loss	3		1		4		3		1		4




Net periodic pension cost	$	1	$	0	$	1	$	0	$	1	$	1


		Three Months Ended September 30,																							Six Months Ended June 30,
		2020										2019											2021				2020
		U.S.		Non-U.S.		Total		U.S.		Non-U.S.		Total			U.S.		Non-U.S.		Total		U.S.		Non-U.S.		Total
Components of Net Periodic Pension Cost	Components of Net Periodic Pension Cost													Components of Net Periodic Pension Cost
Service cost	Service cost	$	1	$	1	$	2	$	1	$	1	$	2	Service cost	$	3	$	3	$	6	$	3	$	2	$	5
Interest cost	Interest cost	7		2		9		9		3		12		Interest cost	11		4		15		14		5		19
Expected return on plan assets	Expected return on plan assets	(11)		(4)		(15)		(13)		(4)		(17)		Expected return on plan assets	(18)		(9)		(27)		(23)		(8)		(31)

Amortization of actuarial loss	Amortization of actuarial loss	3		1		4		3		1		4		Amortization of actuarial loss	6		2		8		6		2		8

Net periodic pension cost	Net periodic pension cost	$	0	$	0	$	0	$	0	$	1	$	1	Net periodic pension cost	$	2	$	0	$	2	$	0	$	1	$	1

Nine Months Ended September 30,
2020 2019

U.S. Non-U.S. Total U.S. Non-U.S. Total
Components of Net Periodic Pension Cost
Service cost $ 4 $ 3 $ 7 $ 4 $ 3 $ 7
Interest cost 21 7 28 27 10 37
Expected return on plan assets (34) (12) (46) (39) (12) (51)
Amortization of actuarial loss 9 3 12 7 3 10
Net periodic pension cost $ 0 $ 1 $ 1 $ (1) $ 4 $ 3

The Company does not expect to contribute to the U.S. pension plans during 2021. The Company expects to contribute ~~between $50 million and $100~~$25 million in cash to ~~the U.S. pension plans and another $15 million to $25 million to~~ non-U.S. plans during ~~2020.~~2021. The Company made cash contributions of ~~$20~~$2 million to the plans during the ~~nine~~six months ended ~~September~~June 30, ~~2020.~~2021.

Postemployment and Postretirement Benefits Other than ~~Pension Plans~~Pensions ("OPEB")

The Company maintains healthcare and life insurance benefit plans for certain retired employees and their dependents. The health care plans in the United States are non-funded and pay either (1) stated percentages of covered medically necessary expenses, after subtracting payments by Medicare or other providers and after stated deductibles have been met, or (2) fixed amounts of medical expense reimbursement.

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OWENS CORNING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

~~11.~~10. PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS (continued)

The following table provides the components of net periodic benefit cost for aggregated U.S. and non-U.S. plans for the periods indicated (in millions):


		Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended June 30,				Six Months Ended June 30,
		2020		2019		2020		2019			2021		2020		2021		2020
Components of Net Periodic Benefit Cost	Components of Net Periodic Benefit Cost									Components of Net Periodic Benefit Cost
Service cost	Service cost	$	0	$	0	$	1	$	1	Service cost	$	1	$	1	$	1	$	1
Interest cost	Interest cost	1		2		4		6		Interest cost	1		1		2		3
Amortization of prior service credit	Amortization of prior service credit	0		(1)		(2)		(3)		Amortization of prior service credit	(1)		(1)		(1)		(2)
Amortization of actuarial gain	Amortization of actuarial gain	(2)		(2)		(6)		(6)		Amortization of actuarial gain	(2)		(2)		(4)		(4)
Net periodic benefit income	Net periodic benefit income	$	(1)	$	(1)	$	(3)	$	(2)	Net periodic benefit income	$	(1)	$	(1)	$	(2)	$	(2)

~~12.~~11. CONTINGENT LIABILITIES AND OTHER MATTERS

The Company may be involved in various legal and regulatory proceedings relating to employment, antitrust, tax, product liability, environmental, contracts, intellectual property and other matters (collectively, “Proceedings”). The Company regularly reviews the status of such Proceedings along with legal counsel. Liabilities for such Proceedings are recorded when it is probable that the liability has been incurred and when the amount of the liability can be reasonably estimated. Liabilities are adjusted when additional information becomes available. Management believes that the amount of any reasonably possible losses in excess of any amounts accrued, if any, with respect to such Proceedings or any other known claim, including the matters described below under the caption Environmental Matters (the “Environmental Matters”), are not material to the Company’s financial statements. Management believes that the ultimate disposition of the Proceedings and the Environmental Matters will not have a material adverse effect on the Company’s financial condition. While the likelihood is remote, the disposition of the Proceedings and Environmental Matters could have a material impact on the results of operations, cash flows or liquidity in any given reporting period.

Litigation and Regulatory Proceedings

The Company is involved in litigation and regulatory proceedings from time to time in the regular course of its business. The Company believes that adequate provisions for resolution of all contingencies, claims and pending matters have been made for probable losses that are reasonably estimable.

Environmental Matters

The Company has established policies and procedures designed to ensure that its operations are conducted in compliance with all relevant laws and regulations and that enable the Company to meet its high standards for corporate sustainability and environmental stewardship. Our manufacturing facilities are subject to numerous foreign, federal, state and local laws and regulations relating to the presence of hazardous materials, pollution and protection of the environment, including emissions to air, reductions of greenhouse gases, discharges to water, management of hazardous materials, handling and disposal of solid wastes, use of chemicals in our manufacturing processes, and remediation of contaminated sites. All Company manufacturing facilities operate using an ISO 14001 or equivalent environmental management system. The Company’s 2030 Sustainability Goals include significant global reductions in energy use, water consumption, waste to landfill, and emissions of greenhouse gases, fine particulate matter, and volatile organic air emissions, and protection of biodiversity.

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- 2826 -

OWENS CORNING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

~~12.~~11. CONTINGENT LIABILITIES AND OTHER MATTERS (continued)

Owens Corning is involved in remedial response activities and is responsible for environmental remediation at a number of sites, including certain of its currently owned or formerly owned plants. These responsibilities arise under a number of laws, including, but not limited to, the Federal Resource Conservation and Recovery Act, and similar state or local laws pertaining to the management and remediation of hazardous materials and petroleum. The Company has also been named a potentially responsible party under the U.S. Federal Superfund law, or state equivalents, at a number of disposal sites. The Company became involved in these sites as a result of government action or in connection with business acquisitions. As of ~~September~~June 30, ~~2020,~~2021, the Company was involved with a total of 21 sites worldwide, including 8 Superfund and state equivalent sites and 13 owned or formerly owned sites. None of the liabilities for these sites are individually significant to the Company.

Remediation activities generally involve a potential range of activities and costs related to soil, groundwater, and sediment contamination. This can include pre-cleanup activities such as fact-finding and investigation, risk assessment, feasibility studies, remedial action design and implementation (where actions may range from monitoring to removal of contaminants, to installation of longer-term remediation systems). A number of factors affect the cost of environmental remediation, including the number of parties involved in a particular site, the determination of the extent of contamination, the length of time the remediation may require, the complexity of environmental regulations, variability in clean-up standards, the need for legal action, and changes in remediation technology. Taking these factors into account, Owens Corning has predicted the costs of remediation reasonably estimated to be paid over a period of years. The Company accrues an amount on an undiscounted basis, consistent with the reasonable estimates of these costs when it is probable that a liability has been incurred. Actual cost may differ from these estimates for the reasons mentioned above. At ~~September~~June 30, ~~2020,~~2021, the Company had an accrual totaling $7$4 million for these costs, of which the current portion is $3$1 million. Changes in required remediation procedures or timing of those procedures, or discovery of contamination at additional sites, could result in material increases to the Company’s environmental obligations.

~~13.~~

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OWENS CORNING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

12. STOCK COMPENSATION

Description of the Plan

On April 18, 2019, the Company’s stockholders approved the Owens Corning 2019 Stock Plan (the “2019 Stock Plan”) which authorizes grants of stock options, stock appreciation rights, restricted stock awards, restricted stock units, bonus stock awards and performance ~~stock~~share awards. At ~~September~~June 30, ~~2020,~~2021, the number of shares remaining available under the 2019 Stock Plan for all stock awards was approximately ~~3.5~~3.1 million.

Prior to 2019, employees were eligible to receive stock awards under the Owens Corning 2016 Stock Plan and the Owens Corning 2013 Stock Plan.

Total Stock-Based Compensation Expense

Stock-based compensation expense included in Marketing and administrative expenses in the accompanying Consolidated Statements of Earnings (Loss) is as follows (in millions):

Three Months Ended September 30, Nine Months Ended
September 30,
2020 2019 2020 2019
Total stock-based compensation expense $ 11 $ 10 $ 31 $ 31


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Total stock-based compensation expense	$	12	$	9	$	24	$	20

~~Table of Contents~~

~~- 29 -~~

~~OWENS CORNING AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(unaudited)~~

~~13. STOCK COMPENSATION (continued)~~

Stock Options

The Company has granted stock options under its stockholder approved stock plans. The Company calculates a weighted-average grant-date fair value using a Black-Scholes valuation model for options granted. Compensation expense for options is measured based on the fair market value of the option on the date of grant, and is recognized on a straight-line basis over a four year vesting period. In general, the exercise price of each option awarded was equal to the closing market price of the Company’s common stock on the date of grant and an option’s maximum term is 10 years. The volatility assumption was based on a benchmark study of our peers prior to 2014. Starting with the options granted in 2014, the volatility was based on the Company’s historic volatility.

The Company has not granted stock options since the year ended December 31, 2014. As of ~~September~~June 30, ~~2020,~~2021, there was no unrecognized compensation cost related to stock options and the range of exercise prices on outstanding stock options was ~~$33.73~~$37.65 - $42.16.

The following table summarizes the Company’s stock option activity:

Weighted-Average

Number of
Options
Exercise Price Remaining
Contractual Life
(in years) Intrinsic Value (in millions)
Outstanding, December 31, 2019 414,800 $ 37.79 3.06 $ 11
Exercised (52,000) 37.91
Outstanding, September 30, 2020 362,800 $ 37.77 1.75 $ 11
Exercisable, September 30, 2020 362,800 $ 37.77 1.75 $ 11


		Weighted-Average
	Number of Options	Exercise Price		Remaining Contractual Life (in years)	Intrinsic Value (in millions)
Outstanding, December 31, 2020	361,775	$	37.77	1.50	$	14

Exercised	(215,875)	37.42


Outstanding, June 30, 2021	145,900	$	38.30	1.34	$	9
Exercisable, June 30, 2021	145,900	$	38.30	1.34	$	9

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- 28 -

OWENS CORNING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

12. STOCK COMPENSATION (continued)

Restricted Stock Awards and Restricted Stock Units

The Company has granted restricted stock awards and restricted stock units (collectively referred to as “RSUs”) under its stockholder approved stock plans. Compensation expense for RSUs is measured based on the closing market price of the stock at date of grant and is recognized on a straight-line basis over the vesting period, which is typically three or four years. The Stock Plan allows alternate vesting schedules for death, disability, and retirement. The weighted average grant date fair value of RSUs granted in ~~2020~~2021 was ~~$63.32.~~$83.26.

The following table summarizes the Company’s RSU plans:

Number of RSUs Weighted-Average
Fair Value
Balance at December 31, 2019 1,515,706 $ 51.70
Granted 454,196 63.32
Vested (388,164) 57.51
Forfeited (70,202) 69.39
Balance at September 30, 2020 1,511,536 $ 52.78

~~Table of Contents~~

~~- 30 -~~

~~OWENS CORNING AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(unaudited)~~

~~13. STOCK COMPENSATION (continued)~~



	Number of RSUs	Weighted-Average Fair Value
Balance at December 31, 2020	1,419,454	$	54.99
Granted	338,315	83.26
Vested	(421,818)	56.15
Forfeited	(38,699)	65.56
Balance at June 30, 2021	1,297,252	$	61.56

As of ~~September~~June 30, ~~2020,~~2021, there was ~~$36~~$44 million of total unrecognized compensation cost related to RSUs. That cost is expected to be recognized over a weighted-average period of ~~2.32~~2.51 years. The total grant date fair value of shares vested during the ~~nine~~six months ended ~~September~~June 30, 2021 and 2020 ~~and 2019~~ was ~~$22~~$24 million and ~~$20~~$21 million, respectively.

Performance ~~Stock~~Share Awards and Performance ~~Stock~~Share Units

The Company has granted performance ~~stock~~share awards and performance ~~stock~~share units (collectively referred to as “PSUs”) as a part of its long-term incentive plan. All outstanding performance grants will fully settle in stock. The amount of stock ultimately distributed from all performance shares is contingent on meeting internal company-based metrics or an external-based stock performance metric.

In the ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, the Company granted both internal company-based and external-based metric PSUs.

