Owens Corning Annual Report 2020

FY2020 Annual Report · Owens Corning

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2020
ANNUAL REPORT

Unless the context indicates otherwise, the terms “Owens Corning,” “Company,” “we” and “our” in this 2020
Annual Report refer to Owens Corning and its subsidiaries. References to a particular year mean the Company’s
year commencing on January 1 and ending on December 31 of that year.

ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 2020

Table of Contents

PERFORMANCE GRAPH

DIRECTORS

119

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K

Í ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2020

‘ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934
For the transition period from

Commission File Number: 1-33100

Owens Corning

(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of
incorporation or organization)
One Owens Corning Parkway,
Toledo, OH
(Address of principal executive offices)

43-2109021
(I.R.S. Employer
Identification No.)

43659
(Zip Code)

Title of each class

Common Stock, par value $0.01 per share

Name of each exchange on which registered

New York Stock Exchange

(419) 248-8000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Trading Symbol

OC
Securities registered pursuant to Section 12(g) of the Act:
None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes Í No ‘
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes ‘ No Í
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 Í 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 Í 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 Í 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. ‘
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its
internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public
accounting firm that prepared or issued its audit report. ‘
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ‘ No Í
On June 30, 2020, the last business day of the registrant’s most recently completed second fiscal quarter, the aggregate market value of $0.01
par value common stock (the voting stock of the registrant) held by non-affiliates (assuming for purposes of this computation only that the
registrant had no affiliates) was approximately $6,023,086,936.
As of February 12, 2021, 104,926,383 shares of the registrant’s common stock, par value $0.01 per share, were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of Owens Corning’s proxy statement to be delivered to stockholders in connection with the Annual Meeting of Stockholders to be
held on or about April 15, 2021 (the “2021 Proxy Statement”) are incorporated by reference into Part III hereof.

PART I

ITEM 1.

Business

Overview

Segment overview

General

Availability of information

ITEM 1A. Risk factors

ITEM 1B. Unresolved staff comments

ITEM 2.

Properties

ITEM 3.

Legal proceedings

ITEM 4.

Mine safety disclosures

Information about our Executive Officers

PART II

ITEM 5. Market for Owens Corning’s common equity, related stockholder matters and issuer

purchases of equity securities

ITEM 6.

Selected financial data

ITEM 7. Management’s discussion and analysis of financial condition and results of operations

ITEM 7A. Quantitative and qualitative disclosures about market risk

ITEM 8.

Financial statements and supplementary data

ITEM 9.

Changes in and disagreements with accountants on accounting and financial disclosure

ITEM 9A. Controls and procedures

ITEM 9B. Other information

PART III

ITEM 10. Directors, executive officers and corporate governance

ITEM 11. Executive compensation

ITEM 12.

Security ownership of certain beneficial owners and management and related
stockholder matters

ITEM 13. Certain relationships and related transactions, director independence

ITEM 14.

Principal accountant fees and services

PART IV

ITEM 15. Exhibits and financial statement schedules

ITEM 16.

Form 10-K Summary

Signatures

Index to Consolidated Financial Statements

Management’s Report on Internal Control Over Financial Reporting

Report of Independent Registered Public Accounting Firm

Consolidated Financial Statements

Notes to Consolidated Financial Statements

Index to Consolidated Financial Statement Schedule

Schedule II

Page

117

118

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PART I

ITEM 1. BUSINESS

OVERVIEW

Owens Corning is a global building and industrial materials leader that manufactures and delivers a broad range
of high-quality insulation, roofing, and fiberglass composite materials. Its insulation products conserve energy
and improve acoustics, fire resistance and air quality in the spaces where people live, work and play. Its roofing
products and systems enhance curb appeal of people’s homes and protect homes and commercial buildings alike.
Its fiberglass composites make thousands of products lighter, stronger, and more durable. In short, the Company
provides innovative products and solutions that deliver a material difference to its customers and, ultimately,
makes the world a better place.

The business is global in scope, with operations in 33 countries, and human in scale, with approximately 19,000
employees and longstanding, local relationships with its customers. Based in Toledo, Ohio, Owens Corning
recorded net sales in 2020 of $7.1 billion. Founded in 1938, it has been a Fortune 500® company for
66 consecutive years.

Unless the context indicates otherwise, the terms “Owens Corning,” “Company,” “we” and “our” in this report
refer to Owens Corning and its subsidiaries. References to a particular year mean the Company’s year
commencing on January 1 and ending on December 31 of that year.

SEGMENT OVERVIEW

The Company has three reportable segments: Composites, Insulation and Roofing. Our Composites, Insulation
and Roofing reportable segments accounted for approximately 27%, 36% and 37% of our total reportable
segment net sales, respectively, in 2020.

Composites

Owens Corning glass fiber materials can be found in over 40,000 end-use applications within five primary
markets: building and construction, transportation, consumer, industrial, and power and energy. Such end-use
applications include pipe, roofing shingles, sporting goods, consumer electronics, telecommunications cables,
boats, aviation, automotive, industrial containers and wind-energy. Our products are manufactured and sold
worldwide. We primarily sell our products directly to parts molders and fabricators. Within the building and
construction market, our Composites segment sells glass fiber and/or glass mat directly to a small number of
major shingle manufacturers, including our own Roofing segment.

Our Composites segment includes vertically integrated downstream activities. 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.

Demand for composites is driven by general global economic activity and, more specifically, by the increasing
replacement of traditional materials such as aluminum, wood and steel with composites that offer lighter weight,
improved strength, lack of conductivity and corrosion resistance. We estimate that over the last 35 years, on
average, annual global demand for composite materials grew at about 1.6 times global industrial production
growth.

We compete with glass fiber manufacturers worldwide. According to various industry reports and Company
estimates, our Composites segment is a world leader in the production of glass fiber reinforcement materials.
Primary methods of competition include innovation, quality, customer service and global geographic reach.

ITEM 1. BUSINESS (continued)

Insulation

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Our insulating products help customers conserve energy, provide improved acoustical performance and offer
convenience of installation and use. Our Insulation segment includes a diverse portfolio of high, mid and
low-temperature products with a geographic mix of United States, Canada, Europe, Asia-Pacific and Latin
America, a market mix of residential, commercial, industrial and other markets, and a channel mix of retail,
contractor and distribution.

Our products in the residential market include thermal and acoustical batts, loosefill insulation, foam sheathing
and accessories, and are sold under well-recognized brand names and trademarks such as Owens Corning PINK®
FIBERGLAS™ Insulation. Our products in the commercial and industrial markets include glass fiber pipe
insulation, energy efficient flexible duct media, bonded and granulated mineral wool insulation, cellular glass
insulation and foam insulation used in above- and below-grade construction applications, and are sold under
well-recognized brand names and trademarks such as Thermafiber®, FOAMULAR®, FOAMGLAS® and Paroc®.
We sell our insulation products primarily to insulation installers, home centers, lumberyards, retailers and
distributors in the United States, Canada, Europe, Asia-Pacific and Latin America.

Demand for Owens Corning’s insulating products is driven by North American new residential construction,
repair and remodeling activity, commercial and industrial construction activity in the United States, Canada,
Europe, Asia-Pacific and Latin America, and increasingly stringent building codes and the growing need for
energy efficiency. Demand in the segment typically follows seasonal home improvement, remodeling and
renovation and residential, commercial and industrial construction industry patterns. Demand for new residential
construction in North America typically follows housing starts on a three-month lagged basis, although the new
residential construction cycle can elongate due to labor availability and other factors beyond our control. The
peak season for home construction and remodeling in our geographic markets generally corresponds with the
second and third calendar quarters. Demand for commercial and industrial applications is more heavily tied to
industrial production growth, commercial construction activity, and overall economic conditions in the global
markets we serve.

Our Insulation segment competes primarily with fiberglass insulation manufacturers in the United States, with an
international presence in Canada, Europe, Asia-Pacific and Latin America. According to industry reports and
Company estimates, Owens Corning is North America’s largest producer of residential, commercial and
industrial insulation. Principal methods of competition include innovation and product design, service, location,
quality, price and compatibility of systems solutions.

Working capital practices for this segment historically have followed a seasonal cycle. Typically, our insulation
plants run continuously throughout the year. This production plan, along with the seasonal nature of portions of
the segment, generally results in higher finished goods inventory balances in the first half of the year. Since sales
increase during the second half of the year, our accounts receivable balances are typically higher during this
period.

Roofing

Our primary products in the Roofing segment are laminate and strip asphalt roofing shingles. Other products
include roofing components, synthetic packaging materials and oxidized asphalt. We have been able to meet the
growing demand for longer lasting, aesthetically attractive laminate products with modest capital investment.

We sell shingles and roofing components primarily through distributors, home centers, lumberyards, retailers and
contractors in the United States. Our synthetic packaging materials are used primarily in the construction industry
for lumber and metal packaging. Oxidized asphalt is a significant input used in the production of our asphalt

ITEM 1. BUSINESS (continued)

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roofing shingles. We are vertically integrated and have manufacturing facilities that process asphalt for use in our
roofing shingles manufacturing process. In addition, we sell processed asphalt to other shingle manufacturers, to
roofing contractors for built-up roofing asphalt systems and to manufacturers in a variety of other industries,
including automotive, chemical, rubber and construction. Asphalt input costs and third-party asphalt sales prices
are correlated to crude oil prices. As a result, third-party asphalt sales are largely a cost-plus business.

Demand for products in our Roofing segment is generally driven by both residential repair and remodeling
activity and by new residential construction. Roofing damage from major storms can significantly increase
demand in this segment. As a result, sales in this segment do not always follow seasonal home improvement,
remodeling and new construction industry patterns as closely as our Insulation segment.

Our Roofing segment competes primarily with asphalt shingle manufacturers in the United States. According to
various industry reports and Company estimates, Owens Corning’s Roofing segment is the second largest
producer of asphalt roofing shingles in the United States. Principal methods of competition include innovation
and product design, proximity to customers, quality and price.

Our manufacturing operations are generally continuous in nature, and we warehouse much of our production
prior to sale since we operate with relatively short delivery cycles. One of the raw materials important to this
segment is sourced from a sole supplier. We have a long-term supply contract for this material, and have no
reason to believe that any availability issues will exist. If this supply was to become unavailable, our production
could be interrupted until such time as the supplies again became available or the Company reformulated its
in this segment, has been
products. Additionally,
constricted at times. Although this has not caused an interruption of our production in the past, prolonged asphalt
shortages would restrict our ability to produce products in this segment.

the supply of asphalt, another significant raw material

GENERAL

Intellectual Property

The Company relies on a combination of intellectual property laws, as well as confidentiality procedures and
contractual provisions, to protect our intellectual property, proprietary technology and our brands. Through
continuous and extensive use of the color PINK since 1956, Owens Corning became the first owner of a single
color trademark registration. In addition to our Owens Corning and PINK brands, the Company has registered,
and applied for the registration of, U.S. and international trademarks, service marks, and domain names.
Additionally, the Company has filed U.S. and international patent applications, including numerous issued
patents, covering certain of our proprietary technology resulting from research and development efforts. Over
time, the Company has assembled a portfolio of intellectual property rights including patents, trademarks, service
marks, copyrights, domain names, know-how and trade secrets covering our products, services and
manufacturing processes. Our proprietary technology is not dependent on any single or group of intellectual
property rights and the Company does not expect the expiration of existing intellectual property to have a
material adverse effect on the business as a whole. The Company believes the duration of our patents is adequate
relative to the expected lives of our products. Although the Company protects its intellectual property and
proprietary technology, any significant impairment of, or third-party claim against, our intellectual property
rights could harm our business or our ability to compete.

Environmental Control

Owens Corning has established policies and procedures 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,

ITEM 1. BUSINESS (continued)

-4-

federal, state and local laws and regulations relating to the presence of hazardous materials, pollution and
protection of the environment, including emissions to air, discharges to water, management of hazardous
materials, handling and disposal of solid wastes, 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 require significant global reductions in energy use, water consumption,
waste to landfill, emissions of greenhouse gases, fine particulate matter and toxic air emissions. The Company is
dedicated to continuous improvement in our environmental, health and safety performance and to achieving its
2030 Sustainability Goals.

The Company has not experienced a material adverse effect upon our capital expenditures or competitive
position as a result of environmental control
legislation and regulations. Operating costs associated with
environmental compliance were approximately $39 million in 2020. The Company continues to invest in
equipment and process modifications to remain in compliance with applicable environmental
laws and
regulations worldwide.

Our manufacturing facilities are subject to numerous national, state and local environmental protection laws and
regulations. Regulatory activities of particular importance to our operations include those addressing air
pollution, water pollution, waste disposal and chemical control. It is possible that new laws and regulations will
specifically address climate change, toxic air emissions, ozone forming emissions and fine particulate matter.
New environmental and chemical regulations could impact our ability to expand production or construct new
facilities in geographic regions in which we operate. However, based on information known to the Company,
including the nature of our manufacturing operations and associated air emissions, at this time we do not expect
any of these new laws, regulations or activities to have a material adverse effect on our results of current
operations, financial condition or long-term liquidity.

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 United States 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. At the end of 2020, the Company was involved
with a total of 21 sites worldwide, including 8 Superfund 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 and groundwater
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 December 31, 2020, the Company had an accrual totaling $7 million for its environmental liabilities, of which
the current portion is $3 million. Changes in required remediation procedures or timing of those procedures at
existing legacy sites, or discovery of contamination at additional sites, could result in material increases to the
Company’s environmental obligations.

ITEM 1. BUSINESS (continued)

Additional Government Laws and Regulations

-5-

In addition to environmental laws and regulations, we are subject to various laws and regulations around the
world. For example, trade regulations, including tariffs or other import or export restrictions, may increase the
cost of some of our raw materials or cross-border shipments, and limit our ability to do business in certain
countries or with certain individuals. Our business is also subject to competition laws in the various jurisdictions
where we operate, including the Sherman Antitrust Act and related federal and state antitrust laws in the United
States, as well as similar foreign laws and regulations. These laws and regulations generally prohibit competitors
from fixing prices, boycotting competitors, or engaging in other conduct that unreasonably restrains competition,
and such laws and regulations may impact potential business relationships or transactions with third parties in the
future. In addition, health and safety regulations (including laws or regulations promulgated in response to the
ongoing COVID-19 pandemic, as discussed below in Item 1A, “Risk Factors”) have necessitated, and may
continue to necessitate, increased operating costs or capital investments to promote a safe working environment.
The Company is also required to comply with increasingly complex and changing laws and regulations enacted
to protect business and personal data in the United States and other jurisdictions regarding privacy, data
protection and data security, including those related to the collection, storage, use, transmission and protection of
personal information and other consumer, customer, vendor or employee data. Further, an increasing number of
laws and regulations focused on product and chemical hazards and preferential product selection could also
impact our ability to manufacture and sell certain products or require significant research and development
investment and capital expenditures to meet regulatory requirements. With respect to the laws and regulations
noted above, as well as other applicable laws and regulations, the Company’s compliance programs may under
certain circumstances involve material investments in the form of additional processes, training, personnel,
information technology and capital. For a discussion of the risks associated with certain applicable laws and
regulations, see Item 1A, “Risk Factors.”

Human Capital Resources

Important to the Company’s long-term success is ensuring its people feel valued, included, and engaged – from
recruitment to retirement. That is why Owens Corning is dedicated to fostering an environment of learning and
growth within a supportive, caring culture. We are committed to providing a safe, healthy workplace and a
meaningful, engaging employee experience.

As of December 31, 2020, Owens Corning had approximately 19,000 employees, of which about 11,000 are
located outside the United States. Approximately 8,000 (63%) of hourly employees are subject to collective
bargaining agreements. The Company believes that its relations with employees are good.

The Company focuses on a number of human capital resource objectives in managing its business which, taken
together, may be material to understanding our business under certain circumstances.

Safety and Well-Being

One of our primary objectives is the safety and well-being of our employees. Working safely is an unconditional,
organization-wide expectation at Owens Corning, which we believe directly benefits employees’ lives, improves
our manufacturing processes and reduces our costs. The Company maintains comprehensive safety programs
focused on identifying hazards and eliminating risks that can lead to severe injuries. One of our primary safety
measures is the Recordable Incidence Rate (“RIR”) as defined by the United States Bureau of Labor Statistics.
For the year ended December 31, 2020, our RIR was 0.61, compared to 0.66 in the same period a year ago.

Additionally, with our Healthy Living platform, we provide a multifaceted well-being program designed to drive
sustainable, long-term change, improve the health and lives of employees, and strengthen the culture and work
experience.

ITEM 1. BUSINESS (continued)

Employee Performance and Related Objectives

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We also focus on managing employee performance, development, succession planning, and turnover. Our goal is
to create a high-performance culture and team that is diverse, capable and engaged. We strive to have clear
objectives, effective performance management, and a structure that includes regular talent reviews, succession
planning, development, and compensation analysis.

Corporate Culture

Another objective we pursue is maintaining a corporate culture focused on inclusion and diversity, ethics and
compliance, training, and positive employee relations and engagement.

The Company believes its success and sustainability are enhanced by an inclusive and diverse workforce. We
believe that inclusion and diversity add value to the business by fostering an environment that leads to high
engagement and innovative thinking in the workplace. Our Chief Executive Officer, along with more than a
thousand other company leaders around the world, signed the CEO Action for Diversity & Inclusion pledge in
2018, signaling our goal to advance diversity and inclusion within the workplace. Owens Corning operates
programs that foster gender and ethnic diversity as well as equality within its workforce, including supporting
various employee-led affinity groups, so its employees feel valued and appreciated for the distinct voices they
bring to the team.

The Company performs a biennial pay equity review with the assistance of a third-party vendor. These reviews
include a robust, statistical analysis of pay equity across the majority of its global salaried workforce. Consistent
with our commitment to “equal pay for equal work,” we remediate all identified and substantiated pay gaps
through pay increases. Further, the Company has implemented processes and policies to avoid inheriting unequal
pay bias of prior employers.

Ethics and compliance efforts include our support of the Owens Corning Code of Conduct (“Code of Conduct”),
which is dedicated to encouraging compliance with a range of legal guidelines and our corporate values. Our
training efforts encompass the Code of Conduct and other areas of compliance and development as relevant to
employees. We also seek to foster positive and productive relations with the labor organizations representing
them.

Owens Corning employees contribute service hours to boards, special causes and nonprofit organizations in the
communities where they live and operate. These programs aim to enable the Company’s employees to connect
with the community, further improve its reputation locally and globally, and instill a sense of pride in the
workforce.

Owens Corning is a recognized leader on social issues. Select awards and honors earned by the Company
include:

• Named a 2020 Noteworthy Company by DiversityInc for diversity, equity and inclusion

• Obtained a perfect score on the Human Rights Campaign’s 2020 Corporate Equality Index

• Recognized as one of the “2020 World’s Most Ethical Companies” by Ethisphere Institute for the third

year in a row

• Ranked 1st among the 100 Best Corporate Citizens in 2020 by 3BL Media for the second year in a row

ITEM 1. BUSINESS (continued)

-7-

More information about Owens Corning’s approach to human capital and other social issues can be found in our
Sustainability Report on our website.1

AVAILABILITY OF INFORMATION

the Company’s Annual Report on
Owens Corning makes available, free of charge,
Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all amendments to those reports
as soon as reasonably practicable after such material is electronically filed with or furnished to the Securities and
Exchange Commission. These documents are available through the Investor Relations page of the Company’s
website at www.owenscorning.com.

through its website,

ITEM 1A. RISK FACTORS

In an enterprise as diverse as ours, a wide range of factors could affect future performance. We discuss in this
section some of the risk factors that could materially and adversely affect our business, financial condition, value
and results of operations. You should consider these risk factors in connection with evaluating the forward-
looking statements contained in this Annual Report on Form 10-K because these factors could cause our actual
results and financial condition to differ materially from those projected in forward-looking statements.

The Company maintains processes that aim to manage enterprise risks through identification and mitigation of
those risks. Despite our efforts, we may fail to identify or mitigate certain risks, which could have a material and
adverse impact on our business, financial condition, value and results of operations.

RISKS RELATING TO THE COVID-19 PANDEMIC

The COVID-19 pandemic has had a significant impact, and could continue 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.

The information on our website, including our Sustainability Report, is not, and will not be deemed to be, a
part of this Annual Report on Form 10-K or incorporated into any of our other filings with the SEC.

ITEM 1A. RISK FACTORS (continued)

-8-

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;

•

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 of the COVID-19 pandemic may also exacerbate other risks discussed in this Item 1A. “Risk
Factors.” 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.

MACROECONOMIC, MARKET AND OPERATIONAL RISKS

Low levels of residential, commercial or industrial construction activity can have a material adverse
impact on our business and results of operations.

A large portion of our products are used in the markets for residential and commercial construction and repair
and remodeling. Demand for certain of our products is affected in part by the level of new residential
construction in the United States and elsewhere, although typically not until a number of months after the change
in the level of construction. Lower demand in the regions and markets where our products are sold could result in
lower revenues and lower profitability. Historically, construction activity has been cyclical and is influenced by
prevailing economic conditions, including the level of interest rates and availability of financing, inflation,
employment levels, consumer spending habits, consumer confidence and other macroeconomic factors outside
our control. Residential and commercial construction is also affected by the cost and availability of skilled labor,
which could impact both the cost and pace of construction activity, as well as the construction methods used, all
of which could adversely affect demand for our products.

ITEM 1A. RISK FACTORS (continued)

-9-

Some of our products, particularly in our insulation business, are used in industrial applications, such as piping
and storage tanks. Lower levels of industrial production and other macroeconomic factors affecting industrial
construction activity could lessen demand for those products and lead to lower revenues or profitability.

We face significant competition in the markets we serve and we may not be able to compete successfully.

All of the markets we serve are highly competitive. We compete with manufacturers and distributors, both within
and outside the United States, in the sale of building products and composite products. Some of our competitors
may have superior financial, technical, marketing and other resources than we do. In some cases, we face
competition from manufacturers in countries able to produce similar products at lower costs. We also face
competition from the introduction by competitors of new products or technologies that may address our
customers’ needs in a better manner, whether based on considerations of pricing, usability, effectiveness,
sustainability, quality or other features or benefits. If we are not able to successfully commercialize our
innovation efforts, we may lose market share. Price competition or overcapacity may limit our ability to raise
prices for our products when necessary, may force us to reduce prices and may also result in reduced levels of
demand for our products and cause us to lose market share. In addition, in order to effectively compete, we must
continue to develop new products that meet changing consumer preferences and successfully develop,
manufacture and market these new products. Our inability to effectively compete could result in the loss of
customers and reduce the sales of our products, which could have a material adverse impact on our business,
financial condition and results of operations.

Our sales may fall rapidly in response to declines in demand because we do not operate under long-term
volume agreements to supply our customers and because of customer concentration in certain segments.

Many of our customer volume commitments are short-term;
therefore, we do not have a significant
manufacturing backlog. As a result, we do not benefit from the visibility provided by long-term volume contracts
against downturns in customer demand and sales. Further, we are not able to immediately adjust our costs in
response to declines in sales. In addition, although no single customer represents more than 10% of our annual
sales, our ability to sell some of the products in Insulation and Roofing are dependent on a limited number of
customers, who account for a significant portion of such sales. The loss of key customers for these products, a
consolidation of key customers or a significant reduction in sales to those customers, could significantly reduce
our revenues from these products. In addition, if key customers experience financial pressure or consolidate, they
could attempt to demand more favorable contractual terms, which would place additional pressure on our
margins and cash flows. Lower demand for our products, loss of key customers and material changes to
contractual
terms could materially and adversely impact our business, financial condition and results of
operations. Furthermore, some of our sales are concentrated in certain geographic areas, and market growth that
is skewed to other geographic areas may negatively impact our rate of growth or market share.

Worldwide economic conditions and credit tightening could have a material adverse impact on the
Company.

The Company’s business may be materially and adversely impacted by changes in United States or global
economic conditions, including global industrial production rates, inflation, deflation, interest rates, availability
of capital, consumer spending rates, energy availability and commodity prices, trade laws, and the effects of
governmental initiatives to manage economic conditions. Changes in and/or new laws, regulations and policies
that may be enacted in the United States or elsewhere could also materially impact economic conditions and the
Company’s business and results of operations. Volatility in financial markets and the deterioration of national

ITEM 1A. RISK FACTORS (continued)

-10-

and global economic conditions could materially adversely impact the Company’s operations, financial results
and/or liquidity including as follows:

•

the financial stability of our customers or suppliers may be compromised, which could result in reduced
demand for our products, additional bad debts for the Company or non-performance by suppliers;

one or more of the financial institutions associated with our credit facilities cease to be able to fulfill
their funding obligations, or the amount of eligible receivables under our receivables securitization
facility could decrease, which could materially adversely impact our liquidity;

it may become more costly or difficult to obtain financing or refinance the Company’s debt in the
future;

the value of the Company’s assets held in pension plans may decline; and/or

the Company’s assets may be impaired or subject to write-down or write-off.

Uncertainty about global economic conditions may cause consumers of our products to postpone spending in
response to tighter credit, negative financial news and/or declines in income or asset values. This could have a
material adverse impact on the demand for our products and on our financial condition and operating results. A
deterioration of economic conditions would likely exacerbate these adverse effects and could result in a wide-
ranging and prolonged impact on general business conditions, thereby negatively impacting our operations,
financial results and/or liquidity.

We are subject to risks associated with our international operations.

We sell products and operate plants throughout the world. Our international sales and operations are subject to
risks and uncertainties, including:

•

difficulties and costs associated with complying with a wide variety of complex and changing laws,
including securities laws, tax laws, employment and pension-related laws, competition laws, U.S. and
foreign export and trading laws, and laws governing improper business practices,
treaties and
regulations;

limitations on our ability to enforce legal rights and remedies;

adverse domestic or international economic and political conditions, business interruption, war and civil
disturbance;

changes to tax, currency, or other laws or policies that may adversely impact our ability to repatriate
cash from non-United States subsidiaries, make cross-border
investments, or engage in other
intercompany transactions;

future tax legislation, regulations, or related guidance or interpretations;

changes to tariffs or other import or export restrictions, penalties or sanctions, including modification or
elimination of international agreements covering trade or investment;

costs and availability of shipping and transportation;

ITEM 1A. RISK FACTORS (continued)

-11-

•

nationalization or forced relocation of properties by foreign governments;

currency exchange rate fluctuations between the United States Dollar and foreign currencies; and

uncertainty with respect to any potential changes to laws, regulations and policies that could exacerbate
the risks described above.

As we continue to expand our business globally, we may have difficulty anticipating and effectively managing
these and other risks that our international operations may face, which may adversely impact our business,
financial condition and results of operations.

In addition, we operate in many parts of the world that have experienced governmental corruption and we could
be adversely affected by violations of the Foreign Corrupt Practices Act (FCPA) and similar worldwide anti-
corruption laws. The FCPA and similar anti-corruption laws in other jurisdictions generally prohibit companies
and their intermediaries from making improper payments to officials for the purpose of obtaining or retaining
business. Although we mandate compliance with these anti-corruption laws and maintain an anti-corruption
compliance program, we cannot provide assurance that these measures will necessarily prevent violations of
these laws by our employees or agents. If we were found to be liable for violations of anti-corruption laws, we
could be liable for criminal or civil penalties or other sanctions, which could have a material adverse impact on
our business, financial condition and results of operations.

We will not be insured against all potential losses and could be seriously harmed by natural disasters,
catastrophes, pandemics, theft or sabotage.

Many of our business activities globally involve substantial investments in manufacturing facilities and many
products are produced at a limited number of locations. These facilities could be materially damaged by natural
disasters such as floods, tornados, hurricanes, fires, earthquakes, pandemics or by theft or sabotage. We could
incur uninsured losses and liabilities arising from such events, including damage to our reputation, and/or suffer
material losses in operational capacity, which could have a material adverse impact on our business, financial
condition and results of operations.

