Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2019
or
¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from             to            
Commission File Number:     1-33100
Owens Corning
(Exact name of registrant as specified in its charter)
 
 
 
 
Delaware
 
43-2109021
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)
 
 
 
One Owens Corning Parkway, Toledo, OH
 
43659
(Address of principal executive offices)
 
(Zip Code)
(419) 248-8000
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes þ             No ¨
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes þ             No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
Large accelerated filer  þ
Accelerated filer ¨
Non-accelerated filer ¨  
Smaller reporting company  ¨
Emerging growth company  ¨
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ¨             No þ
As of April 19, 2019 , 108,569,534 shares of registrant’s common stock, par value $0.01 per share, were outstanding.


Table of Contents

 
 
 
Contents
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 1.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 2.
 
 
 
 
 
Item 3.
 
 
 
 
 
Item 4.
 
 
 
 
 
 
 
 
 
Item 1.
 
 
 
 
 
Item 1A.
 
 
 
 
 
Item 2.
 
 
 
 
 
Item 3.
 
 
 
 
 
Item 4.
 
 
 
 
 
Item 5.
 
 
 
 
 
Item 6.
 
 
 
 
 
 



Table of Contents
- 3 -

PART I
ITEM 1. FINANCIAL STATEMENTS
OWENS CORNING AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited)
(in millions, except per share amounts)
 
 
Three Months Ended 
 March 31,
   
   
2019
2018
NET SALES
$
1,667

$
1,691

COST OF SALES
1,342

1,336

Gross margin
325

355

OPERATING EXPENSES


Marketing and administrative expenses
182

185

Science and technology expenses
22

23

Other expenses, net
5

20

Total operating expenses
209

228

OPERATING INCOME
116

127

Non-operating income
(2
)
(4
)
EARNINGS BEFORE INTEREST AND TAXES
118

131

Interest expense, net
36

28

EARNINGS BEFORE TAXES
82

103

Income tax expense
39

11

Equity in net earnings of affiliates
1

—

NET EARNINGS
44

92

Net earnings attributable to noncontrolling interests
—

—

NET EARNINGS ATTRIBUTABLE TO OWENS CORNING
$
44

$
92

EARNINGS PER COMMON SHARE ATTRIBUTABLE TO OWENS CORNING COMMON STOCKHOLDERS
 
 
Basic
$
0.40

$
0.83

Diluted
$
0.40

$
0.82

WEIGHTED AVERAGE COMMON SHARES
 
 
Basic
109.5

111.5

Diluted
110.1

112.8

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


- 4 -

OWENS CORNING AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS
(unaudited)
(in millions)
 
   
Three Months Ended 
 March 31,
   
2019
2018
NET EARNINGS
$
44

$
92

Currency translation adjustment (net of tax of $(3) and $6 for the three months ended March 31, 2019 and 2018, respectively)
11

(15
)
Pension and other postretirement adjustment (net of tax of $0 and $(2) for the three months ended March 31, 2019 and 2018, respectively)
(1
)
(2
)
Hedging adjustment (net of tax of $1 and $0 for the three months ended March 31, 2019 and 2018, respectively)
(1
)
1

COMPREHENSIVE EARNINGS
53

76

Comprehensive earnings attributable to noncontrolling interests
—

—

COMPREHENSIVE EARNINGS ATTRIBUTABLE TO OWENS CORNING
$
53

$
76


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


- 5 -

OWENS CORNING AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(unaudited)
(in millions, except per share amounts)
ASSETS
March 31,
2019
December 31,
2018
CURRENT ASSETS
 
 
Cash and cash equivalents
$
82

$
78

Receivables, less allowances of $12 at March 31, 2019 and $16 at December 31, 2018
1,040

794

Inventories
1,109

1,072

Assets held for sale
3

3

Other current assets
99

73

Total current assets
2,333

2,020

Property, plant and equipment, net
3,776

3,811

Operating lease right-of-use assets
235

—

Goodwill
1,935

1,949

Intangible assets
1,758

1,779

Deferred income taxes
44

43

Other non-current assets
184

169

TOTAL ASSETS
$
10,265

$
9,771

LIABILITIES AND EQUITY
 
 
Current liabilities
$
1,275

$
1,278

Long-term debt, net of current portion
3,711

3,362

Pension plan liability
258

268

Other employee benefits liability
187

190

Non-current operating lease liabilities
168

—

Deferred income taxes
169

141

Other liabilities
195

208

OWENS CORNING STOCKHOLDERS’ EQUITY
 
 
Preferred stock, par value $0.01 per share (a)
—

—

Common stock, par value $0.01 per share (b)
1

1

Additional paid in capital
4,025

4,028

Accumulated earnings
2,033

2,013

Accumulated other comprehensive deficit
(647
)
(656
)
Cost of common stock in treasury (c)
(1,150
)
(1,103
)
Total Owens Corning stockholders’ equity
4,262