Internal Company-based metrics

The internal company-based metrics are based on various Company metrics and typically vest over a three-year period. The amount of stock distributed will vary from 0% to 300% of PSUs awarded depending on each award's design and performance versus the internal Company-based metrics.

The initial fair value for all internal Company-based metric PSUs assumes that the performance goals will be achieved and is based on the grant date stock price. This assumption is monitored quarterly and if it becomes probable that such goals will not be achieved or will be exceeded, compensation expense recognized will be adjusted and previous surplus compensation expense recognized will be reversed or additional expense will be recognized. The expected term represents the period from the grant date to the end of the vesting period. Pro-rata vesting may be utilized in the case of death, disability or approved retirement and awards, if earned, will be paid at the end of the vesting period.

External-based metrics

The external-based metrics vest after a three-year period. Outstanding grants ~~issued in or after 2018~~ are based on the Company's total stockholder return relative to the performance of the Dow Jones U.S. Construction & Materials Index. The amount of stock distributed will vary from 0% to 200% of PSUs awarded depending on the relative stockholder return performance. The fair value of external-based metric PSUs has been estimated at the grant date using a Monte Carlo simulation that uses various assumptions.

Table of Contents

- 29 -

OWENS CORNING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

12. STOCK COMPENSATION (continued)

In the ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, the Company granted separate tranches of external-based metric PSU's subject to a Monte Carlo simulation. The following table provides a range of the assumptions for shares granted in ~~2020:~~2021:

Expected volatility

~~28.43%~~42.74% — ~~44.83%~~43.67%

Risk free interest rate

~~0.15%~~0.18% — ~~1.43%~~0.24%

Expected term (in years)

~~2.31~~2.56 — 2.90

Grant date fair value of units granted

$~~68.60~~99.19 — ~~$76.58~~$127.37

The risk-free interest rate was based on zero coupon United States Treasury bills at the grant date. The expected term represents the period from the grant date to the end of the three-year performance period.

PSU Summary

As of ~~September~~June 30, ~~2020,~~2021, there was ~~$16~~$24 million total unrecognized compensation cost related to PSUs. That cost is expected to be recognized over a weighted-average period of ~~1.97~~2.03 years. There were no shares vested during the six months ended June 30, 2021. The total grant date fair value of shares vested during the ~~nine~~six months ended ~~September~~June 30, 2020 was $1 million.

~~Table of Contents~~

~~- 31 -~~

~~OWENS CORNING AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)~~

~~(unaudited)~~

~~13. STOCK COMPENSATION (continued)~~

The following table summarizes the Company’s PSU activity:

Number
of PSUs Weighted-Average
Grant-Date
Fair Value
Balance at December 31, 2019 312,725 $ 69.23
Granted 169,539 65.29
Vested (12,553) 84.46
Forfeited (30,327) 83.14
Balance at September 30, 2020 439,384 $ 69.20



	Number of PSUs	Weighted-Average Grant-Date Fair Value
Balance at December 31, 2020	323,361	$	69.20
Granted	153,858	85.81

Forfeited	(23,130)	65.59
Balance at June 30, 2021	454,089	$	69.63

Employee Stock Purchase Plan

The Owens Corning Employee Stock Purchase Plan (ESPP) is a tax-qualified plan under Section 423 of the Internal Revenue Code. The purchase price of shares purchased under the ESPP is equal to 85% of the lower of the fair market value of shares of Owens Corning common stock at the beginning or ending of the offering period, which is a six-month period ending on May 31 and November 30 of each year. ~~When the initial plan was approved in 2013, 2.0 million shares were available for purchase under the ESPP.~~ On April 16, 2020, the Company's stockholders approved the Amended and Restated Owens Corning Employee Stock Purchase Plan which increased the number of shares available for issuance under the plan by 4.2 million shares. As of ~~September~~June 30, ~~2020, 4.3~~2021, 4.0 million shares remain available for purchase.

Included in total stock-based compensation expense is $1$2 million and $4$3 million of expense related to the Company's ESPP recognized during the three and ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, respectively. During the three and ~~nine~~six months ended ~~September~~June 30, ~~2019,~~2020, the Company recognized expense of $1$2 million and $4$3 million, respectively, related to the Company's ESPP. As of ~~September~~June 30, ~~2020,~~2021, there was $1$2 million of total unrecognized compensation cost related to the ESPP.

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- 3230 -

OWENS CORNING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

~~14.~~13. EARNINGS PER SHARE

The following table is a reconciliation of weighted-average shares for calculating basic and diluted earnings (loss) per-share (in millions, except per share amounts):


		Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended June 30,				Six Months Ended June 30,
		2020		2019		2020		2019			2021		2020		2021		2020
Net earnings (loss) attributable to Owens Corning	Net earnings (loss) attributable to Owens Corning	$	206	$	150	$	(615)	$	332	Net earnings (loss) attributable to Owens Corning	$	298	$	96	$	508	$	(821)
Weighted-average number of shares outstanding used for basic earnings (loss) per share	Weighted-average number of shares outstanding used for basic earnings (loss) per share	108.8		109.2		108.7		109.2		Weighted-average number of shares outstanding used for basic earnings (loss) per share	104.6		108.6		105.0		108.7
Non-vested restricted and performance shares	Non-vested restricted and performance shares	0.6		0.6		0		0.6		Non-vested restricted and performance shares	0.8		0.2		0.8		0
Options to purchase common stock	Options to purchase common stock	0.1		0.2		0		0.2		Options to purchase common stock	0.1		0.1		0.1		0
Weighted-average number of shares outstanding and common equivalent shares used for diluted earnings (loss) per share	Weighted-average number of shares outstanding and common equivalent shares used for diluted earnings (loss) per share	109.5		110.0		108.7		110.0		Weighted-average number of shares outstanding and common equivalent shares used for diluted earnings (loss) per share	105.5		108.9		105.9		108.7
Earnings (loss) per common share attributable to Owens Corning common stockholders:	Earnings (loss) per common share attributable to Owens Corning common stockholders:									Earnings (loss) per common share attributable to Owens Corning common stockholders:
Basic	Basic	$	1.89	$	1.37	$	(5.66)	$	3.04	Basic	$	2.85	$	0.88	$	4.84	$	(7.55)
Diluted	Diluted	$	1.88	$	1.36	$	(5.66)	$	3.02	Diluted	$	2.82	$	0.88	$	4.80	$	(7.55)

For the three and six months ended ~~September~~June 30, ~~2020,~~2021, there were no non-vested restricted or performance shares that had an anti-dilutive effect on earnings per share. For the ~~nine~~three months ended ~~September~~June 30, 2020, ~~diluted earnings per share was equal to basic earnings per share due to the net loss attributable to Owens Corning. For the three and nine months ended September 30, 2019,~~ the number of shares used in the calculation of diluted earnings per share did not include 0.1 million non-vested performance shares, due to their anti-dilutive effect. For the six months ended June 30, 2020, diluted earnings per share was equal to basic earnings per share due to the net loss attributable to Owens Corning.

On ~~October 24, 2016,~~December 3, 2020, the Board of Directors approved a share buy-back program under which the Company is authorized to repurchase up to 10 million shares of the Company’s outstanding common stock (the “Repurchase Authorization”). The Repurchase Authorization enables the Company to repurchase shares through the open market, privately negotiated, or other transactions. The actual number of shares repurchased will depend on timing, market conditions and other factors and is at the Company’s discretion. The Company repurchased ~~1.3~~2.9 million shares of its common stock for ~~$81~~$262 million during the ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, under the Repurchase Authorization. As of ~~September~~June 30, ~~2020, 2.3~~2021, 6.6 million shares remain available for repurchase under the Repurchase Authorization.

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- 3331 -

OWENS CORNING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

~~15.~~14. INCOME TAXES

The following table provides the Income tax expense (in millions) and effective tax rate for the periods indicated:


		Three Months Ended September 30,									Nine Months Ended September 30,										Three Months Ended June 30,						Six Months Ended June 30,
		2020			2019			2020			2019				2021			2020			2021			2020
Income tax expense	Income tax expense	$	56		$	61		$	119		$	159		Income tax expense	$	97		$	39		$	156		$	63
Effective tax rate	Effective tax rate	21		%	29		%	(24)		%	32		%	Effective tax rate	25		%	29		%	24		%	(8)		%

The difference between the effective tax rate and the U.S. federal statutory tax rate of 21% for the three months ended ~~September~~June 30, ~~2020~~2021 is ~~21%. The effective tax rate was positively impacted by final regulations on global intangible low-taxed income (GILTI), offset by the impact of taxes on foreign earnings,~~primarily due to U.S. state and local income tax expense, U.S. federal taxes on foreign earnings, excess tax benefits related to stock compensation, and other discrete adjustments. The difference between the effective tax rate and the U.S. federal statutory tax rate of 21% for the ~~nine~~six months ended ~~September~~June 30, 2021 is primarily due to U.S. state and local income tax expense, U.S. federal taxes on foreign earnings, adjustments to valuation allowances against certain deferred tax assets, excess tax benefits related to stock compensation, and other discrete adjustments.

The difference between the effective tax rate and the U.S. federal statutory tax rate of 21% for the three months ended June 30, 2020 is primarily due to U.S. state and local income tax expense, the impact of U.S. federal taxes on foreign earnings, and other discrete adjustments. The difference between the effective tax rate and the U.S. federal statutory tax rate of 21% for the six months ended June 30, 2020 is primarily a result of charges related to the impairment of goodwill and certain other indefinite-lived intangible assets recorded in the first quarter of 2020, which were mostly non-deductible. ~~In addition, non-cash~~Non-cash charges of ~~$15~~$18 million were recorded related to adjustments to valuation allowances against certain deferred tax assets. The remaining difference between the statutory rate of 21% and the effective rate was driven by the impact of recording U.S. state and local income tax expense and U.S. federal taxes on foreign earnings.

On July 20, 2020 the Internal Revenue Service (IRS) issued final regulations under IRC Section 951A permitting a taxpayer to elect to exclude from its inclusion of GILTI items of income subject to a high effective rate of foreign tax. As a result of the final regulations, the Company recorded a net non-cash income tax benefit of $13 million in the third quarter of 2020 relating to the 2018 and 2019 tax years and an increase in the valuation allowance.

The difference between the effective tax rate and the U.S. federal statutory tax rate of 21% for the three months ended September 30, 2019 is primarily due to U.S. state and local income tax expense, the impact of U.S. federal taxes on foreign earnings and other discrete adjustments. The difference between the effective tax rate and the U.S. federal statutory tax rate of 21% for the nine months ended September 30, 2019 is primarily due to U.S. state and local income tax expense, the impact of U.S. federal taxes on foreign earnings, legislative changes and other discrete adjustments.

On March 6, 2019, the U.S. Treasury and the IRS proposed regulations that provide guidance on determining the amount of a domestic corporation’s deduction for the GILTI and foreign-derived intangible income (FDII) recently added by the U.S. Tax Cuts and Jobs Act of 2017 (the "Tax Act"). The proposed regulations provide special rules in determining the deduction amount which adjusted the Company’s 2018 tax estimate resulting in an increase to tax expense of $12 million for the nine months ended September 30, 2019.

The Company continues ~~to assert~~its current practice of asserting indefinite reinvestment in accordance with ASC 740 based on the laws as of enactment of the Tax Act.