Climate change, weather conditions and storm activity could have a material adverse impact on our
results of operations.

Weather conditions and the level of severe storms can have a significant impact on the markets for residential
and commercial construction, repair and improvement. As a result, climate change that results in altered weather
conditions or storm activity could have a significant impact on our business. These factors could impact our
business as follows:

•

generally, any weather conditions that slow or limit residential or commercial construction activity can
adversely impact demand for our products; and

a portion of our annual product demand is attributable to the repair of damage caused by severe storms.
In periods with below average levels of severe storms, demand for such products could be reduced.

Lower demand for our products as a result of either of these scenarios could adversely impact our business,
financial condition and results of operations. Additionally, severely low temperatures may lead to significant and
immediate spikes in costs of natural gas, electricity and other commodities that could negatively affect our results
of operation.

ITEM 1A. RISK FACTORS (continued)

-12-

Climate change and associated weather phenomena, such as flooding, may impact our ability to operate
manufacturing facilities in some locations. Further, laws or regulations aimed at addressing climate change may
materially impact our cost of doing business.

We may be exposed to cost increases or reduced availability of energy, materials or transportation, which
could reduce our margins and have a material adverse impact on our business, financial condition and
results of operations.

Our business relies heavily on certain commodities and raw materials used in our manufacturing processes.
Additionally, we spend a significant amount on inputs that are influenced by energy prices, such as asphalt,
chemicals, resins, and transportation. Price increases for these inputs could raise costs and reduce our margins if
we are not able to offset them by increasing the prices of our products, improving productivity or hedging where
appropriate. In particular, energy prices could increase as a result of climate change legislation or other
environmental mandates. Availability of certain of the raw materials we use has occasionally been limited, and
our sourcing of some of these raw materials from a limited number of suppliers, and in some cases a sole
supplier, increases the risk of unavailability. For example, if one of the raw materials important to our business is
sourced from a sole supplier, our production could be interrupted regardless of whether we have a long-term
supply contract for the material. Despite our contractual supply agreements with many of our suppliers, it is
possible that we could experience a lack of certain raw materials that limits our ability to manufacture our
products, thereby materially and adversely impacting our business, financial condition and results of operations.

Our efforts in acquiring and integrating other businesses, establishing joint ventures, expanding our
production capacity or divesting assets are subject to a number of risks.

Some of the ways we have historically grown or restructured our business have been through acquisitions, joint
ventures, the expansion of our production capacity and divestitures. Our ability to grow or restructure our
business depends upon our ability to identify, negotiate and finance suitable arrangements. If we cannot
successfully execute on such arrangements or receive any required regulatory approvals on a timely basis, we
may be unable to generate desired returns, and our expectations of future results of operations, including cost
savings and synergies, may not be achieved. Acquisitions, joint ventures, production capacity expansions and
divestitures involve substantial risks, including:

•

unforeseen difficulties in operations, technologies, products, services, accounting and personnel;

increased cybersecurity risks;

diversion of financial and management resources from existing operations;

unforeseen difficulties related to entering geographic regions, markets or product lines where we do not
have prior experience;

risks relating to obtaining sufficient financing;

difficulty in integrating the acquired business’ standards, processes, procedures and controls with our
existing operations;

potential loss of key employees;

unanticipated competitive responses;

ITEM 1A. RISK FACTORS (continued)

-13-

•

potential loss of customers; and

undisclosed or undiscovered liabilities or claims, or retention of unpredictable future liabilities.

Our failure to address these risks or other problems encountered in connection with our past or future
acquisitions, investments and divestitures could cause us to fail to realize the anticipated benefits of such
transactions, incur unanticipated liabilities, and harm our business generally. Future acquisitions and investments
could also result in dilutive issuances of our equity securities, the incurrence of debt, contingent liabilities, or
amortization expenses, or write-offs of goodwill, any of which could have a material adverse impact on our
business, financial condition and results of operations. Also, the anticipated benefits of our investments may not
materialize.

LEGAL, REGULATORY AND COMPLIANCE RISKS

We could face potential product liability and warranty claims, we may not accurately estimate costs
related to such claims, and we may not have sufficient insurance coverage available to cover such claims.

Our products are used and have been used in a wide variety of residential, commercial and industrial
applications. We face an inherent business risk of exposure to product liability or other claims in the event our
products are alleged to be defective or that the use of our products is alleged to have resulted in harm to others or
to property. We may, in the future, incur liability if product liability lawsuits against us are successful. Moreover,
any such lawsuits, whether or not successful, could result in adverse publicity to us, which could cause our sales
to decline. We maintain insurance coverage to protect us against product liability claims, but that coverage may
not be adequate to cover all claims that may arise or we may not be able to maintain adequate insurance coverage
in the future at an acceptable cost. Any liability not covered by insurance or that exceeds our established reserves
could materially and adversely impact our business, financial condition and results of operations.

In addition, consistent with industry practice, we provide warranties on many of our products. We may
experience costs of warranty claims when the product is not performing to the satisfaction of the claimant even
though it has not caused harm to others or property. We estimate our future warranty costs based on historical
trends and product sales, but we may fail to accurately estimate those costs and thereby fail to establish adequate
warranty reserves for them. Warranty claims are not insurable.

We are subject to various legal and regulatory proceedings, including litigation in the ordinary course of
business, and uninsured judgments or a rise in insurance premiums may adversely impact our business,
financial condition and results of operations.

In the ordinary course of business, we are subject to various legal and regulatory proceedings, which may include
but are not limited to those involving antitrust, tax, trade, environmental, intellectual property, data privacy and
other matters, including general commercial litigation. Any claims raised in legal and regulatory proceedings,
whether with or without merit, could be time consuming and expensive to defend and could divert management’s
attention and resources. Additionally, the outcome of legal and regulatory proceedings may differ from our
expectations because the outcomes of these proceedings are often difficult to predict reliably. Various factors and
developments can lead to changes in our estimates of liabilities and related insurance receivables, where
applicable, or may require us to make additional estimates, including new or modified estimates that may be
appropriate due to a judicial ruling or judgment, a settlement, regulatory developments or changes in applicable
law. A future adverse ruling, settlement or unfavorable development could result in charges that could have a
material adverse effect on our results of operations in any particular period.

ITEM 1A. RISK FACTORS (continued)

-14-

In accordance with customary practice, we maintain insurance against some, but not all, of these potential claims.
In the future, we may not be able to maintain insurance at commercially acceptable premium levels. In addition,
the levels of insurance we maintain may not be adequate to fully cover any and all losses or liabilities. If any
significant judgment or claim is not fully insured or indemnified against, it could have a material adverse impact
on our business, financial condition and results of operations.

We may be subject to liability under and may make substantial future expenditures to comply with
environmental and emerging product-based laws and regulations.

Our manufacturing facilities are subject to numerous foreign, federal, state and local laws and regulations
relating to the presence of hazardous materials, pollution and the protection of the environment, including those
governing emissions to air, discharges to water, use, storage and transport of hazardous materials, storage,
treatment and disposal of waste, remediation of contaminated sites and protection of worker health and safety.

Liability under these laws involves inherent uncertainties. Environmental liability estimates may be affected by
changing determinations of what constitutes an environmental exposure or an acceptable level of cleanup. For
example, remediation activities generally involve a potential range of activities and costs related to soil and
groundwater 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). Please see “Item 1 -
Business - Environmental Control” for information on costs and accruals related to environmental remediation.
that the required remediation procedures or timing of those procedures change, additional
To the extent
contamination is identified, or the financial condition of other potentially responsible parties is adversely
affected, the estimate of our environmental liabilities may change. Change in required remediation procedures or
timing of those procedures at existing legacy sites, or discovery of contamination at additional sites, could result
in increases to our environmental obligations. Violations of environmental, health and safety laws are subject to
civil, and, in some cases, criminal sanctions. As a result of these uncertainties, we may incur unexpected
interruptions to operations, fines, penalties or other reductions in income which could adversely impact our
business, financial condition and results of operations. It
is possible that new laws and regulations will
specifically address climate change, toxic air emissions, ozone forming emissions and fine particulate matter.
New environmental and chemical regulations could impact our ability to expand production or construct new
facilities in every geographic region in which we operate. Continued and increased government and public
emphasis on environmental issues is expected to result in increased future investments for environmental controls
income from future operations. Present and future
at ongoing operations, which will be charged against
environmental laws and regulations applicable to our operations, and changes in their interpretation, may require
substantial capital expenditures or may require or cause us to modify or curtail our operations, which may have a
material adverse impact on our business, financial condition and results of operations. Although emerging in
nature, an increasing number of laws and regulations focused on product and chemical hazards and preferential
product selection could also impact our ability to manufacture and sell certain products or require significant
research and development investment and capital expenditures to meet regulatory requirements.

Our intellectual property rights may not provide meaningful commercial protection for our products or
brands and third parties may assert that we violate their intellectual property rights, which could
adversely impact our business, financial condition and results of operations.

Owens Corning relies on its intellectual property,
trade secrets,
confidential information, as well as its licensed intellectual property to differentiate our products and brands in
the marketplace. We monitor and protect against activities that might infringe, dilute, or otherwise harm our
intellectual property and rely on the laws of the United States and other countries. However, in some instances,
we may be unaware of unauthorized use of our intellectual property. To the extent we cannot protect our

including numerous patents,

trademarks,

ITEM 1A. RISK FACTORS (continued)

-15-

innovations or are unable to enforce our intellectual property, unauthorized use and misuse of our intellectual
property or innovations could harm our competitive position and have a material adverse impact on our business,
financial condition and results of operations. In addition, the laws of some non-United States jurisdictions
provide less protection for our proprietary rights than the laws of the United States and we therefore may not be
able to effectively enforce our intellectual property rights in these jurisdictions. If we are unable to maintain
certain exclusive licenses, our brand recognition and sales could be adversely impacted. Current employees,
contractors and suppliers have, and former employees, contractors and suppliers may have, access to trade secrets
and confidential information regarding our operations which could be disclosed improperly and in breach of
contract to our competitors or otherwise used to harm us.

Third parties may also claim that we are infringing upon their intellectual property rights. If we are unable to
successfully defend or license such alleged infringing intellectual property or if we are required to substitute
similar technology from another source, our operations could be adversely affected. Even if we believe that such
intellectual property claims are without merit, defending such claims can be costly, time consuming and require
significant resources. Claims of intellectual property infringement also might require us to redesign affected
products, pay costly damage awards, or face injunctions prohibiting us from manufacturing,
importing,
marketing or selling certain of our products. Even if we have agreements to indemnify us, indemnifying parties
may be unable or unwilling to do so.

FINANCIAL RISKS

Our level of indebtedness could adversely impact our business, financial condition or results of operations.

Our debt level and degree of leverage could have important consequences, including the following:

•

our ability to obtain additional debt or equity financing for working capital, capital expenditures, debt
service requirements, acquisitions and general corporate or other purposes may be limited;

a substantial portion of our cash flow could be required for the payment of principal and interest on our
indebtedness, and may not be available for other business purposes;

certain of our borrowings are at variable rates of interest, exposing us to the risk of increased interest
rates;

if due to liquidity needs we must replace any indebtedness upon maturity, we would be exposed to the
risk that we may not be able to refinance such indebtedness;

our ability to adjust to changing market conditions may be limited and place us at a competitive
disadvantage compared to our competitors if they have less debt; and

• we may be vulnerable in a downturn in general economic conditions or in our business, or we may be

unable to carry out important capital spending.

The credit agreement governing our senior credit facility, the indentures governing our senior notes, and the
receivables purchase agreement governing our receivables securitization facility contain various covenants that
impose operating and financial restrictions on us and/or our subsidiaries. Additionally,
instruments and
agreements governing our future indebtedness may impose other restrictive conditions or covenants that could
restrict our ability to conduct our business operations or pursue growth strategies.

ITEM 1A. RISK FACTORS (continued)

Downgrades of our credit ratings could adversely impact us.

-16-

Our credit ratings are important to our cost of capital. The major debt rating agencies routinely evaluate our debt
based on a number of factors, which include financial strength and business risk as well as transparency with
rating agencies and timeliness of financial reporting. A downgrade in our debt rating could result in increased
interest on our existing variable interest rate debt, increased interest and other expenses for future borrowings,
and reduced ability for our suppliers to utilize supply chain financing programs. Downgrades in our debt rating
could also restrict our access to capital markets and affect the value and marketability of our outstanding notes.

If we were required to write down all or part of our goodwill or other indefinite-lived intangible assets, our
results of operations or financial condition could be materially adversely affected in a particular period.

Declines in the Company’s business may result in an impairment of the Company’s tangible and intangible assets
which could result in a material non-cash charge. A significant or prolonged decrease in the Company’s market
capitalization, including a decline in stock price, or a negative long-term performance outlook, could result in an
impairment of its tangible and intangible assets which results when the carrying value of the Company’s assets
exceed their fair value. For example, 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 and, based on the results of interim testing over the Insulation reporting unit, the Company recorded pre-tax
non-cash impairment charges of $987 million in the first quarter of 2020. At least annually, the Company
assesses goodwill and intangible assets for impairment. Since the Company utilizes a discounted cash flow
methodology to calculate the fair value of its reporting units, weak demand for a specific product line or business
could result in an impairment. Accordingly, any determination requiring the write-off of a significant portion of
goodwill or intangible assets could negatively impact the Company’s results of operations.

Our ongoing efforts to increase productivity and reduce costs may not result in anticipated savings in
operating costs.

Our cost reduction and productivity efforts, including those related to our existing operations, production
capacity expansions, new manufacturing platforms, or other capital expenditures, may not produce anticipated
results. Our ability to achieve cost savings and other benefits within expected time frames is subject to many
estimates and assumptions. These estimates and assumptions are subject to significant economic, competitive,
legal and other uncertainties, some of which are beyond our control. If these estimates and assumptions are
incorrect, if we experience delays, or if other unforeseen events occur, our business, financial condition and
results of operations could be adversely impacted.

Our operations require substantial capital, leading to high levels of fixed costs that will be incurred
regardless of our level of business activity.

Our businesses are capital intensive, and regularly require capital expenditures to expand operations, maintain
equipment, increase operating efficiency and comply with applicable laws and regulations, leading to high fixed
costs, including depreciation expense. Also, increased regulatory focus could lead to additional or higher costs in
the future. We are limited in our ability to reduce fixed costs quickly in response to reduced demand for our
products and these fixed costs may not be fully absorbed, resulting in higher average unit costs and lower gross
margins if we are not able to offset this higher unit cost with price increases. Alternatively, we may be limited in
our ability to quickly respond to unanticipated increased demand for our products, which could result in an
inability to satisfy demand for our products and loss of market share.

ITEM 1A. RISK FACTORS (continued)

-17-

The Company’s income tax net operating loss may be limited and our results of operations may be
adversely impacted.

The Company has deferred tax assets related to both U.S. federal and state net operating losses (NOLs) for
income tax purposes, which the Company expects generally are available, with some exceptions, to offset future
taxable income. However, the Company’s ability to utilize or realize the current carrying value of the NOLs may
be impacted by certain events, such as changes in tax legislation or the interpretation thereof, or insufficient
future taxable income prior to expiration of the NOLs, or annual limits imposed under sections 382 and 383 of
the Internal Revenue Code, or by state law, as a result of a change in control. A change in control is generally
defined as a cumulative change of more than 50% in the ownership positions of certain stockholders during a
rolling three-year period. Changes in the ownership positions of certain stockholders could occur as the result of
stock transactions by such stockholders and/or by the issuance of stock by the Company. Such limitations may
cause the Company to pay income taxes earlier and in greater amounts than would be the case if the NOLs were
not subject to such limitations. Additionally, uncertainty exists with respect to future regulatory guidance and
interpretations of the U.S. Tax Cuts and Jobs Act of 2017 (the “Tax Act”), as well as assumptions that the
Company makes related to the Tax Act, which could have an impact on the use of the Company’s NOLs.

Should the Company determine that it is likely that its recorded NOL benefits are not realizable, the Company
would be required to reduce the NOL reflected on its financial statements to the net realizable amount either by a
direct adjustment to the NOL or by establishing a valuation allowance and recording a corresponding charge to
current earnings. The corresponding charge to current earnings would have an adverse effect on the Company’s
financial condition and results of operations in the period in which it is recorded. Conversely, if the Company is
required to increase its NOL either by a direct adjustment or reversing any portion of the accounting valuation
allowance against its deferred tax assets related to its NOLs, such credit to current earnings could have a positive
effect on the Company’s business, financial condition and results of operations in the period in which it is
recorded.

Our hedging activities to address energy price fluctuations may not be successful in offsetting increases in
those costs or may reduce or eliminate the benefits of any decreases in those costs.

In order to mitigate short-term variation in our operating results due to commodity price fluctuations in certain
geographic markets, we may hedge a portion of our near-term exposure to the cost of energy. The results of our
hedging practices could be positive, neutral or negative in any period depending on price changes of the hedged
exposures.

Our hedging activities are not designed to mitigate long-term commodity price fluctuations and, therefore, would
not protect us from long-term commodity price increases. In addition, in the future, our hedging positions may
not correlate to our actual energy costs, which would cause acceleration in the recognition of unrealized gains
and losses on our hedging positions in our operating results.

Our results of operations in a given period may be impacted by price volatility in certain wind-generated
energy markets.

In connection with our sustainability goals to reduce greenhouse gas and toxic air emissions, we entered into
contracts pursuant to which we have agreed to purchase wind-generated electricity from third parties. Under
these contracts, we do not take physical delivery of wind-generated electricity. The generated electricity is
instead sold by our counterparties to local grid operators at the prevailing market price and we obtain the
associated non-tax renewable energy credits. The prevailing market pricing for wind-generated electricity can be
affected by factors beyond our control and is subject to significant period over period volatility. For example,
wind-generated energy output fluctuates due to climactic and other factors beyond our control and can be

ITEM 1A. RISK FACTORS (continued)

-18-

constrained by available transmission capacity, thereby significantly impacting pricing. Due to this potential
volatility, it is possible that these contracts could have an impact on our results of operations in a given reporting
period.

HUMAN CAPITAL RISKS

We depend on our senior management team and other skilled and experienced personnel to operate our
business effectively, and the loss of any of these individuals or the failure to attract additional personnel
could adversely impact our financial condition and results of operations.

We are highly dependent on the skills and experience of our senior management team and other skilled and
experienced personnel. These individuals possess sales, marketing, manufacturing, logistical, financial, business
strategy and administrative skills that are important to the operation of our business. We cannot assure that we
will be able to retain all of our existing senior management personnel and skilled and experienced personnel. The
loss of any of these individuals or an inability to attract additional personnel could prevent us from implementing
our business strategy and could adversely impact our business and our future financial condition or results of
operations. This risk is emerging in the sense that future labor markets may impact our ability to retain these
individuals.

Increases in the cost of labor, union organizing activity, labor disputes and work stoppages at our facilities
could delay or impede our production, reduce sales of our products and increase our costs.

The costs of labor are generally increasing, including the costs of employee benefit plans. We are subject to the
risk that strikes or other types of conflicts with personnel may arise or that we may become the subject of union
organizing activity at additional facilities. In particular, renewal of collective bargaining agreements typically
involves negotiation, with the potential for work stoppages or increased costs at affected facilities.

Significant changes in the factors and assumptions used to measure our defined benefit plan obligations,
actual investment returns on pension assets and other factors could have a negative impact on our
financial condition or liquidity.

We have certain defined benefit pension plans and other post-employment benefit (OPEB) plans. Our future
funding requirements for defined benefit pension and OPEB plans depend upon a number of factors and
assumptions, including our actual experience against assumptions with regard to interest rates used to determine
funding levels; return on plan assets; benefit levels; participant experience (e.g., mortality and retirement rates);
health care cost trends; and applicable regulatory changes. To the extent actual results are less favorable than our
assumptions, there could be a material adverse impact on our financial condition and results of operations.

Additional risks exist due to the nature and magnitude of our investments, including the implementation of or
changes to the investment policy, insufficient market capacity to absorb a particular investment strategy or high-
volume transactions, and the inability to quickly rebalance illiquid and long-term investments.

If our cash flows and capital resources are insufficient to fund our pension or OPEB obligations, we could be
forced to reduce or delay investments and capital expenditures, seek additional capital, or restructure or refinance
our indebtedness.

RISKS RELATED TO OWNERSHIP OF OUR COMMON STOCK

The market price of our common stock is subject to volatility.

The market price of our common stock could be subject to wide fluctuations in response to numerous factors,
many of which are beyond our control. These factors include actual or anticipated variations in our operational

ITEM 1A. RISK FACTORS (continued)

-19-

results and cash flow, our earnings relative to our competition, changes in financial estimates by securities
analysts, trading volume, sales by holders of large amounts of our common stock, short selling, market
conditions within the industries in which we operate, seasonality of our business operations, the general state of
the securities markets and the market for stocks of companies in our industry, governmental legislation or
regulation and currency and exchange rate fluctuations, as well as general economic and market conditions, such
as recessions.

We are a holding company with no operations of our own and depend on our subsidiaries for cash.

As a holding company, most of our assets are held by our direct and indirect subsidiaries and we will primarily
rely on dividends and other payments or distributions from our subsidiaries to meet our debt service and other
obligations and to enable us to pay dividends. The ability of our subsidiaries to pay dividends or make other
payments or distributions to us will depend on their respective operating results and may be restricted by, among
other things, the laws of their jurisdiction of organization (which may limit the amount of funds available for the
payment of dividends or other payments), agreements of those subsidiaries, agreements with any co-investors in
non-wholly-owned subsidiaries, the terms of our facilities and senior notes and the covenants of any future
indebtedness we or our subsidiaries may incur.

Provisions in our amended and restated certificate of incorporation and bylaws or Delaware law might
discourage, delay or prevent a change in control of our company or changes in our management and
therefore depress the trading price of our common stock.

Our amended and restated certificate of incorporation and bylaws contain provisions that could depress the
trading price of our common stock through provisions that may discourage, delay or prevent a change in control
of our Company or changes in our management that our stockholders may deem advantageous.

Additionally, we are subject to Section 203 of the Delaware General Corporation Law, which generally prohibits
a Delaware corporation from engaging in any of a broad range of business combinations with any “interested”
stockholder for a period of three years following the date on which the stockholder became an “interested”
stockholder and which may discourage, delay or prevent a change in control of our company.

Dividends on our common stock are declared at the discretion of our Board of Directors.

Since February 2014, the Board has declared a quarterly dividend on our common stock. The payment of any
future cash dividends to our stockholders is not guaranteed and will depend on decisions that will be made by our
Board of Directors and will depend on then-existing conditions, including our operating results, financial
conditions, contractual restrictions, corporate law restrictions, capital agreements, applicable laws of the State of
Delaware and business prospects.

GENERAL RISKS

We are subject to risks relating to our information technology systems, and any failure to adequately
protect our critical information technology systems could materially affect our operations.

We rely on information technology systems across our operations, including for management, supply chain and
financial information and various other processes and transactions. Our ability to effectively manage our business
depends on the security, reliability and capacity of these systems. Information technology system failures,
network disruptions or breaches of security could disrupt our operations, causing delays or cancellation of
customer orders or impeding the manufacture or shipment of products, processing of transactions or reporting of
financial results. An attack or other problem with our systems could also result in the disclosure of proprietary
information about our business or confidential information concerning our customers or employees, which could
result in significant damage to our business and our reputation.

ITEM 1A. RISK FACTORS (continued)

-20-

We have put in place security measures designed to protect against the misappropriation or corruption of our
systems, intentional or unintentional disclosure of confidential information, or disruption of our operations.
However, advanced cybersecurity threats, such as computer viruses, attempts to access information, and other
security breaches, are persistent and continue to evolve, making them increasingly difficult to identify and
prevent. Protecting against these threats may require significant resources, and we may not be able to implement
measures that will protect against all of the significant risks to our information technology systems. In addition,
we rely on a number of third party service providers to execute certain business processes and maintain certain
information technology systems and infrastructure, and any breach of security on their part could impair our
ability to effectively operate. Moreover, our operations in certain geographic locations may be particularly
vulnerable to security attacks or other problems.

Any breach of our security measures could result in unauthorized access to and misappropriation of our
information, corruption of data or disruption of operations or transactions, any of which could have a material
adverse effect on our business.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2.

PROPERTIES

Composites

Our Composites segment operates out of 27 manufacturing facilities. We recently finalized plans to expand our
operations in Fort Smith, Arkansas, and we expect this new capacity to be available in 2023. Principal
manufacturing facilities for our Composites segment, all of which are owned by the Company, include the
following:

Aiken, South Carolina
Amarillo, Texas
Anderson, South Carolina
Apeldoorn, The Netherlands
Chambery, France
Fort Smith, Arkansas
Gous, Russia

Insulation

Jackson, Tennessee
Kimchon, Korea
L’Ardoise, France
Rio Claro, Brazil
Taloja, India
Tlaxcala, Mexico
Yuhang, China

Our Insulation segment operates out of 42 manufacturing facilities. Principal manufacturing facilities for our
Insulation segment, all of which are owned by the Company, include the following:

Delmar, New York
Edmonton, Alberta, Canada
Fairburn, Georgia
Guangzhou, Guandong, China
Joplin, Missouri
Kansas City, Kansas
Mexico City, Mexico
Newark, Ohio
Rockford, Illinois

Santa Clara, California
Sedalia, Missouri
Tallmadge, Ohio
Tessenderlo, Belgium
Toronto, Ontario, Canada
Trzemeszno, Poland
Vilnius, Lithuania
Wabash, Indiana
Waxahachie, Texas

ITEM 2.

PROPERTIES (continued)

Roofing

-21-

Our Roofing segment operates out of 35 total manufacturing facilities. This number separately counts many
roofing and asphalt manufacturing facilities that are located at the same site. Principal manufacturing facilities
for our Roofing segment, all of which are owned by the Company, include the following:

Brookville, Indiana
Denver, Colorado
Irving, Texas
Kearny, New Jersey
Medina, Ohio
Memphis, Tennessee

Minneapolis, Minnesota
Portland, Oregon
Qingdao, China
Savannah, Georgia
Silvassa, India
Summit, Illinois

We believe that these properties are in good condition and well maintained, and are suitable and adequate to
carry on our business. The capacity of each plant varies depending upon product mix.

Our principal executive offices are located in the Owens Corning World Headquarters, Toledo, Ohio, an owned
facility of approximately 400,000 square feet. Our research and development activities are primarily conducted at
our Science and Technology Center, located on approximately 500 acres of land owned by the Company outside
of Granville, Ohio. It consists of approximately 20 structures totaling more than 650,000 square feet. In addition,
we have application development and other product and market focused research and development centers in
various locations.

ITEM 3.

LEGAL PROCEEDINGS

Environmental Legal Proceedings

None.

Litigation, Other Regulatory Proceedings and Environmental Matters

Additional information required by this item is incorporated by reference to Note 14, Contingent Liabilities and
Other Matters.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

-22-

INFORMATION ABOUT OUR EXECUTIVE OFFICERS

The name, age and business experience during the past five years of Owens Corning’s executive officers as of
January 1, 2021 are set forth below. Each executive officer holds office until his or her successor is elected and
qualified or until his or her earlier resignation, retirement or removal. All those listed have been employees of
Owens Corning during the past five years except as indicated.