4,283

Noncontrolling interests
40

41

Total equity
4,302

4,324

TOTAL LIABILITIES AND EQUITY
$
10,265

$
9,771

 
(a)
10 shares authorized; none issued or outstanding at March 31, 2019 and December 31, 2018
(b)
400 shares authorized; 135.5 issued and 108.6 outstanding at March 31, 2019 ; 135.5 issued and 109.5 outstanding at December 31, 2018
(c)
26.9 shares at March 31, 2019 and 26.0 shares at December 31, 2018
The accompanying Notes to the Consolidated Financial Statements are an integral part of this Statement.


- 6 -

OWENS CORNING AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
(unaudited)
(in millions)

 
Common Stock
Outstanding
 
Treasury
Stock
 
APIC (a)
 
Accumulated
Earnings
 
AOCI (b)
 
NCI (c)
 
Total
  
Shares
 
Par Value
 
Shares
 
Cost
 
Balance at December 31, 2018
109.5

 
$
1

 
26.0

 
$
(1,103
)
 
$
4,028

 
$
2,013

 
$
(656
)
 
$
41

 
$
4,324

Net earnings attributable to Owens Corning
—

 
—

 
—

 
—

 
—

 
44

 
—

 
—

 
44

Currency translation adjustment
—

 
—

 
—

 
—

 
—

 
—

 
11

 
(1
)
 
10

Pension and other postretirement adjustment (net of tax)
—

 
—

 
—

 
—

 
—

 
—

 
(1
)
 
—

 
(1
)
Deferred loss on hedging transactions (net of tax)
—

 
—

 
—

 
—

 
—

 
—

 
(1
)
 
—

 
(1
)
Issuance of common stock under share-based payment plans
0.4

 
—

 
(0.4
)
 
14

 
(14
)
 
—

 
—

 
—

 
—

Purchases of treasury stock
(1.3
)
 
—

 
1.3

 
(61
)
 
—

 
—

 
—

 
—

 
(61
)
Stock-based compensation expense
—

 
—

 
—

 
—

 
11

 
—

 
—

 
—

 
11

Dividends declared (e)
—

 
—

 
—

 
—

 
—

 
(24
)
 
—

 
—

 
(24
)
Balance at March 31, 2019
108.6

 
$
1

 
26.9

 
$
(1,150
)
 
$
4,025

 
$
2,033

 
$
(647
)
 
$
40

 
$
4,302

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common Stock
Outstanding
 
Treasury
Stock
 
APIC (a)
 
Accumulated
Earnings
 
AOCI (b)
 
NCI (c)
 
Total
 
Shares
 
Par Value
 
Shares
 
Cost
 
Balance at December 31, 2017
111.5

 
$
1

 
24.0

 
$
(911
)
 
$
4,011

 
$
1,575

 
$
(514
)
 
$
42

 
$
4,204

Net earnings attributable to Owens Corning
—

 
—

 
—

 
—

 
—

 
92

 
—

 
—

 
92

Currency translation adjustment
—

 
—

 
—

 
—

 
—

 
—

 
(15
)
 
1

 
(14
)
Pension and other postretirement adjustment (net of tax)
—

 
—

 
—

 
—

 
—

 
—

 
(2
)
 
—

 
(2
)
Deferred loss on hedging transactions (net of tax)
—

 
—

 
—

 
—

 
—

 
—

 
1

 
—

 
1

Issuance of common stock under share-based payment plans
0.6

 
—

 
(0.6
)
 
21

 
(21
)
 
—

 
—

 
—

 
—

Purchases of treasury stock
(1.1
)
 
—

 
1.1

 
(113
)
 
—

 
—

 
—

 
—

 
(113
)
Stock-based compensation expense
—

 
—

 
—

 
—

 
9

 
—

 
—

 
—

 
9

Cumulative effect of accounting change (d)
—

 
—

 
—

 
—

 
—

 
(12
)
 
—

 
—

 
(12
)
Dividends declared (e)
—

 
—

 
—

 
—

 
—

 
(24
)
 
—

 
—

 
(24
)
Balance at March 31, 2018
111.0

 
1.0

 
24.5

 
$
(1,003
)
 
$
3,999

 
$
1,631

 
$
(530
)
 
$
43

 
$
4,141

 
(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 accounting standard updates (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)
Dividends declared of $0.22 per share and $0.21 per share as of March 31, 2019 and March 31, 2018, respectively.