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- 3432 -

OWENS CORNING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

~~16.~~15. CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME

The following table summarizes the changes in accumulated other comprehensive income (deficit) (in millions):


		Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended June 30,					Six Months Ended June 30,
											Six Months Ended June 30,
		2020		2019		2020				2019									2021		2020	2021	2020
Currency Translation Adjustment	Currency Translation Adjustment									Currency Translation Adjustment
Beginning balance	Beginning balance	$	(351)	$	(285)	$	(282)	$	(306)	Beginning balance	$	(265)	$	(404)	$	(220)	$	(282)
Net investment hedge amounts classified into AOCI, net of tax	Net investment hedge amounts classified into AOCI, net of tax	(9)		22		20		24		Net investment hedge amounts classified into AOCI, net of tax	(1)		(3)		3		29

Gain/(loss) on foreign currency translation	Gain/(loss) on foreign currency translation	46		(79)		(52)		(60)		Gain/(loss) on foreign currency translation	33		56		(16)		(98)
Other comprehensive income/(loss), net of tax	Other comprehensive income/(loss), net of tax	37		(57)		(32)		(36)		Other comprehensive income/(loss), net of tax	32		53		(13)		(69)
Ending balance	Ending balance	$	(314)	$	(342)	$	(314)	$	(342)	Ending balance	$	(233)	$	(351)	$	(233)	$	(351)
Pension and Other Postretirement Adjustment	Pension and Other Postretirement Adjustment									Pension and Other Postretirement Adjustment
Beginning balance	Beginning balance	$	(321)	$	(349)	$	(326)	$	(350)	Beginning balance	$	(371)	$	(319)	$	(372)	$	(326)
Amounts reclassified from AOCI to net earnings, net of tax (a)	Amounts reclassified from AOCI to net earnings, net of tax (a)	(3)		1		4		2		Amounts reclassified from AOCI to net earnings, net of tax (a)	0		0		2		7
Amounts classified into AOCI, net of tax	Amounts classified into AOCI, net of tax	0		(3)		(2)		(3)		Amounts classified into AOCI, net of tax	(3)		(2)		(4)		(2)

Other comprehensive (loss)/income, net of tax		(3)		(2)		2		(1)
Other comprehensive income/(loss), net of tax										Other comprehensive income/(loss), net of tax	(3)		(2)		(2)		5
Ending balance	Ending balance	$	(324)	$	(351)	$	(324)	$	(351)	Ending balance	$	(374)	$	(321)	$	(374)	$	(321)
Hedging Adjustment	Hedging Adjustment									Hedging Adjustment
Beginning balance	Beginning balance	$	(3)	$	(1)	$	(2)	$	0	Beginning balance	$	16	$	(3)	$	4	$	(2)

Amounts reclassified from AOCI to net earnings, net of tax (b)										Amounts reclassified from AOCI to net earnings, net of tax (b)	(1)		1		(2)		3
Amounts classified into AOCI, net of tax	Amounts classified into AOCI, net of tax	2		1		(2)		0		Amounts classified into AOCI, net of tax	(1)		(1)		12		(4)

Amounts reclassified from AOCI to net earnings, net of tax (b)		1		0		4		0

Other comprehensive income, net of tax		3		1		2		0

Other comprehensive income/(loss), net of tax										Other comprehensive income/(loss), net of tax	(2)		0		10		(1)
Ending balance	Ending balance	$	0	$	0	$	0	$	0	Ending balance	$	14	$	(3)	$	14	$	(3)
Total AOCI ending balance	Total AOCI ending balance	$	(638)	$	(693)	$	(638)	$	(693)	Total AOCI ending balance	$	(593)	$	(675)	$	(593)	$	(675)

(a)These AOCI components are included in the computation of total Pension and Other postretirement expense and are recorded in Non-operating income. See Note 1110 for additional information.

(b)Amounts reclassified from (loss)/gain on cash flow hedges are reclassified from AOCI to income when the hedged item affects earnings and is recognized in Cost of sales or Interest expense, net depending on the hedged item. See Note 54 for additional information.

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- 3533 -

OWENS CORNING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(unaudited)

16. SUBSEQUENT EVENTS

On July 13, 2021, the Company acquired vliepa GmbH ("vliepa"), which specializes in the coating, printing, and finishing of nonwovens, paper, and film for the building materials industry in Europe, for approximately $40 million, net of cash acquired. The acquisition broadens the Company’s significant global nonwovens portfolio to better serve European customers and accelerate growth of building and construction market applications in the region. Operating results of the acquisition will be included in the Company’s Composites segment within the Consolidated Financial Statements beginning July 13, 2021. The Company is in the process of valuing certain assets and liabilities, and the purchase price allocation will be completed with the finalization of these valuations.

On July 28, 2021, the Company entered into a purchase and sale agreement for the Company’s Insulation site in Santa Clara, California to commercial real estate developer Panattoni for expected gross proceeds of approximately $240 million, including a non-refundable deposit of $50 million received at signing. The Company expects to continue operations at this facility through third-quarter 2022 and complete the transaction in first-quarter 2023. This action is part of the Company’s on-going strategy to operate a flexible, cost-efficient manufacturing network and geographically locate its assets to better service its customers. Cumulative cash pre-tax charges associated with the transaction are expected to be in the range of $30 million to $40 million, primarily related to severance and one-time employee termination benefits, demolition costs, and other closing costs. In addition, cumulative non-cash charges are expected to be in the range of $75 million to $85 million, primarily consisting of accelerated depreciation of property, plant and equipment and derecognition of the carrying value of land, which will offset the gross proceeds at closing.

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

This Management’s Discussion and Analysis (MD&A) is intended to help investors understand Owens Corning, our operations and our present business environment. MD&A is provided as a supplement to, and should be read in conjunction with, our Consolidated Financial Statements and the accompanying Notes thereto contained in this report. Unless the context requires otherwise, the terms “Owens Corning,” “Company,” “we” and “our” in this report refer to Owens Corning and its subsidiaries.

GENERAL

Owens Corning is a leading global producer of residential and commercial building materials and of glass fiber reinforcements and other materials for composites. The Company has three reportable segments: Composites, Insulation and Roofing. Through these lines of business, we manufacture and sell products worldwide. We maintain leading market positions in many of our major product categories.

EXECUTIVE OVERVIEW

~~The spread~~Throughout the first half of the COVID-19 virus in 2020 has caused an economic downturn on a global scale, with varying degrees in the pace of recovery in certain end markets and geographies served by the Company, as well as volatility in the financial markets. As of October 28, 2020, the Company’s operations have been impacted to the extent described in the paragraphs below and as discussed in our Results of Operations. The Company cannot at this time predict2021, the impact ~~that the COVID-19 pandemic will have on its financial condition and operations, although we are continuing to monitor our supply chain and orders from customers for COVID-19 pandemic-related changes.~~

~~In this time of uncertainty as a result~~ of the COVID-19 pandemic on our operations continued to wane due to the resumption of widespread economic activity and ensuing recovery in many of the markets we ~~are continuing~~serve globally. Despite this lessening impact throughout the first half of 2021, we continue to ~~serve~~monitor the COVID-19 pandemic for potential impacts on our ~~customers while taking significant~~business and take precautions to provide a safe environment for our employees and customers. ~~We have enacted enhanced operating protocols to assure~~The spread of the ~~safety and well-being~~COVID-19 pandemic in 2020 caused an economic downturn on a global scale, the impact of which was felt across the markets served by our employees, placed restrictions on non-essential travel, and otherwise adjusted work schedules to maximize our capacity while adhering to recommended precautions such as social distancing. We may have to take further actions that we determine arethree segments. Our financial results in the ~~best interests~~second quarter and first half of ~~our employees or~~2020, which serve as ~~required by federal, state, or local authorities.~~

~~The~~the basis for comparison in the paragraphs below, reflect the impact of the COVID-19 pandemic continues to unfold. The extent of the pandemic’s effect on our operational and financial performance will depend in large part on future developments, which cannot be predicted with confidence at this time. Future developments include the duration, scope and severity of the pandemic, the actions taken to contain or mitigate its impact, the impact on governmental programs and budgets, the development of treatments or vaccines, and the resumption of widespread economic activity. Due to the inherent uncertainty of the unprecedented and rapidly evolving situation, we are unable to predict with any confidence the likely impact of the COVID-19 pandemic on our future operations.pandemic.

Net earnings attributable to Owens Corning were ~~$206~~$298 million in the ~~third~~second quarter of ~~2020,~~2021, compared to ~~$150~~$96 million in the same period of ~~2019.~~2020. The Company reported ~~$296~~$428 million in earnings before interest and taxes (EBIT) for the ~~third~~second quarter of ~~2020~~2021 compared to ~~$277~~$171 million in the same period of ~~2019.~~2020. The Company generated ~~$289~~$408 million in adjusted earnings before interest and taxes (“Adjusted EBIT”) for the ~~third~~second quarter of ~~2020~~2021 compared to ~~$277~~$167 million in the same period of ~~2019.~~2020. See the Adjusted Earnings Before Interest and Taxes paragraph of the MD&A for further information regarding EBIT and Adjusted EBIT, including the reconciliation to net earnings (loss) attributable to Owens Corning. ~~Third~~Second quarter of ~~2020~~2021 EBIT performance compared to the same period of ~~2019~~2020 increased ~~$53~~$92 million, $86 million, and $80 million in our Composites, Roofing, ~~segment and decreased $12 million and $11 million in our Composites~~ and Insulation segments, respectively. Within our Corporate, Other and Eliminations category, General corporate expense and other increased by ~~$18~~$17 million.

Cash and cash equivalents were ~~$647~~$888 million as of ~~September~~June 30, ~~2020,~~2021, compared to ~~$35~~$582 million as of ~~September~~June 30, ~~2019,~~2020, as a result of strong cash flow provided by operating ~~activities, lower cash paid for property, plant and equipment and issuance of $300 million of 2030 senior notes on May 12, 2020.~~activities. In the ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, the Company's operating activities provided ~~$717~~$702 million of cash flow, compared to ~~$596~~$229 million in the same period in ~~2019.~~2020. The change was primarily driven by ~~the lower~~higher earnings and a smaller increase in operating assets and liabilities, primarily accounts payable, compared to the same period a year ago. During the third quarter of 2020, the Company repaid all outstanding borrowings on the term loan associated with the purchase of Paroc Group Oy, and the Senior Revolving Credit Facility (as defined below).

The Company ~~did not repurchase any~~repurchased 1.3 million shares of its common stock ~~during~~for $131 million in the ~~third~~second quarter of ~~2020~~2021 under a previously announced repurchase authorization (the "Share Repurchase Authorization"). As of ~~September~~June 30, ~~2020, 2.3~~2021, 6.6 million shares remained available for repurchase under the Share Repurchase Authorization.

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- 3635 -

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

RESULTS OF OPERATIONS

Consolidated Results (in millions)

Three Months Ended
September 30, Nine Months Ended
September 30,

2020 2019 2020 2019
Net sales $ 1,904 $ 1,883 $ 5,130 $ 5,468
Gross margin $ 477 $ 461 $ 1,126 $ 1,226
% of net sales 25 % 24 % 22 % 22 %
Marketing and administrative expenses $ 163 $ 164 $ 493 $ 527
Goodwill impairment charge $ — $ — $ 944 $ —
Other expenses, net $ 2 $ 1 $ 40 $ 16
Earnings (loss) before interest and taxes $ 296 $ 277 $ (399) $ 625
Interest expense, net $ 35 $ 33 $ 98 $ 101
Loss on extinguishment of debt $ — $ 32 $ — $ 32
Income tax expense $ 56 $ 61 $ 119 $ 159
Net earnings (loss) attributable to Owens Corning $ 206 $ 150 $ (615) $ 332


	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
Net sales	$	2,239		$	1,625		$	4,154		$	3,226
Gross margin	$	618		$	343		$	1,062		$	649
% of net sales	28		%	21		%	26		%	20		%
Marketing and administrative expenses	$	188		$	151		$	362		$	330
Goodwill impairment charge	$	—		$	—		$	—		$	944
Other (income) expenses, net	$	(17)		$	6		$	(65)		$	38
Earnings (loss) before interest and taxes	$	428		$	171		$	729		$	(695)
Interest expense, net	$	33		$	36		$	66		$	63

Income tax expense	$	97		$	39		$	156		$	63
Net earnings (loss) attributable to Owens Corning	$	298		$	96		$	508		$	(821)

The Consolidated Results discussion below provides a summary of our results and the trends affecting our business, and should be read in conjunction with the more detailed Segment Results discussion that follows.

NET SALES

In the ~~third~~second quarter ~~2020,~~and year-to-date 2021, net sales increased ~~$21~~$614 million and $928 million, respectively, compared to the same ~~period~~periods in ~~2019. Year-to-date net sales decreased $338 million compared to the same period in 2019.~~2020. For the ~~third~~second quarter and year-to-date, the increase in net sales was driven by the impact of higher sales volumes ~~in our Roofing segment partially offset by lower selling prices in all three segments. For the year-to-date comparison, the decrease in net sales was driven by the impact of lower sales volumes~~ and ~~lower~~higher selling prices in all three segments.

GROSS MARGIN

In the ~~third~~second quarter ~~2020,~~and year-to-date 2021, gross margin increased ~~$16~~$275 million and $413 million, respectively, compared to the same ~~period~~periods in ~~2019. Year-to-date gross margin decreased $100 million compared to the same period in 2019.~~2020. For the ~~third~~second quarter and year-to-date, the increase in gross margin was driven ~~primarily~~ by ~~favorable manufacturing performance~~the impact of higher sales volumes and higher selling prices in all three segments and higher sales volumes in our Roofing segment. For the year-to-date comparison, the decrease in gross margin was driven by lower selling prices and lower sales volumes in all three segments, and production curtailment actions, most notably in our Composites segment.segments.

MARKETING AND ADMINISTRATIVE EXPENSES

In the ~~third~~second quarter ~~2020,~~and year-to-date 2021, marketing and administrative expenses ~~were largely flat.~~increased $37 million and $32 million, respectively, compared to the same periods in 2020. For the second quarter and year-to-date, ~~2020,~~the increase in marketing and administrative expenses ~~decreased $34 million compared~~was driven primarily by higher performance-based compensation associated with an improved outlook for 2021 and higher general corporate expenses as business activities return to ~~the same period in 2019. The decrease was primarily driven by cost control actions across the Company.~~a more typical, post-pandemic level.

GOODWILL IMPAIRMENT CHARGE

The Company recorded a pre-tax non-cash impairment charge of $944 million in the first quarter of 2020 related to the Insulation reporting unit, which was equal to the excess of the reporting unit's carrying value over its fair value.