Name and Age

Brian D. Chambers (54)

Todd Fister (46)

Kenneth S. Parks (57)

Paula Russell (43)

Marcio Sandri (57)

Kelly J. Schmidt (55)

Daniel T. Smith (55)

Gunner Smith (47)

Position*

Chairman, President and Chief Executive Officer since April 2020;
President and Chief Executive Officer (2019); formerly President and
Chief Operating Officer (2018); formerly President, Roofing (2014)

President, Insulation since July 2019; formerly Vice President of Global
Insulation and Strategy (2019); formerly Vice President and Managing
Director for Europe Insulation and Global Foamglas® (2018); formerly
Vice President and Managing Director for Foamglas® (2017); formerly
Vice President of Strategic Marketing (2014)

Executive Vice President and Chief Financial Officer since January
2021; formerly Senior Vice President and Chief Financial Officer (2020);
formerly Chief Financial Officer of Mylan N.V. (2016); formerly Chief
Financial Officer of WESCO, International, Inc. (2012)

Executive Vice President, Chief Human Resources Officer since January
2021; formerly Senior Vice President, Chief Human Resources Officer
(December 2019); formerly Vice President, Chief Human Resources
Officer (April 2019); formerly Vice President of Total Rewards and
Center of Excellence (2018); formerly Vice President of Total Rewards
(2017);
formerly Vice President of Human Resources, Composites
(2012)

President, Composites since May 2018; formerly Vice President Global
Strategy and Operations, Composites (2017); formerly Vice President
and General Manager, Composites (2007)

Vice President, Controller since April 2011

Executive Vice President, Chief Growth Officer since January 2021;
formerly Senior Vice President, Chief Growth Officer (2019); formerly
Senior Vice President, Organization and Administration (2014)

President, Roofing since August 2018, formerly Vice President of
Distribution Sales for Roofing (2012)

Information in parentheses indicates year during the past five years in which service in position began. The
last item listed for each individual represents the position held by such individual at the beginning of the
five-year period.

-23-

Part II

ITEM 5. MARKET FOR OWENS CORNING’S COMMON EQUITY, RELATED STOCKHOLDER

MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

Owens Corning’s common stock trades on the New York Stock Exchange under the symbol “OC.”

Holders of Common Stock

The number of stockholders of record of Owens Corning’s common stock on February 12, 2021 was 310.

Cash Dividends

The payment of any future cash dividends to our stockholders will depend on decisions that will be made by our
Board of Directors and will depend on then existing conditions, including our operating results, financial
conditions, contractual restrictions, corporate law restrictions, capital agreements, applicable laws of the State of
Delaware and business prospects.

Under the credit agreement applicable to our senior revolving credit facility, the Company may not declare a cash
dividend if a default or event of default exists or would come to exist at the time of declaration or if a dividend
declaration violates the provisions of our formation documents or other material agreements.

The Company’s subsidiaries are subject to certain restrictions on their ability to pay dividends under the
agreements governing our senior revolving credit facility and our receivables securitization facility.

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 during the three
months ended December 31, 2020:

Period

October 1-31, 2020
November 1-30, 2020
December 1-31, 2020

Total

Total Number of
Shares (or Units)
Purchased*

Average Price
Paid per Share
(or Unit)

134,336
501,291
2,317,361

2,952,988

$74.26
74.06
75.72

$75.37

Total Number of
Shares (or Units)
Purchased as Part of
Publicly Announced
Plans or Programs**

Maximum Number of
Shares (or Units) that
May Yet Be
Purchased Under the
Plans or Programs**

—
498,190
2,301,810

2,800,000

2,286,726
1,788,536
9,486,726

9,486,726

The Company retained 152,988 shares surrendered to satisfy tax withholding obligations in connection with
the vesting of restricted shares granted to our employees.

** On 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 “2020
Repurchase Authorization”). The 2020 Repurchase Authorization is in addition to the share buy-back program
announced October 24, 2016 (the 2016 Repurchase Authorization and collectively with the 2020 Repurchase

-24-

ITEM 5. MARKET FOR OWENS CORNING’S COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES (continued)

Authorization, the “Repurchase Authorization”). The Repurchase Authorization enables the Company to
repurchase shares through 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 2.8 million shares of its common stock for $211 million during the three
months ended December 31, 2020 under the Repurchase Authorization. As of December 31, 2020,
approximately 9.5 million shares remain available for repurchase under the Repurchase Authorization.

Performance Graph

The annual changes for the five-year period shown in the graph on this page are based on the assumption that
$100 had been invested in Owens Corning (OC) stock, the Standard & Poor’s 500 Stock Index (“S&P 500”), and
the Dow Jones U.S. Construction & Materials Index (“DJ Constr. & Mat.”) on December 31, 2015, and that all
quarterly dividends were reinvested. The total cumulative dollar returns shown on the graph represent the value
that such investments would have had on December 31, 2020. We have selected the U.S. Construction &
Materials Index to include in the graph below as that index is used in an external metric to determine
performance-based compensation and is utilized by the Company’s investor relations function.

$250

$200

$150

$100

$50

12/15

12/16

12/17

12/18

12/19

12/20

Owens Corning

S&P 500

Dow Jones US Construction & Materials Sector

Performance Graph

2015

2016

2017

2018

2019

2020

OC
S&P 500
DJ Constr. & Mat.

$
$
$

100
100
100

$
$
$

111
112
119

$
$
$

201
136
138

$
$
$

97
130
108

$
$
$

146
171
156

$
$
$

172
203
193

ITEM 6. SELECTED FINANCIAL DATA

The selected financial data previously required by Item 301 of Regulation S-K has been omitted in reliance on
SEC Release No. 33-10890.

-25-

ITEM 7. 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,” “its,” and
“our” in this report refer to Owens Corning and its subsidiaries.

This section of this Form 10-K generally discusses 2020 and 2019 items and year-to-year comparisons between
2020 and 2019. Discussions of 2018 items and year-to-year comparisons between 2019 and 2018 that are not
included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and
Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year
ended December 31, 2019.

GENERAL

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

EXECUTIVE OVERVIEW

The COVID-19 pandemic caused significant uncertainty in the markets we serve and increased volatility in the
financial markets in 2020. The spread of COVID-19 impacted the Company’s operations and financial results in
varying ways as the impact and pace of recovery varied throughout the geographies and end markets we serve.
While the pandemic continues to pervade much of the globe, we are continuing to serve our customers, while
taking significant precautions to provide a safe environment for our employees and customers. 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 effective distribution of vaccines or other treatments, and the continued resumption of
widespread economic activity.

Net loss attributable to Owens Corning was $383 million in 2020, compared to Net earnings attributable to
Owens Corning of $405 million in 2019. The Company reported a loss of $124 million in earnings before interest
and taxes (EBIT) in 2020 compared to earnings of $753 million in 2019. The Company generated $878 million in
adjusted earnings before interest and taxes (“Adjusted EBIT”) in 2020 compared to $828 million in 2019. See the
Adjusted Earnings Before Interest and Taxes paragraph of MD&A for further information regarding EBIT and
Adjusted EBIT, including the reconciliation to net earnings (loss) attributable to Owens Corning. Segment EBIT
performance compared to 2019 decreased $82 million in our Composites segment, increased $20 million in our
Insulation segment, and increased $136 million in our Roofing segment. Within our Corporate, Other and
Eliminations category, General corporate expenses and other increased by $24 million.

Cash and cash equivalents were $717 million as of December 31, 2020, compared to $172 million as of
December 31, 2019, as a result of strong cash flow provided by operating activities, lower cash paid for additions
to property, plant and equipment and the issuance of $300 million of 2030 senior notes on May 12, 2020. In
2020, the Company’s operating activities provided $1,135 million of cash flow, compared to $1,037 million in
2019. The change was primarily driven by lower inventories year-over-year. During 2020, the Company repaid
all outstanding borrowings on the term loan associated with the purchase of Paroc.

-26-

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS (continued)

In December 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 “2020
Repurchase Authorization”). The 2020 Repurchase Authorization is in addition to the share buy-back program
announced October 24, 2016 (the 2016 Repurchase Authorization and collectively with the 2020 Repurchase
Authorization,
the “Repurchase Authorization”). The Repurchase Authorization enables the Company to
repurchase shares through 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. In
2020, the Company repurchased 4.1 million shares of the Company’s common stock for $292 million under a
previously announced repurchase authorization. As of December 31, 2020, 9.5 million shares remain available
for repurchase under the repurchase authorization.

RESULTS OF OPERATIONS

Consolidated Results (in millions)

Net sales
Gross margin

% of net sales

Marketing and administrative expenses
Goodwill impairment charge
Other expenses, net
Non-operating expense (income)
Earnings (loss) before interest and taxes
Interest expense, net
Loss on extinguishment of debt
Income tax expense
Net earnings (loss) attributable to Owens Corning

Twelve Months Ended
December 31,
2019

2020

2018

$7,055
$1,610

$7,160
$1,609

$7,057
$1,632

23%

22%

23%

$ 698
$ 664
—
$ 944
37
$
$
58
34
$ (14) $
$ (124) $ 753
$ 131
$ 132
32
$ — $
$ 186
$ 129
$ (383) $ 405

$ 700
—
$
36
$ (14)
$ 821
$ 117
$ —
$ 156
$ 545

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

Net sales decreased $105 million in 2020 compared to 2019. The decrease in net sales was primarily driven by
lower selling prices across all three segments. Higher sales volumes in our Roofing segment were partially offset
by lower third party asphalt sales, lower sales volumes in our Composites segment and an unfavorable product
mix in our Composites and Insulation segments.

GROSS MARGIN

Gross margin in 2020 was largely flat compared to 2019.

MARKETING AND ADMINISTRATIVE EXPENSES

Marketing and administrative expenses decreased $34 million in 2020 compared to 2019. The decrease was
primarily driven by cost control actions across the Company.

-27-

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS (continued)

GOODWILL IMPAIRMENT CHARGE

The Company recorded a 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

Other expenses, net increased $21 million in 2020 compared to 2019. The increase was primarily driven by
intangible asset impairment charges of $43 million and $13 million of higher restructuring charges, 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.

NON-OPERATING EXPENSE (INCOME)

Non-operating expense (income) decreased $48 million compared to 2019, primarily due to the $43 million
favorable year-over-year comparison to pension settlement losses recognized in 2019.

INTEREST EXPENSE, NET

Interest expense, net in 2020 was largely flat compared to 2019.

LOSS ON EXTINGUISHMENT OF DEBT

During 2020, there were no extinguishments of debt. For the year ended December 31, 2019, the Company
recognized a $32 million loss on extinguishment of debt in connection with the repurchase of a portion of its
outstanding 2022 senior notes and 2036 senior notes in a tender offer.

INCOME TAX EXPENSE

Income tax expense for 2020 was $129 million compared to $186 million in 2019. The Company’s effective tax
rate for 2020 was (50%) on pre-tax losses of $256 million. The difference between the (50%) effective tax rate
and the U.S. federal statutory tax rate of 21% is primarily attributable to charges related to the impairment of
goodwill and certain other indefinite-lived intangible assets recorded in the first quarter of 2020, which were
largely non-deductible. In addition, non-cash charges were recorded related to adjustments to valuation
allowances against certain deferred tax assets. The company also recorded an amortizable asset in the US related
to its transfer of economic rights of its non-US based Intellectual Property to the U.S., as further discussed in the
following paragraph.

In December 2020, the Company completed an intercompany restructuring that resulted in the transfer of certain
intellectual property rights held by wholly owned foreign subsidiaries to the U.S. The intellectual property rights
transferred to the U.S. resulted in a step-up in the tax basis for U.S. tax purposes resulting in the Company
recognizing a deferred tax asset of $37 million and a current year tax expense of $5 million. The recognized tax
benefit of $37 million is amortizable for U.S. tax purposes over a fifteen-year period.

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 global intangible low-taxed income (GILTI), income subject
to a high foreign effective tax rate. As a result of the final regulations, the Company recorded a net non-cash
income tax benefit of $13 million in the third quarter relating to the 2018 and 2019 tax years.

-28-

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS (continued)

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 GILTI and foreign-derived intangible income (FDII) recently
added by the Tax Act. The proposed regulations provide special rules to determine the deduction amount, which
adjusted the Company’s 2018 tax estimate and resulted in an increase to tax expense of $12 million for 2019.

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 $9 million.

The Company’s effective tax rate for 2019 was 31% on pre-tax income of $590 million. The difference between
the 31% effective tax rate and the U.S. federal statutory tax rate of 21% is primarily attributable to U.S. state and
local income tax expense, legislative changes, the impact of U.S federal tax expense on foreign earnings, an
increase in tax valuation allowances recorded against U.S. foreign tax credits and certain foreign deferred tax
assets and other discrete adjustments.

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 in the Corporate, Other and Eliminations category. Please refer to Note 10 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) items on the
Consolidated Statements of Earnings (Loss) (in millions):

Restructuring costs
Restructuring costs
Restructuring costs
Acquisition-related costs

Acquisition-related costs
Recognition of acquisition inventory fair value step-up

Total restructuring, acquisition and integration-related

costs

Location

Cost of sales
Other expenses, net
Non-operating expense
Marketing and
administrative expenses
Other expenses, net
Cost of sales

Twelve Months Ended
December 31,
2019

2020

2018

$(26)
(15)
—

$(15)
(12)
(1)

$(17)
(5)
—

—
—
—

(7)
(9)
(2)

$(41)

$(28)

$(40)

Adjusted Earnings Before Interest and Taxes (“Adjusted EBIT”)

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.

-29-

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS (continued)

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

Twelve Months Ended
December 31,
2019

2020

2018

Restructuring costs
Gains on sale of certain precious metals
Goodwill impairment charge
Intangible assets impairment charge
Acquisition-related costs
Recognition of acquisition inventory fair value step-up
Pension settlement losses
Environmental liability charges

Total adjusting items

(41)
26

$ (28)
—
(944) —
(43) —
—
—
—
—
(43)
—
(4)
—

$ (22)
—
—
—
(16)
(2)

—
—

$(1,002)

$ (75)

$ (40)

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

Twelve Months Ended
December 31,
2019

2020

2018

NET EARNINGS (LOSS) ATTRIBUTABLE TO OWENS CORNING

Net earnings (loss) attributable to noncontrolling interests

$ (383)

$405
(2) —

$545
2

NET EARNINGS (LOSS)

Equity in net earnings (loss) of affiliates
Income tax expense

EARNINGS (LOSS) BEFORE TAXES

Interest expense, net
Loss on extinguishment of debt

EARNINGS (LOSS) BEFORE INTEREST AND TAXES

Adjusting items from above

ADJUSTED EBIT

Segment Results

(385)
—
129

(256)
132
—

(124)
(1,002)

405
1
186

590
131
32

753
(75)

547
(1)
156

704
117
—

821
(40)

878

$828

$861

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.

-30-

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS (continued)

Composites

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

Twelve Months Ended
December 31,
2019

2020

2018

Net sales

% change from prior year

EBIT

EBIT as a % of net sales

Depreciation and amortization expense

NET SALES

$1,960

$2,059

$2,041

-5%

-1%

$ 165

$ 247

$ 251

12%

$ 159

$ 154

$ 147

Net sales in our Composites segment decreased $99 million in 2020 compared to 2019. The decrease was due to
lower sales volumes of approximately 1% due to the impact on demand from the COVID-19 pandemic, lower
selling prices of $27 million, the unfavorable impact of $20 million from translating sales denominated in foreign
currencies into United States Dollars, and the impact of unfavorable customer and product mix.

EBIT

EBIT in our Composites segment decreased $82 million in 2020 compared to 2019. The decline was driven by
the $86 million unfavorable impact of production curtailment actions taken in response to the decline in demand
from the COVID-19 pandemic. Favorable manufacturing performance of $43 million was offset by lower selling
prices and the unfavorable impact of lower sales volumes. The $19 million unfavorable impact of translating
sales and costs denominated in foreign currencies into United States Dollars was offset by lower selling, general
and administrative expenses. Lower transportation costs and input cost deflation more than offset the impact of
unfavorable customer mix.

OUTLOOK

Global glass reinforcements market demand has historically been correlated with global industrial production and
we believe this relationship will continue. 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 Composites segment. The company continues
to focus on managing costs, capital expenditures, and working capital.

-31-

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS (continued)

Insulation

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

Twelve Months Ended
December 31,
2019

2020

2018

Net sales

% change from prior year

EBIT

EBIT as a % of net sales

Depreciation and amortization expense

NET SALES

$2,607

$2,668

$2,720

-2%

36%

$ 250

$ 230

$ 290

10%

11%

$ 201

$ 194

$ 186

In our Insulation segment, 2020 net sales decreased $61 million compared to 2019. The decrease was due to the
impact of unfavorable customer and product mix, the $18 million unfavorable impact from the divestiture of an
immaterial business in the first quarter of 2020, and lower selling prices of $12 million. Volume growth was
largely flat across the segment, with positive volume growth in our North American residential fiberglass
business offsetting volume declines in our technical and other building insulation businesses.

EBIT

In our Insulation segment, EBIT increased $20 million in 2020 compared to 2019, primarily due to favorable
manufacturing performance partially offset by $12 million in lower selling prices. The $19 million favorable
impact of lower selling, general and administrative expenses and the $5 million gain on the divestiture of an
immaterial business in the first quarter of 2020 were offset by the unfavorable impact of customer and product
mix and higher delivery 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 U.S. housing starts.

During the fourth quarter of 2020, the average Seasonally Adjusted Annual Rate (SAAR) of U.S. housing starts
was approximately 1.592 million starts, which was up from 1.433 million starts in the fourth quarter of 2019.

Through the fourth quarter of 2020, the North American new residential construction recovery has continued,
while global commercial and industrial construction activity has recovered at a slower pace. 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, 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.

-32-

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS (continued)

Roofing

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

Twelve Months Ended
December 31,
2019

2018

2020

Net sales

% change from prior year

EBIT

EBIT as a % of net sales

Depreciation and amortization expense

NET SALES

$2,695

$2,634

$2,492

-2%

$ 591

$ 455

$ 434

22%
59

17%
54

17%
51

In our Roofing segment, net sales increased $61 million in 2020 compared to 2019. The increase was driven by
higher sales volumes of about 6% on higher shingle and components volumes, partially offset by $64 million of
lower third-party asphalt sales and $51 million of lower selling prices.

EBIT

In our Roofing segment, EBIT increased $136 million in 2020 compared to 2019. The increase was largely
driven by the impact of higher sales volumes, favorable manufacturing performance of $19 million, $12 million
in lower transportation costs and the $11 million benefit related to the 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 was more than offset by $89 million of input cost deflation, primarily asphalt.

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.

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.

-33-

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS (continued)

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):

Twelve Months Ended
December 31,
2019

2020

2018

EBIT

Depreciation and amortization

EBIT

(41)
26

$ (28)
—
(944) —
(43) —
—
—
—
—
(43)
—
(4)
—
(104)
(128)

$ (22)
—
—
—
(16)
(2)

—
—
(114)

$(1,130)

$(179)

$(154)

$ 55

$ 49

In Corporate, Other and Eliminations, EBIT losses in 2020 were $951 million higher compared to 2019,
primarily due to the $944 million goodwill impairment charge and $43 million of intangible assets impairment
charge recorded in the first quarter of 2020. Additional details of this charge are further explained in both the
Critical Accounting Estimates paragraph of MD&A and Note 5 of the Consolidated Financial Statements.

General corporate expense and other in 2020 was $24 million higher than in 2019, driven primarily by higher
performance-based compensation associated with improved Adjusted EBIT results for 2020.

OUTLOOK

In 2021, we expect general corporate expenses to range between $135 and 145 million.

LIQUIDITY, CAPITAL RESOURCES AND OTHER RELATED MATTERS

Liquidity

The Company’s primary sources of liquidity are its its balance of Cash and cash equivalents of $717 million as of
December 31, 2020, 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, which matures in May 2024.

The Company has a $280 million securitization facility (the “Receivables Securitization Facility”) that has been
amended from time to time, which matures in April 2022.

-34-

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS (continued)

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

Facility size
Collateral capacity limitation on availability
Outstanding borrowings
Outstanding letters of credit

Availability on facility

As of December 31, 2020

Senior Revolving
Credit Facility

Receivables Securitization
Facility

$800
n/a
—

$796

$280
—
—

$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 Company issued $450 million of 2029 senior notes on August 12, 2019. Interest on the 2029 senior notes is
payable semiannually in arrears on February 15 and August 15 each year, beginning on February 15, 2020. The
proceeds from the 2029 senior notes were used to repay portions of the 2022 senior notes and 2036 senior notes.
The Company recognized $32 million of loss on extinguishment of debt in the third quarter of 2019 associated
with these actions.

The Company obtained a term loan commitment on October 27, 2017 for $600 million (the “Term Loan”). The
Company entered into the Term Loan, in part, to pay a portion of the purchase price of the Paroc acquisition. The
Term Loan contained 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 Receivables Securitization Facility and Senior Revolving Credit Facility mature in 2022 and 2024,
respectively. The Company has no significant debt maturities of senior notes before 2022. As of December 31,
2020, the Company had $3.1 billion of total debt and cash and cash equivalents of $717 million.

Cash and cash equivalents held by foreign subsidiaries may be subject to foreign withholding taxes upon
repatriation to the U.S. As of December 31, 2020 and December 31, 2019, the Company had $71 million and
$30 million, respectively, in cash and cash equivalents in certain of its 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 the
Risk Factors disclosed in Item 1A of this Form 10-K for details on the factors that could inhibit our subsidiaries’
abilities to pay dividends or make other distributions to the parent company.

Our anticipated uses of cash include capital expenditures, working capital needs, pension contributions, meeting
financial obligations, payments of quarterly dividends as authorized by our Board of Directors, acquisitions and
repaying outstanding amounts under the Senior Revolving Credit Facility and Receivables Securitization Facility
if drawn. We 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 our Receivables Securitization Facility,
will provide ample liquidity to enable us to meet our cash requirements.

-35-

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS (continued)

We have outstanding share repurchase authorizations and will evaluate and consider repurchasing shares of our
common stock, as well as strategic acquisitions, divestitures, joint ventures and other transactions to create
stockholder value and enhance financial performance. Such transactions may require cash expenditures beyond
current sources of liquidity or generate proceeds.

The credit agreements applicable to 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 December 31, 2020.

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 Credit
Agreement.

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 $170 million
and $117 million as of December 31, 2020 and 2019, respectively. The amounts paid that are associated with
suppliers once they chose to voluntarily participate in the Programs for the twelve months ended December 31,
2020, 2019 and 2018 were $375 million, $344 million and $369 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.

-36-

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS (continued)

Cash Flows

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

Twelve Months Ended
December 31,
2019

2018

2020

Cash and cash equivalents
Cash provided by operating activities
Cash used for investing activities
Cash (used for) provided by financing activities
Availability on the Senior Revolving Credit Facility
Availability on the Receivables Securitization Facility

$
$

78
$ 172
$ 717
$1,135
803
$1,037
$ (205) $ (394) $(1,589)
647
$ (358) $ (573) $
791
$
$ 796
202
$
$ 279

$ 796
$ 278

Cash and cash equivalents: Cash and cash equivalents as of December 31, 2020 increased $545 million
compared to December 31, 2019, primarily due to higher cash flow provided by operating activities, lower cash
paid for property, plant and equipment, and from the issuance of the 2030 senior notes during 2020.

Operating activities: In 2020, the Company generated $1,135 million of cash from operating activities compared
to $1,037 million in 2019. The change in cash provided by operating activities was primarily due to lower
inventories and higher accounts payable and accrued liabilities compared to 2019.

Investing activities: The $189 million decrease in cash used for investing activities in 2020 compared to 2019
was primarily driven by lower cash paid for property, plant and equipment and higher proceeds from the sale of
assets and derivative settlements compared to the prior year.

Financing activities: Net cash used for financing activities in 2020 was $358 million compared to $573 million
in 2019. The change year-over-year was primarily due to the issuance of the 2030 senior notes during the second
quarter of 2020 and lower payments on the Term Loan (see Note 11 of the Consolidated Financial Statements
and the Liquidity section above for further discussion of activities related to debt).

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. Capital expenditures in 2021 are expected
to increase to approximately $460 million, primarily driven by capacity expansion in our Composites segment.

Tax Net Operating Losses and U.S. Foreign Tax Credits (FTCs)

As of December 31, 2020 and 2019, our federal tax net operating losses remaining were $111 million and
$126 million, respectively. The decrease in U.S. federal tax NOLs is primarily due to the impact of 2020
estimated taxable income. The company generated a significant U.S. FTC in 2017 of approximately $161 million
as a result of changes from the Tax Act. As of December 31, 2020 and 2019, our remaining U.S. FTCs were
$49 million and $119 million, respectively. Our NOL and FTC carryforwards are subject to the limitations
imposed under sections 382 and 383 of the Internal Revenue Code. These limits are triggered when a change in
control occurs and are computed based upon several variable factors including the share price of the Company’s
common stock on the date of the change in control. A change in control is generally defined as a cumulative
change of more than 50% in the ownership positions of certain stockholders during a rolling three-year period.

-37-

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS (continued)

In addition to the United States federal tax NOLs described above, we have NOLs in various state and foreign
jurisdictions which totaled $1,160 million and $418 million as of December 31, 2020, respectively, and
$1,352 million and $366 million as of December 31, 2019, respectively. The decrease in state NOL is due to our
estimate of 2020 taxable income. The evaluation of the amount of NOLs and FTCs expected to be realized
necessarily involves forecasting the amount of taxable income that will be generated in future years. In assessing
the realizability of our deferred tax assets, we have not relied on any material future tax planning strategies. We
have forecasted future results in accordance with the recently enacted Tax Act using estimates management
believes to be reasonable, which are based on independent evidence such as expected trends resulting from
certain leading economic indicators, such as global industrial production and new U.S. residential housing starts.
In order to utilize our NOLs, we estimate that the Company will need to generate future federal, state and foreign
earnings before taxes of approximately $111 million, $1,115 million and $395 million,
respectively.
Management believes the Company will generate sufficient future taxable income within the statutory limitations
in order to fully realize the carrying value of its U.S. federal NOLs. As of December 31, 2020, a valuation
allowance was established for U.S. FTC carryforwards and certain state and foreign jurisdictions’ NOL
carryforwards.

The realization of deferred income tax assets is dependent on future events. Actual results inevitably will vary
from management’s forecasts. Should we determine that it is likely that our deferred income tax assets are not
realizable, we would be required to reduce our deferred tax assets reflected on our Consolidated Financial
Statements to the net realizable amount by establishing an accounting valuation allowance and recording a
corresponding charge to current earnings. Such adjustments could be material to the financial statements. To
date, we have recorded valuation allowances against certain of these deferred tax assets totaling $133 million as
of December 31, 2020.

Pension Contributions

Please refer to Note 12 of the Consolidated Financial Statements. The Company has several defined benefit
pension plans. The Company made cash contributions of $122 million and $46 million to the plans during the
twelve months ended December 31, 2020 and 2019, respectively. The Company expects to contribute
$25 million in cash to its pension plans during 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 4 of the Consolidated Financial Statements.

Fair Value Measurement

Please refer to Notes 1, 4, and 11 of the Consolidated Financial Statements.

OFF-BALANCE-SHEET ARRANGEMENTS

The Company has entered into limited off-balance-sheet arrangements, as defined under Securities and Exchange
Commission rules, in the ordinary course of business. The Company does not believe these arrangements will
have a material effect on the Company’s financial condition, changes in financial condition, revenues or
expenses, results of operations, liquidity, capital expenditures or capital resources.

-38-

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS (continued)

CONTRACTUAL OBLIGATIONS

In the ordinary course of business, the Company enters into contractual obligations to make cash payments to
third parties. The Company’s known contractual obligations as of December 31, 2020 are as follows (in
millions):

Long-term debt obligations
Interest on variable rate debt (1), fixed rate debt,

finance lease payments
Finance lease obligations
Operating lease obligations
Purchase obligations (2)
Deferred acquisition payments
Pension contributions (3)

Total (4)

Payments due by period

2021

2022

2023

2024

2025

2026 and
beyond

Total

$— $184

$— $400

$—

$2,526

$3,110

140
19
59
238

139
17
45
77
3 —
25 —

130
13
28
57
—
—

131
7
15
18
—
—

114
4
8
14
—
—

1,393
18
13
38
—
—

2,047
78
168
442
3
25

$484

$462

$228

$571

$140

$3,988

$5,873

(1)

Interest on variable rate debt is calculated using LIBOR rates as of December 31, 2020 plus a facility credit
spread for all future periods.