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



- 7 -


OWENS CORNING AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in millions)
 
   
Three Months Ended 
 March 31,
   
2019
2018
NET CASH FLOW USED FOR OPERATING ACTIVITIES
 
 
Net earnings
$
44

$
92

Adjustments to reconcile net earnings to cash provided by operating activities:
 
 
Depreciation and amortization
113

109

Deferred income taxes
29

1

Stock-based compensation expense
11

9

Other non-cash
15

(1
)
Changes in operating assets and liabilities
(346
)
(284
)
Pension fund contribution
(8
)
(6
)
Payments for other employee benefits liabilities
(6
)
(6
)
Other
(3
)
(4
)
Net cash flow used for operating activities
(151
)
(90
)
NET CASH FLOW USED FOR INVESTING ACTIVITIES
 
 
Cash paid for property, plant, and equipment
(98
)
(101
)
Proceeds from the sale of assets or affiliates
—

14

Investment in subsidiaries and affiliates, net of cash acquired
—

(1,121
)
Other
3

1

Net cash flow used for investing activities
(95
)
(1,207
)
NET CASH FLOW PROVIDED BY FINANCING ACTIVITIES
 
 
Proceeds from long-term debt
—

389

Proceeds from senior revolving credit and receivables securitization facilities
548

565

Payments on senior revolving credit and receivables securitization facilities
(182
)
(197
)
Proceeds from term loan borrowing
—

600

Net decrease in short-term debt
(13
)
—

Dividends paid
(48
)
(46
)
Purchases of treasury stock
(61
)
(111
)
Other
(3
)
1

Net cash flow provided by financing activities
241

1,201

Effect of exchange rate changes on cash
10

(10
)
Net increase (decrease) in cash, cash equivalents, and restricted cash
5

(106
)
Cash, cash equivalents and restricted cash at beginning of period
85

253

CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD
$
90

$
147

 

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



- 8 -

OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
 
1.      GENERAL
Unless the context requires otherwise, the terms “Owens Corning,” “Company,” “we” and “our” in this report refer to Owens Corning, a Delaware corporation, and its subsidiaries.
The Consolidated Financial Statements included in this report are unaudited, pursuant to certain rules and regulations of the Securities and Exchange Commission, and include, in the opinion of the Company, normal recurring adjustments necessary for a fair statement of the results for the periods indicated, which, however, are not necessarily indicative of results which may be expected for the full year. The December 31, 2018 balance sheet data was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States ("U.S."). In connection with the Consolidated Financial Statements and Notes included in this report, reference is made to the Consolidated Financial Statements and Notes contained in the Company’s Form 10-K for the year ended December 31, 2018 (the " 2018 Form 10-K"). Certain reclassifications have been made to the periods presented for 2018 to conform to the classifications used in the periods presented for 2019 .
Cash, Cash Equivalents and Restricted Cash

On the Consolidated Statements of Cash Flows, the total of Cash, cash equivalents and restricted cash includes restricted cash of $8 million , $7 million , $7 million and $7 million as of March 31, 2019 , December 31, 2018 , March 31, 2018 and December 31, 2017 , respectively. Restricted cash primarily represents amounts received from a counterparty related to its performance assurance on an executory contract, which is included in Other current assets on the Consolidated Balance Sheets. These amounts are contractually required to be set aside, and the counterparty can exchange the cash for another form of performance assurance at its discretion.

Accounting Pronouncements

The following table summarizes recent ASU issued by the Financial Accounting Standards Board (FASB) that could have an impact on the Company's Consolidated Financial Statements:
Standard
Description
Effective Date for Company
Effect on the
Consolidated Financial Statements
Recently adopted standards:
 
 
 
ASU 2016-02, "Leases (Topic 842)," as amended by ASU 2017-13, 2018-01, 2018-10, 2018-11, and 2019-01
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.
January 1, 2019
We adopted this standard using the optional transition method in the first quarter of 2019. Please refer to Note 9 of the Consolidated Financial Statements for transition disclosures as well as other ongoing disclosure requirements.
Recently issued standards:
 
 
 
ASU 2016-13 "Financial Instruments - Credit Losses (Topic 326)"
This standard replaces the incurred loss methodology for recognizing credit losses with a current expected credit losses model and applies to all financial assets, including trade receivables. Entities will adopt the standard using a modified-retrospective approach.
January 1, 2020
We are currently assessing the impact this standard will have on our Consolidated Financial Statements. Our current accounts receivable policy (as described in Note 1 of our 2018 Form 10-K) uses historical and current information to estimate the amount of probable credit losses in our existing accounts receivable. We have not yet analyzed our current systems and methods to determine the impact of using forward-looking information to estimate expected credit losses.


- 9 -
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)


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

NET SALES
The following table summarizes our Net sales by segment and geographic region (in millions). Corporate eliminations (shown below) largely reflect intercompany sales from Composites to Roofing. External customer sales are attributed to geographic region based upon the location from which the product is sold to the external customer.
   