~~OTHER EXPENSES, NET~~

In the third quarter 2020, Other expenses, net were largely flat compared to the same period in 2019. For the year-to-date 2020, Other expenses, net increased $24 million compared to the same period in 2019. The increase was driven primarily by intangible asset impairment charges of $43 million and $6 million of restructuring costs, partially offset by $26 million of gains on sale of precious metals used in production tooling as needs changed in response to economic and technological factors.

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

OTHER (INCOME) EXPENSES, NET

In the second quarter and year-to-date 2021, other (income) expenses, net decreased $23 million and $103 million, respectively, compared to the same period in 2020. For the second quarter, the decrease was driven primarily by $12 million of higher gains on sale of precious metals used in production tooling as needs changed in response to economic and technological factors and $4 million of lower restructuring costs. For the year-to-date comparison, the decrease was driven by the favorable comparison year-over-year to intangible asset impairment charges of $43 million recognized in 2020. The remaining difference was driven by $25 million of gains on settlements from contracts to purchase and sell wind-generated electricity, $22 million of higher gains on sale of precious metals and $8 million of lower restructuring costs.

INTEREST EXPENSE, NET

In the ~~third~~second quarter and year-to-date ~~2020,~~2021, interest expense, net was largely flat compared to the same periods in ~~2019.~~2020.

INCOME TAX EXPENSE

Income tax expense for the three and ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 was ~~$56~~$97 million and ~~$119~~$156 million, respectively. For the ~~third~~second quarter ~~2020,~~2021, the Company's effective tax rate was ~~21%~~25% and for the ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, the Company's effective tax rate was ~~(24)%~~24%. The difference between the effective tax rate and the U.S. federal statutory tax rate of 21% for the three months ended ~~September~~June 30, ~~2020~~2021 is ~~21%. The effective tax rate was positively impacted by final regulations on global intangible low-taxed income (GILTI), offset by the impact of taxes on foreign earnings,~~primarily due to U.S. state and local income tax expense, U.S. federal taxes on foreign earnings, excess tax benefits related to stock compensation, and other discrete adjustments. The difference between the effective tax rate and the U.S. federal statutory tax rate of 21% for the ~~nine~~six months ended ~~September~~June 30, 2021 is primarily due to U.S. state and local income tax expense, U.S. federal taxes on foreign earnings, adjustments to valuation allowances against certain deferred tax assets, excess tax benefits related to stock compensation, and other discrete adjustments.

The realization of deferred tax assets depends on achieving a certain minimum level of future taxable income. Management currently believes that it is at least reasonably possible that the minimum level of taxable income will be met within the next 12 months to reduce the valuation allowances of certain foreign jurisdictions by a range of zero to $2 million.

Income tax expense for the three and six months ended June 30, 2020 was $39 million and $63 million, respectively. For the second quarter 2020, the Company's effective tax rate was 29% and for the six months ended June 30, 2020, the Company's effective tax rate was (8)%. The difference between the effective tax rate and the U.S. federal statutory tax rate of 21% for the three months ended June 30, 2020 is primarily due to U.S. state and local income tax expense, the impact of U.S. federal taxes on foreign earnings, and other discrete adjustments. The difference between the effective tax rate and the U.S. federal statutory tax rate of 21% for the six months ended June 30, 2020 is primarily a result of charges related to the impairment of goodwill and certain other indefinite-lived intangible assets recorded in the first quarter of 2020, which were mostly non-deductible. Non-cash charges of ~~$15~~$18 million were recorded related to adjustments to valuation allowances against certain deferred tax assets. The remaining difference between the statutory rate of 21% and the effective rate was driven by the impact of recording U.S. state and local income tax expense and U.S. federal taxes on foreign earnings.

The realization of deferred tax assets depends on achieving a certain minimum level of future taxable income. Management currently believes that an immaterial amount of valuation allowances of certain foreign jurisdictions could be reduced within the next 12 months.

Income tax expense for the three and nine months ended September 30, 2019 was $61 million and $159 million, respectively. For the third quarter 2019, the Company's effective tax rate was 29% and for the nine months ended September 30, 2019, the Company's effective tax rate was 32%. The difference between the effective tax rate and the U.S. federal statutory tax rate of 21% for the three months ended September 30, 2019 was primarily due to U.S. state and local income tax expense, the impact of U.S. federal taxes on foreign earnings and other discrete adjustments. The difference between the effective tax rate and the U.S. federal statutory tax rate of 21% for the nine months ended September 30, 2019 was primarily due to U.S. state and local income tax expense, the impact of U.S. federal taxes on foreign earnings, legislative changes and other discrete adjustments.

On March 6, 2019, the U.S. Treasury and the IRS proposed regulations that provide guidance on determining the amount of a domestic corporation’s deduction for the GILTI and foreign-derived intangible income (FDII) recently added by the U.S. Tax Cuts and Jobs Act of 2017 (the “Tax Act”). The proposed regulations provide special rules in determining the deduction amount which adjusted the Company’s 2018 tax estimate resulting in an increase to tax expense of $12 million for the nine months ended September 30, 2019.

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- 3837 -

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

Restructuring and Acquisition-Related Costs

The Company has incurred restructuring, transaction and integration costs related to acquisitions, along with restructuring costs in connection with its global cost reduction and productivity initiatives. These costs are recorded within Corporate, Other and Eliminations. Please refer to Note 98 of the Consolidated Financial Statements for further information on the nature of these costs.

The following table presents the impact and respective location of these ~~income (expense)~~expense items on the Consolidated Statements of Earnings (Loss) (in millions):

Three Months Ended September 30, Nine Months Ended September 30,
Location 2020 2019 2020 2019
Restructuring costs Cost of sales $ — $ — $ (4) $ (2)
Restructuring (costs) / gains Other expenses, net — — (6) 3
Total restructuring, acquisition and integration-related (costs) / gains $ — $ — $ (10) $ 1


		Three Months Ended June 30,				Six Months Ended June 30,
	Location	2021		2020		2021		2020
Restructuring costs	Cost of sales	$	(1)	$	(1)	$	(2)	$	(4)
Restructuring costs	Marketing and administrative expenses	(1)		—		(1)		—
Restructuring costs	Other (income) expenses, net	1		(4)		1		(6)



Total restructuring, acquisition and integration-related costs		$	(1)	$	(5)	$	(2)	$	(10)

Adjusted Earnings Before Interest and Taxes

Adjusted EBIT is a non-GAAP measure that excludes certain items that management does not allocate to our segment results because it believes they are not representative of the Company's ongoing operations. Adjusted EBIT is used internally by the Company for various purposes, including reporting results of operations to the Board of Directors of the Company, analysis of performance and related employee compensation measures. Although management believes that these adjustments result in a measure that provides a useful representation of our operational performance, the adjusted measure should not be considered in isolation or as a substitute for Net earnings (loss) attributable to Owens Corning as prepared in accordance with accounting principles generally accepted in the United States.

Adjusting income (expense) items to EBIT are shown in the table below (in millions):


		Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended June 30,				Six Months Ended June 30,
		2020		2019		2020		2019			2021		2020		2021		2020
Restructuring (costs) / gains		$	—	$	—	$	(10)	$	1
Restructuring costs										Restructuring costs	$	(1)	$	(5)	$	(2)	$	(10)
Gains on sale of certain precious metals	Gains on sale of certain precious metals	7		—		26		—		Gains on sale of certain precious metals	21		9		41		19
Goodwill impairment charge	Goodwill impairment charge	—		—		(944)		—		Goodwill impairment charge	—		—		—		(944)
Intangible assets impairment charge	Intangible assets impairment charge	—		—		(43)		—		Intangible assets impairment charge	—		—		—		(43)

Total adjusting items	Total adjusting items	$	7	$	—	$	(971)	$	1	Total adjusting items	$	20	$	4	$	39	$	(978)

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

The reconciliation from Net earnings (loss) attributable to Owens Corning to EBIT and to Adjusted EBIT is shown in the table below (in millions):


		Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended June 30,				Six Months Ended June 30,
		2020		2019		2020		2019			2021		2020		2021		2020
NET EARNINGS (LOSS) ATTRIBUTABLE TO OWENS CORNING	NET EARNINGS (LOSS) ATTRIBUTABLE TO OWENS CORNING	$	206	$	150	$	(615)	$	332	NET EARNINGS (LOSS) ATTRIBUTABLE TO OWENS CORNING	$	298	$	96	$	508	$	(821)
Net earnings attributable to noncontrolling interests		—		1		—		1
Net loss attributable to noncontrolling interests										Net loss attributable to noncontrolling interests	—		(1)		—		—
NET EARNINGS (LOSS)	NET EARNINGS (LOSS)	206		151		(615)		333		NET EARNINGS (LOSS)	298		95		508		(821)
Equity in net earnings of affiliates		1		—		1		—
Equity in net (loss) earnings of affiliates										Equity in net (loss) earnings of affiliates	—		(1)		1		—
Income tax expense	Income tax expense	56		61		119		159		Income tax expense	97		39		156		63
EARNINGS (LOSS) BEFORE TAXES	EARNINGS (LOSS) BEFORE TAXES	261		212		(497)		492		EARNINGS (LOSS) BEFORE TAXES	395		135		663		(758)
Interest expense, net	Interest expense, net	35		33		98		101		Interest expense, net	33		36		66		63
Loss on extinguishment of debt		—		32		—		32

EARNINGS (LOSS) BEFORE INTEREST AND TAXES	EARNINGS (LOSS) BEFORE INTEREST AND TAXES	296		277		(399)		625		EARNINGS (LOSS) BEFORE INTEREST AND TAXES	428		171		729		(695)
Adjusting items from above	Adjusting items from above	7		—		(971)		1		Adjusting items from above	20		4		39		(978)
ADJUSTED EBIT	ADJUSTED EBIT	$	289	$	277	$	572	$	624	ADJUSTED EBIT	$	408	$	167	$	690	$	283

Segment Results

EBIT by segment consists of net sales less related costs and expenses and is presented on a basis that is used internally for evaluating segment performance. Certain items, such as general corporate expenses or income and certain other expense or income items, are excluded from the internal evaluation of segment performance. Accordingly, these items are not reflected in EBIT for our reportable segments and are included in the Corporate, Other and Eliminations category, which is presented following the discussion of our reportable segments.

Composites

The table below provides a summary of net sales, EBIT and depreciation and amortization expense for the Composites segment (in millions):


		Three Months Ended September 30,									Nine Months Ended September 30,										Three Months Ended June 30,						Six Months Ended June 30,
		2020			2019			2020			2019				2021			2020			2021			2020
Net sales	Net sales	$	521		$	531		$	1,413		$	1,579		Net sales	$	583		$	398		$	1,142		$	892
% change from prior year	% change from prior year	-2		%	5		%	-11		%	1		%	% change from prior year	46		%	-26		%	28		%	-15		%
EBIT	EBIT	$	55		$	67		$	105		$	191		EBIT	$	98		$	6		$	177		$	50
EBIT as a % of net sales	EBIT as a % of net sales	11		%	13		%	7		%	12		%	EBIT as a % of net sales	17		%	2		%	15		%	6		%
Depreciation and amortization expense	Depreciation and amortization expense	$	40		$	37		$	117		$	114		Depreciation and amortization expense	$	39		$	39		$	77		$	77

NET SALES

In our Composites segment, net sales in the ~~third~~second quarter ~~2020 decreased $10~~2021 increased $185 million compared to the same period in ~~2019. Lower selling prices~~2020. The increase was primarily driven by higher sales volumes of $5approximately 28%. The remaining variance was driven by favorable customer mix, $20 million from the ~~slightly unfavorable~~favorable impact of translating sales denominated in foreign currencies into United States dollars and ~~slightly~~higher selling prices of $16 million.

For the year-to-date 2021, net sales in our Composites segment increased $250 million compared to the same period in 2020. The increase was primarily driven by higher sales volumes of approximately 17%. The remaining variance was driven by favorable customer and product mix, $29 million from the favorable impact of translating sales denominated in foreign currencies into United States dollars, and higher selling prices of $25 million.

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

EBIT

In our Composites segment, EBIT in the second quarter of 2021 increased $92 million compared to the same period in 2020. The impact of higher sales volumes, higher selling prices and favorable customer mix drove the majority of the increase. The favorable comparison year-over-year to curtailment costs in 2020 provided additional benefit of $33 million. Input cost inflation of $12 million and higher transportation costs of $8 million were offset by favorable manufacturing performance.

For the year-to-date 2021, EBIT in our Composites segment increased $127 million compared to the same period in 2020. The impact of higher sales volumes, higher selling prices and favorable customer mix drove the majority of the increase. The favorable comparison year-over-year to curtailment costs in 2020 provided additional benefit of $37 million. Input cost inflation of $16 million and higher transportation costs of $10 million were offset by favorable manufacturing performance.