(2) Purchase obligations are commitments to suppliers to purchase goods or services, and include take-or-pay
arrangements, capital expenditures, and contractual commitments to purchase equipment. The Company did
not include ordinary course of business purchase orders in this amount as the majority of such purchase
orders may be canceled and are reflected in historical operating cash flow trends. The Company does not
believe such purchase orders will adversely affect our liquidity position.

(3) Pension contributions include estimated contributions for our defined benefit pension plans. The Company
is not presenting estimated payments in the table above beyond 2021 as funding can vary significantly from
year to year based upon changes in the fair value of plan assets, funding regulations and actuarial
assumptions.

(4) The Company has not included its accounting for uncertainty in income taxes liability in the contractual
obligation table as the timing of payment, if any, cannot be reasonably estimated. The balance of this
liability at December 31, 2020 was $19 million.

CRITICAL ACCOUNTING ESTIMATES

Our discussion and analysis of our financial condition and results of operations is based upon our Consolidated
Financial Statements, which have been prepared in accordance with accounting principles generally accepted in
the United States. The preparation of these financial statements requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the
reporting period. On an ongoing basis, management evaluates its estimates and judgments related to these assets,
liabilities, revenues and expenses. We believe these estimates to be reasonable under the circumstances.
Management bases its estimates and judgments on historical experience, expected future outcomes, and on
various other factors that are believed to be reasonable under the circumstances, the results of which form the
basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from
other sources. Actual results may differ from these estimates.

-39-

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS (continued)

The Company believes that the following accounting estimates are critical to our financial results:

Tax Estimates. The determination of our tax provision is complex due to operations in several tax jurisdictions
outside the United States. We apply a more-likely-than-not recognition threshold for all tax uncertainties. Such
uncertainties include any claims by the Internal Revenue Service for income taxes, interest, and penalties
attributable to audits of open tax years.

In addition, we record a valuation allowance to reduce our deferred tax assets to the amount that we believe is
more likely than not to be realized. We estimate future taxable income and the effect of tax planning strategies in
our consideration of whether deferred tax assets will more likely than not be realized. In the event we were to
determine that we would not be able to realize all or part of our net deferred tax assets in the future, an
adjustment to reduce the net deferred tax assets would be charged to earnings in the period such determination
was made. Conversely, if we were to determine that we would be able to realize our net deferred tax assets in the
future in excess of their currently recorded amount, an adjustment to increase the net deferred tax assets would be
credited to earnings in the period such determination was made.

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 indicate
there may be an impairment. Long-lived assets are tested for impairment when economic conditions or
management decisions indicate an impairment may exist. These tests require comparing recorded values to
estimated fair values for the assets under review.

The Company has recorded its goodwill and conducted testing for potential goodwill impairment at a reporting
unit level. 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

As of the prior year 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. Accordingly, the Insulation reporting unit
was the reporting unit most susceptible to an impairment during an economic downturn.

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
related to the COVID-19 pandemic 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.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS (continued)

-40-

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 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 5 of the Consolidated Financial Statements for additional details on the
impairment charge that was recorded in the first quarter of 2020.

the Company asserted that

the time of the analysis,

2020 Annual Goodwill Impairment Assessment

Goodwill is an intangible asset that is not subject to amortization; however, annual tests are required to be
performed to determine whether impairment exists. Prior to performing impairment testing process described in
ASC 350-20, the guidance permits companies to assess qualitative factors to determine if it is more likely than
not that a reporting unit’s fair value is less than its carrying value. If, based on the review of the qualitative
factors, we determine it is not more likely than not that the fair value of a reporting unit is less than its carrying
value, we would bypass the one-step impairment test. Events and circumstances we consider in performing the
qualitative assessment include macro-economic conditions, market and industry conditions, internal cost factors,
and the operational stability and the overall financial performance of the reporting units. If it is more likely than
not that a reporting unit’s fair value is greater than its carrying value, then no additional testing is required. If it is
more likely than not that a reporting unit’s fair value is less than or close to its carrying value, then the
impairment test must be performed to determine if impairment is required.

In 2020, the Company has elected to perform the qualitative approach on its Roofing and Composites reporting
units, and proceeded in performing a step one analysis for the Insulation reporting unit. After evaluating and
weighing all relevant events and circumstances, we concluded that it is not more likely than not that the fair value
of the Roofing and Composites reporting units was less than their carrying amounts. Consequently, we did not
perform a step one quantitative analysis for the Roofing and Composites reporting units and determined goodwill
was not impaired for 2020.

As part of our quantitative testing process for goodwill of the Insulation reporting unit, we estimated fair values
using a discounted cash flow approach from the perspective of a market participant. Significant assumptions used
in the discounted cash flow approach are 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. The cash flow forecasts of the reporting unit are
based upon management’s long-term view of our markets and are the forecasts that are used by senior

-41-

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS (continued)

management and the Board of Directors to evaluate operating performance. The discount rate utilized is
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. The terminal business value is determined by applying the
long-term growth rate to the latest year for which a forecast exists. 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.

Our annual test of goodwill for impairment was conducted as of October 1, 2020. As a result of the Insulation
reporting unit’s improved financial performance throughout 2020, an improved outlook in the macroeconomic
factors impacting the Insulation reporting unit, and the significant recovery of the Company’s stock price since
the first quarter of 2020, the fair value of the Insulation reporting unit was significantly in excess of its carrying
value and, thus, no impairment exists.

The following table summarizes the segment allocation of recorded goodwill on our Consolidated Balance Sheets
as of December 31, 2019 and December 31, 2020 (in millions):

Segment

Composites
Insulation
Roofing

Total goodwill

December 31, 2020 Percent of Total December 31, 2019 Percent of Total

$ 57
532
400

$989

6%
54%
40%

100%

57
1,479
396

$1,932

3%
77%
20%

100%

First Quarter of 2020 Intangible Assets Impairment Charge

Other indefinite-lived intangible assets are the Company’s trademarks. Our prior year 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 near-term 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 5 of the Consolidated Financial Statements for
additional details on the impairment charges that were recorded in the first quarter of 2020. The assets affected
by the impairment charge had an aggregate carrying value of $264 million as of December 31, 2020.

Annual 2020 Indefinite-lived Intangible Asset Impairment Assessment

Fair values used in testing for potential impairment of our trademarks are 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 are discounted at a rate based on a market participant discount rate. Our annual test of
indefinite-lived intangibles was conducted as of October 1, 2020. The fair value of each of our indefinite-lived
intangible assets was in excess of its carrying value and thus, no impairment exists.

-42-

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS (continued)

Testing indicated that the outlook had improved for the macroeconomic factors impacting our global cellular
glass insulation products such that the fair value of the trademark that was previously impaired in the first quarter
of 2020 now substantially exceeds its carrying value.

Testing also indicated that the fair value of a trade name used by our European building and technical insulation
business within our Insulation segment exceeded its carrying value by approximately 7%. 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 for this asset. Assuming all other assumptions remain constant, a 50 basis point increase
in the selected discount rate of 11.0% would decrease the fair value of the trade name by approximately 5%, and
a 50 basis point decrease in the selected long-term growth rate of 1.5% would decrease the fair value of the trade
name by approximately 3%. The affected asset had a carrying value of $173 million as of December 31, 2020.

The fair value of the remaining assets substantially exceeded the carrying value as of the date of our assessment.

Long-lived Asset Recoverability Assessment

Fair values for long-lived asset testing are calculated by estimating the undiscounted cash flows from the use and
ultimate disposition of the asset or by estimating the amount that a willing third party would pay. For impairment
testing, long-lived assets are grouped at the lowest level for which identifiable cash flows are largely independent
of the cash flows of other groups of assets and liabilities. The Company groups long-lived assets based on
manufacturing facilities that produce similar products either globally or within a geographic region. Management
tests asset groups for potential impairment whenever events or changes in circumstances indicate that the
carrying value may not be recoverable. Current market conditions have caused the Company to have idle
capacity. We consider such temporary idled capacity to be unimpaired because there has not been a significant
change in the forecasted long-term cash flows at the asset group level to indicate that the carrying values may not
be recoverable. While management’s current strategy is to utilize this capacity to meet expected future demand,
any significant decrease in this expectation or change in management’s strategy could result in future impairment
charges related to this excess capacity. We evaluated and concluded that there are not any reasonably likely
changes to management’s estimates that would indicate that the carrying value of our long-lived assets is
unrecoverable.

However, 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.

Pensions and Other Postretirement Benefits. Accounting for pensions and other postretirement benefits involves
estimating the cost of benefits to be provided well into the future and attributing that cost over the time period
each employee works. To accomplish this, extensive use is made of assumptions about investment returns,
discount rates, inflation, mortality, turnover, and medical costs. Changes in assumptions used could result in a
material impact to our Consolidated Financial Statements in any given period.

Two key assumptions that could have a significant impact on the measurement of pension liabilities and pension
expense are the discount rate and the expected return on plan assets. For our largest plan, the United States plan,
the discount rate used for the December 31, 2020 measurement date is based on a yield curve approach where the
expected future benefit payments are matched with a yield curve derived from certain AA-rated corporate bonds.

The result supported a discount rate of 2.50% at December 31, 2020 compared to 3.30% at December 31, 2019.
A 25 basis point increase (decrease) in the discount rate would decrease (increase) the December 31, 2020
projected benefit obligation for the United States pension plan by approximately $26 million. A 25 basis point

-43-

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS (continued)

increase (decrease) in the discount rate would decrease (increase) 2021 net periodic pension cost by less than
$1 million.

The expected return on plan assets in the United States was derived by taking into consideration the target plan
asset allocation, historical rates of return on those assets, projected future asset class returns and net
outperformance of the market by active investment managers and plan related and investment related expenses
paid from the plan trust. The Company uses the target plan asset allocation because we rebalance our portfolio to
target on a quarterly basis. An asset return model was used to develop an expected range of returns on plan
investments over a 20-year period, with the expected rate of return selected from a best estimate range within the
total range of projected results. This process resulted in the selection of an expected return of 4.75% at the
December 31, 2020 measurement date, which is used to determine net periodic pension cost for the year 2021.
This assumption is down from the 6.50% return selected at the December 31, 2019 measurement date. A 25 basis
point increase (decrease) in return on plan assets assumption would result in a respective decrease (increase) of
2021 net periodic pension cost by approximately $2 million.

The discount rate for our United States postretirement plan was selected using the same method as described for
the pension plan. The result supported a discount rate of 2.25% at December 31, 2020 compared to 3.10% at
December 31, 2019. A 25 basis point increase (decrease) in the discount rate would decrease (increase) the
United States postretirement benefit obligation by approximately $4 million and decrease (increase) 2021 net
periodic postretirement benefit cost by less than $1 million.

The methods corresponding to those described above are used to determine the discount rate and expected return
on assets for non-U.S. pension and postretirement plans, to the extent applicable.

RECENT ACCOUNTING PRONOUNCEMENTS

Please refer to Note 1 of the Consolidated Financial Statements.

ENVIRONMENTAL MATTERS

Please refer to Note 14 of the Consolidated Financial Statements.

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;

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS (continued)

-44-

•

levels of global industrial production;

competitive and pricing factors;

demand for our products;

relationships with key customers and customer concentration in certain areas;

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;

climate change, weather conditions and storm activity;

changes to tariff, trade or investment policies or laws;

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

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;

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

our ability to utilize our net operating loss carryforwards;

loss of key employees, labor disputes or shortages; and

defined benefit plan funding obligations

-45-

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS (continued)

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 above, and as detailed from time to time in the Company’s filings with the U.S.
Securities and Exchange Commission. 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.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is exposed to the impact of changes in foreign currency exchange rates, interest rates and the
prices of various commodities used in the normal course of business. To mitigate some of the near-term volatility
in our earnings and cash flows, the Company manages certain of our exposures through the use of financial
contracts, contracts for physical delivery of a particular commodity, and derivative financial instruments. The
Company’s objective with these instruments is to reduce exposure to near-term fluctuations in earnings and cash
flows. The Company’s policy enables the use of foreign currency, interest rate and commodity derivative
financial instruments only to the extent necessary to manage exposures as described above. The Company does
not enter into such transactions for trading purposes.

A discussion of the Company’s accounting policies for derivative financial
instruments, as well as the
Company’s exposure to market risk, is included in Notes 1 and 4 to the Consolidated Financial Statements.
Please refer to Note 4 for details of the fair values of derivative financial instruments and their classification on
the Consolidated Balance Sheets.

For purposes of disclosing the market risk inherent in its derivative financial instruments the Company uses
sensitivity analysis disclosures that express the potential loss in fair values of market rate sensitive instruments
resulting from changes in interest rates, foreign currency exchange rates, and commodity prices that assume
instantaneous, parallel shifts in exchange rates, interest rate yield curves, and commodity prices. The following
analysis provides such quantitative information regarding market risk. There are certain shortcomings inherent in
the sensitivity analysis presented, primarily due to the assumption that exchange rates change instantaneously
and that interest rates change in a parallel fashion. In addition, the analyses are unable to reflect the complex
market reactions that normally would arise from the market shifts modeled.

Foreign Exchange Rate Risk

The Company has transactional foreign currency exposures related to buying, selling, and financing in currencies
other than the local currencies in which it operates. The Company enters into various forward contracts, which
change in value as foreign currency exchange rates change, to preserve the carrying amount of foreign currency-
denominated assets, liabilities, commitments, and certain anticipated foreign currency transactions. Exposures
are related to the United States Dollar primarily relative to the Brazilian Real, Chinese Yuan, European Euro,
Hong Kong Dollar, Indian Rupee, and South Korean Won exchange rates. Also, there are additional exposures
related to the European Euro primarily versus the Russian Ruble and Polish Zloty. These transactional risks are
mitigated through the use of derivative financial instruments and balancing of cash deposits and loans. The net
fair value of derivative financial instruments used to limit exposure to foreign currency risk was $43 million and
$9 million as of December 31, 2020 and 2019, respectively. As of December 31, 2020, the potential change in
fair value for such financial instruments from an increase (decrease) of 10% in the quoted foreign currency
exchange rates would be a (decrease) increase of approximately $40 million and $37 million, respectively. As of

-46-

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET

RISK (continued)

December 31, 2019, the potential change in fair value for such financial instruments from an increase (decrease)
of 10% in the quoted foreign currency exchange rates would be a (decrease) increase of approximately
$49 million and $49 million, respectively.

We have translation exposure resulting from translating the financial statements of foreign subsidiaries into
United States Dollars. Our most significant translation exposures are the Canadian Dollar, Chinese Yuan,
European Euro, Indian Rupee, and Polish Zloty in relation to the United States Dollar. The Company has hedged
portions of the net
in foreign subsidiaries against fluctuations in the European Euro through
derivative financial instruments. The net fair value of these instruments was $6 million and $8 million as of
December 31, 2020 and 2019, respectively. As of December 31, 2020 and 2019, the potential change in fair value
for such financial instruments from an increase (decrease) of 10% in the quoted foreign currency exchange rates
would be a (decrease) increase of approximately $26 million and $57 million, respectively.

investment

Interest Rate Risk

The Company is subject to market risk from exposure to changes in interest rates due to its financing, investing,
and cash management activities. The Company has a Senior Revolving Credit Facility, Receivables
Securitization Facility, Term Loan (fully repaid in 2020), other floating rate debt and cash and cash equivalents
which are exposed to floating interest rates and may impact cash flow. As of December 31, 2020, the Company
had no borrowings on its Senior Revolving Credit Facility or Receivables Securitization Facility, with the
balance of other floating rate debt of $1 million. As of December 31, 2019, the Company had no borrowings on
its Senior Revolving Credit Facility or Receivables Securitization Facility, and $200 million outstanding on its
Term Loan, with the balance of other floating rate debt of $20 million. Cash and cash equivalents were
$717 million and $172 million at December 31, 2020 and 2019, respectively. Based on the year-end outstanding
balances on floating rate debt, a one percentage point increase (decrease) in interest rates at December 31, 2020
and 2019 would increase (decrease) our annual net interest expense by less than $1 million and $2 million,
respectively.

The fair market value of the Company’s senior notes are subject to interest rate risk. The following table shows
how a one percentage point increase / decrease in interest rates would impact the fair market value of the senior
notes:

As of December 31, 2020:

Increase in interest rates

Decrease in fair value

Decrease in interest rates
Increase in fair value

As of December 31, 2019:

Increase in interest rates

Decrease in fair value

Decrease in interest rates
Increase in fair value

Commodity Price Risk

2022

2024

Senior Notes Maturity Year
2036
2026

2029

2030

2047

2048

8% 10% 15% 15%

2022

8%
4%
Senior Notes Maturity Year
2029

2026

2030

2024

8% 11% 19% 19%

2036

2047

2048

8% n/a

10% 14% 14%

8% n/a

12% 18% 18%

The Company is exposed to changes in prices of commodities used in its operations, primarily associated with
energy, such as natural gas, and raw materials, such as asphalt and polystyrene. The Company enters into cash-

-47-

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET

RISK (continued)

settled natural gas swap contracts in certain markets to protect against changes in natural gas prices that mature
within 15 months; however, no financial instruments are currently used to protect against changes in raw material
costs. At December 31, 2020 and 2019, the net fair value of such swap contracts was less than $1 million and
$3 million, respectively. The potential change in fair value at December 31, 2020 and 2019 resulting from an
increase (decrease) of 10% in the underlying commodity prices would be an increase (decrease) of $1 million in
both years. This amount excludes the offsetting impact of the price risk inherent in the physical purchase of the
underlying commodities.

ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Pages 58 through 107 of this filing are incorporated herein by reference.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND

FINANCIAL DISCLOSURE

None.

ITEM 9A. 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
December 31, 2020 that materially affected, or is reasonably likely to materially affect, the Company’s internal
control over financial reporting.

A report of the Company’s management on the Company’s internal control over financial reporting is contained
on page 54 hereof and is incorporated here by reference. PricewaterhouseCoopers LLP’s report on the
effectiveness of internal control over financial reporting is included in the Report of Independent Registered
Public Accounting Firm beginning on page 55 hereof.

ITEM 9B. OTHER INFORMATION

None.

-48-

Part III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Information with respect to directors and corporate governance will be presented in the 2021 Proxy Statement in
the sections titled “Information Concerning Directors” and “Governance Information,” and such information is
incorporated herein by reference.

Information with respect to executive officers is included herein under Part I, “Information about our Executive
Officers”.

Code of Ethics for Senior Financial Officers

Owens Corning has adopted an Ethics Policy for Chief Executive and Senior Financial Officers that applies to
our Chief Executive Officer, Chief Financial Officer and Controller. This policy is available on our website
(www.owenscorning.com) under “Corporate Governance” located in the “Investing in Owens Corning” section
and print copies will be made available free of charge upon request to the Secretary of the Company. To the
extent required by applicable SEC rules or New York Stock Exchange listing standards, the Company intends to
post any amendments or waivers to the above referenced codes of ethics to our website, under the tab entitled
“Corporate Governance”.

ITEM 11. EXECUTIVE COMPENSATION

Information regarding executive officer and director compensation will be presented in the 2021 Proxy Statement
under the section titled “Executive Compensation,” exclusive of the subsection titled “Compensation Committee
Report,” and the section titled “2020 Non-Management Director Compensation,” and such information is
incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

AND RELATED STOCKHOLDER MATTERS

Information regarding security ownership of certain beneficial owners and management and related stockholder
matters, as well as equity compensation plan information, will be presented in the 2021 Proxy Statement under
the sections titled “Security Ownership of Certain Beneficial Owners and Management” and “Securities
Authorized for Issuance Under Equity Compensation Plans,” and such information is incorporated herein by
reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, DIRECTOR

INDEPENDENCE

Information regarding certain relationships and related transactions and director independence will be presented
in the 2021 Proxy Statement under the sections titled “Review of Transactions with Related Persons,” “Director
Qualifications Standards” and “Director Independence,” and such information is incorporated herein by
reference.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Information regarding principal accounting fees and services will be presented in the 2021 Proxy Statement
under the sections titled “Principal Accountant Fees and Services,” and such information is incorporated herein
by reference.

-49-

Part IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) DOCUMENTS FILED AS PART OF THIS REPORT

See Index to Consolidated Financial Statements on page 57 hereof.

See Index to Financial Statement Schedules on page 58 hereof.

EXHIBIT INDEX

Pursuant to the rules and regulations of the SEC, the Company has filed or incorporated by reference certain
agreements as exhibits to this Annual Report on Form 10-K. These agreements may contain representations and
warranties by the parties. These representations and warranties have been made solely for the benefit of the other
party or parties to such agreements and (i) may have been qualified by disclosures made to such other party or
parties, (ii) were made only as of the date of such agreements or such other date(s) as may be specified in such
agreements and are subject to more recent developments, which may not be fully reflected in the Company’s
public disclosure, (iii) may reflect the allocation of risk among the parties to such agreements and (iv) may apply
these
materiality standards different
representations and warranties may not describe the Company’s actual state of affairs at the date hereof and
should not be relied upon.

from what may be viewed as material

to investors. Accordingly,

Exhibit
Number

Description

2.1

2.2

3.1

3.2

4.1

4.2

4.3

Purchase Agreement, dated as of October 27, 2017, by and among Owens Corning Finland Oy, Parry
Investment S.A. and the individuals party thereto (incorporated by reference to Exhibit 2.1 to Owens
Corning’s Current Report on Form 8-K (File No. 1-33100), filed February 5, 2018).+

Amendment Agreement, dated February 2, 2018, related to the Purchase Agreement, dated
October 27, 2017, by and among Owens Corning Finland Oy, Parry Investment S.A. and the
individuals party thereto (incorporated by reference to Exhibit 2.1 to Owens Corning’s Quarterly
Report of Form 10-Q (File No. 1-33100) for the quarter ended March 31, 2018).

Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 of
Owens Corning’s Quarterly Report on Form 10-Q (File No. 1-33100), for the quarter ended
March 31, 2016).

Second Amended and Restated Bylaws of the Company, effective as of June 19, 2019 (incorporated
by reference to Exhibit 3.1 to Owens Corning’s Current Report on Form 10-Q (File No. 1-33100), for
the quarter ended June 30, 2019).

Indenture, dated as of October 31, 2006, by and among Owens Corning, each of the guarantors
named therein and LaSalle Bank, National Association, as trustee (incorporated by reference to
Exhibit 4.1 to Owens Corning’s Current Report on Form 8-K (File No. 1-33100), filed November 2,
2006).

Form of 7.000% Senior Notes due 2036 (incorporated by reference to Exhibit 4.1 to Owens
Corning’s Current Report on Form 8-K (File No. 1-33100), filed November 2, 2006).

First Supplemental Indenture, dated as of April 13, 2007, by and among Owens Corning, each of the
guarantors named therein and LaSalle Bank National Association, as trustee (incorporated by
reference to Exhibit 4.1 to Owens Corning’s Current Report on Form 8-K (File No. 1-33100), filed
April 13, 2007).

Exhibit
Number

4.4

4.5

4.6

4.7

4.8

4.9

4.10

4.11

4.12

4.13

4.14

Description

-50-

Second Supplemental Indenture, dated as of December 12, 2007, by and among Owens Corning,
each of
the guarantors named therein and LaSalle Bank National Association, as trustee
(incorporated by reference to Exhibit 4.3 to Owens Corning’s Annual Report on Form 10-K (File
No. 1-33100) for the year ended December 31, 2007).

Third Supplemental Indenture, dated as of April 24, 2008, by and among Owens Corning, each of the
guarantors named therein and LaSalle Bank National Association, as trustee (incorporated by
reference to Exhibit 4.1 to Owens Corning’s Quarterly Report on Form 10-Q (File No. 1-33100) for
the quarter ended June 30, 2008).

Fourth Supplemental Indenture, dated as of May 26, 2010, by and among Owens Corning, each of
the guarantors named therein and Wells Fargo Bank, National Association, as trustee (incorporated
by reference to Exhibit 4.1 to Owens Corning’s Current Report on Form 8-K (File No. 1-33100),
filed May 28, 2010).

Fifth Supplemental Indenture, dated as of October 3, 2016, by and among Owens Corning, each of
the guarantors named therein and Wells Fargo Bank, National Association, as trustee (incorporated
by reference to Exhibit 4.7 to Owens Corning’s Annual Report on Form 10-K (File No. 1-33100) for
the year ended December 31,2017).

Sixth Supplemental Indenture, dated as of February 27, 2017, by and among Owens Corning, each of
the guarantors named therein and Wells Fargo Bank, National Association, as trustee (incorporated
by reference to Exhibit 4.8 to Owens Corning’s Annual Report on Form 10-K (File No. 1-33100) for
the year ended December 31, 2017).

Seventh Supplemental Indenture, dated as of August 23, 2017, by and among Owens Corning, the
guarantor named therein and Wells Fargo Bank, National Association, as successor trustee
(incorporated by reference to Exhibit 4.5 to Owens Corning’s Quarterly Report on Form 10-Q (File
No. 1-33100), for the quarter ended September 30, 2017).

Indenture, dated as of June 2, 2009, between Owens Corning, certain of Owens Corning’s
subsidiaries and Wells Fargo Bank, National Association, as trustee (incorporated by reference to
Exhibit 4.1 to Owens Corning’s Registration Statement on Form S-3 (File No. 333-159689), filed
June 3, 2009).

Second Supplemental Indenture, dated as of May 26, 2010, by and among Owens Corning, certain
subsidiaries, and Wells Fargo Bank, National Association, as Trustee (incorporated by reference to
Exhibit 4.2 to Owens Corning’s Current Report on Form 8-K (File No. 1-33100), filed May 28,
2010).

Third Supplemental Indenture, dated as of October 22, 2012, by and among Owens Corning, certain
subsidiaries, and Wells Fargo Bank, National Association, as successor Trustee (incorporated by
reference to Exhibit 4.1 to Owens Corning’s Current Form 8-K (File No. 1-33100), filed October 22,
2012).

Form of 4.200% Senior Notes due 2022 (incorporated by reference to Exhibit 4.1 to Owens
Corning’s Current Report on Form 8-K (File No. 1-33100), filed October 22, 2012).

Fourth Supplemental Indenture, dated as of November 12, 2014, by and among Owens Corning, the
guarantors named therein and Wells Fargo Bank, National Association, as Trustee (incorporated by
reference to Exhibit 4.1 to Owens Corning’s Current Report on Form 8-K (File No. 1-33100) filed
November 12, 2014).

4.15

Form of 4.200% Senior Notes due 2024 (incorporated by reference to Exhibit 4.1 to Owens
Corning’s Current Report on Form 8-K (File No. 1-33100), filed November 12, 2014).

Exhibit
Number

4.16

4.17

4.18

4.19

4.20

4.21

4.22

4.23

4.24

4.25

4.26

4.27

4.28

Description

-51-

Fifth Supplemental Indenture, dated as of August 8, 2016, by and among the Company, the
guarantors party thereto and Wells Fargo Bank, National Association, as Trustee (incorporated by
reference to Exhibit 4.1 to Owens Corning’s Current Report on Form 8-K (File No. 1-33100) filed
August 8, 2016).

Form of 3.400% Senior Notes due 2026 (incorporated by reference to Exhibit 4.1 to Owens
Corning’s Current Report on Form 8-K (File No. 1-33100) filed August 8, 2016).

Sixth Supplemental Indenture, dated as of October 3, 2016, by and among Owens Corning, the
guarantors party thereto and Wells Fargo Bank, National Association, as trustee (incorporated by
reference to Exhibit 4.9 to Post-Effective Amendment No. 1 to Owens Corning’s Registration
Statement on Form S-3 (Registration No. 333-202011), filed June 21, 2017).

