The level of residential housing starts has experienced a period of unprecedented growth over the past ten years. Based on data from the U.S. Census Bureau, new housing starts grew at a compound annual growth rate of 4.7% from 1995 through 2005, and grew at a compound annual growth rate of 6.5% from 2001 through 2005. New housing starts were reported to have declined approximately 4% during the first six months of 2006 as compared to the first six months of 2005.

Growth in residential improvements and non-residential construction is expected to continue to drive demand for construction materials. The aging housing stock is helping to drive growth in residential improvements and repair activity, which is typically less cyclical than new residential construction activity. According to the U.S. Census Bureau total residential improvement and repair expenditures in 2005 were estimated to be $215 billion; and residential improvements grew at a compound annual growth rate of 8.0% from 2001 through 2005.

Demand for insulation products is mainly driven by new residential and commercial construction and residential repair and remodeling markets, product substitution and increasingly stringent building codes. Fiberglass and foam products comprise the majority of the insulation market, and Owens Corning sells both types of insulation.

Demand for Roofing and Asphalt products is generally driven by residential repair and remodeling activity, rather than by the new construction market. As a result, the residential roofing industry tends to be less cyclical than other building product categories. Each region of the United States has a different average roof life, due to seasonal weather patterns, but on average a roof needs to be replaced approximately every 19 years.

Demand for composites is driven by general global economic activity and, more specifically, by the replacement of traditional materials like aluminum, wood and steel with composites that offer lighter weight and improved strength.

The Company is North America’s largest producer of residential, commercial and industrial insulation, and the second-largest producer of extruded polystyrene foam insulation. The Company also sells energy efficient flexible duct media for residential applications, fiberglass hot and cold pipe insulation, and metal building insulation for commercial and industrial uses.

The Company’s Roofing and Asphalt business is the largest producer in the United States of asphalt roofing shingles and industrial, specialty and roofing asphalts. The Company’s products include both laminate and strip shingles as well as oxidized asphalt, which is used in the Company’s own manufacturing and sold to third-party customers for use in asphalt shingle manufacturing, commercial roofing, water proofing and industrial and specialty applications.

The Company’s Other Building Materials and Services segment is comprised of vinyl siding, manufactured stone veneer products, construction services and franchising, and distribution of other building products not manufactured by the Company. The Company also distributes other exterior building products such as windows, doors, shutters, aluminum trim coil, gutters/downspouts, and other siding materials through its national network of 165 distribution centers.

The Company’s Composite Solutions segment is the world’s largest producer of glass fiber materials used in composites. The Company’s products are sold to customers in the United States, Canada, Europe, Latin America and Asia Pacific. In addition to providing basic glass reinforcement materials, Composite Solutions also fabricates specialized composite systems that are designed for a particular end-use application, each of which entail a material, a proprietary process or a fully assembled part or system.

Income from operations for the first six months of 2006 was $283 million as compared to a loss of $4.112 billion in 2005.

For the first half of 2006, net income was $314 million, or $5.24 per share, compared to net loss of $4.170 billion, or ($75.38) per share, for the first six months of the prior year.