OUTLOOK

Global glass reinforcements market demand has historically been correlated with global industrial production and we believe this relationship will continue. In 2021, the Company expects continued global industrial production growth, though at lower levels than experienced in the first half of 2021 due to the favorable comparison to the first half of 2020, which was significantly impacted by the COVID-19 pandemic. Uncertainties that may impact our Composites financial results include the cost and availability of input materials.

Insulation

The table below provides a summary of net sales, EBIT and depreciation and amortization expense for the Insulation segment (in millions):


	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
Net sales	$	806		$	595		$	1,506		$	1,198
% change from prior year	35		%	-10		%	26		%	-4		%
EBIT	$	112		$	32		$	194		$	71
EBIT as a % of net sales	14		%	5		%	13		%	6		%
Depreciation and amortization expense	$	53		$	49		$	104		$	98

NET SALES

In our Insulation segment, net sales in the second quarter of 2021 increased $211 million compared to the same period in 2020. The increase was due to higher sales volumes of about 25% and higher selling prices of $34 million. The remaining variance was driven by the $33 million favorable impact of translating sales denominated in foreign currencies into United States dollars.

For the year-to-date 2021, net sales in our Insulation segment increased $308 million compared to the same period in 2020. The increase was due to higher sales volumes of about 19% and higher selling prices of $48 million. The $55 million favorable impact of translating sales denominated in foreign currencies into United States dollars was partially offset by unfavorable product ~~mix accounted for the decline. Sales volumes were flat on a year-over-year basis.~~

and customer mix.

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

~~For~~EBIT

In our Insulation segment, EBIT in the ~~year-to-date 2020, net sales in our Composites segment decreased $166~~second quarter of 2021 increased $80 million compared to the same period in ~~2019, primarily due to lower sales volumes of approximately 6% due to the impact on demand from the COVID-19 pandemic.~~2020. The ~~unfavorable impact of $23 million from translating sales denominated in foreign currencies into United States dollars,~~increase was driven by the impact of ~~unfavorable customer~~higher sales volumes and ~~product mix, and $21 million in lower~~higher selling prices ~~accounted for the remaining year over year decline.~~

~~EBIT~~

~~In our Composites segment, EBIT in the third quarter~~ of ~~2020 decreased $12~~$34 million. The benefit of fixed cost absorption on higher production volumes of $34 million ~~compared to the same period in 2019. The decline was primarily driven by the $27 million unfavorable impact of production curtailment actions~~ and ~~lower selling prices, partially offset by~~ favorable manufacturing performance of ~~$19 million. Unfavorable customer mix and the unfavorable impact of translating sales and costs denominated in foreign currencies into United States dollars were largely~~$10 million more than offset ~~by $6~~$23 million of ~~lower selling, general and administrative expenses,~~ input cost ~~deflation~~inflation and ~~lower~~$16 million in higher transportation costs.

For the year-to-date ~~2020,~~2021, EBIT in our ~~Composites~~Insulation segment ~~decreased $86~~increased $123 million compared to the same period in ~~2019.~~2020. The ~~decline~~increase was primarily driven by ~~lower~~the impact of higher sales volumes and ~~the $77~~higher selling prices of $48 million. The benefit of fixed cost absorption on higher production volumes of $49 million ~~unfavorable impact of production curtailment actions, partially offset by lower selling, general~~ and ~~administrative expenses. Favorable~~favorable manufacturing performance of ~~$35~~$15 million more than offset ~~lower selling prices and unfavorable customer mix. The $12~~$30 million ~~unfavorable impact~~ of ~~translating sales and costs denominated in foreign currencies into United States dollars was offset by lower transportation costs and lower~~ input cost ~~deflation.~~

~~OUTLOOK~~

~~Global glass reinforcements market demand has historically been correlated with global industrial production~~inflation and ~~we believe this relationship will continue. The Company expects the COVID-19 pandemic will continue to create uncertainty~~$22 million in its end markets. The magnitude of the impact will depend on the depth and duration of the crisis, as well as the timing of the recovery in the markets served by the Composites segment. The company continues to focus on managing costs, capital expenditures, and working capital.

~~Insulation~~

~~The table below provides a summary of net sales, EBIT and depreciation and amortization expense for the Insulation segment (in millions):~~

Three Months Ended
September 30, Nine Months Ended
September 30,
2020 2019 2020 2019
Net sales $ 681 $ 693 $ 1,879 $ 1,945
% change from prior year -2 % -2 % -3 % -2 %
EBIT $ 73 $ 84 $ 144 $ 141
EBIT as a % of net sales 11 % 12 % 8 % 7 %
Depreciation and amortization expense $ 51 $ 48 $ 149 $ 146

~~NET SALES~~

In our Insulation segment, net sales in the third quarter of 2020 decreased $12 million compared to the same period in 2019. The decline was due to lower selling prices of $6 million and unfavorable product mix. The $5 million favorable impact of translating sales denominated in foreign currencies into United States dollars offset the unfavorable impact of lost sales from the divestiture of an immaterial business in the first quarter of 2020. Sales volumes were flat on a year-over-year basis, as volume growth in certain North American building insulation markets have offset volume decreases in certain international and industrial markets.

For the year-to-date 2020, net sales in our Insulation segment decreased $66 million compared to the same period in 2019. The decrease was due to the impact of unfavorable customer and product mix, lower selling prices of $18 million, the unfavorable

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

impact of lost sales from the divestiture of an immaterial business in the first quarter of 2020, and the $11 million negative impact of translating sales denominated in foreign currencies into United States dollars. Sales volumes were flat on a year-over-year basis.

~~EBIT~~

In our Insulation segment, EBIT in the third quarter of 2020 decreased $11 million compared to the same period in 2019. The decline was primarily driven by lower selling prices of $6 million and unfavorable customer and product mix. Favorable manufacturing performance of $8 million was largely offset by the unfavorable impact of production curtailment actions and higher ~~delivery costs.~~

For the year-to-date 2020, EBIT in our Insulation segment increased $3 million compared to the same period in 2019. The favorable impact of manufacturing performance and the $5 million gain on the divestiture of an immaterial business in the first quarter of 2020 was offset by lower selling prices of $18 million and the unfavorable impact of customer and product mix. The $16 million favorable impact of lower selling, general and administrative expenses was partially offset by the unfavorable impact of production curtailment actions and higher deliverytransportation costs.

OUTLOOK

The outlook for Insulation demand is driven by North American new residential construction, remodeling and repair activity, as well as commercial and industrial construction activity in the United States, Canada, Europe and Asia-Pacific. Demand in commercial and industrial insulation markets is most closely correlated to industrial production growth and overall economic activity in the global markets we serve. Demand for residential insulation is most closely correlated to lagged U.S. housing starts.

During the ~~third~~second quarter of ~~2020,~~2021, the average Seasonally Adjusted Annual Rate (SAAR) of U.S. housing starts was approximately ~~1.430~~1.568 million, up from an annual average of approximately ~~1.288~~1.086 million starts in the ~~third~~second quarter of ~~2019.~~

Through the third quarter of 2020, the North American new residential construction recovery has continued to accelerate, while global commercial and industrial construction activity has recovered at a slower pace.2020. The Company expects continued growth in the SAAR of U.S. housing starts in the second half of 2021, though at lower levels than experienced in the first half of 2021 due to the favorable comparison to the first half of 2020, which was impacted by the COVID-19 ~~pandemic will continue to create uncertainty in its end markets. The magnitude~~pandemic. Uncertainties that may impact our Insulation financial results include the cost and availability of the impact will depend on the depth and duration of the crisis, and the pace of recovery in the end markets and geographies served by the Insulation segment. The company continues to focus on managing costs, capital expenditures, and working capital.input materials.

Roofing

The table below provides a summary of net sales, EBIT and depreciation and amortization expense for the Roofing segment (in millions):

Three Months Ended
September 30, Nine Months Ended
September 30,
2020 2019 2020 2019
Net sales $ 761 $ 713 $ 1,993 $ 2,105
% change from prior year 7 % 11 % -5 % 8 %
EBIT $ 196 $ 143 $ 408 $ 368
EBIT as a % of net sales 26 % 20 % 20 % 17 %
Depreciation and amortization expense $ 15 $ 14 $ 44 $ 40


	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
Net sales	$	917		$	677		$	1,628		$	1,232
% change from prior year	35		%	-13		%	32		%	-11		%
EBIT	$	234		$	148		$	390		$	212
EBIT as a % of net sales	26		%	22		%	24		%	17		%
Depreciation and amortization expense	$	14		$	15		$	29		$	29

NET SALES

In our Roofing segment, net sales in the ~~third~~second quarter of ~~2020~~2021 increased ~~$48~~$240 million compared to the same period in ~~2019.~~2020. The increase was primarily driven by higher sales volumes of ~~approximately 12%~~about 19% on both higher shingle volumes and higher component volumes, ~~partially offset by lower~~higher selling prices of ~~$23~~$94 million, and ~~lower~~slightly higher third-party asphalt sales ~~of $20 million. The remaining difference was primarily driven by favorable~~and product mix.

For the year-to-date ~~2020,~~2021, net sales in our Roofing segment ~~decreased $112~~increased $396 million compared to the same period in ~~2019.~~2020. The ~~decrease~~increase was primarily driven by ~~$50 million of lower selling prices and $43 million of lower third-party asphalt sales. Slightly lower~~higher sales volumes of ~~1% contributed to the decrease, as lower~~about 22% on both higher shingle volumes ~~largely offset by~~and higher component ~~volumes.~~volumes and higher selling prices of $125 million.

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

EBIT

In our Roofing segment, EBIT in the ~~third~~second quarter of ~~2020~~2021 increased ~~$53~~$86 million compared to the same period in ~~2019.~~2020. The increase was primarily driven by higher ~~sales volumes~~selling prices of $94 million and the ~~combined $14~~impact of higher sales volumes. Input cost inflation, primarily asphalt and other petroleum-based products, of $42 million ~~impact~~and $19 million of higher transportation costs were partially offset by favorable manufacturing performance ~~and lower transportation costs. The unfavorable impact~~ of ~~lower selling prices was more than offset by $34 million of input cost deflation, primarily asphalt.~~$14 million.

For the year-to-date ~~2020,~~2021, EBIT in our Roofing segment increased ~~$40~~$178 million compared to the same period in ~~2019.~~2020. The increase was ~~largely~~primarily driven by ~~$13~~higher selling prices of $125 million ~~in lower~~and the impact of higher sales volumes. Input cost inflation, primarily asphalt and other petroleum-based products, of $45 million and $24 million of higher transportation costs were partially offset by favorable manufacturing performance ~~and the $11 million benefit related to the anticipated recovery~~ of certain tariffs paid over the past two years, following a short-term exclusion request granted by the U.S. government. The unfavorable impact of lower selling prices and lower sales volumes was more than offset by $63 million of input cost deflation, primarily asphalt.$46 million.

OUTLOOK

In our Roofing segment, we expect the factors that have driven strong margins in recent years, such as growth from remodeling demand, along with higher sales of roofing components, to continue to deliver profitability. Uncertainties that may impact our Roofing margins include demand from storm and other weather events, demand from new construction, competitive pricing pressure and the cost and availability of ~~raw materials, particularly asphalt.~~input materials.

Despite recent strength in the U.S. asphalt shingle market, the Company expects the COVID-19 pandemic will continue to create uncertainty in its end markets. The magnitude of the impact will depend on the depth and duration of the crisis, as well as the timing of the recovery in the markets served by the Roofing segment. The company continues to focus on managing costs, capital expenditures, and working capital.

Corporate, Other and Eliminations

The table below provides a summary of EBIT and depreciation and amortization expense for the Corporate, Other and Eliminations category (in millions):


		Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended June 30,				Six Months Ended June 30,
		2020		2019		2020		2019			2021		2020		2021		2020
Restructuring (costs) / gains		$	—	$	—	$	(10)	$	1
Restructuring costs										Restructuring costs	$	(1)	$	(5)	$	(2)	$	(10)
Gains on sale of certain precious metals	Gains on sale of certain precious metals	7		—		26		—		Gains on sale of certain precious metals	21		9		41		19
Goodwill impairment charge	Goodwill impairment charge	—		—		(944)		—		Goodwill impairment charge	—		—		—		(944)
Intangible assets impairment charge	Intangible assets impairment charge	—		—		(43)		—		Intangible assets impairment charge	—		—		—		(43)

General corporate expense and other	General corporate expense and other	(35)		(17)		(85)		(76)		General corporate expense and other	(36)		(19)		(71)		(50)
EBIT	EBIT	$	(28)	$	(17)	$	(1,056)	$	(75)	EBIT	$	(16)	$	(15)	$	(32)	$	(1,028)
Depreciation and amortization	Depreciation and amortization	$	14	$	13	$	42	$	37	Depreciation and amortization	$	16	$	13	$	31	$	28

EBIT

In Corporate, Other and Eliminations, EBIT losses for the ~~third~~second quarter of ~~2020~~2021 were higher by ~~$11~~$1 million compared to the same period in ~~2019, primarily driven by higher General corporate expense and other, partially offset by the gains on sale of certain precious metals.~~2020. For the year-to-date ~~2020,~~2021, EBIT losses in Corporate, Other and Eliminations were ~~higher~~lower by ~~$981~~$996 million ~~as a result of~~primarily driven by the ~~$944 million~~favorable comparison year-over-year to the goodwill impairment charge of $944 million and intangible asset charges of $43 million ~~of intangible assets impairment charge~~ recorded in the first quarter of 2020. Additional details of ~~this charge~~these charges are further explained in ~~both the Critical Accounting Estimates paragraph of MD&A and~~ Note 65 of the Consolidated Financial Statements. The remaining difference was driven by $22 million of higher gains on sale of certain precious metals.