Seventh Supplemental Indenture, dated as of February 27, 2017, by and among Owens Corning, the
guarantors party thereto and Wells Fargo Bank, National Association, as trustee (incorporated by
reference to Exhibit 4.10 to Post-Effective Amendment No. 1 to Owens Corning’s Registration
Statement on Form S-3 (Registration No. 333-202011), filed June 21, 2017).

Eighth Supplemental Indenture, dated as of June 26, 2017, by and among Owens Corning, the
guarantors party thereto and Wells Fargo Bank, National Association, as trustee (incorporated by
reference to Exhibit 4.1 to Owens Corning’s Current Report on Form 8-K (File No. 1-33100), filed
June 26, 2017).

Form of 4.300% Senior Notes due 2047 (incorporated by reference to Exhibit 4.2 to Owens
Corning’s Current Report on Form 8-K (File No. 1-33100), filed June 26, 2017).

Ninth Supplemental Indenture, dated as of August 23, 2017, by and among Owens Corning, the
guarantor named therein and Wells Fargo Bank, National Association, as trustee (incorporated by
reference to Exhibit 4.6 to Owens Corning’s Quarterly Report on Form 10-Q (File No. 1-33100), for
the quarter ended September 30, 2017).

Tenth Supplemental Indenture, dated as of January 25, 2018, by and among Owens Corning, the
guarantors party thereto and Wells Fargo Bank, National Association, as trustee (incorporated by
reference to Exhibit 4.1 to Owens Corning’s Current Report on Form 8-K (File No. 1-33100), filed
January 25, 2018).

Form of 4.400% Senior Notes due 2048 (incorporated by reference to Exhibit 4.2 to Owens
Corning’s Current Report on Form 8-K (File No. 1-33100), filed January 25, 2018).

Eleventh Supplemental Indenture, dated as of August 12, 2019, by and among Owens Corning and
BofA Securities,
Inc., Citigroup Global Markets Inc., and Wells Fargo Securities, LLC as
representatives of the several underwriters named therein (incorporated by reference to Exhibit 4.1 to
Owens Corning’s Current Report on Form 8-K (File No. 1-33100), filed August 12, 2019).

Form of 3.950% Senior Note due 2029 (incorporated by reference to Exhibit 4.2 to Owens Corning’s
Current Report on Form 8-K (File No. 1-33100), filed August 12, 2019).

Twelfth Supplemental Indenture, dated as of May 7, 2020, by and among Owens Corning and Wells
Fargo Bank, National Association, as trustee (incorporated by reference to Exhibit 4.1 to Owens
Corning’s Current Report on Form 8-K (File No. 1-33100), filed May 12, 2020).

Form of 3.875% Senior Note due 2030 (incorporated by reference to Exhibit 4.2 to Owens Corning’s
Current Report on Form 8-K (File No. 1-33100), filed May 12, 2020.

Exhibit
Number

4.29

10.1

10.2

10.3

10.4

10.5

10.6

10.7

10.8

10.9

10.10

10.11

10.12

Description

-52-

Description of Securities Registered under Section 12 of the Securities Exchange Act of 1934
(incorporated by reference to Exhibit 4.26 to Owens Corning’s Annual Report on Form 10-K (File
No. 1-33100) for the year ended December 31, 2019).

Credit Agreement, dated as of May 4, 2018, by and among the Company, the lenders signatory
thereto and Wells Fargo Bank, National Association, as administrative agent (incorporated by
reference to Exhibit 10.1 to Owens Corning’s Current Report on Form 8-K (File No. 1-33100), filed
May 4, 2018).

Extension Agreement, dated April 9, 2019, to the Credit Agreement by and among Owens Corning,
Wells Fargo Bank, National Association and other signatory lenders (incorporated by reference to
Exhibit 10.2 to Owens Corning’s Quarterly Report on Form 10-Q (File 1-133100) for the quarter
ended June 30, 2019).

Second Amended and Restated Receivables Purchase Agreement, dated as of May 5, 2017
(incorporated by reference to Exhibit 10.1 to Owens Corning’s Current Report on Form 8-K (File
No. 1-33100), filed May 9, 2017).

First Amendment, dated April 12, 2018, related to the Second Amended and Restated Receivables
Purchase Agreement, dated as of May 5, 2017 (incorporated by reference to Exhibit 10.1 to Owens
Corning’s Quarterly Report on Form 10-Q (File No. 1-33100) for the quarter ended March 31, 2018).

Second Amendment to Second Amended and Restated Receivables Purchase Agreement, dated
April 8, 2019 (incorporated by reference to Exhibit 10.1 to Owens Corning’s Quarterly Report on
Form 10-Q (File 1-133100) for the quarter ended June 30, 2019).

Purchase and Sale Agreement, dated as of March 31, 2011, between Owens Corning Sales, LLC and
Owens Corning Receivables, LLC (incorporated by reference to Exhibit 10.2 to Owens Corning’s
Current Report on Form 8-K (File No. 1-33100), filed April 5, 2011).

First Amendment to Purchase and Sale Agreement, dated as of May 5, 2017, by and between Owens
Corning Sales, LLC and Owens Corning Receivables LLC (incorporated by reference to Exhibit 10.2
to Owens Corning’s Quarterly Report on Form 10-Q (File No. 1-33100), for the quarter ended
June 30, 2017).

Amended and Restated Performance Guaranty, dated as of May 5, 2017 (incorporated by reference to
Exhibit 10.3 to Owens Corning’s Quarterly Report on Form 10-Q (File No. 1-33100), for the quarter
ended June 30, 2017).

Form of Key Management Severance Agreement for Executive Officers* (incorporated by reference
to Exhibit 10.10 to Owens Corning’s Annual Report on Form 10-K (File No. 1-33100) for the year
ended December 31, 2013).*

Amended and Restated Key Management Severance Agreement with Michael H. Thaman
(incorporated by reference to Exhibit 10 to Owens Corning Sales, LLC’s Annual Report on Form
10-K (File No. 1-3660) for the year ended December 31, 2005).*

Amendment, dated April 16, 2015, to Key Management Severance Agreement with Michael H.
Thaman (incorporated by reference to Exhibit 10.31 to Owens Corning’s Quarterly Report on Form
10-Q (File 1-33100), for the quarter ended March 31, 2015).*

Transition Agreement with Michael H. Thaman, dated January 3, 2019 (incorporated by reference to
Exhibit 10.16 of Owens Corning’s Annual Report on Form 10-K (File No. 1-33100) for the year
ended December 31, 2018).

Exhibit
Number

10.13

10.14

10.15

10.16

10.17

10.18

10.19

10.20

10.21

10.22

10.23

10.24

10.25

10.26

10.27

10.28

Description

-53-

Form of Directors’ Indemnification Agreement (incorporated by reference to Exhibit 10.2 of Owens
Corning’s Current Report on Form 8-K (File No. 1-33100), filed November 2, 2006).

Owens Corning Executive Supplemental Benefit Plan, 2009 Restatement (incorporated by reference
to Exhibit 10.28 to Owens Corning’s annual report on Form 10-K (File No. 1-33100) for the year
ended December 31, 2008).*

Owens Corning Supplemental Executive Retirement Plan, as amended and restated, effective as of
January 1, 2009 (incorporated by reference to Exhibit 10.30 to Owens Corning’s annual report on
Form 10-K (File No. 1-33100) for the year ended December 31, 2008).*

Owens Corning 2021 Corporate Incentive Plan (filed herewith).*

Owens Corning Amended and Restated Deferred Compensation Plan, effective as of January 1, 2021
(filed herewith).*

Owens Corning 2010 Stock Plan (incorporated by reference to Exhibit 10.1 to Owens Corning’s
Current Report on Form 8-K (File No. 1-33100), filed April 23, 2010).*

Owens Corning 2013 Stock Plan (incorporated by reference to Annex C to Owens Corning’s Proxy
Statement (File No 1-33100), filed March 14, 2013).*

Owens Corning 2016 Stock Plan (incorporated by reference to Exhibit 10.39 to Owens Corning’s
Quarterly Report on Form 10-Q (File No. 1-33100) for the quarter ended March 31, 2016).*

Owens Corning 2019 Stock Plan (incorporated by reference to Exhibit 10.1 to Owens Corning’s
Quarterly Report on Form 10-Q (File No. 1-33100) for the quarter ended March 31, 2019).*

Amended and Restated Owens Corning Employee Stock Purchase Plan, (incorporated by reference to
Exhibit 10.1 to Owens Corning’s Current Report on Form 8-K (File No. 1-33100), filed April 21,
2020).*

Form of Owens Corning 2013 Long Term Incentive Program Award Agreement for Option Award
(incorporated by reference to Exhibit 10.27 to Owens Corning’s Annual Report on Form 10-K (File
No. 1-33100) for the year ended December 31, 2013).*

Form of Owens Corning 2018 Long Term Incentive Program Award Agreement for Performance
Share Units (incorporated by reference to Exhibit 10.2 to Owens Corning’s Quarterly Report on
Form 10-Q (File No. 1-33100) for the quarter ended March 31, 2018).

Form of Owens Corning 2018 Long Term Incentive Program Award Agreement for Restricted Stock
(incorporated by reference to Exhibit 10.3 to Owens Corning’s Quarterly Report on Form 10-Q (File
No. 1-33100) for the quarter ended March 31, 2018).

Form of Owens Corning 2019 Long Term Incentive Program Award Agreement pursuant to the
Owens Corning 2016 Stock Plan for Restricted Stock Unit Award (incorporated by reference to
Exhibit 10.2 to Owens Corning’s Quarterly Report on Form 10-Q (File 1-133100) for the quarter
ended March 31, 2019).*

Form of Deferred Stock Unit Award Agreement for Directors (incorporated by reference to Exhibit
10.32 to Owens Corning’s Quarterly Report on Form 10-Q (File 1-33100), for the quarter ended
June 30, 2015).*

Form of Long Term Incentive Program Award Agreement for Restricted Stock Unit (incorporated by
reference to Exhibit 10.33 to Owens Corning’s Quarterly Report on Form 10-Q (File 1-33100), for
the quarter ended June 30, 2015).*

Exhibit
Number

10.29

10.30

10.31

Description

-54-

Form of Long Term Incentive Program Award Agreement for Performance Share Unit (incorporated
by reference to Exhibit 10.34 to Owens Corning’s Quarterly Report on Form 10-Q (File 1-33100),
for the quarter ended June 30, 2015).*

Form of Owens Corning 2020 Long Term Incentive Program Award Agreement pursuant to the
Owens Corning 2019 Stock Plan for Performance Share Unit Award (filed herewith).*

Form of Long Term Incentive Program Award Agreement for Restricted Stock (incorporated by
reference to Exhibit 10.35 to Owens Corning’s Quarterly Report on Form 10-Q (File 1-33100), for
the quarter ended June 30, 2015).*

10.32

Form of Owens Corning 2020 Long Term Incentive Program Award Agreement pursuant to the
Owens Corning 2019 Stock Plan for Restricted Stock Unit Award (filed herewith).*

21.1

23.1

31.1

31.2

32.1

32.2

101

Subsidiaries of Owens Corning (filed herewith).

Consent of PricewaterhouseCoopers LLP (filed herewith).

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

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

Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350.

Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350.

The following materials from the Annual Report on Form 10-K for Owens Corning for the period
ended December 31, 2020, 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 Annual Report on Form 10-K, formatted as Inline XBRL

Schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K. Owens Corning agrees to
furnish supplementally to the Securities and Exchange Commission a copy of any omitted schedule upon
request.
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.

ITEM 16. FORM 10-K SUMMARY

None.

-55-

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

OWENS CORNING

By /s/ Brian D. Chambers

Brian D. Chambers
Chief Executive Officer
(Principal Executive Officer)

February 17, 2021

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the Registrant and in the capacities and on the dates indicated.

/s/ Brian D. Chambers

Brian D. Chambers,
Chief Executive Officer and Director
(Principal Executive Officer)

/s/ Kenneth S. Parks

Kenneth S. Parks,
Chief Financial Officer
(Principal Financial Officer)

/s/ Kelly J. Schmidt

Kelly J. Schmidt,
Vice President and Controller

/s/ Eduardo Cordeiro

Eduardo Cordeiro,
Director

/s/ Adrienne Elsner

Adrienne Elsner,
Director

/s/ J. Brian Ferguson

J. Brian Ferguson,
Director

/s/ Alfred E. Festa

Alfred E. Festa,
Director

/s/ Ralph F. Hake
Ralph F. Hake,
Director

February 17, 2021

/s/ Edward F. Lonergan

Edward F. Lonergan,
Director

/s/ Maryann T. Mannen

Maryann T. Mannen,
Director

/s/ Paul E. Martin

Paul E. Martin,
Director

/s/ W. Howard Morris

W. Howard Morris,
Director

/s/ Suzanne P. Nimocks

Suzanne P. Nimocks,
Director

/s/ John D. Williams

John D. Williams,
Director

-56-

February 17, 2021

-57-

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

ITEM

PAGE

Management’s Report on Internal Control Over Financial Reporting

Report of Independent Registered Public Accounting Firm

Consolidated Statements of Earnings (Loss)

Consolidated Statements of Comprehensive Earnings (Loss)

Consolidated Balance Sheets

Consolidated Statements of Stockholders’ Equity

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

1. Business and summary of significant accounting policies
2. Segment information
3. Inventories
4. Derivative financial instruments
5. Goodwill and other intangible assets
6. Property, plant and equipment
7. Leases
8. Total current liabilities
9. Warranties
10. Restructuring and acquisition-related costs
11. Debt
12. Pension plans
13. Postemployment and postretirement benefits other than pensions
14. Contingent liabilities and other matters
15. Stock compensation
16. Changes in accumulated other comprehensive deficit
17. Earnings per share
18. Income taxes

68
68
76
80
80
83
86
86
88
89
89
91
94
101
104
105
110
111
112

-58-

Management’s Report on Internal Control Over Financial Reporting

Management of the Company is responsible for establishing and maintaining adequate internal control over
financial reporting as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of
1934.

Management has assessed the effectiveness of the Company’s internal control over financial reporting as of
December 31, 2020 based on criteria established in the Internal Control-Integrated Framework in 2013 issued by
the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

PricewaterhouseCoopers LLP has audited the effectiveness of the internal controls over financial reporting as of
December 31, 2020 as stated in their Report of Independent Registered Public Accounting Firm on page 55
hereof.

Based on our assessment, management determined that, as of December 31, 2020, the Company’s internal
control over financial reporting was effective.

/s/ Brian D. Chambers

Brian D. Chambers,
Chief Executive Officer
(Principal Executive Officer)

/s/ Kenneth S. Parks

Kenneth S. Parks,
Chief Financial Officer
(Principal Financial Officer)

February 17, 2021

-59-

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of Owens Corning:

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of Owens Corning and its subsidiaries (the
“Company”) as of December 31, 2020 and 2019, and the related consolidated statements of earnings (loss), of
comprehensive earnings (loss), of stockholders’ equity and of cash flows for each of the three years in the period
ended December 31, 2020, including the related notes and schedule of valuation and qualifying accounts and
reserves for each of the three years in the period ended December 31, 2020 appearing on page 111 (collectively
referred to as the “consolidated financial statements”). We also have audited the Company’s internal control over
financial reporting as of December 31, 2020, based on criteria established in Internal Control—Integrated
Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the
financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its
cash flows for each of the three years in the period ended December 31, 2020 in conformity with accounting
principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in
all material respects, effective internal control over financial reporting as of December 31, 2020, based on criteria
established in Internal Control—Integrated Framework (2013) issued by the COSO.

Change in Accounting Principles

As discussed in Note 1 to the consolidated financial statements, the Company changed the manner in which it
accounts for leases in 2019.

Basis for Opinions

The Company’s management is responsible for these consolidated financial statements, for maintaining effective
internal control over financial reporting, and for its assessment of the effectiveness of internal control over
financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial
Reporting. Our responsibility is to express opinions on the Company’s consolidated financial statements and on
the Company’s internal control over financial reporting based on our audits. We are a public accounting firm
registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to
be independent with respect to the Company in accordance with the U.S. federal securities laws and the
applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are
free of material misstatement, whether due to error or fraud, and whether effective internal control over financial
reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material
misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures
that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts
and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting
principles used and significant estimates made by management, as well as evaluating the overall presentation of
the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an
understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and
testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our
audits also included performing such other procedures as we considered necessary in the circumstances. We
believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

-60-

A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the
company’s assets that could have a material effect on the financial statements.

Because of its inherent
internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.

limitations,

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the
consolidated financial statements that were communicated or required to be communicated to the audit
committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements
and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical
audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole,
and we are not, by communicating the critical audit matters below, providing separate opinions on the critical
audit matters or on the accounts or disclosures to which they relate.

Goodwill Impairment Assessments—Insulation Reporting Unit

As described in Notes 1 and 5 to the consolidated financial statements, the Company’s consolidated goodwill
balance was $989 million as of December 31, 2020, and the goodwill associated with the Insulation reporting
unit was $532 million. Management tests goodwill for impairment as of October 1st 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 amount. During the first quarter of 2020, management performed its 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 Company’s significant share price reduction during the ongoing
COVID-19 pandemic, the narrow cushion on the Insulation reporting unit and the high level of near-term
macroeconomic uncertainty caused management to perform an interim goodwill impairment test as of March 31,
2020 over the Insulation reporting unit. Based on the results of this testing, management recorded a $944 million
pre-tax non-cash impairment charge. Management estimates fair value using a discounted cash flow approach
from the perspective of a market participant. Significant assumptions used in the discounted cash flow approach
are revenue growth rates and earnings before interest and taxes (“EBIT”) margins used in estimating the 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.

The principal considerations for our determination that performing procedures relating to the goodwill
impairment assessments of the Insulation reporting unit is a critical audit matter are (i) the significant judgment
by management when developing the fair value measurement of the reporting unit; (ii) a high degree of auditor
judgment, subjectivity and effort in performing procedures and evaluating management’s significant assumptions
related to the revenue growth rates and EBIT margins used in estimating the discrete period cash flow forecasts
of the reporting unit, the discount rate, and the long-term revenue growth rate and EBIT margin used in

-61-

estimating the terminal business value; and (iii) the audit effort involved the use of professionals with specialized
skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming
our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness
of controls relating to management’s goodwill impairment assessments, including controls over the review of
significant assumptions used in the valuation of the Insulation reporting unit. These procedures also included,
among others (i) testing management’s process for developing the fair value measurement of the Insulation
reporting unit; (ii) evaluating the appropriateness of the discounted cash flow approach; (iii) testing the
completeness and accuracy of underlying data used in the approach; and (iv) evaluating the reasonableness of the
significant assumptions used by management related to the revenue growth rates and EBIT margins used in
estimating the discrete period cash flow forecasts, the discount rate, and the long-term revenue growth rate and
EBIT margin used in estimating the terminal business value. Evaluating management’s assumptions related to
the revenue growth rates and EBIT margins used in estimating the discrete period cash flow forecasts and EBIT
margin used in estimating the terminal business value involved evaluating whether the assumptions used by
management were reasonable considering (i) the current and past performance of the reporting unit; (ii) the
consistency with external market and industry data; and (iii) whether these assumptions were consistent with
evidence obtained in other areas of the audit. Professionals with specialized skill and knowledge were used to
assist in the evaluation of management’s discounted cash flow approach and the discount rate and long-term
revenue growth rate assumptions.

Indefinite-Lived Intangible Asset Impairment Assessments—One Trademark and One Trade Name in the
Insulation Segment

As described in Notes 1 and 5 to the consolidated financial statements, the Company’s consolidated intangible
assets, net balance was $1,667 million as of December 31, 2020, which includes $1,109 million of trademarks
and trade names. Management tests indefinite-lived intangible assets for impairment as of October 1st each year,
or more frequently should circumstances change or events occur that would more likely than not reduce the fair
value below its carrying amount. In the first quarter of 2020, management performed an interim impairment test
of one indefinite-lived trademark and one trade name used by the Company’s Insulation segment, based on the
macroeconomic conditions that precipitated the interim goodwill impairment test described above. Based on the
results of this testing, management recorded pre-tax non-cash impairment charges totaling $43 million in the first
quarter of 2020 related to one trademark and one trade name in the Insulation segment. The assets affected by
this impairment charge had an aggregate carrying value of $264 million as of December 31, 2020. Management
uses the royalty relief approach to determine whether it is more likely than not that the fair value of these assets
is less than its carrying amount. When applying the royalty relief approach, management performs a discounted
cash flow analysis based on the value derived from owning these trademarks and trade names and being relieved
from paying royalty to third parties. Significant assumptions used include the discrete-period revenue growth
rates, royalty rates, discount rates, and terminal value.

The principal considerations for our determination that performing procedures relating to the indefinite-lived
intangible asset impairment assessments for one trademark and one trade name in the Insulation segment is a
critical audit matter are (i) the significant judgment by management when developing the fair value measurement
of the trademark and trade name; (ii) a high degree of auditor judgment, subjectivity and effort in performing
procedures and evaluating management’s significant assumptions related to the discrete-period revenue growth
rates, royalty rates, and discount rates; and (iii) the audit effort involved the use of professionals with specialized
skill and knowledge.

-62-

These procedures also included, among others (i) testing management’s process for developing the fair value
measurements of the Insulation trademark and trade name; (ii) evaluating the appropriateness of the royalty relief
approach; (iii) testing the completeness and accuracy of underlying data used in the approach; and (iv) evaluating
the reasonableness of the significant assumptions used by management related to the discrete period revenue
growth rates, royalty rates, and discount rates. Evaluating management’s assumptions related to the discrete-
period revenue growth rates, royalty rates, and discount rates used in estimating the fair value of the trademark
and trade name involved evaluating whether the assumptions used by management were reasonable considering
(i) the current and past performance of the business associated with the Insulation trademark and trade name;
(ii) the consistency with external market and industry data; and (iii) whether these assumptions were consistent
with evidence obtained in other areas of the audit. Professionals with specialized skill and knowledge were used
to assist in the evaluation of the discount rates.

Toledo, Ohio
February 17, 2021

We have served as the Company’s auditor since 2002.

-63-

OWENS CORNING AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS (LOSS)
(in millions, except per share amounts)

Twelve Months Ended
December 31,
2019

2018

2020

NET SALES
COST OF SALES

Gross margin

OPERATING EXPENSES

Marketing and administrative expenses
Science and technology expenses
Goodwill impairment charge
Other expenses, net

Total operating expenses

OPERATING INCOME (LOSS)
Non-operating expense (income)

EARNINGS (LOSS) BEFORE INTEREST AND TAXES
Interest expense, net
Loss on extinguishment of debt

EARNINGS (LOSS) BEFORE TAXES
Income tax expense
Equity in net earnings (loss) of affiliates

NET EARNINGS (LOSS)
Net earnings (loss) attributable to noncontrolling interests

$7,055
5,445

$7,160
5,551

$7,057
5,425

1,610

1,609

1,632

664
82
944
58

1,748

(138)
(14)

(124)
132
—

(256)
129
—

(385)

698
87
—
37

822

787
34

753
131
32

590
186
1

405

(2) —

700
89
—
36

825

807
(14)

821
117
—

704
156
(1)

547
2

NET EARNINGS (LOSS) ATTRIBUTABLE TO OWENS CORNING

$ (383) $ 405

$ 545

EARNINGS (LOSS) PER COMMON SHARE ATTRIBUTABLE TO OWENS

CORNING COMMON STOCKHOLDERS

Basic
Diluted

WEIGHTED AVERAGE COMMON SHARES

Basic
Diluted

$ (3.53) $ 3.71
$ (3.53) $ 3.68

$ 4.94
$ 4.89

108.6
108.6

109.2
110.1

110.4
111.4

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

-64-

OWENS CORNING AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS (LOSS)
(in millions)

Twelve Months Ended
December 31,
2019

2018

2020

NET EARNINGS (LOSS)
Currency translation adjustment (net of tax of $(4), $(4) and $(4), for the periods

ended December 31, 2020, 2019 and 2018, respectively)

Pension and other postretirement adjustment (net of tax of $14, $(10), and $6, for

the periods ended December 31, 2020, 2019 and 2018, respectively)
Hedging adjustment (net of tax of $(3), $1 and $0, for the periods ended

December 31, 2020, 2019 and 2018, respectively)

COMPREHENSIVE EARNINGS (LOSS)
Comprehensive earnings (loss) attributable to noncontrolling interests

COMPREHENSIVE EARNINGS (LOSS) ATTRIBUTABLE TO OWENS

CORNING

$(385)

$405

$ 547

(46)

(2)

(363)

451

(2) —

(123)

(19)

—

405
2

$(361)

$451

$ 403

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

-65-

OWENS CORNING AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in millions)

ASSETS

CURRENT ASSETS

Cash and cash equivalents
Receivables, less allowances of $10 at December 31, 2020 and $11 at

717

172

December 31,
2020

December 31,
2019

December 31, 2019

Inventories
Other current assets

Total current assets

Property, plant and equipment, net
Operating lease right-of-use assets
Goodwill
Intangible assets, net
Deferred income taxes
Other non-current assets

TOTAL ASSETS

LIABILITIES AND EQUITY
Total current liabilities
Long-term debt, net of current portion
Pension plan liability
Other employee benefits liability
Non-current operating lease liabilities
Deferred income taxes
Other liabilities
OWENS CORNING STOCKHOLDERS’ EQUITY

Preferred stock, par value $0.01 per share (a)
Common stock, par value $0.01 per share (b)
Additional paid in capital
Accumulated earnings
Accumulated other comprehensive deficit
Cost of common stock in treasury (c)

Total Owens Corning stockholders’ equity

Noncontrolling interests

Total equity

919
855
115

2,606
3,809
154
989
1,667
28
228

770
1,033
86

2,061
3,855
203
1,932
1,721
46
188

$ 9,481

$10,006

$ 1,440
3,126
159
171
99
332
213

—

1
4,059
1,829
(588)
(1,400)

3,901
40

3,941

$ 1,329
2,986
231
179
138
272
200

—

1
4,051
2,319
(610)
(1,130)

4,631
40

4,671

TOTAL LIABILITIES AND EQUITY

$ 9,481

$10,006

(a) 10 shares authorized; none issued or outstanding at December 31, 2020 and December 31, 2019
(b) 400 shares authorized; 135.5 issued and 105.6 outstanding at December 31, 2020; 135.5 issued and 109.0

outstanding at December 31, 2019

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

-66-

OWENS CORNING AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in millions)

Common Stock
Outstanding

Treasury
Stock

Shares Par Value Shares

Cost

APIC (a)

Accumulated
Earnings

AOCI (b) NCI (c) Total

Balance at December 31, 2017

111.5

24.0

$ (911)

$4,011

$1,575

$(514)

$ 42

$4,204

Net earnings attributable to Owens

Corning

Net earnings attributable to
noncontrolling interests

Currency translation adjustment
Pension and other postretirement

adjustment (net of tax)

Issuance of common stock under
share-based payment plans

Purchases of treasury stock
Stock-based compensation expense
Cumulative effect of accounting

change (d)

Dividends declared (e)

—

—
—

—

1.0
(3.0)
—

—
—

—

—
—

—

—
—
—

—
—

—

—
—

—

(1.0)
3.0
—

—
—

—

—
—

—

44
(236)
—

—
—

—

—
—

—

(30)
—

—
—

545

—

545

—
—

—

—
—
—

(12)
(95)

—
(123)

(19)

—
—
—

—
—

2
(2)

—

—
—
—

—

(1)

2
(125)

(19)

14
(236)
47

(12)
(96)

Balance at December 31, 2018

109.5

26.0

$(1,103)

$4,028

$2,013

$(656)

$ 41

$4,324

Net earnings attributable to Owens

Corning

Currency translation adjustment
Pension and other postretirement

adjustment (net of tax)

Deferred gain on hedging transactions

(net of tax)

Issuance of common stock under
share-based payment plans

Purchases of treasury stock
Stock-based compensation expense
Dividends declared (e)

—
—

—

0.8
(1.3)
—
—

—
—

—

—
—
—
—

—
—

—

(0.8)
1.3
—
—

—
—

—

34
(61)
—
—

—
—

—

(16)
—

—

405
—

—

—
—
—
(99)

—
24

(2)

—
—
—
—

—

(1)

—

—
—
—
—

405
23

(2)

18
(61)
39
(99)

Balance at December 31, 2019

109.0

26.5

$(1,130)

$4,051

$2,319

$(610)

$ 40

$4,671

Net loss attributable to Owens

Corning

Net loss attributable to noncontrolling

interests

Currency translation adjustment
Pension and other postretirement

adjustment (net of tax)

Deferred loss on hedging transactions

(net of tax)

Issuance of common stock under
share-based payment plans

Purchases of treasury stock
Stock-based compensation expense
Dividends declared (e)

—

—
—

—

1.1
(4.5)
—
—

—

—
—

—

—
—
—
—

—

—
—

—

—
—

—

(1.1)
4.5
—
—

48
(318)
—
—

—

—
—

—

(33)
—

—

(383)

—
—

—

—
—
—
(107)

—

—
62

(46)

—
—
—
—

—

(383)

(2)
3

—

—
—
—

(1)

(2)
65

(46)

15
(318)
41
(108)

Balance at December 31, 2020

105.6

29.9

$(1,400)

$4,059

$1,829

$(588)

$ 40

$3,941

(a) Additional Paid in Capital (APIC)
(b) Accumulated Other Comprehensive Earnings (Deficit) (“AOCI”)
(c) Noncontrolling Interest (“NCI”)
(d) Cumulative effect of accounting change relates to our adoption of ASU 2014-09 “Revenue from Contracts with

Customers (Topic 606)” and ASU 2016-16 “Intra-Entity Transfers of Assets Other Than Inventory (Topic 740).”