General corporate expense and other for the ~~third~~second quarter and year-to-date ~~2020~~2021 were higher by ~~$18~~$17 million and $9$21 million ~~respectively,~~ compared to the same periods in ~~2019,~~2020, driven primarily by higher performance-based compensation associated with an improved outlook for ~~2020, along with smaller one-time items that offset modest benefits from cost control initiatives.~~2021 and higher general corporate expenses as business activities return to a more typical, post-pandemic level.

OUTLOOK

In 2021, we estimate general corporate expenses to be in the range of $150 million and $155 million.

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

~~OUTLOOK~~

~~In 2020, we now estimate general corporate expenses to be approximately $125 million, based on an increase in performance-based compensation~~

LIQUIDITY, CAPITAL RESOURCES AND OTHER RELATED MATTERS

Liquidity

The Company's primary external sources of liquidity are its Senior Revolving Credit Facility and its Receivables Securitization Facility (each as defined below).

The Company has an $800 million senior revolving credit facility (the "Senior Revolving Credit Facility") that has been amended from time to ~~time with a~~time. In July 2021, the Senior Revolving Credit Facility was amended to extend the maturity date ~~in May 2024.~~to July 2026.

The Company has a $280 million receivables securitization facility (the "Receivables Securitization Facility") that has been amended from time to ~~time, which matures in~~time. In April ~~2022.~~2021, the Receivables Securitization Facility was amended to extend the maturity date to April 2024.

The following table shows how the Company utilized its primary sources of liquidity (in millions):


		Balance at September 30, 2020							Balance at June 30, 2021
		Senior Revolving Credit Facility		Receivables Securitization Facility			Senior Revolving Credit Facility		Receivables Securitization Facility
Facility size or borrowing limit	Facility size or borrowing limit	$	800	$	280	Facility size or borrowing limit	$	800	$	280
Collateral capacity limitation on availability	Collateral capacity limitation on availability	n/a		—		Collateral capacity limitation on availability	n/a		—
Outstanding borrowings	Outstanding borrowings	—		—		Outstanding borrowings	—		—
Outstanding letters of credit	Outstanding letters of credit	4		1		Outstanding letters of credit	4		1
Availability on facility	Availability on facility	$	796	$	279	Availability on facility	$	796	$	279

The Company issued $300 million of 2030 senior notes on May 12, 2020 subject to $3 million of discounts and issuance costs. Interest on the notes is payable semiannually in arrears on June 1 and December 1 each year, beginning on December 1, 2020. The proceeds from these notes were used for general corporate purposes.

The Receivables Securitization Facility and Senior Revolving Credit Facility mature in ~~2022~~2024 and ~~2024,~~2026, respectively. The Company also had a term loan (the "Term Loan"), which required minimum quarterly principal repayments and full repayment by February 2021. In the third quarter of 2020, the Company repaid all outstanding borrowings on the Term Loan. The Company has no significant debt maturities of senior notes before the fourth quarter of 2022. As of ~~September~~June 30, ~~2020,~~2021, the Company had ~~$3.1~~$3.2 billion of total debt and cash and cash equivalents of ~~$647~~$888 million.

Cash and cash equivalents held by foreign subsidiaries may be subject to foreign withholding taxes upon repatriation to the U.S. As of ~~September~~June 30, ~~2020,~~2021, and December 31, ~~2019,~~2020, the Company had ~~$59~~$118 million and ~~$30~~$71 million, respectively, in cash and cash equivalents in certain of our foreign subsidiaries. The Company continues to assert indefinite reinvestment in accordance with ASC 740 based on the laws as of enactment of the tax legislation commonly known as the U.S. Tax Cuts and Jobs Act of 2017.

As a holding company, we have no operations of our own and most of our assets are held by our direct and indirect subsidiaries. Dividends and other payments or distributions from our subsidiaries will be used to meet our debt service and other obligations and to enable us to pay dividends to our stockholders. Please refer to page 1315 of the Risk Factors disclosed in Item 1A of the Company's Form 10-K for the year ended December 31, ~~2019~~2020 (the ~~"2019~~"2020 Form 10-K") for details on the factors that could inhibit our subsidiaries' ability to pay dividends or make other distributions to the parent company.

Our anticipated uses of cash include capital expenditures, working capital needs, pension contributions, share repurchases, meeting financial obligations, payments of quarterly dividends as authorized by our Board of Directors, ~~acquisitions~~ and reducing outstanding amounts under the Senior Revolving Credit Facility and Receivables Securitization Facility. A sustained significant decrease in revenue in the U.S. or excessive aging of the underlying receivables, as a result of the impact of the COVID-19 pandemic, could materially affect the collateral capacity limitation on the availability under the Receivables Securitization Facility.acquisitions. We

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

expect that our cash on hand, coupled with future cash flows from operations and other available sources of liquidity, including our Senior Revolving Credit Facility and, to the extent available, our Receivables Securitization Facility, will provide ample liquidity to enable us to meet our cash requirements.

The agreements governing our Senior Revolving Credit Facility and Receivables Securitization Facility contain various covenants that we believe are usual and customary. These covenants include a maximum allowed leverage ratio and a minimum required interest expense coverage ratio. We were in compliance with these covenants as of ~~September~~June 30, ~~2020.~~2021. In July 2021, the Senior Revolving Credit Facility was amended to eliminate the minimum required interest expense coverage ratio covenant.

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

Supplier Finance Programs

We review supplier terms and conditions on an ongoing basis, and have negotiated payment terms extensions in recent years in connection with our efforts to reduce working capital and improve cash flow.Separate from those terms extension actions, certain of our subsidiaries have entered into paying agency agreements with third-party administrators.These voluntary supply chain finance programs (collectively, the “Programs”) generally give participating suppliers the ability to sell, or otherwise pledge as collateral, their receivables from the Company to the participating financial institutions, at the sole discretion of both the suppliers and financial institutions.The Company is not a party to the arrangements between the suppliers and the financial institutions. The Company’s obligations to its suppliers, including amounts due and scheduled payment dates, are not impacted by the suppliers’ decisions to sell, or otherwise pledge as collateral, amounts under these arrangements.One of our programs includes a parent guarantee to the participating financial institution for a certain U.S. subsidiary that, at the time of the respective program’s inception in 2015, was a guarantor subsidiary of the Company’s Senior Revolving Credit Facility.

The payables associated with suppliers choosing to voluntarily participate in the Programs were presented as accounts payable within Total current liabilities on the Consolidated Balance Sheets, and totaled $185 million and $170 million as of June 30, 2021 and December 31, 2020, respectively. The amounts paid that are associated with suppliers once they chose to voluntarily participate in the Programs for the six months ended June 30, 2021 and 2020 were $235 million, and $181 million, respectively, with all activity related to the obligations presented within operating activities on the Consolidated Statements of Cash Flows.

The desire of suppliers and financial institutions to participate in the Programs could be negatively impacted by, among other factors, the availability of capital committed by the participating financial institutions, the cost and availability of our suppliers’ capital, a credit rating downgrade or deteriorating financial performance of the Company or its participating subsidiaries, or other changes in financial markets beyond our control.We do not expect these risks, or potential long-term growth of our programs, to materially affect our overall financial condition, as we expect a significant portion of our payments to continue to be made outside of the Programs.Accordingly, we do not believe the programs have materially impacted our current period liquidity, and do not believe that the programs are reasonably likely to materially affect liquidity in the future.

Cash Flows

The following table presents a summary of our cash balance, cash flows, and availability on credit facilities (in millions):

Nine Months Ended
September 30,

2020 2019
Cash and cash equivalents $ 647 $ 35
Net cash flow provided by operating activities $ 717 $ 596
Net cash flow used for investing activities $ (104) $ (285)
Net cash flow used for financing activities $ (106) $ (370)
Availability on the Senior Revolving Credit Facility $ 796 $ 791
Availability on the Receivables Securitization Facility $ 279 $ 64


	Six Months Ended June 30,
		2021		2020
Cash and cash equivalents		$	888	$	582
Net cash flow provided by operating activities		$	702	$	229
Net cash flow used for investing activities		$	(213)	$	(54)
Net cash flow (used for) provided by financing activities		$	(320)	$	265
Availability on the Senior Revolving Credit Facility		$	796	$	606
Availability on the Receivables Securitization Facility		$	279	$	279

Cash and cash ~~equivalents~~equivalents: Cash and cash equivalents as of ~~September~~June 30, ~~2020~~2021 increased ~~$612~~$306 million compared to ~~September~~June 30, ~~2019~~2020 primarily due to higher cash flow provided by operating ~~activities, lower cash paid for property, plant and equipment, and from issuance of the 2030 senior notes during the nine months ended September 30, 2020.~~activities.

Operating activities: For the ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, the Company's operating activities provided ~~$717~~$702 million of cash compared to ~~$596~~$229 million provided in the same period in ~~2019.~~2020. The change in cash provided by operating activities was due to higher earnings, and a ~~larger decrease~~smaller increase in operating assets and liabilities, primarily ~~inventories and~~ accounts payable, ~~and lower pension contributions in 2020~~ compared to the same period in ~~2019.~~2020.

Investing activities: Net cash flow used for investing activities ~~decreased $181~~increased $159 million for the ~~nine~~six months ended ~~September~~June 30, ~~2020~~2021 compared to the same period of ~~2019,~~2020, primarily driven by ~~lower~~cash outflows from derivative settlements, higher cash paid for property, plant and equipment, and ~~higher~~the unfavorable year-over-year comparison to proceeds from the sale of assets ~~and derivative settlements compared to the same period~~or affiliates in ~~the prior year.~~2020.

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- 44 -

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

Financing activities: Net cash used for financing activities was ~~$106~~$320 million for the ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, compared to net cash ~~used for~~provided by financing activities of ~~$370~~$265 million in the same period in ~~2019.~~2020. The change was primarily due to ~~issuance~~lower borrowings on the Senior Revolving Credit Facility, higher purchases of ~~the 2030 senior notes during the second quarter of 2020 (see Note 10 of the Consolidated Financial Statements~~treasury stock and ~~the Liquidity section above for further discussion of activities related~~an unfavorable year-over-year comparison to ~~debt).~~proceeds from long-term debt in 2020.

~~2020~~2021 Investments

Capital Expenditures: The Company will continue a balanced approach to the use of its cash flows. Operational cash flow will be used to fund the Company’s growth and innovation. ~~Given the uncertain market environment, we are focused on reducing or postponing discretionary expenses including capital~~Capital expenditures in ~~2020; capital expenditures~~2021 are expected to be ~~at the high end of the range of $250~~approximately $460 million, primarily driven by capacity expansion in our Composites segment to ~~$300 million.~~support growth in our downstream Nonwovens business.

Tax Net Operating Losses and U.S. Foreign Tax Credits

There have been no material changes to the disclosure in our ~~2019~~2020 Form 10-K.

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~~- 45 -~~

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

Pension Contributions

Please refer to Note 1110 of the Consolidated Financial Statements. The Company expects to contribute ~~between $65 million and $125~~$25 million in cash to its global pension plans during ~~2020. We will evaluate discretionary pension contributions as we continue to manage liquidity as the COVID-19 pandemic unfolds throughout the remainder of the year.~~2021. Actual contributions to the plans may change as a result of several factors, including changes in laws that impact funding requirements. The ultimate cash flow impact to the Company, if any, of the pension plan liability and the timing of any such impact will depend on numerous variables, including future changes in actuarial assumptions, legislative changes to pension funding laws, and market conditions.

Derivatives

Please refer to Note 54 of the Consolidated Financial Statements.

Fair Value Measurement

Please refer to Notes 54 and 109 of the Consolidated Financial Statements.

Contractual Obligations

In the normal course of business, we enter into contractual obligations to make payments to third parties. During the ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, there were no material changes to such contractual obligations outside the ordinary course of our business.

SAFETY

Working safely is a condition of employment at Owens Corning. We believe this organization-wide expectation provides for a safer work environment for employees, improves our manufacturing processes, reduces our costs and enhances our reputation. Furthermore, striving to be a world-class leader in safety provides a platform for all employees to understand and apply the resolve necessary to be a high-performing global organization. We measure our progress on safety based on Recordable Incidence Rate (“RIR”) as defined by the United States Department of Labor, Bureau of Labor Statistics. For the three months ended ~~September~~June 30, ~~2020,~~2021, our RIR was ~~0.73~~0.51 as compared to ~~0.55~~0.80 in the same period a year ago. For the ~~nine~~six months ended ~~September~~June 30, ~~2020,~~2021, our RIR was ~~0.69~~0.58 as compared to 0.67 in the same period a year ago.

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~~- 46 -~~

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

~~CRITICAL ACCOUNTING ESTIMATES~~

~~Impairment of Assets~~

The Company exercises judgment in evaluating assets for impairment. Goodwill and other indefinite-lived intangible assets are tested for impairment annually, or when circumstances arise which could more likely than not reduce the fair value of a reporting unit below its carrying value. These tests require comparing recorded values to estimated fair values for the assets under review.

Our reporting units represent a business for which discrete financial information is available and segment management regularly reviews the operating results. The Company has three reporting units: Composites, Insulation and Roofing.

~~First Quarter of 2020 Goodwill Impairment Charge~~

In the first quarter of 2020, the Company performed its ongoing assessment to consider whether events or circumstances had occurred that could more likely than not reduce the fair value of a reporting unit below its carrying value. The valuation limitation from the Company’s share price decline during the first quarter of 2020, the narrow cushion on the Insulation reporting unit and the high level of near-term macroeconomic uncertainty caused the Company to perform an interim goodwill impairment test as of March 31, 2020 over the Insulation reporting unit. After evaluating and weighing all relevant events and circumstances, and considering the substantial excess fair values for these reporting units, we concluded that it was not more likely than not that the fair value of the Roofing and Composites reporting units were less than their carrying values. Consequently, we determined that it was not necessary to perform an interim impairment test for the Roofing and Composites reporting units.

As part of our quantitative testing process for goodwill of the Insulation reporting unit, we estimated fair values using a discounted cash flow analysis, a form of the income approach, from the perspective of a market participant. Significant assumptions used in the discounted cash flow analysis were revenue growth rates and EBIT margins used in estimating discrete period cash flow forecasts of the reporting unit, the discount rate, and the long-term revenue growth rate and EBIT margins used in estimating the terminal business value. For our interim test, the cash flow forecasts of the reporting unit were based upon management’s near-term and long-term views of our markets and represented the forecasts used by senior management and the Board of Directors to operate the business during the COVID-19 pandemic and evaluate operating performance in the first quarter of 2020. The discount rate utilized was management’s estimate of what the market’s weighted average cost of capital is for a company with a similar debt rating and stock volatility, as measured by beta, which included an additional risk premium due to uncertainty surrounding the level and pace of economic recovery. The terminal business value was determined by applying the long-term growth rate to the latest year for which a forecast exists. At the time of the analysis, the Company asserted that the Insulation reporting unit’s long-term market-size and profitability outlook had not meaningfully deteriorated since the time of our most recent annual impairment test. The overall enterprise fair value of the Company was limited by the decline in our share price in the first quarter of 2020. The reduction in fair value of the Insulation reporting unit, and corresponding impairment charge, was primarily driven by an increase in the discount rate arising from higher equity risk premiums that reflected significant uncertainty surrounding the effect that the COVID-19 pandemic would have on the reporting unit’s near-term cash flows and a decrease in the reporting unit's forecasted near-term cash flows. As part of our goodwill quantitative testing process, the Company evaluates whether there are reasonably likely changes to management’s estimates that would have a material impact on the results of the goodwill impairment testing. Please refer to Note 6 of the Consolidated Financial Statements for additional details on the impairment charge that was recorded in the first quarter of 2020.

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~~- 47 -~~

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

~~Ongoing 2020 Goodwill Impairment Indicator Assessment~~

During the second and third quarters of 2020, the Company performed its quarterly assessment to identify potential impairment indicators for each of its reporting units. Among the qualitative and quantitative factors considered, management reviewed key assumptions and information, including updated macroeconomic indicators that impact the markets we serve, financial forecast information for each reporting unit, and recent performance of the Company’s share price to perform this assessment. The Company did not identify any impairment indicators for any of its reporting units during the second or third quarter of 2020 and determined that it was not more likely than not that the carrying value of any of its reporting units exceeded their respective fair values. ~~Consequently, we determined that it was not necessary to perform an interim impairment test for goodwill.~~ ~~We will continue to monitor the impacts of the COVID-19 pandemic on the Company and significant changes in key assumptions that could result in future period impairment charges.~~

The following table summarizes the segment allocation of recorded goodwill on our Consolidated Balance Sheets as of December 31, 2019 and, after giving effect to the first quarter 2020 impairment charge in our Insulation reporting unit, as of September 30, 2020 (in millions):

Segment September 30, 2020 Percent of Total December 31, 2019 Percent of Total
Composites $ 56 6 % $ 57 3 %
Insulation 522 53 % 1,479 77 %
Roofing 398 41 % 396 20 %
Total goodwill $ 976 100 % $ 1,932 100 %

There continues to be uncertainty surrounding the macroeconomic factors for the Insulation reporting unit, and a sustained downturn, significantly extended recovery, or a change in the long-term revenue growth or profitability for this reporting unit could increase the likelihood of an additional future impairment. Additionally, changes in market participant assumptions such as an increased discount rate or further share price reductions could increase the likelihood of a future impairment.

~~First Quarter of 2020 Intangible Assets Impairment Charge~~

Other indefinite-lived intangible assets are the Company’s trademarks. Our most recent annual test of indefinite-lived intangibles was conducted as of October 1, 2019. The fair value of each of our indefinite-lived intangible assets was in excess of its carrying value and thus, no impairment existed. The fair value of these assets substantially exceeded the carrying value as of the date of that assessment.

During the first quarter of 2020, we performed an interim impairment test on certain trademarks and trade names used by our Insulation segment. Fair values used in testing for potential impairment of our trademarks were calculated by applying an estimated market value royalty rate to the forecasted revenues of the businesses that utilize those assets. The assumed cash flows from this calculation were discounted at a rate based on a market participant discount rate, which included a risk premium due to the near-term economic uncertainty from the COVID-19 pandemic and its impact on the projected revenue derived from the trademarks. For two assets used by our Insulation segment, the reduction in fair values, and corresponding impairment charges, were driven by a lower expected sales outlook, the compounding effect of lower expected sales following an immaterial divestiture in the first quarter of 2020 and a higher discount rate associated with the near-term economic uncertainty from the COVID-19 pandemic. Please refer to Note 6 of the Consolidated Financial Statements for additional details on the impairment charges that were recorded in the first quarter of 2020.

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~~- 48 -~~

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

~~Ongoing 2020 Indefinite-lived Intangible Asset Impairment Indicator Assessment~~

During the second and third quarters of 2020, the Company performed its quarterly assessment to identify any potential impairment indicators for each of its indefinite-lived intangible assets. Among qualitative and quantitative factors considered, management reviewed key assumptions and information, including updated macroeconomic indicators that impact the markets we serve and financial forecast information for each reporting unit. ~~After evaluating and weighing all relevant events and circumstances, t~~he Company did not identify any impairment indicators for any of its indefinite-lived intangible assets during the second or third quarter of 2020 and determined that it was not more likely than not that the carrying value of any of its indefinite-lived intangible assets exceeded their respective fair values. ~~Consequently, we determined that it was not necessary to perform an interim impairment test for any indefinite-lived intangible assets.~~ ~~We will continue to monitor the impacts of the COVID-19 pandemic on the Company and significant changes in key assumptions that could result in future period impairment charges.~~

There are two indefinite-lived intangible assets that are at an increased risk of impairment, both of which are used by our Insulation segment and were partially impaired in the first quarter of 2020. A change in the estimated long-term revenue growth rate or increase in the discount rate assumption could increase the likelihood of a future impairment. These affected assets had an aggregate carrying value of $257 million as of September 30, 2020.

~~Long-lived Asset Recoverability Assessment~~

~~There were no changes to the recoverability conclusions for our long-lived assets disclosed in our 2019 Form-10-K.~~

Changes in management intentions, market conditions, operating performance and other similar circumstances could affect the assumptions used in these impairment tests. Changes in the assumptions could result in impairment charges that could be material to our Consolidated Financial Statements in any given period.

ACCOUNTING PRONOUNCEMENTS

Please refer to Note 1 of the Consolidated Financial Statements.

ENVIRONMENTAL MATTERS

Please refer to Note 1211 of the Consolidated Financial Statements.

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

CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

Our disclosures and analysis in this report, including Management’s Discussion and Analysis of Financial Condition and Results of Operations, contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (the "Exchange Act"). Forward-looking statements present our current forecasts and estimates of future events. These statements do not strictly relate to historical or current results and can be identified by words such as “anticipate,” "appear," "assume," “believe,” “estimate,” “expect,” "forecast," “intend,” “likely,” “may,” “plan,” “project,” "seek," "should," “strategy,” "will" and other terms of similar meaning or import in connection with any discussion of future operating, financial or other performance. These forward-looking statements are subject to risks, uncertainties and other factors and actual results may differ materially from those results projected in the statements. These risks, uncertainties and other factors include, without limitation:

•the severity and duration of the current COVID-19 pandemic on our operations, customers and suppliers, as well as related actions taken by governmental authorities and other third parties in response, each of which is uncertain, rapidly changing and difficult to predict;

•levels of residential and commercial or industrial construction activity;

•levels of global industrial production;

•competitive and pricing factors;

•demand for our products;

•relationships with key customers and customer concentration in certain areas;

•availability and cost of energy and raw materials;

•issues related to acquisitions, divestitures and joint ventures or expansions;

•legislation and related regulations or interpretations, in the United States or elsewhere;

•industry and economic conditions that affect the market and operating conditions of our customers, suppliers or lenders;

•domestic and international economic and political conditions, policies or other governmental actions;

•~~legislation~~climate change, weather conditions and ~~related regulations or interpretations, in the United States or elsewhere;~~storm activity;

•changes to tariff, trade or investment policies or laws;

•uninsured losses, including those from natural disasters, ~~catastrophe,~~catastrophes, pandemics, theft or sabotage;

•~~climate change, weather conditions and storm activity;~~

•~~availability and cost of energy and raw materials;~~

•environmental, product-related or other legal and regulatory liabilities, proceedings or, actions;

•research and development activities and intellectual property protection;

•issues involving implementation and protection of information technology systems;

•achievement of expected synergies, cost reductions and/or productivity improvements;

•the level of fixed costs required to run our business;

•foreign exchange and commodity price fluctuations;

•our level of indebtedness;

•our liquidity and the availability and cost of credit;

•levels of goodwill or other indefinite-lived intangible assets;

•~~achievement of expected synergies, cost reductions and/or productivity improvements;~~

•~~the level of fixed costs required to run our business;~~

•~~our ability to utilize our net operating loss carryforwards and foreign tax credits;~~

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~~- 50 -~~

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

•~~issues related to acquisitions, divestitures and joint ventures or expansions;~~

•~~foreign exchange and commodity price fluctuations;~~

•price volatility in certain wind energy markets in the U.S;

•loss of key employees, labor disputes or shortages; and

•defined benefit plan funding obligations.

All forward-looking statements in this report should be considered in the context of the risks and other factors described herein, and in Item 1A - Risk factors in Part I of our ~~2019~~2020 Form 10-K. Users of this report should not interpret the disclosure of any risk factor to imply that the risk has not already materialized. Any forward-looking statements speak only as of the date the statement is made and we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by federal securities laws. It is not possible to identify all of the risks, uncertainties and other factors that may affect future results. In light of these risks and uncertainties, the forward-looking events and circumstances discussed in this report may not occur and actual results may differ materially from those anticipated or implied in the forward-looking statements. Accordingly, users of this report are cautioned not to place undue reliance on the forward-looking statements.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There has been no material change in our exposure to market risk during the ~~nine~~six months ended ~~September~~June 30, ~~2020.~~2021. Please refer to "Quantitative and Qualitative Disclosures about Market Risk" contained in Part II, Item 7A of our ~~2019~~2020 Form 10-K for a discussion of our exposure to market risk.

ITEM 4. CONTROLS AND PROCEDURES

The Company maintains (a) disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act), and (b) internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act).

The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by this report. Based on such evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company’s disclosure controls and procedures are effective.

There has been no change in the Company's internal control over financial reporting during the quarter ended ~~September~~June 30, ~~2020~~2021 that materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting. Despite temporary work-from-home arrangements for a significant portion of our administrative employees, the changes have had a minimal effect on the Company's accounting processes and internal control over financial reporting during the quarter ended September 30, 2020.

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PART II

ITEM 1. LEGAL PROCEEDINGS

Information required by this item is incorporated by reference to Note 1211 of the Consolidated Financial Statements, Contingent Liabilities and Other Matters.