(e) Dividend declarations of $0.98 per share as of December 31, 2020, $0.90 per share as of December 31, 2019, and $0.85

per share as of December 31, 2018.

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

-67-

OWENS CORNING AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)

NET CASH FLOW PROVIDED BY OPERATING ACTIVITIES

Net earnings (loss)
Adjustments to reconcile net earnings (loss) to cash provided by operating

activities:

Depreciation and amortization
Deferred income taxes
Provision for pension and other employee benefits liabilities
Stock-based compensation expense
Goodwill impairment charge
Intangible assets impairment charge
Loss on extinguishment of debt
Other adjustments to reconcile net earnings (loss) to cash provided by

operating activities

Change in operating assets and liabilities:

Changes in receivables, net
Changes in inventories
Changes in accounts payable and accrued liabilities
Changes in other operating assets and liabilities

Pension fund contributions
Payments for other employee benefits liabilities
Other

Net cash flow provided by operating activities

NET CASH FLOW USED FOR INVESTING ACTIVITIES

Cash paid for property, plant and equipment
Derivative settlements
Proceeds from the sale of assets or affiliates
Investment in subsidiaries and affiliates, net of cash acquired

Net cash flow used for investing activities

NET CASH FLOW (USED FOR) PROVIDED BY FINANCING ACTIVITIES

Proceeds from senior revolving credit and receivables securitization facilities
Payments on senior revolving credit and receivables securitization facilities
Proceeds from term loan borrowing
Payments on term loan borrowing
Proceeds from long-term debt
Payments on long-term debt
Dividends paid
Net (decrease) increase in short-term debt
Purchases of treasury stock
Other

Net cash flow (used for) provided by financing activities

Effect of exchange rate changes on cash
Net increase (decrease) in cash, cash equivalents and restricted cash
Cash, cash equivalents and restricted cash at beginning of period
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF

PERIOD

DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the year for income taxes
Cash paid during the year for interest

Twelve Months Ended
December 31,
2019

2018

2020

$ (385) $

405

547

493
86
(3)
41
944
43
—

(40)

(109)
189
25
(11)
(122)
(13)
(3)
1,135

(307)
50
52

—
(205)

876
(876)
—
(200)
297
—
(104)
(19)
(318)
(14)
(358)
(27)
545
179

457
118
45
39
—
—
32

433
141
—

47
—
—
—

(28)

(49)

19
35
(11)
(10)
(46)
(15)
(3)
1,037

(447)
31
22

—
(394)

2,172
(2,248)
—
(300)
445
(484)
(95)
4
(61)
(6)
(573)
24
94
85

39
(216)
(89)
7
(40)
(19)
2
803

(537)
64
27
(1,143)
(1,589)

1,954
(1,879)
600
(100)
389
—
(92)
16
(236)
(5)
647
(29)
(168)
253

$ 724

78
$
$ 135

$
$

179

58
131

$
$

91
158

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

-68-

OWENS CORNING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of Business

Owens Corning, a Delaware corporation, is a global building and construction materials leader that manufactures
and delivers a broad range of high-quality insulation, roofing and fiberglass composite materials. The Company
operates within three segments: Composites, Insulation and Roofing. Through these lines of business, Owens
Corning manufactures and sells products worldwide. The Company maintains leading market positions in many
of its major product categories.

General

On February 4, 2021, the Board of Directors declared a quarterly dividend of $0.26 per common share payable
on April 2, 2021 to shareholders of record as of March 5, 2021.

Basis of Presentation

Unless the context requires otherwise, the terms “Owens Corning,” “Company,” “we” and “our” in these notes
refer to Owens Corning and its subsidiaries.

The accompanying Consolidated Financial Statements have been prepared in accordance with accounting
principles generally accepted in the United States.

Principles of Consolidation

The Consolidated Financial Statements of the Company include the accounts of majority-owned subsidiaries.
Intercompany accounts and transactions are eliminated.

Reclassifications

Certain reclassifications have been made to the 2019 and 2018 Consolidated Financial Statements and Notes to
the Consolidated Financial Statements to conform to the classifications used in 2020.

Use of Estimates and Assumptions

The preparation of financial statements in conformity with accounting principles generally accepted in the United
States requires management to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results could differ materially from those
estimates.

Revenue Recognition

We recognize revenue as the amount of consideration that we expect to receive in exchange for transferring
promised goods or services to customers. We do not adjust the transaction price for the effects of a significant
financing component, as the time period between control transfer of goods and services and expected payment is
one year or less. At the time of sale, we estimate provisions for different forms of variable consideration
(discounts, rebates, returns and other refund liabilities) based on historical experience, current conditions and

-69-

OWENS CORNING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

1. BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

contractual obligations, as applicable. The estimated transaction price is typically not subject to significant
reversals. We adjust these estimates when the most likely amount of consideration we expect to receive changes,
although these changes are typically minor. Sales, value-added and other similar taxes that we collect are
excluded from revenue.

Many of our customer volume commitments are short-term and our performance obligations are generally
limited to single purchase orders. Substantially all of our revenue is recognized at a point-in-time when control of
goods transfers to the customer. Control transfer typically occurs when goods are shipped from our facilities or at
other predetermined control transfer points (for instance, destination terms or consignment arrangements).

We typically do not satisfy performance obligations without obtaining an unconditional right to payment from
customers and, therefore, do not carry contract asset balances on the Consolidated Balance Sheets. Contract
liability balances are recorded separately from receivables on the Consolidated Balance Sheets in either Total
current liabilities or Other liabilities, depending on the timing of performance obligation satisfaction.

We sell separately-priced warranties that extend certain product and workmanship coverages beyond our
standard product warranty, which is described in Note 9. The up-front consideration on extended warranty
contracts is deferred and recognized as revenue over time, based on the respective coverage period, ranging from
16 to 20 years. On an annual basis, we expect to recognize approximately $4 million of revenue associated with
these extended warranty contracts. Additionally, in certain limited cases, we receive consideration before goods
or services are transferred to the customer. These customer down payments and deposits are deferred, and
typically recognized as revenue in the following quarter when we satisfy the related performance obligations.

As of December 31, 2019, our contract liability balances (for extended warranties, down payments and deposits,
collectively) totaled $60 million, of which $19 million was recognized as revenue throughout 2020. As of
December 31, 2020, our contract liability balances totaled $66 million.

As a practical expedient, we recognize incremental costs of obtaining a contract, if any, as an expense when
incurred if the amortization period of the asset would have been one year or less. We do not have any costs to
obtain or fulfill a contract that are capitalized under Accounting Standard Codification (ASC) 606.

Cost of Sales

Cost of sales includes material, labor, energy and manufacturing overhead costs, including depreciation and
amortization expense associated with the manufacture and distribution of the Company’s products. Provisions for
warranties are provided in the same period that the related sales are recorded and are based on historical
experience, current conditions and contractual obligations, as applicable. Distribution costs include inbound
freight costs; purchasing and receiving costs; inspection costs; warehousing costs; shipping and handling costs,
which include costs incurred relating to preparing, packaging, and shipping products to customers; and other
costs of the Company’s distribution network. We account for shipping and handling activities that occur after
control of the related good transfers as fulfillment activities instead of performance obligations. All shipping and
handling costs billed to the customer are included as net sales in the Consolidated Statements of Earnings (Loss).

Marketing and Advertising Expenses

Marketing and advertising expenses are included in Marketing and administrative expenses. These costs include
advertising and marketing communications, which are expensed the first time the advertisement takes place.

-70-

OWENS CORNING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

1. BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Marketing and advertising expenses for the years ended December 31, 2020, 2019 and 2018 were $98 million,
$117 million and $120 million, respectively.

Science and Technology Expenses

The Company incurs certain expenses related to science and technology. These expenses include salaries,
building and equipment costs, utilities, administrative expenses, materials and supplies associated with the
improvement and development of the Company’s products and manufacturing processes. These costs are
expensed as incurred.

Earnings per Share

Basic earnings (loss) per share are computed using the weighted-average number of common shares outstanding
during the period. Diluted earnings (loss) per share reflect the dilutive effect of common equivalent shares and
increased shares that would result from the conversion of equity securities. The effects of anti-dilution are not
presented.

Cash, Cash Equivalents and Restricted Cash

The Company defines cash and cash equivalents as cash and time deposits with maturities of three months or less
when purchased. On the Consolidated Statements of Cash Flows, the total of Cash, cash equivalents and
restricted cash includes restricted cash of $7 million as of December 31, 2020, 2019 and 2018. Restricted cash
primarily represents amounts received from a counterparty related to its performance assurance on an executory
contract, and 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

Trade accounts receivable are recorded at the invoiced amount and do not bear interest. Consistent with the
requirements of ASU 2016-13, “Financial Instruments—Credit Losses (Topic 236),” the allowance for doubtful
accounts is based on the Company’s assessment of the collectability of customer accounts. The Company
regularly reviews the allowance by considering factors such as historical experience, credit quality, the age of the
accounts receivable balances, and current economic conditions that may affect a customer’s ability to pay.
Account balances are charged off against the allowance when the Company believes it is probable the receivable
will not be recovered.

Inventory Valuation

Inventory costs include material,
including depreciation and
amortization expense associated with the manufacture and distribution of the Company’s products. Inventories
are stated at lower of cost or net realizable value and expense estimates are made for excess and obsolete
inventories. Cost is determined by the first-in, first-out (“FIFO”) method.

labor, and manufacturing overhead costs,

Investments in Affiliates

The Company accounts for investments in affiliates of 20% to 50% ownership when the Company does not have
a controlling financial interest using the equity method under which the Company’s share of earnings and losses

-71-

OWENS CORNING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

1. BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

of the affiliate is reflected in earnings, and dividends are credited against the investment in affiliate when
declared. Investments in affiliates are recorded in Other non-current assets on the Consolidated Balance Sheets
and as of December 31, 2020 and 2019, the total value of investments was $51 million.

Goodwill and Other Intangible Assets

Goodwill assets are not amortized but are tested for impairment on at least an annual basis. In the current year, as
part of the annual assessment, the Company used both a qualitative and quantitative approach to determine
whether the fair value of a reporting unit was less than its carrying amount.

include macro-economic
Events and circumstances we consider in performing the qualitative assessment
conditions, market and industry conditions, internal cost factors, and the overall financial performance of the
reporting units. As part of our quantitative testing process for goodwill, the Company estimates fair values using
a discounted cash flow approach from the perspective of a market participant. Significant assumptions used in
the discounted cash flow approach are revenue growth rates and earnings before interest and taxes (“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. The cash flow
forecasts of the reporting units are based upon management’s long-term view of our markets and are the forecasts
that are used by senior management and the Board of Directors to evaluate operating performance. The discount
rate utilized is 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. The terminal business value is determined by
applying the long-term growth rate to the latest year for which a forecast exists. As part of our goodwill
quantitative testing process, we would evaluate whether there are reasonably likely changes to management’s
estimates that would have a material impact on the results of the goodwill impairment testing.

Other indefinite-lived intangible assets are not amortized but are tested for impairment on at least an annual basis
or when determined to have a finite useful life. Substantially all of the indefinite-lived intangible assets are in
trademarks and trade names. The Company uses the royalty relief approach to determine whether it is more likely
than not that the fair value of these assets is less than its carrying amount. This review is performed annually, or
when circumstances arise which indicate there may be impairment. When applying the royalty relief approach,
the Company performs a discounted cash flow analysis based on the value derived from owning these trademarks
and trade names and being relieved from paying royalty to third parties. Significant assumptions used include the
discrete period revenue growth rates, royalty rates, discount rates, and terminal value.

The inputs for the goodwill and indefinite-lived intangible tests are considered Level 3 inputs under the fair value
hierarchy as they are the Company’s own data, and are unobservable in the marketplace. Indefinite-lived
intangible assets purchased through acquisition are generally tested qualitatively for impairment in the first year
following the acquisition before transitioning to the standard methodology described herein in subsequent years.

Properties and Depreciation

Property, plant and equipment are stated at cost and depreciated over their estimated useful lives using the
straight-line method. Property, plant and equipment accounts are relieved of the cost and related accumulated
depreciation when assets are disposed of or otherwise retired.

Precious metals used in our production tooling are included in property, plant and equipment and are depleted as
they are consumed during the production process. Depletion typically represents an annual expense of less than
3% of the outstanding value and is recorded in Cost of sales on the Consolidated Statements of Earnings (Loss).

-72-

OWENS CORNING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

1. BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

The range of useful lives for the major components of the Company’s plant and equipment is as follows:

Buildings and leasehold improvements
Machinery and equipment

Furnaces
Information systems
Equipment

15 – 40 years

4 – 15 years
5 – 10 years
5 – 20 years

Expenditures for normal maintenance and repairs are expensed as incurred.

Asset Impairments

The Company evaluates tangible and intangible long-lived assets for impairment when triggering events have
occurred. This requires significant assumptions including projected cash flows, projected income tax rate and
terminal business value. These inputs are considered Level 3 inputs under the fair value hierarchy as they are the
Company’s own data, and are unobservable in the marketplace. Changes in management intentions, market
conditions or operating performance could indicate that impairment charges might be necessary that could be
material to the Company’s Consolidated Financial Statements in any given period. Please refer to Note 5 for
additional detail on impairment charges recorded in 2020.

Income Taxes

The Company recognizes current tax liabilities and assets for the estimated taxes payable or refundable on the tax
returns for the current year. Deferred tax balances reflect the impact of temporary differences between the
carrying amount of assets and liabilities and their tax basis. Amounts are stated at enacted tax rates expected to
be in effect when taxes are actually paid or recovered. In addition, realization of certain deferred tax assets is
dependent upon our ability to generate future taxable income. The Company records a valuation allowance to
reduce its deferred tax assets to the amount that it believes is more likely than not to be realized. In addition, the
Company estimates tax reserves to cover potential taxing authority claims for income taxes and interest
attributable to audits of open tax years.

Taxes Collected from Customers and Remitted to Government Authorities and Taxes Paid to Vendors

rates on many different

Taxes are assessed by various governmental authorities at different
types of
transactions. The Company charges sales tax or value-added tax (VAT) on sales to customers where applicable,
as well as captures and claims back all available VAT that has been paid on purchases. VAT is recorded in
separate payable or receivable accounts and does not affect revenue or cost of sales line items in the income
statement. VAT receivable is recorded as a percentage of qualifying purchases at the time the vendor invoice is
processed. VAT payable is recorded as a percentage of qualifying sales at the time an Owens Corning sale to a
customer subject to VAT occurs. Amounts are paid to the taxing authority according to the method and collection
prescribed by local regulations. Where applicable, VAT payable is netted against VAT receivable. The Company
also pays sales tax to vendors who include a tax, required by government regulations, to the purchase price
charged to the Company.

Pension and Other Postretirement Benefits

Accounting for pensions and other postretirement benefits involves estimating the cost of benefits to be provided
well into the future and attributing that cost over the time period each employee works. To accomplish this,

-73-

OWENS CORNING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

1. BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

extensive use is made of assumptions about investment returns, discount rates, inflation, mortality, turnover and
medical costs.

Derivative Financial Instruments

The Company recognizes all derivative instruments as either assets or liabilities at fair value on the balance sheet.
Please refer to Note 4 for further disclosure on derivatives.

The Company performs an analysis for effectiveness of its derivatives designated as hedging instruments at the
end of each quarter based on the terms of the contracts and the underlying items being hedged. The change in the
fair value of cash flow hedges is deferred in Accumulated other comprehensive income (deficit) (“AOCI”) and is
subsequently recognized in Cost of sales (for commodity and foreign currency cash flow hedges) on the
Consolidated Statements of Earnings (Loss) in order to mirror the location of the hedged items impacting
earnings. Cash settlements for commodity and foreign currency hedges qualifying as cash flow hedges are
included in Operating activities in the Consolidated Statements of Cash Flows.

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 of the net investment in foreign subsidiaries against
fluctuations in foreign exchange rates. The changes in fair values of these derivative instruments are recognized
in Currency translation adjustment (a component of AOCI), with recognition of the excluded components
amortized to Interest expense, net on the Consolidated Statements of Earnings (Loss). Cash settlements for
investment hedges are included in Investing activities in the Consolidated
derivatives qualifying as net
Statements of Cash Flows.

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. Gains and losses resulting from the
changes in fair value of these instruments are recorded in Other expenses, net on the Consolidated Statements of
Earnings (Loss), and are substantially offset by net revaluation impacts on foreign currency denominated balance
sheet exposures (which are also recorded in Other expenses, net). Cash settlements for non-designated
derivatives are included in the Consolidated Statements of Cash Flows in the category that is consistent with the
nature of the derivative instrument, which is generally the same category as the underlying item being hedged.

Fair Value Measurements

The carrying value of cash and cash equivalents, accounts receivable and short-term debt approximate fair value
because of the short-term maturity of the instruments. The Company uses widely accepted valuation tools to
determine fair value of our derivatives, such as discounting cash flows to calculate a present value for the
derivatives. Our derivatives consist of natural gas forward swaps, cross currency swaps and foreign exchange
forward contracts, all of which are over-the-counter and not traded through an exchange. 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.

Please refer to Notes 4 and 11 for additional fair value disclosure of derivative financial instruments and long-
term debt, respectively.

-74-

OWENS CORNING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

1. BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Foreign Currency

The functional currency of the Company’s subsidiaries is generally the applicable local currency. Assets and
liabilities of foreign subsidiaries are translated into United States Dollars at the period-end rate of exchange, and
their Statements of Earnings and Statements of Cash Flows are converted on an ongoing basis at the monthly
average rate. The resulting translation adjustment is included in AOCI in the Consolidated Balance Sheets and
Consolidated Statements of Stockholders’ Equity. Transaction gains and losses that arise from exchange rate
fluctuations on transactions denominated in a currency other than the functional currency are recorded in Other
expenses, net in the Consolidated Statements of Earnings (Loss) as incurred. As discussed in the Derivative
Financial Instruments section above, the Company uses non-designated foreign currency derivative financial
instruments to mitigate this risk. The Company recorded foreign currency transactional gains (net of associated
derivative activity) of $6 million, $12 million and $7 million during the years ended December 31, 2020, 2019,
and 2018, respectively. Please refer to Note 4 for additional disclosures related to non-designated derivatives.

Accounting Pronouncements

The following table summarizes recent accounting standard updates (ASU) issued by the Financial Accounting
Standards Board (FASB) that could have an impact on the Company’s Consolidated Financial Statements:

Standard

Description

Recently adopted standards:
ASU 2018-14
“Compensation- Retirement
Benefits- Defined Benefit
Plans- General
(Subtopic 715-20)

This standard modifies the
disclosure requirements for
employers that sponsor
defined benefit pension or
other postretirement plans.

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.

Effective Date
for Company

Effect on the
Consolidated Financial
Statements

January 1, 2020 We adopted this guidance

using the retrospective
approach for the year ended
December 31, 2020. The
adoption of this guidance did
not have a material effect on
our consolidated financial
statements. Please refer to
Notes 12 and 13 for relevant
disclosure requirements.

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.

-75-

OWENS CORNING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

1. BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Standard

Description

ASU 2017-04 “Intangibles –
Goodwill and Other
(Topic 350)”

ASU 2016-02, “Leases
(Topic 842),” as amended
by ASU 2017-13, 2018-01,
2018-10, 2018-11, 2019-01,
2019-10, 2020-02 and
2020-05

Recently issued standards:
ASU 2019-12 “Income
Taxes (Topic 740)”

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.

The standard requires lessees
to recognize a right-of-use
asset and lease liability for all
leases with terms of more than
12 months. The recognition
and presentation of expenses
will depend on classification
as a finance or operating
lease. Entities may elect to
apply the provisions of the
new leasing standard on
January 1, 2019, without
adjusting the comparative
periods presented by
recognizing a cumulative-
effect adjustment to the
opening balance of retained
earnings.

This standard simplifies
accounting for income taxes
including such topics as
intraperiod tax allocations,
franchise taxes and separate
company financial statements.

Effective Date
for Company

Effect on the
Consolidated Financial
Statements

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 year ended December 31,
2020, was calculated in
accordance with this standard.
Please refer to Note 5 of the
Consolidated Financial
Statements for additional
detail on this adoption.

January 1, 2019 We adopted this standard

using the optional transition
method in the first quarter of
2019. Please refer to Note 7 of
the Consolidated Financial
Statements for ongoing
disclosure requirements.

January 1, 2021 We do not expect the adoption

of this standard to have a
material effect on our
consolidated financial
statements.

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OWENS CORNING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

2. SEGMENT INFORMATION

The Company has three reportable segments: Composites, Insulation and Roofing. Accounting policies for the
segments are the same as those for the Company. The Company’s three 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 tables show a disaggregation of 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.

Reportable Segments

Composites

Insulation Roofing Eliminations Consolidated

Twelve Months Ended December 31, 2020

Disaggregation Categories
U.S. residential
U.S. commercial and industrial

Total United States

Europe
Asia-Pacific
Rest of world

NET SALES

$ 272
538

810
524
495
131

$ 949
603

1,552
609
158
288

$2,450
133

2,583
14
11
87

$(204)
—

(204)
(1)
—
(2)

$3,467
1,274

4,741
1,146
664
504

$1,960

$2,607

$2,695

$(207)

$7,055

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OWENS CORNING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

2. SEGMENT INFORMATION (continued)

Reportable Segments

Composites

Insulation Roofing Eliminations Consolidated

Twelve Months Ended December 31, 2019

Disaggregation Categories
U.S. residential
U.S. commercial and industrial

Total United States

Europe
Asia-Pacific
Rest of world

NET SALES

$ 269
614

883
572
475
129

$ 927
643

1,570
625
176
297

$2,375
143

2,518
13
13
90

$(195)
—

(195)
(1)
—
(5)

$3,376
1,400

4,776
1,209
664
511

$2,059

$2,668

$2,634

$(201)

$7,160

Reportable Segments

Composites

Insulation Roofing Eliminations Consolidated

Twelve Months Ended December 31, 2018

Disaggregation Categories
U.S. residential
U.S. commercial and industrial

Total United States

Europe
Asia-Pacific
Rest of world

NET SALES

$ 263
598

861
590
464
126

$ 990
625

1,615
605
178
322

$2,199
161

2,360
14
15
103

$(177)
(12)

(189)
—
(1)
(6)

$3,275
1,372

4,647
1,209
656
545

$2,041

$2,720

$2,492

$(196)

$7,057

Our contracts with customers are broadly similar in nature throughout our reportable segments, but the amount,
timing and uncertainty of revenue and cash flows may vary in each reportable segment due to geographic and
end-market economic factors.

In the United States, sales are primarily related to the residential housing market and commercial and industrial
applications. Residential market demand is driven by housing starts and repair and remodeling activity
(influenced by existing home sales, seasonal home improvement and damage from major storms). Significant
portions of our residential products across our three reportable segments are used interchangeably in both new
construction and repair and remodeling, and our customers typically distribute (or use) the products for both
applications. U.S. commercial and industrial revenues are largely driven by U.S. industrial production growth,
commercial construction activity and overall economic conditions in the U.S.

Outside of the United States (Europe, Asia-Pacific and Rest of world), sales are primarily related to commercial
and industrial applications and, to a lesser extent, residential applications in certain countries. Throughout the
international regions, demand is primarily driven by industrial production growth, commercial construction
activity and overall economic conditions in each respective geographical region.

EARNINGS BEFORE INTEREST AND TAXES

Earnings (loss) before interest and taxes (EBIT) by segment consists 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

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OWENS CORNING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

2. SEGMENT INFORMATION (continued)

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.

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

Twelve Months Ended
December 31,
2019

2020

2018

Reportable Segments
Composites
Insulation
Roofing

Total reportable segments

Total Corporate, other and eliminations

EBIT

165
250
591

$ 247
230
455

$ 251
290
434

1,006

932

975

(41)
26
(944)
(43)
—
—
—
—
(128)

(22)
(28)
—
—
—
—
—
—
— (16)
(2)
—
—
(43)
—
(4)
(114)
(104)

(1,130)

(179)

(154)

$ (124) $ 753

$ 821

TOTAL ASSETS AND PROPERTY, PLANT AND EQUIPMENT

The following table summarizes total assets by segment and property, plant and equipment by geographic region
(in millions):

TOTAL ASSETS

Reportable Segments
Composites
Insulation
Roofing

Total reportable segments

Cash and cash equivalents
Noncurrent deferred income taxes
Investments in affiliates
Assets held for sale
Corporate property, plant and equipment, other assets and eliminations

CONSOLIDATED TOTAL ASSETS

December 31,
2019
2020

$2,426
3,937
1,814

$ 2,470
4,975
1,784

8,177
717
28
51
5
503

9,229
172
46
51
1
507

$9,481

$10,006

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OWENS CORNING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

2. SEGMENT INFORMATION (continued)

PROPERTY, PLANT AND EQUIPMENT BY GEOGRAPHIC REGION

United States
Europe
Asia-Pacific
Rest of world

TOTAL PROPERTY, PLANT AND EQUIPMENT

PROVISION FOR DEPRECIATION AND AMORTIZATION

December 31,
2019
2020

$2,169
777
594
269

$2,204
762
601
288

$3,809

$3,855

The following table summarizes the provision for depreciation and amortization by segment (in millions):

Twelve Months Ended
December 31,
2019

2020

2018

Reportable Segments
Composites
Insulation
Roofing

Total reportable segments

General corporate depreciation and amortization (a)

CONSOLIDATED PROVISION FOR DEPRECIATION AND

AMORTIZATION

$159
201
59

419
74

$154
194
54

402
55

$147
186
51

384
49

$493

$457

$433

(a)

In 2020, 2019 and 2018, General corporate depreciation and amortization expense included $20 million,
$9 million and $10 million, respectively, of accelerated depreciation related to restructuring actions further
explained in Note 10 to the Consolidated Financial Statements.