ITEM 1A. RISK FACTORS

~~The information set forth in this report, including without limitation, the risk factor presented below, updates and should be read in conjunction with,~~There have been no material changes to the risk factors ~~and information~~ disclosed in ~~Part 1,~~ Item 1A., "Risk Factors," in our Annual Report on Form 10-K for the year ended December 31, 2019. Similar risk factors were also provided in our Quarterly Report on Form 10-Q for the periods ended March 31, 2020 and June 30, 2020.

~~The recent COVID-19 pandemic is expected to have a significant impact on the Company's operations and results.~~

~~We have been managing matters related to the global COVID-19 pandemic, including the following impacts that we have experienced at various times since the first quarter of 2020:~~

•We believe that COVID-19 placed downward pressure on demand for some of our products, on at least a temporary basis and caused us to curtail some of our operations as we attempted to balance demand with inventory and output.

•Governmental authorities have implemented numerous measures to contain the virus, such as travel bans and restrictions, quarantines, shelter-in-place orders and business shutdowns. Some of these actions resulted in temporary curtailment of some operations and increased costs to operate certain facilities.

•In the first quarter of 2020, we recorded an impairment to goodwill that was driven, at least in part, by an increase in the discount rate arising from higher equity risk premiums that reflected significant uncertainty surrounding the effect that COVID-19 would have on the Insulation reporting unit’s near-term cash flows.

•~~The Company has focused on managing costs, capital expenditures and working capital during the COVID-19 pandemic.~~

In response to the pandemic, we implemented a number of precautionary and other measures to promote business continuity. These measures have been comprehensive and included initiatives regarding employee health and safety, working conditions (including remote working), engagements with customers and suppliers, financial management, operational efficiency, internal and external communications, government relations and community outreach. While we believe that all of these measures have been necessary or appropriate, they have resulted in additional costs and may adversely impact our business and financial performance in the future or expose us to additional unknown risks.

Although it is not possible to predict the ultimate impact of COVID-19, including on our business, results of operations, financial position or cash flows, such impacts may be material and may include:

•~~shifting customer demand for our products in the markets that we serve around the world;~~

•~~increased credit risk, including increased failure by customers experiencing business disruptions to make timely payments;~~

•~~reduced availability and productivity of employees;~~

•~~costs associated with production curtailments that are driven by governmental actions, customer demand or other causes related to COVID-19;~~

•increased operational risks resulting from changes to operations and remote work arrangements, including the potential effects on internal controls and procedures, cybersecurity risks and increased vulnerability to security breaches, information technology disruptions and other similar events;

•higher costs in certain areas such as transportation and distribution, as well as incremental costs associated with health screenings, temperature checks and enhanced cleaning and sanitation protocols to protect our employees and others;

•~~delays and disruptions in the availability of and timely delivery of materials and equipment used in our operations, as well as increased costs for such materials and equipment;~~

•~~a negative impact on our liquidity position, as well as increased costs and less ability to access funds under our existing credit facilities and the capital markets;~~

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~~- 53 -~~

~~ITEM 1A. RISK FACTORS (continued)~~

•~~impairment in the value of tangible or intangible assets that could be recorded as a result of weaker or more volatile economic conditions; and~~

•~~administrative proceedings, litigation or regulatory compliance matters.~~

~~The impact~~1A of the ~~COVID-19 pandemic may also exacerbate other risks discussed in Item 1A. “Risk Factors” in our Annual Report on~~Company’s 2020 Form 10-K for the fiscal year ended December 31, 2019, any of which could have a material effect on us. The impact depends on the severity and duration of the current COVID-19 pandemic and actions taken by governmental authorities and other third parties in response, each of which is uncertain, rapidly changing and difficult to predict.

10-K.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities

None.

Issuer Purchases of Equity Securities

The following table provides information about Owens Corning’s purchases of its common stock for each month during the quarterly period covered by this report:

Period Total Number of
Shares (or
Units)
Purchased Average
Price Paid
per Share
(or Unit) Total Number of
Shares (or
Units)
Purchased as
Part of Publicly
Announced
Plans or
Programs** Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs**
July 1-31, 2020 10,159 $ 59.85 — 2,286,726
August 1-31, 2020 1,128 67.33 — 2,286,726
September 1-30, 2020 471 69.52 — 2,286,726
Total 11,758 * $ 60.95 — 2,286,726


Period	Total Number of Shares (or Units) Purchased		Average Price Paid per Share (or Unit)		Total Number of Shares (or Units) Purchased as Part of Publicly Announced Plans or Programs**	Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs**
April 1-30, 2021	1,894		$	93.79	—	7,890,255
May 1-31, 2021	375,004		105.07		375,000	7,515,255
June 1-30, 2021	925,018		98.64		925,000	6,590,255
Total	1,301,916	*	$	100.49	1,300,000	6,590,255

* The Company retained an aggregate of ~~11,758~~1,916 shares surrendered to satisfy tax withholding obligations in connection with the vesting of restricted shares granted to our employees.

** On ~~October 24, 2016,~~December 3, 2020, the Board of Directors approved a share buy-back program under which the Company is authorized to repurchase up to 10 million shares of the Company’s outstanding common stock (the “Repurchase Authorization”). The Repurchase Authorization enables the Company to repurchase shares through the open market, privately negotiated transactions, or other transactions. The actual number of shares repurchased will depend on timing, market conditions and other factors and is at the Company’s discretion. The Company ~~did not repurchase any~~repurchased 1.3 million shares of its common stock for $131 million during the three months ended ~~September~~June 30, ~~2020~~2021 under the Repurchase Authorization. As of ~~September~~June 30, ~~2020, 2.3~~2021, 6.6 million shares remain available for repurchase under the Repurchase Authorization.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

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ITEM 5. OTHER INFORMATION

~~Departure~~Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

On July 28, 2021, the Board of Directors ~~or Certain Officers; Election~~ of ~~Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.~~Owens Corning adopted, effective immediately, the Company’s Third Amended and Restated Bylaws (as amended, the “Bylaws”). The Bylaws include amendments to ensure that gender references in the document are balanced.

~~Ava Harter, Senior Vice President, General Counsel and Secretary~~The foregoing description of the Bylaws is not complete and is qualified in its entirety by reference to a marked copy of the full text of the Bylaws, which is attached as an exhibit to this Quarterly Report on Form 10-Q and is incorporated herein by reference.

Entry into a Material Definitive Agreement; Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant

On July 23, 2021, Owens Corning entered into an Amended and Restated Credit Agreement among the Company, ~~submitted her resignation~~as borrower, the lenders signatory thereto and Wells Fargo Bank, National Association, as administrative agent (the “Credit Agreement”). The Credit Agreement replaces the Company’s existing Credit Agreement, dated as of May 4, 2018 (as amended and supplemented, the “Existing Credit Agreement”), among the Company, the lenders signatory thereto and Wells Fargo Bank, National Association, as administrative agent. The Credit Agreement amends and extends the Company’s Senior Revolving Credit Facility in an aggregate principal amount of $800 million, including borrowings and letters of credit on substantially the same terms as under the Company’s Existing Credit Agreement, except as described below.

Interest on outstanding indebtedness under the Senior Revolving Credit Facility accrues at a rate equal to, at the Company’s option, (1) the highest of (i) Wells Fargo Bank, National Association’s prime rate, (ii) the federal funds rate plus 0.50% and (iii) except when LIBOR is unavailable, LIBOR plus 1.00%; plus an applicable margin based upon the then applicable debt ratings of the Company; (2) if available, LIBOR plus an applicable margin based upon the then applicable debt ratings of the Company; or (3) the applicable LIBOR benchmark replacement plus an applicable margin based upon the then applicable debt ratings of the Company.

The applicable margins have been reduced across each pricing level as compared to the ~~Company~~Company’s Existing Credit Agreement. In addition, the Credit Agreement includes (a) provisions to address the anticipated unavailability of LIBOR and (b) a framework to include in the future a sustainability component whereby the Credit Agreement pricing can improve upon the Company’s achievement of either (x) certain specified key performance indicators with respect to certain environmental, social and governmental targets or (y) external sustainability ratings determined via an independent third-party evaluation. The Credit Agreement eliminated the Interest Coverage Ratio contained in the Existing Credit Agreement.

The Senior Revolving Credit Facility matures on ~~October~~the earlier of July 23, ~~2020, in order~~2026, the date of acceleration pursuant to ~~pursue another professional opportunity. Ms. Harter will continue in her role through November 30, 2020.~~its terms, or the date the commitments thereunder are terminated pursuant to the terms thereof.

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ITEM 6. EXHIBITS


Exhibit Number			Description



























3.1			Third Amended and Restated Bylaws of Owens Corning (as adopted on July 28, 2021) (filed herewith).

10.1			Third Amendment to Second Amended and Restated Receivables Purchase Agreement, dated as of April 26, 2021, by and among Owens Corning Sales, LLC, Owens Corning Receivables LLC, PNC Bank, National Association and the other parties thereto (filed herewith).

10.2			Second Amendment to Purchase and Sale Agreement, dated as of April 26, 2021, by and between Owens Corning Sales, LLC and Owens Corning Receivables, LLC (filed herewith).

31.1			Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a) (filed herewith).

31.2			Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a) (filed herewith).

32.1			Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350 (furnished herewith).

32.2			Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350 (furnished herewith).

101			The following materials from the Quarterly Report on Form 10-Q for Owens Corning for the period ended ~~September~~June 30, ~~2020,~~2021, formatted in iXBRL (Inline Extensible Business Reporting Language): (i) Consolidated Statements of Earnings (Loss), (ii) Consolidated Statements of Comprehensive Earnings (Loss); (iii) Consolidated Balance Sheets (iv) Consolidated Statements of Stockholders' Equity, (v) Consolidated Statements of Cash Flows, (vi) related notes to these financial statements and (vii) document and entity information.












104			The cover page from this Quarterly Report on Form 10-Q, formatted as Inline XBRL.

*Denotes management contract or compensatory plan or arrangement required to be filed as an exhibit pursuant to Form 10-K.

Owens Corning agrees to furnish to the U.S. Securities and Exchange Commission, upon request, copies of all instruments defining the rights of holders of long-term debt of Owens Corning where the total amount of securities authorized under each issue does not exceed 10% of the total assets of Owens Corning and its subsidiaries on a consolidated basis.

Table of Contents

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SIGNATURES

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

OWENS CORNING

Registrant

Date:

~~October~~July 28, ~~2020~~2021

By:

/s/ Kenneth S. Parks

Kenneth S. Parks

Chief Financial Officer

Date:

~~October~~July 28, ~~2020~~2021

By:

/s/ Kelly J. Schmidt

Kelly J. Schmidt

Vice President and

Controller


ASSETS	September 30, 2020		December 31, 2019
CURRENT ASSETS
Cash and cash equivalents	$	647	$	172
Receivables, less allowances of $10 at September 30, 2020 and $11 at December 31, 2019	1,016		770
Inventories	886		1,033

Other current assets	84		86
Total current assets	2,633		2,061
Property, plant and equipment, net	3,717		3,855
Operating lease right-of-use assets	160		203
Goodwill	976		1,932
Intangible assets	1,655		1,721
Deferred income taxes	33		46
Other non-current assets	224		188
TOTAL ASSETS	$	9,398	$	10,006
LIABILITIES AND EQUITY






Current liabilities	$	1,351	$	1,329
Long-term debt, net of current portion	3,126		2,986
Pension plan liability	200		231
Other employee benefits liability	173		179
Non-current operating lease liabilities	106		138
Deferred income taxes	342		272
Other liabilities	208		200

OWENS CORNING STOCKHOLDERS’ EQUITY
Preferred stock, par value $0.01 per share (a)	0		0
Common stock, par value $0.01 per share (b)	1		1
Additional paid in capital	4,064		4,051
Accumulated earnings	1,625		2,319
Accumulated other comprehensive deficit	(638)		(610)
Cost of common stock in treasury (c)	(1,200)		(1,130)
Total Owens Corning stockholders’ equity	3,852		4,631
Noncontrolling interests	40		40
Total equity	3,892		4,671
TOTAL LIABILITIES AND EQUITY	$	9,398	$	10,006


External Customer Sales by Geographic Region
United States	$	1,294	$	1,273	$	3,482	$	3,670
Europe	289		310		832		920
Asia-Pacific	187		169		461		492
Rest of world	134		131		355		386
NET SALES	$	1,904	$	1,883	$	5,130	$	5,468


	2020 Cost Reduction Actions		Insulation Network Optimization Restructuring		Acquisition-Related Restructuring
Balance at December 31, 2019	$	0	$	5	$	11
Restructuring costs	5		5		0
Payments	(3)		(8)		(4)
Non-cash items and reclassifications to other accounts	0		(2)		2


Balance at September 30, 2020	$	2	$	0	$	9
Cumulative charges incurred	$	5	$	29	$	30


Segment	September 30, 2020		Percent of Total		December 31, 2019		Percent of Total
Composites	$	56	6	%	$	57	3	%
Insulation	522		53	%	1,479		77	%
Roofing	398		41	%	396		20	%
Total goodwill	$	976	100	%	$	1,932	100	%