ADDITIONS TO PROPERTY, PLANT AND EQUIPMENT

The following table summarizes additions to property, plant and equipment on an accrual basis by segment (in
millions):

Twelve Months Ended
December 31,
2019

2020

2018

Reportable Segments
Composites
Insulation
Roofing

Total reportable segments

General corporate additions

$105
132
46

283
37

$123
210
56

389
62

$154
240
91

485
57

CONSOLIDATED ADDITIONS TO PROPERTY, PLANT AND EQUIPMENT

$320

$451

$542

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OWENS CORNING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

INVENTORIES

Inventories consist of the following (in millions):

Finished goods
Materials and supplies

Total inventories

December 31,
2019
2020

$532
323

$855

$ 715
318

$1,033

4. 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 December 31, 2020 and 2019, 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.

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OWENS CORNING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

4. DERIVATIVE FINANCIAL INSTRUMENTS (continued)

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

Location

December 31,
2020

December 31,
2019

Derivative assets designated as hedging

instruments:

Net investment hedges:

Cross currency swaps
Cross currency swaps

Cash flow hedges:

Natural gas forward swaps
Treasury interest rate lock

Derivative liabilities designated as hedging

instruments:

Net investment hedges:

Cross-currency swaps

Cash flow hedges:

Other current assets
Other non-current assets

$
$ —

$
$

2
4

Other liabilities

$ 11

Natural gas forward swaps

Total current liabilities

$ —

Derivative assets not designated as hedging

instruments:

Foreign exchange forward contracts

Other current assets

Derivative liabilities not designated as hedging

instruments:

Foreign exchange forward contracts

Total current liabilities

$ 45

Consolidated Statements of Earnings (Loss) Activity

$ 12
1
$

$ —
$ —

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

Twelve Months Ended
December 31,
2019

2020

2018

Location

Derivative activity designated as hedging instruments:
Natural gas cash flow hedges:

Amount of loss/(gain) reclassified from AOCI (as defined

below) into earnings (a)

Cross-currency swap net investment hedges:

Amount of gain recognized in earnings on derivative amounts

excluded from effectiveness testing

Derivative activity not designated as hedging instruments:
Foreign currency:

Amount of (gain)/loss recognized in earnings (b)

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

Cost of sales

$ 5

$ 4

$ (2)

Interest expense,
net

$ (8)

$(13)

$(12)

Other expenses,
net

$41

$(35)

$(55)

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OWENS CORNING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

4. DERIVATIVE FINANCIAL INSTRUMENTS (continued)

(b)

(Gains)/losses 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 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 (Gain) Loss Recognized in
Comprehensive Earnings (Loss)
Twelve
Months Ended December 31,

Derivative Financial Instrument

2020

2019

Cross-currency swaps
Natural gas forward swaps
Treasury interest rate lock

$
$
$

(15)
(5)
(4)

$
$
$

(18)
2

—

Hedging Type

Net investment hedge
Cash flow hedge
Cash flow hedge

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 portions of the net investment in foreign subsidiaries against
fluctuations in foreign exchange rates. As of December 31, 2020, 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.

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 December 31, 2020,
the notional amounts of these natural gas forward swaps was 2 million MMBTu (or MMBTu equivalent based on
U.S. and European indices), which is in line with the notional amounts at December 31, 2019.

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 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.

Other Derivatives

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OWENS CORNING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

4. DERIVATIVE FINANCIAL INSTRUMENTS (continued)

Company had notional amounts of $729 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
$198 million for non-designated derivative financial
instruments related to foreign currency exposures in
European Euro primarily related to the Polish Zloty and Russian Ruble.

5. GOODWILL AND OTHER INTANGIBLE ASSETS

The Company tests goodwill and indefinite-lived intangible assets for impairment as of October 1st 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 amount.

Goodwill

First Quarter of 2020 Impairment Charge

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
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 our prior year 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%.
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.

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OWENS CORNING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

5. GOODWILL AND OTHER INTANGIBLE ASSETS (continued)

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 approach are 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. The
terminal business value is determined by applying the long-term growth rate to the latest year for which a
forecast exists.

Annual 2020 Goodwill Impairment Assessment

The annual tests performed in the fourth quarter of 2020 resulted in no impairment of goodwill.

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

Balance at December 31, 2019
Impairment charge
Divestiture
Foreign currency translation

Balance at December 31, 2020

Other Intangible Assets

Composites

Insulation Roofing Total

$ 57
—
—
—

$ 57

$1,479
(944)
(4)
1

$ 532

$396
—
—

$1,932
(944)
(4)
5

$400

$ 989

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 of 2020 Indefinite-lived Intangibles Impairment Charge

In the first quarter of 2020, we performed an interim impairment test of one indefinite-lived trademark and one
trade name 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 one trademark and one trade name in the Insulation segment.
These charges were recorded in Other 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 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 at a rate based on a market
participant discount rate.

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

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OWENS CORNING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

5. GOODWILL AND OTHER INTANGIBLE ASSETS (continued)

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.

The assets affected by the impairment charge had an aggregate carrying value of $264 million as of
December 31, 2020.

Annual 2020 Indefinite-lived Intangibles Impairment Assessment

The annual tests performed in 2020 resulted in no impairment of indefinite-lived intangible assets.

Testing did indicate that the fair value of a trade name used by our European building and technical insulation
business within our Insulation segment exceeded its carrying value by approximately 7%. 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 for this asset. The affected asset had a carrying value of $173 million as of December 31,
2020.

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

December 31, 2020

December 31, 2019

Gross
Carrying
Amount

Accumulated
Amortization

Net
Carrying
Amount

Gross
Carrying
Amount

Accumulated
Amortization

Net
Carrying
Amount

Trademarks and trade names
Customer relationships
Technology
Other

Total other intangible assets

$1,109
570
327
36

$2,042

$ —
(200)
(172)
(3)

$(375)

$1,109
370
155
33

$1,667

$1,139
550
319
67

$2,075

$ —
(167)
(152)
(35)

$(354)

$1,139
383
167
32

$1,721

Amortization expense for intangible assets for the years ended December 31, 2020, 2019, and 2018 was
$48 million, $49 million, and $49 million, respectively. The estimated amortization expense for intangible assets
for the next five years is as follows (in millions):

Period

2021
2022
2023
2024
2025

Amortization

$49
$47
$43
$40
$40

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OWENS CORNING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

6. PROPERTY, PLANT AND EQUIPMENT

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

Land
Buildings and leasehold improvements
Machinery and equipment
Construction in progress

Accumulated depreciation

Property, plant and equipment, net

December 31,
2019
2020

222
1,241
5,155
292

221
1,186
4,978
310

6,910
(3,101)

6,695
(2,840)

$ 3,809

$ 3,855

Machinery and equipment includes certain precious metals used in our production tooling, which comprise
approximately 10% of total machinery and equipment as of both December 31, 2020 and December 31, 2019.

For
the years ended December 31, 2020, 2019 and 2018, depreciation expense was $429 million,
$403 million and $384 million, respectively, which includes depletion expense related to precious metals used in
our production tooling. In 2020, 2019 and 2018, depreciation expense included $20 million, $9 million and
$10 million, respectively, of accelerated depreciation related to restructuring actions further explained in Note 10
to the Consolidated Financial Statements.

7. LEASES

The Company leases certain equipment and facilities under both operating and finance leases expiring on various
dates through 2036. The nature of these leases generally fall into the following five categories: real estate,
material handling, fleet vehicles, office equipment and energy equipment.

For leases with initial terms greater than 12 months, we consider these our right-of-use assets and record the
related asset and obligation at the present value of lease payments over the term. For leases with initial terms
equal to or less than 12 months, we do not consider them as right-of-use assets and instead consider them short-
term lease costs that are recognized on a straight-line basis over the lease term.

Many of our leases include escalation clauses, renewal options and/or termination options that are factored into
our determination of lease payments when reasonably certain. These options to extend or terminate a lease are at
our discretion. We have elected to take the practical expedient and not separate lease and non-lease components
of contracts. We estimate our incremental borrowing rate to discount the lease payments based on information
available at lease commencement. Our lease agreements do not contain any material residual value guarantees.

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OWENS CORNING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

7. LEASES (continued)

Balance Sheet Classification

The table below presents the lease-related assets and liabilities recorded on the balance sheet (in millions):

Leases

Assets
Operating lease assets
Finance lease assets

Total lease assets

Liabilities
Current

Operating
Finance
Non-Current

Operating
Finance

Total lease liabilities

Lease Costs

Classification on Balance Sheet

Operating lease right-of-use assets
Other non-current assets

Total current liabilities
Total current liabilities

Non-current operating lease liabilities
Long-term debt, net of current portion

December 31,
2019
2020

$154
73

$227

$203
21

$224

$ 55
19

$ 66
7

99
59

138
19

$232

$230

The table below presents lease-related costs (in millions):

Operating lease cost
Finance lease cost
Amortization
Interest

Short-term lease cost
Variable lease cost

Twelve Months
Ended December 31,

2020

$71

$16
$ 3
$11
$ 5

2019

$81

$ 5
$ 2
$10
$ 6

For the year ended December 31, 2018, total rent expense accounted for under ASC 840 was $106 million.

Cash paid for operating leases approximated operating lease expense for both years ended December 31, 2020
and 2019. Cash paid for finance leases included $16 million for financing activities and $3 million for operating
activities for the year ended December 31, 2020. Cash paid for finance leases included $5 million for financing
activities and $2 million for operating activities for the year ended December 31, 2019.

We added $36 million and $47 million of operating lease liabilities as a result of obtaining operating lease
right-of-use assets in the years ended December 31, 2020 and 2019, respectively. We added $69 million and
$12 million of finance lease liabilities as a result of obtaining finance lease right-of-use assets in the years ended
December 31, 2020 and 2019, respectively.

-88-

OWENS CORNING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

7. LEASES (continued)

Other Information

The tables below present supplemental information related to leases:

Weighted-average remaining lease term (years)

Operating leases
Finance leases

Weighted-average discount rate

Operating leases
Finance leases

Maturities of Lease Liabilities

December 31,
2019
2020

3.8
6.8

4.0
3.9

December 31,
2019
2020

3.29% 3.30%
4.04% 6.29%

The table below reconciles the undiscounted cash flows for each of the first five years and the total of the
remaining years to the finance lease liabilities and operating lease liabilities recorded on the balance sheet as of
December 31, 2020 (in millions):

Period

2021
2022
2023
2024
2025
2026 and beyond

Total minimum lease payments
Less: implied interest

Present value of future minimum lease payments
Less: current lease obligations

Long-term lease obligations

8. TOTAL CURRENT LIABILITIES

Operating Leases Finance Leases

$ 59
45
28
15
8
13

168
14

154
55

$ 99

$22
19
14
8
5
21

89
11

78
19

$59

Current liabilities consist of the following current portions of these liabilities (in millions):

Accounts payable
Payroll, vacation pay and incentive compensation
Current operating lease liabilities
Other

Total

December 31,
2019
2020

$ 875
197
55
313

$ 815
172
66
276

$1,440

$1,329

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OWENS CORNING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

9. 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 for information about our separately-
priced extended warranty contracts. A reconciliation of the warranty liability is as follows (in millions):

Beginning balance

Amounts accrued for current year
Settlements of warranty claims

Ending balance

December 31,
2019
2020

$ 64
21
(13)

$ 60
21
(17)

$ 72

$ 64

10. 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 Insulation Restructuring Actions

During the 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 2020, the Company recorded
$23 million of charges, inclusive of $14 million of accelerated depreciation, $6 million of severance and
$3 million of other exit costs. The Company expects to recognize approximately $5 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, closure of manufacturing lines and other asset write-offs. As a result of
these actions, the Company recorded $13 million of charges during 2020, inclusive of $6 million of severance,
$5 million of accelerated depreciation and $2 million of other exit costs. The Company does not expect to
recognize significant incremental costs related to these actions.

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 2020, the Company recorded
$5 million of charges. The Company does not expect to recognize significant incremental 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.

-90-

OWENS CORNING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

10. 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 in our Corporate, Other and Eliminations category (in
millions):

Type of Cost

Accelerated depreciation
Other exit costs
Severance
Other exit costs/(gains) (a)
Other exit costs

Total restructuring costs

Location

Cost of sales
Cost of sales
Other expenses, net
Other expenses, net
Non-operating expense (income)

Twelve Months Ended
December 31,
2019

2020

2018

$ 20
6
13
2

—

$ 41

$ 9
6
13
(1)
1

$28

$ 10
7
4
1

—

$ 22

(a) Other exit costs/(gains) in 2019 includes a $6 million gain related to the sale of an idle residential fiberglass

insulation facility in Canada resulting from restructuring actions taken in 2016.

Summary of Unpaid Liabilities

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

2020
Insulation
Restructuring
Actions

2020
Composites
Restructuring
Actions

Insulation
Network
Optimization
Restructuring

Acquisition-
Related
Restructuring

Balance at December 31, 2019
Restructuring costs
Payments
Accelerated depreciation and other

non-cash items

Balance at December 31, 2020

Cumulative charges incurred

$—

23
(4)

(17)

$ 23

$—

13
(6)

(5)

$ 13

5
5
(8)

(2)

$—

$ 29

$ 11
—

(6)

$ 29

As of December 31, 2020, the remaining liability balance is comprised of $13 million of severance, inclusive of
$3 million of non-current severance and $10 million of severance the Company expects to pay over the next
twelve months.

-91-

OWENS CORNING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

11. DEBT

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

4.200% senior notes, net of discount and financing fees, due 2022
4.200% senior notes, net of discount and financing fees, due 2024
3.400% senior notes, net of discount and financing fees, due 2026
3.950% senior notes, net of discount and financing fees, due 2029
3.875% senior notes, net of discount and financing fees, due 2030
7.000% senior notes, net of discount and financing fees, due 2036
4.300% senior notes, net of discount and financing fees, due 2047
4.400% senior notes, net of discount and financing fees, due 2048
Various finance leases, due through 2036 (a)
Term loan borrowing, maturing in 2021 (a)
Other

Total long-term debt
Less – current portion (a)

December 31,
2020

December 31,
2019

Carrying
Value

Fair
Value

Carrying
Value

Fair
Value

$ 184
396
397
445
297
368
588
390
78
—

3,145
19

106% $ 183
395
111%
396
111%
445
115%
—
115%
367
142%
588
120%
390
121%
26
100%
200
— %
3
n/a

n/a
100%

2,993
7

104%
106%
101%
104%
— %
126%
95%
97%
100%
100%
n/a

n/a
100%

Long-term debt, net of current portion

$3,126

n/a

$2,986

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 $450 million of 2029 senior notes on August 12, 2019 subject to $5 million of discounts
and issuance costs. 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

-92-

OWENS CORNING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

11. DEBT (continued)

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.

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 redeem $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.

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 refinance $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 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.

In May 2018, the Company entered into a new agreement covering our Senior Revolving Credit Facility. This
new agreement, among other things, removed all subsidiaries of the Company as guarantors under our Senior
Revolving Credit Facility, unless certain conditions precedent are met that do not exist at this time, and had the
effect of removing the guarantees of such subsidiaries under our Senior Notes. In addition, we elected to amend
our Registration Statement on Form S-3 to eliminate the guarantees of our Senior Notes as registered securities.

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 December 31,
2020.

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.

-93-

OWENS CORNING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

11. DEBT (continued)

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 December 31,
2020. Please refer to the Credit Facility Utilization paragraph below for liquidity information as of December 31,
2020.

Term Loan Borrowing

The Company obtained a term loan commitment on October 27, 2017 for $600 million (the “Term Loan”). The
Company entered into 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.

Receivables Securitization Facility

Included in long-term debt on the Consolidated Balance Sheets are borrowings outstanding under a Receivables
Purchase Agreement (“RPA”) that are 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. In April 2019, the securitization facility (the “Receivables Securitization Facility”)
was amended to extend the maturity date to April 2022.

The Receivables Securitization 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
securitization facility. The Company was in compliance with these covenants as of December 31, 2020. Please
refer to the Credit Facility Utilization section below for liquidity information as of December 31, 2020.

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 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.

-94-

OWENS CORNING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

11. DEBT (continued)

Credit Facility Utilization

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

Facility size
Collateral capacity limitation on availability
Outstanding borrowings
Outstanding letters of credit

Availability on facility

Debt Maturities

Balance at December 31, 2020
Receivables
Securitization
Facility

Senior
Revolving
Credit Facility

$800
n/a
—

$796

$280
—
—

$279

The aggregate maturities for all outstanding long-term debt borrowings for each of the five years following
December 31, 2020 and thereafter are presented in the table below (in millions). The maturities below are the
aggregate par amounts of the outstanding senior notes and finance lease liabilities:

Period

2021
2022
2023
2024
2025
2026 and beyond

Total

Maturities

19
201
13
407
4
2,544

$3,188

Short-Term Debt

At December 31, 2020 and December 31, 2019, short-term borrowings were $1 million and $20 million,
respectively. The short-term borrowings for both periods 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. The weighted average interest rate on all
short-term borrowings was approximately 1.1% and 7.8% for December 31, 2020 and December 31, 2019,
respectively.

12. PENSION PLANS

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

-95-

OWENS CORNING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

12. PENSION PLANS (continued)

funding requirements. In our U.S. plan, the unrecognized cost of any retroactive amendments and actuarial gains
and losses are amortized over the average remaining life expectancy of inactive participants. In all of 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.

During 2019, the Company completed balance sheet risk mitigation actions related to certain U.S. and non-U.S.
pension plans. These actions included the purchase of non-participating annuity contracts from insurance
companies and the payment of lump sums to retirees, which resulted in the settlement of liabilities to affected
participants. As a result of these transactions, the Company recognized pension settlement losses of $43 million
during the twelve months ended December 31, 2019. These losses are included in Non-operating expense
(income) on the Consolidated Statements of Earnings (Loss) in our Corporate, Other and Eliminations category.
These transactions did not have a material effect on the plans’ funded status.

The following tables provide a reconciliation of the change in the projected benefit obligation, the change in plan
assets and the net amount recognized in the Consolidated Balance Sheets (in millions):

December 31, 2020
U.S. Non-U.S. Total

December 31, 2019
U.S. Non-U.S. Total

Change in Projected Benefit Obligation
Benefit obligation at beginning of period
Service cost
Interest cost
Actuarial loss
Currency loss
Benefits paid
Plan amendments
Settlements/curtailments
Other

Benefit obligation at end of period

Change in Plan Assets
Fair value of assets at beginning of period
Actual return on plan assets
Currency gain
Company contributions
Benefits paid
Settlements/curtailments
Other

Fair value of assets at end of period

Funded status

$866
5
28
83

—
(71)
—

(1)

—

$910

$475
5
10
28
18
(16)
3
(4)
4

$523

$ 891
5
34
85

$1,341
10
38
111
18 —
(87)

(45)

3 —
(5)
4 —

(104)

$1,433

$ 866

$427
5
13
42
13
(18)
—

(7)

—

$475

$1,318
10
47
127
13
(63)
—
(111)
—

$1,341

December 31, 2020
U.S. Non-U.S. Total

December 31, 2019
U.S. Non-U.S. Total

$733
80
—
101
(71)
(1)

—

$842

$386
37
14
21
(16)
(4)
3

$441

$ 727
$1,119
117
130
14 —
25
122
(45)
(87)
(5)
(104)
3 —

$1,283

$ 733

$328
50
11
21
(18)
(5)
(1)

$386

$1,055
180
11
46
(63)
(109)
(1)

$1,119

$ (68)

$ (82)

$ (150) $(133)

$ (89)

$ (222)

-96-

OWENS CORNING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

12. PENSION PLANS (continued)

Amounts Recognized in the Consolidated Balance

Sheets

Prepaid pension cost
Accrued pension cost – current
Accrued pension cost – non-current

Net amount recognized

Amounts Recorded in AOCI
Net actuarial loss

December 31, 2020

December 31, 2019

U.S. Non-U.S. Total U.S. Non-U.S. Total

$ —
—
(68)

$ 12
(2)
(92)

$ 12

$ —
(2) —

(160)

(133)

$ (68)

$ (82)

$(150) $(133)

$ 11
(2)
(98)

$(89)

$ 11
(2)
(231)

$(222)

$(381)

$(109)

$(490) $(345)

$(97)

$(442)

For the year ended December 31, 2020, the actuarial loss of $111 million was largely the result of decreases in
discount rates across all plans. In the U.S. plan, the actuarial loss was primarily driven by the decrease in the
discount rate. Additionally, updated mortality assumptions and a decrease in the cash balance interest crediting
rate negatively impacted the projected benefit obligation (PBO). In the Non-U.S. plans, the actuarial loss was
driven by a decrease in the discount rate of the U.K. and other plans, partially offset by inflation.

For the year ended December 31, 2019, the actuarial loss of $127 million was largely the result of decreases in
discount rates across all plans. In the U.S. plans, the actuarial loss was primarily driven by a decrease in the
discount rate. In the Non-U.S. plans, the actuarial loss was driven by a decrease in the discount rate of the U.K.
and other plans, partially offset by inflation.

The following table presents information about the projected benefit obligation, accumulated benefit obligation
(ABO) and plan assets of the Company’s pension plans (in millions):

Plans with PBO in excess of fair value of plan
assets:
Projected benefit obligation
Fair value of plan assets

Plans with ABO in excess of fair value of plan
assets:
Accumulated benefit obligation
Fair value of plan assets

December 31, 2020

December 31, 2019

U.S. Non-U.S. Total U.S. Non-U.S. Total

$910
$842

$364
$270

$1,274
$1,112

$866
$733

$329
$229

$1,195
$ 962

$910
$842

$330
$249

$1,240
$1,091

$866
$733

$295
$205

$1,161
$ 938

-97-

OWENS CORNING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

12. PENSION PLANS (continued)

Weighted-Average Assumptions Used to Determine Benefit Obligation

The following table presents weighted average assumptions used to determine benefit obligations at
measurement dates:

the

United States Plans
Discount rate
Expected return on plan assets
Cash balance interest crediting rate

Non-United States Plans
Discount rate
Expected return on plan assets
Rate of compensation increase

December 31,
2019
2020

2.50% 3.30%
4.75% 6.50%
0.79% 2.66%

1.73% 2.24%
4.08% 4.66%
3.00% 3.99%

Components of Net Periodic Pension Cost (Income)

The following table presents the components of net periodic pension cost (income) (in millions):

Twelve Months Ended
December 31,
2019

2020

2018

Service cost
Interest cost
Expected return on plan assets
Amortization of actuarial loss
Settlement/curtailment

Net periodic pension cost

$ 10
38
(62)
15
1

$ 2

$ 10
47
(68)
15
44

$ 12
47
(73)
15
—

$ 48

-98-

OWENS CORNING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

12. PENSION PLANS (continued)

Weighted-Average Assumptions Used to Determine Net Periodic Pension Cost

The following table presents weighted-average assumptions used to determine net periodic pension costs for the
periods noted:

Twelve Months Ended
December 31,
2019

2020

2018

United States Plans
Discount rate
Expected return on plan assets
Cash balance interest crediting rate
Rate of compensation increase

Non-United States Plans
Discount rate
Expected return on plan assets
Rate of compensation increase

3.30% 4.25% 3.55%
6.50% 6.75% 6.75%
2.66% 3.77% 3.10%
N/A(a) N/A(a) N/A(a)

2.24% 3.04% 2.88%
4.66% 4.91% 5.22%
3.99% 4.14% 4.29%

(a) Not applicable due to changes in plan made on August 1, 2009 that were effective beginning January 1,

2010.

The expected return on plan assets assumption is derived by taking into consideration the target plan asset
allocation, historical rates of return on those assets, projected future asset class returns and net outperformance of
the market by active investment managers. An asset return model is used to develop an expected range of returns
on plan investments over a 20 year period, with the expected rate of return selected from a best estimate range
within the total range of projected results. The result is then rounded down to the nearest 25 basis points.

Items Measured at Fair Value

The Company classifies and discloses pension plan assets in one of the following three categories:

Level 1: Quoted market prices in active markets for identical assets.

Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data.

Level 3: Unobservable inputs that are not corroborated by market data.

Plan Assets

The tables in this section show pension plan asset fair values and fair value leveling information. The assets are
categorized into one of the three levels of the fair value hierarchy or are not subject to leveling, in the case of
investments that are valued using the net asset value per share (or its equivalent) practical expedient (“NAV”).

-99-

OWENS CORNING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

12. PENSION PLANS (continued)

The following table summarizes the fair values and applicable fair value hierarchy levels of United States
pension plan assets (in millions):

Asset Category
Equities:

Domestic

Fixed income and cash equivalents:

Corporate bonds
Government debt

Total United States plan assets subject to leveling

Plan assets measured at NAV:

Equities
Fixed income and cash equivalents
Absolute return strategies

Total United States plan assets

Asset Category
Equities:

Domestic
International

Fixed income and cash equivalents:

Corporate bonds
Government debt
Real estate investment trusts

Total United States plan assets subject to leveling

$162

$299

$—

Plan assets measured at NAV:

Equities
Real assets
Fixed income and cash equivalents
Absolute return strategies

Total United States plan assets

December 31, 2020
Level 1 Level 2 Level 3 Total

$ 53

$—

31
—

288
68

$ 84

$356

$—

—
—

$—

$ 53

319
68

440

193
157
52

$842

December 31, 2019
Level 1 Level 2 Level 3 Total

$ 57
55

28
—
22

$—
—

214
85
—

$—
—

—
—
—

$ 57
55

242
85
22

461

130
62
33
47

$733

-100-

OWENS CORNING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

12. PENSION PLANS (continued)

The following table summarizes the fair values and applicable fair value hierarchy levels of non-United States
pension plan assets (in millions):

Asset Category
Equities
Cash and cash equivalents
Fixed income

December 31, 2020
Level 1 Level 2 Level 3 Total
2
81
9

$— $
—
—

$—
—
—

$ 2
81
9

Total non-United States plan assets subject to leveling

$—

$92

$—

Plan assets measured at NAV:

Equities
Fixed income and cash equivalents
Absolute return strategies and other

Total non-United States plan assets

Asset Category
Equities
Fixed income and cash equivalents:
Cash and cash equivalents
Corporate bonds

Total non-United States plan assets subject to leveling

Plan assets measured at NAV:

Equities
Fixed income and cash equivalents
Absolute return strategies

Total non-United States plan assets

Investment Strategy

86
156
107

$441

December 31, 2019
Level 1 Level 2 Level 3 Total
4

$— $

$—

$ 4

—
—

$—

65
13

$82

—
—

$—

65
13

71
123
110

$386

The current targeted asset allocation for the United States pension plan is to have 28.5% of assets invested in
equities, 65.5% in intermediate and long-term fixed income securities and 6% in absolute return
strategies. Assets are rebalanced quarterly to conform to policy tolerances. The Company actively evaluates the
reasonableness of its asset mix given changes in the projected benefit obligation and market dynamics. Our
investment policy and asset mix for the non-United States pension plans varies by location and is based on
projected benefit obligation and market dynamics.

-101-

OWENS CORNING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

12. PENSION PLANS (continued)

Estimated Future Benefit Payments

The following table shows estimated future benefit payments from the Company’s pension plans (in millions):

Year

2021
2022
2023
2024
2025
2026-2030

Contributions

Estimated
Benefit
Payments

$ 82
$ 78
$ 78
$ 79
$ 76
$376

The Company does not expect to contribute to the U.S. pension plan during 2021. The Company expects to
contribute $25 million in cash to non-U.S. plans during 2021. Actual contributions to the plans may change as a
result of a variety of factors, including changes in laws that impact funding requirements.

Defined Contribution Plans

The Company sponsors two defined contribution plans which are available to substantially all United States
employees. The Company matches a percentage of employee contributions up to a maximum level and
contributes up to 2% of an employee’s wages regardless of employee contributions. The Company recognized
expense of $48 million during the years ended December 31, 2020, 2019 and 2018, related to these plans.

13. POSTEMPLOYMENT AND POSTRETIREMENT BENEFITS OTHER THAN PENSIONS

The Company maintains health care 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.

Salaried employees hired on or before December 31, 2005 become eligible to participate in the United States
health care plans upon retirement if they have accumulated 10 years of service after age 45, 48 or 50, depending
on the category of employee. For employees hired after December 31, 2005, the Company does not provide
subsidized retiree health care. Some of the plans are contributory, with some retiree contributions adjusted
annually. The Company has reserved the right to change or eliminate these benefit plans subject to the terms of
collective bargaining agreements.

-102-

OWENS CORNING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

13. POSTEMPLOYMENT AND POSTRETIREMENT BENEFITS OTHER THAN PENSIONS (continued)

The following table provides a reconciliation of the change in the projected benefit obligation and the net amount
recognized in the Consolidated Balance Sheets for the years ended December 31, 2020 and 2019 (in millions):

Change in Projected Benefit Obligation
Benefit obligation at beginning of period
Service cost
Interest cost
Actuarial loss/(gain)
Currency gain
Plan amendments
Benefits paid

Benefit obligation at end of period

Funded status

Amounts Recognized in the Consolidated Balance

Sheets

Accrued benefit obligation – current
Accrued benefit obligation – non-current

Net amount recognized

Amounts Recorded in AOCI
Net actuarial gain
Net prior service credit

Net amount recognized

December 31, 2020

December 31, 2019

U.S. Non-U.S. Total U.S. Non-U.S. Total

$ 169
1
5
—
—
—
(12)

$ 163

$ 14
—
1
1
(1)
—
(1)

$ 14

$ 183
1
6
1
(1)
—
(13)

$ 183
1
7
(7)
—
(1)
(14)

$ 177

$ 169

$ 12
—
1
2
—
—
(1)

$ 14

$ 195
1
8
(5)
—
(1)
(15)

$ 183

$(163)

$(14)

$(177) $(169)

$(14)

$(183)

$ (13)
(150)

$(163)

$ 41
2

$ 43

$ (1)
(13)

$(14)

$ 2
—

$ 2

$ (14) $ (15)
(154)
(163)

$(177) $(169)

$ 43
2

$ 48
6

$ 45

$ 54

$ (1)
(13)

$(14)

$ 3
—

$ 3

$ (16)
$(167)

$(183)

$ 51
6

$ 57

The following table presents information about the accumulated postretirement benefit obligation (APBO) and
plan assets of the Company’s postretirement benefit plans (in millions):

Plans with APBO in excess of fair value of plan assets:
Accumulated postretirement benefit obligation
Fair value of plan assets

$163
$ —

$14
$—

$177
$169
$ — $ —

$14
$—

$183
$ —

December 31, 2020

December 31, 2019

U.S. Non-U.S. Total U.S. Non-U.S. Total

Weighted-Average Assumptions Used to Determine Benefit Obligations

The following table presents the discount rates used to determine the benefit obligations:

United States plans
Non-United States plans

December 31,
2019
2020

2.25% 3.10%
3.04% 3.84%

-103-

OWENS CORNING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

13. POSTEMPLOYMENT AND POSTRETIREMENT BENEFITS OTHER THAN PENSIONS (continued)

Components of Net Periodic Postretirement Benefit Cost (Income)

The following table presents the components of net periodic postretirement benefit cost (income) (in millions):

Service cost
Interest cost
Amortization of prior service credit
Amortization of actuarial gain

Net periodic postretirement benefit income

Twelve Months
Ended December 31,
2018
2019
2020

$ 1
6
(4)
(8)

$(5)

$ 1
8
(4)
(8)

$(3)

$ 1
8
(4)
(6)

$(1)

Weighted-Average Assumptions Used to Determine Net Periodic Postretirement Benefit Cost

The following table presents the discount rates used to determine net periodic postretirement benefit cost:

United States plans
Non-United States plans

Twelve Months
Ended December 31,
2018
2019
2020

3.10% 4.15% 3.45%
3.84% 4.59% 4.56%

The following table presents health care cost trend rates used to determine net periodic postretirement benefit
cost, as well as information regarding the ultimate rate and the year in which the ultimate rate is reached:

Twelve Months
Ended December 31,
2018
2019
2020

United States plans:

Initial rate at end of year
Ultimate rate
Year in which ultimate rate is reached

Non-United States plans:

Initial rate at end of year
Ultimate rate
Year in which ultimate rate is reached

8.20% 6.50% 6.75%
4.50% 5.00% 5.00%
2029

2026

4.10% 5.45% 5.40%
3.90% 5.45% 5.40%
2040

2019

-104-

OWENS CORNING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

13. POSTEMPLOYMENT AND POSTRETIREMENT BENEFITS OTHER THAN PENSIONS (continued)

Estimated Future Benefit Payments

The following table shows estimated future benefit payments from the Company’s postretirement benefit plans
(in millions):

Year

2021
2022
2023
2024
2025
2026-2030

Postemployment Benefits

Estimated
Benefit
Payments

$14
$14
$13
$13
$12
$55

The Company may also provide benefits to former or inactive employees after employment but before retirement
under certain conditions. These benefits include continuation of benefits such as health care and life insurance
coverage. The accrued postemployment benefits liability at December 31, 2020 and 2019 was $8 million and
$11 million, respectively. The net periodic postemployment benefit (income)/expense for the years ended
December 31, 2020, 2019, and 2018 were $(1) million, $1 million and $4 million, respectively.

14. 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.

-105-

OWENS CORNING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

14. CONTINGENT LIABILITIES AND OTHER MATTERS (continued)

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.

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 December 31, 2020, 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 December 31, 2020, the
Company had an accrual totaling $7 million for these costs, of which the current portion is $3 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.

15. 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 replaced the 2016 Stock Plan. The 2019 Stock Plan authorizes grants of stock options, stock
appreciation rights, restricted stock awards, restricted stock units, bonus stock awards, performance stock awards
and performance stock units. At December 31, 2020, the number of shares remaining available under the 2019
Stock Plan for all stock awards was 3.5 million.

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OWENS CORNING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

15. STOCK COMPENSATION (continued)

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):

Twelve Months Ended
December 31,
2019

2020

2018

Total stock-based compensation expense
Income tax benefit recognized on stock-based compensation expense

$41
$14

$39
$ 7

$47
$24

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 December 31, 2020,
there was no unrecognized compensation cost related to stock options and the range of exercise prices on
outstanding stock options was $33.73—$42.16.

The following table summarizes the Company’s stock option activity in 2020:

Weighted-Average

Number of
Options

Exercise Price

Remaining
Contractual Life
(in years)

Intrinsic Value
(in millions)

Outstanding, December 31, 2019
Exercised

Outstanding, December 31, 2020

Exercisable, December 31, 2020

414,800
(53,025)

361,775

$37.79
37.90

$37.77

3.06

1.50

$11

$14

-107-

OWENS CORNING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

15. STOCK COMPENSATION (continued)

The total intrinsic value of stock options exercised and the resulting tax benefits received were as follows (in
millions):

Twelve Months Ended
December 31,
2019

2020

2018

Cash received upon exercise of stock option awards
Income tax benefit received for stock option awards exercised

$ 2
$—

$ 1
$—

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 restricted stock 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 over various periods ending in 2021.

The weighted average grant date fair value of RSUs granted in 2020, 2019 and 2018 was $63.96, $52.60 and
$84.34, respectively.

The following table shows a summary of the Company’s RSU plans:

Balance at January 1, 2020
Granted
Vested
Forfeited

Balance at December 31, 2020

Number of
RSUs

1,515,706
513,111
(515,247)
(94,116)

1,419,454

Weighted-
Average
Fair Value

$51.70
63.96
51.50
67.09

$54.99

As of December 31, 2020, there was $32 million of total unrecognized compensation cost related to RSUs. That
cost is expected to be recognized over a weighted-average period of 2.31 years. The total grant date fair value of
shares vested during the years ended December 31, 2020, 2019 and 2018 was $27 million, $21 million and
$23 million, respectively.

Performance Stock Awards and Performance Stock Units

The Company has granted performance stock awards and performance stock 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 the 2020, 2019 and 2018 grants is contingent on meeting
internal company-based metrics or an external-based stock performance metric.

In 2020, 2019 and 2018, the Company granted both internal company-based and external-based metric PSUs.

-108-

OWENS CORNING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

15. STOCK COMPENSATION (continued)

Internal Company-based metrics

The internal company-based metrics vest after a three-year period and are based on various company-based
metrics over a three-year period. The amount of stock distributed will vary from 0% to 300% of PSUs awarded
depending on performance versus the 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 three-year performance
period. Pro-rata vesting may be utilized in the case of death, disability or retirement, and awards, if earned, will
be paid at the end of the three-year period.

External based metrics

The external-based metrics vest after a three-year period. Outstanding grants issued in or after 2018 will be 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.

The following table provides a range of these assumptions:

Twelve Months Ended
December 31,

2020

2019

2018

Expected volatility
Risk free interest rate
Expected term (in years)
Grant date fair value of units granted

28.43% — 44.83% 26.67% 24.56%
2.45% 2.22%
2.90
$68.65

0.15% — 1.43%
2.31 — 2.90
$68.60 — $76.58

2.92
$94.14

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 December 31, 2020, there was $13 million total unrecognized compensation cost related to PSUs. That cost
is expected to be recognized over a weighted-average period of 1.82 years. The total grant date fair value of
shares vested during the years ended December 31, 2020, 2019 and 2018, was $9 million, $14 million and
$23 million, respectively.

-109-

OWENS CORNING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

15. STOCK COMPENSATION (continued)

The following table shows a summary of the Company’s PSU plans:

Balance as of January 1, 2020
Granted
Vested
Forfeited

Balance as of December 31, 2020

Employee Stock Purchase Plan

Weighted-
Average
Grant Date
Fair Value

$69.23
65.29
95.43
74.09

$69.20

Number of
PSUs

312,725
169,539
(98,842)
(60,061)

323,361

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. 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
December 31, 2020, 4.1 million shares remain available for purchase.

Included in total stock-based compensation expense is $6 million, $5 million and $4 million of expense related to
the Company’s ESPP for the years ended December 31, 2020, 2019 and 2018, respectively. As of December 31,
2020, the Company had $2 million of total unrecognized compensation costs related to the ESPP. Under the
outstanding ESPP as of February 15, 2021, employees have contributed $4 million to purchase shares for the
current purchase period ending May 31, 2021.

The following table shows a summary of employee purchase activity under the ESPP:

Total shares purchased by employees
Average purchase price

366,442
45.17

393,230
41.33

295,407
48.93

Twelve Months Ended
December 31,
2019

2018

2020

-110-

OWENS CORNING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

16. CHANGES IN ACCUMULATED OTHER COMPREHENSIVE DEFICIT

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

Currency Translation Adjustment
Beginning balance

Net investment hedge amounts classified into AOCI, net of tax
Gain on foreign currency translation

Other comprehensive income, net of tax

Ending balance

Pension and Other Postretirement Adjustment
Beginning balance

Amounts reclassified from AOCI to net earnings, net of tax (a)
Amounts classified into AOCI, net of tax

Other comprehensive (loss)/income, net of tax

Ending balance

Hedging Adjustment
Beginning balance

Amounts reclassified from AOCI to net earnings, net of tax (b)
Amounts classified into AOCI, net of tax

Other comprehensive income/(loss), net of tax

Ending balance

Total AOCI ending balance

Twelve Months Ended
December 31,

2020

2019

$(282)
11
51

$(306)
13
11

$(220)

$(282)

$(326)
3
(49)

(46)

$(372)

(2)
4
2

$(588)

$(350)
35
(11)

$(326)

$ —
3
(5)

(2)

$ (2)

$(610)

(a) These AOCI components are included in the computation of total Pension and Other Postretirement cost and

are recorded in Non-operating expense (income). See Notes 12 and 13 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 4 for additional information.

-111-

OWENS CORNING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

17. 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):

Twelve Months Ended
December 31,
2019

2018

2020

Net earnings (loss) attributable to Owens Corning

$ (383) $ 405

$ 545

Weighted-average number of shares outstanding used for basic earnings (loss) per

Non-vested restricted and performance shares
Options to purchase common stock

Weighted-average number of shares outstanding and common equivalent shares used

for diluted earnings (loss) per share

Earnings (loss) per common share attributable to Owens Corning common

stockholders:

Basic
Diluted

108.6
—
—

109.2
0.7
0.2

110.4
0.8
0.2

108.6

110.1

111.4

$ (3.53) $ 3.71
$ (3.53) $ 3.68

$ 4.94
$ 4.89

Basic earnings (loss) per share is calculated by dividing earnings (loss) attributable to Owens Corning by the
weighted-average number of shares of the Company’s common stock outstanding during the period. Outstanding
shares consist of issued shares less treasury stock.

On December 3, 2020, the Board of Directors approved a new 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
“2020 Repurchase Authorization”). The 2020 Repurchase Authorization is in addition to the share buy-back
program announced October 24, 2016 (the 2016 Repurchase Authorization and collectively with the 2020
Repurchase Authorization,
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 4.1 million shares of its common stock for $292 million for
the year ended December 31, 2020 under the Repurchase Authorization. As of December 31, 2020, 9.5 million
shares remain available for repurchase under the Repurchase Authorization.

For the year ended December 31, 2020, diluted earnings per share was equal to basic earnings per share due to
the net loss attributable to Owens Corning. For the year ended December 31, 2019, the Company did not have
any non-vested restricted shares or non-vested performance shares that had an anti-dilutive effect on earnings per
share. For the year ended December 31, 2018, the number of shares used in the calculation of diluted earnings
per share did not include 0.3 million non-vested restricted shares and 0.3 million non-vested performance shares
due to their anti-dilutive effect.

-112-

OWENS CORNING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

18.

INCOME TAXES

The following table summarizes our Earnings (loss) before taxes and Income tax expense (in millions):

Twelve Months Ended
December 31,
2019

2020

2018

Earnings before taxes:
United States
Foreign

Total

Income tax expense:
Current

United States
State and local
Foreign

Total current

Deferred

United States
State and local
Foreign

Total deferred

Total income tax expense

$
8
(264)

$315
275

$(256) $590

$411
293

$704

4
16
30

64
(1)
16

$ (4)
11
60

$ (10)
6
19

112
11
(4)

119

114
12
15

141

$ 129

$186

$156

The reconciliation between the United States federal statutory rate and the Company’s effective income tax rate
from continuing operations is:

Twelve Months Ended
December 31,
2019

2020

2018

United States federal statutory rate
State and local income taxes, net of federal tax benefit
U.S. tax expense on foreign earnings
Legislative tax rate changes
Foreign tax credits
Valuation allowance
Intercompany restructuring—intellectual property transfer
Goodwill impairment charge
Uncertain tax positions and settlements
Excess tax benefits related to stock compensation
Other, net

Effective tax rate

21% 21%
(9)
(5)
7
2
(15)
14
(75)
2
2
6

3
1
2
—
3
—
—
—
—
1

(50)% 31%

21%
2
2
—
—
2
—
—
(5)
(2)
2

22%

-113-

OWENS CORNING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

18.

INCOME TAXES (continued)

In the first quarter of 2020, the company recorded non-cash impairment charges related to the impairment of
goodwill and certain other indefinite-lived intangible assets which were largely non-deductible resulting in a
substantial negative impact to our effective tax rate.

In addition, non-cash charges were recorded in 2020 related to valuation allowance adjustments against certain
deferred tax assets recorded in our French, Indian and Other foreign legal entities due to volatility in the markets
we serve from the COVID-19 pandemic.

In December 2020, the company completed an intercompany restructuring that resulted in the transfer of certain
intellectual property rights, held by wholly owned foreign subsidiaries, to the U.S. The intellectual property
rights transferred to the US resulted in a step-up in the tax basis for U.S. tax purposes which resulted in the
company recognizing a deferred tax asset of $37 million and a current year tax expense of $5 million. The
recognized tax benefit of $37 million is amortizable for US tax purposes over a fifteen-year period.

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 global intangible low-taxed income (GILTI), income subject
to a high foreign effective tax rate. As a result of the final regulations, the company recorded a net non-cash
income tax benefit of $13 million in the third quarter relating to the 2018 and 2019 tax years.

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 GILTI and foreign-derived intangible income (FDII) added by
the U.S. Tax Cuts and Jobs Act of 2017 (the “Tax Act”). The proposed regulations provide special rules to
determine the deduction amount, which adjusted the Company’s 2018 tax estimate and resulted in an increase to
tax expense of $12 million for 2019.

Effective January 1, 2018, the Tax Act created a new requirement to include GILTI earned by controlled foreign
corporations (CFCs) in U.S. income. The GILTI must be included currently in the gross income of the CFCs’
U.S. shareholder. Under U.S. GAAP, we are allowed to make an accounting policy choice of either (1) treating
taxes due on future U.S. inclusions related to GILTI as a current-period expense when incurred (the “period cost
method”) or (2) factoring such amounts into a company’s measurement of its deferred taxes (the “deferred
method”). During the first quarter of 2018, we selected the period cost method in recording the tax effects of
GILTI in our financial statements.

In February 2018, the FASB issued ASU 2018-02 “Income Statement – Reporting Comprehensive Income
(Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income”, which
provides companies with an option to reclassify stranded tax effects resulting from enactment of the Tax Act
from Accumulated other comprehensive income to Accumulated earnings. The standard was effective for the
Company starting January 1, 2019. The Company has elected not to reclassify the income tax effects of the Tax
Act from Accumulated other comprehensive income to Accumulated earnings.

The Company continues to assert indefinite reinvestment in accordance with ASC 740 based on the laws as of
enactment of the Tax Act. As of December 31, 2020, the Company has not provided for withholding or income
taxes on approximately $1.2 billion of undistributed reserves of its foreign subsidiaries and affiliates as they are
considered by management to be permanently reinvested. Quantification of the deferred tax liability associated
with these undistributed reserves is not practicable.

-114-

OWENS CORNING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

18.

INCOME TAXES (continued)

The cumulative temporary differences giving rise to the deferred tax assets and liabilities are as follows (in
millions):

Other employee benefits
Pension plans
Operating loss and tax credit carryforwards
Depreciation
Leases – Right of Use Assets
Leases – Liability
Amortization
Foreign tax credits
State and local taxes
Other

Subtotal

Valuation allowances

Total deferred taxes

December 31, 2020
Deferred
Tax
Liabilities

Deferred
Tax
Assets

December 31, 2019
Deferred
Tax
Liabilities

Deferred
Tax
Assets

$ 71
41
170
—
—
33
—
49
—
90

454
(133)

$ 321

$ —
—
—
259
33
—
333
—
—
—

625
—

$625

$ 76
54
195
—
—
49
—
97
3
76

550
(92)

$458

$ —
—
—
247
49
—
388
—
—
—

684
—

$684

The following table summarizes the amount and expiration dates of our deferred tax assets related to operating
loss and credit carryforwards at December 31, 2020 (in millions):

U.S. federal loss carryforwards
U.S. state loss carryforwards (a)
Foreign loss and tax credit carryforwards
Foreign loss and tax credit carryforwards (a)
Other U.S. federal and state tax credits

Total operating loss and tax credit carryforwards

U.S foreign tax credits

Expiration
Dates

2036
2021 – 2034
Indefinite
2021 – 2039
2028 – 2034

2027

Amounts

$ 23
37
41
66
3

$170

$ 49

(a) As of December 31, 2020, $12 million of U.S. state and $7 million of foreign deferred tax assets related to

loss carryforwards that are set to expire over the next three years.

At December 31, 2020, the Company had federal, state and foreign net operating loss (NOL) carryforwards of
$111 million, $1,160 million and $418 million, respectively. In order to utilize our NOLs, the Company will need
to generate federal, state, and foreign earnings before taxes of approximately $111 million, $1,115 million, and
$395 million, respectively. Certain of these loss carryforwards are subject to limitation as a result of the
acquisition of certain foreign entities in 2007. However, the Company believes that these limitations on its loss
carryforwards will not result in a forfeiture of any of the carryforwards.

Deferred income taxes are provided for temporary differences between amounts of assets and liabilities for
financial reporting purposes and the basis of such assets and liabilities as measured under enacted tax laws and

-115-

OWENS CORNING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

18.

INCOME TAXES (continued)

regulations, as well as NOLs, tax credits and other carryforwards. A valuation allowance will be recorded to
reduce deferred tax assets if, based on all available evidence, it is considered more likely than not that some
portion or all of the recorded deferred tax assets will not be realized in future periods. To the extent the reversal
of deferred tax liabilities is relied upon in our assessment of the realizability of deferred tax assets, they will
reverse in the same period and jurisdiction as the temporary differences giving rise to the deferred tax assets. As
of December 31, 2020, the Company had federal net deferred tax liabilities before valuation allowances of
$140 million, state net deferred tax liabilities of $1 million, and foreign net deferred tax liabilities of $31 million.

The valuation allowance of $133 million as of December 31, 2020 is related to tax assets of $49 million,
$7 million and $77 million for U.S. federal FTCs and certain state and foreign jurisdictions, respectively. 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 allowance of certain foreign jurisdictions by a
range of zero to $9 million. The valuation allowance of $92 million as of December 31, 2019 is related to tax
assets of $43 million, $11 million, and $38 million for U.S. federal FTC’s and certain state and foreign
jurisdictions, respectively.

The Company, or one of its subsidiaries, files income tax returns in the United States and other foreign
jurisdictions. The Company is no longer subject to U.S. federal tax examinations for years before 2017 or state
and foreign examinations for years before 2010. Due to the potential for resolution of federal, state and foreign
examinations, and the expiration of various statutes of limitation, it is reasonably possible that the gross
unrecognized tax benefits balance may change within the next 12 months by a range of zero to $4 million.

A reconciliation of the beginning and ending amounts of unrecognized tax benefits is as follows (in millions):

Twelve Months Ended
December 31,
2019

2020

2018

Balance at beginning of period
Tax positions related to the current year

Gross additions

Tax positions related to prior years

Gross additions
Gross reductions

Settlements
Expiration of statute of limitations
Impact of currency changes

Balance at end of period

$79

$84

$ 90

—

2
(1)
(1)
(3)
—

—

1
—
(1)
(5)
—

36
(37)
(5)
(4)
(2)

$76

$79

$ 84

If these uncertain tax benefits (UTBs) were to be recognized as of December 31, 2020, the Company’s income
tax expense would decrease by about $59 million.

The Company classifies all interest and penalties as income tax expense. As of December 31, 2020, 2019 and
2018, and for the periods then ended, the Company recognized $7 million, $8 million and $10 million,
respectively, in liabilities for tax related interest and penalties on its Consolidated Balance Sheets and less than

-116-

OWENS CORNING AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

18.

INCOME TAXES (continued)

$1 million, $2 million and $1 million, respectively, of interest and penalty expense on its Consolidated
Statements of Earnings (Loss).

On February 5, 2018, the Company acquired all the outstanding equity of Paroc, a leading producer of mineral
wool insulation for building and technical applications in Europe. The acquisition included net uncertain tax
benefits (UTBs) related to a transfer pricing dispute and interest expense. On December 18, 2018, the Finnish
Supreme Administrative Court (SAC) ruled in favor of Paroc Oy Ag, a wholly-owned subsidiary of the
Company, regarding the transfer pricing dispute for tax years 2006 to 2008. Based on the SAC decision, the
Company reduced the UTB regarding the transfer pricing dispute by $32 million and recorded a corresponding
benefit to income tax expense.

-117-

OWENS CORNING AND SUBSIDIARIES

INDEX TO CONDENSED FINANCIAL STATEMENT SCHEDULE

Number Description

Valuation and Qualifying Accounts and Reserves – for the years ended December 31,
2020, 2019 and 2018

Page

118

-118-

OWENS CORNING AND SUBSIDIARIES
SCHEDULE II – VALUATION AND QUALIFYING ACCOUNTS AND RESERVES FOR THE YEARS
ENDED DECEMBER 31, 2020, 2019 AND 2018
(in millions)

Balance at
Beginning
of Period

Charged to
Costs and
Expenses

Charged to
Other

Accounts Deductions

Acquisitions
and
Divestitures

Balance
at End
of Period

FOR THE YEAR ENDED
DECEMBER 31, 2020

Allowance for doubtful

accounts

Tax valuation allowance

FOR THE YEAR ENDED
DECEMBER 31, 2019

Allowance for doubtful

accounts

Tax valuation allowance

FOR THE YEAR ENDED
DECEMBER 31, 2018

Allowance for doubtful

accounts

Tax valuation allowance

$11
$92

$16
$78

$19
$94

$ 1
$39

$ 2
$19

$—
$13

$—
$ 2

$—
$ 1

$ (2)(a)
$ —

$—
$—

$ 10
$133

$ (7)(a)
$ (6)

$—
$—

$ 11
$ 92

$—
$ (4)

$ (4)(a)
$(31)

$ 1
$ 6

$ 16
$ 78

(a) Uncollectible accounts written off, net of recoveries.

-119-

DIRECTORS OF OWENS CORNING
AS OF MARCH 11, 2021

DIRECTORS

Brian D. Chambers
Chairman, President and Chief
Executive Officer

Eduardo E. Cordeiro
Formerly Executive Vice President,
Chief Financial Officer and
President, Americas, Cabot
Corporation, a global specialty
chemicals and performance materials
company

Alfred E. Festa
Formerly Chairman and Chief
Executive Officer of W.R. Grace
& Co., a leading global producer
of specialty chemicals and
materials

Paul E. Martin
Formerly Senior Vice President
and Chief Information Officer
for Baxter International, Inc., a
multinational health care
company

Ralph F. Hake
Formerly Chairman and Chief
Executive Officer of the Maytag
Corporation, a manufacturer of
home and commercial appliances

W. Howard Morris
President and Chief Investment
Officer of The Prairie &
Tireman Group, an investment
partnership

Adrienne D. Elsner
President, Chief Executive Officer
and Director of Charlotte’s Web
Holdings, Inc., a leader in hemp-
derived CBD extract products

Edward F. Lonergan
Executive Chairman of Zep Inc.,
an international provider of
maintenance and cleaning
solutions

Suzanne P. Nimocks
Formerly Director (Senior
Partner) with
McKinsey & Company, a global
management consulting firm

J. Brian Ferguson
Formerly Executive Chairman of
Eastman Chemical Company, a
global chemical company engaged in
the manufacture and sale of a broad
portfolio of chemicals, plastics and
fibers

Directors’ Code of Conduct

Maryann T. Mannen
Executive Vice President and
Chief Financial Officer of
Marathon Petroleum Corporation,
a leading, integrated, downstream
energy company

John D. Williams
President, Chief Executive
Officer and Director of Domtar
Corporation, a manufacturer of
fiber-based products

The members of our Board of Directors are required to comply with a Directors’ Code of Conduct (the “Code”).
The Code is intended to focus the Board and the individual directors on areas of ethical risk, help directors
recognize and deal with ethical issues, provide mechanisms to report unethical conduct, and foster a culture of
honesty and accountability. The Code covers all areas of professional conduct relating to service on the Owens
Corning Board, including conflicts of interest, unfair or unethical use of corporate opportunities, strict protection
of confidential information, compliance with all applicable laws and regulations, sustainability and oversight of
ethics and compliance by employees of the Company. The full texts of our Code of Business Conduct Policy,
Ethics Policy for Chief Executive and Senior Financial Officers and Directors’ Code of Conduct are published on
our website at www.owenscorning.com and will be made available in print upon request by any stockholder to
the Secretary of the Company. To the extent required by applicable SEC rules or New York Stock Exchange
listing standards, we intend to post any amendments to or waivers from the Ethics Policy for Chief Executive and
Senior Financial Officers to our website in the section titled, “Corporate Governance.”

OWENS CORNING WORLD HEADQUARTERS
ONE OWENS CORNING PARKWAY
TOLEDO, OHIO, U.S.A. 43659