Three Months Ended 
 March 31,
   
2019
2018
Reportable Segments
 
 
Composites
$
513

$
511

Insulation
591

596

Roofing
614

642

Total reportable segments
1,718

1,749

Corporate eliminations
(51
)
(58
)
NET SALES
$
1,667

$
1,691


External Customer Sales by Geographic Region
 
 
United States
$
1,100

$
1,128

Europe
296

279

Asia-Pacific
149

142

Rest of world
122

142

NET SALES
$
1,667

$
1,691




- 10 -
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

2.    SEGMENT INFORMATION (continued)


EARNINGS BEFORE INTEREST AND TAXES

Earnings before interest and taxes (EBIT) by segment consist of net sales less related costs and expenses and are presented on a basis that is used internally for evaluating segment performance. Certain items, such as general corporate expenses or income and certain other expense or income items, are excluded from the internal evaluation of segment performance. Accordingly, these items are not reflected in EBIT for our reportable segments and are included within Corporate, Other and Eliminations.
The following table summarizes EBIT by segment (in millions):
   
Three Months Ended 
 March 31,
   
2019
2018
Reportable Segments
 
 
Composites
$
57

$
60

Insulation
15

32

Roofing
74

97

Total reportable segments
146

189

Restructuring gains (costs)
2

(5
)
Acquisition-related costs
—

(14
)
Recognition of acquisition inventory fair value step-up
—

(2
)
General corporate expense and other
(30
)
(37
)
Total corporate, other and eliminations
(28
)
(58
)
EBIT
$
118

$
131


3.      REVENUE

The following table shows a disaggregation of Net sales (in millions):
 
For the three months ended March 31, 2019
Reportable Segments
Composites
Insulation
Roofing
Eliminations
Consolidated
Disaggregation Categories
 
 
 
 
 
U.S. residential
$
67

$
196

$
551

$
(48
)
$
766

U.S. commercial and industrial
154

155

25

—

334

Europe
150

143

4

(1
)
296

Asia-Pacific
112

34

3

—

149

Rest of world
30

63

31

(2
)
122

NET SALES
$
513

$
591

$
614

$
(51
)
$
1,667




- 11 -
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

3.        REVENUE (continued)


 
For the three months ended March 31, 2018
Reportable Segments
Composites
Insulation
Roofing
Eliminations
Consolidated
Disaggregation Categories
 
 
 
 
 
U.S. residential
$
76

$
222

$
559

$
(53
)
$
804

U.S. commercial and industrial
139

147

39

(1
)
324

Europe
157

119

3

—

279

Asia-Pacific
106

33

3

—

142

Rest of world
33

75

38

(4
)
142

NET SALES
$
511

$
596

$
642

$
(58
)
$
1,691

As of December 31, 2018 , our contract liability balances (for extended warranties, down payments and deposits, collectively) totaled $53 million , of which $13 million was recognized as revenue in the first three months of 2019 . As of March 31, 2019 , our contract liability balances totaled $53 million .

4.      INVENTORIES
Inventories consist of the following (in millions):

March 31, 2019
December 31, 2018
Finished goods
$
767

$
730

Materials and supplies
342

342

Total inventories
$
1,109

$
1,072


5.      DERIVATIVE FINANCIAL INSTRUMENTS
The Company is exposed to, among other risks, the impact of changes in commodity prices, foreign currency exchange rates, and interest rates in the normal course of business. The Company’s risk management program is designed to manage the exposure and volatility arising from these risks, and utilizes derivative financial instruments to offset a portion of these risks. The Company uses derivative financial instruments only to the extent necessary to hedge identified business risks, and does not enter into such transactions for trading purposes.
The Company generally does not require collateral or other security with counterparties to these financial instruments and is therefore subject to credit risk in the event of nonperformance; however, the Company monitors credit risk and currently does not anticipate nonperformance by other parties. Contracts with counterparties generally contain right of offset provisions. These provisions effectively reduce the Company’s exposure to credit risk in situations where the Company has gain and loss positions outstanding with a single counterparty. It is the Company’s policy to offset on the Consolidated Balance Sheets the amounts recognized for derivative instruments with any cash collateral arising from derivative instruments executed with the same counterparty under a master netting agreement. As of March 31, 2019 and December 31, 2018 , 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 and foreign exchange forward contracts, 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.



- 12 -
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

5.        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
 
March 31, 2019
 
December 31, 2018
Derivative assets designated as hedging instruments:
 
 
 
 
 
Net investment hedges:
 
 
 
 
 
       Cross-currency swaps
Other current assets
 
$
9

 
$
9

       Cross currency swaps
Other non-current assets
 
$
1

 
$
—

Derivative liabilities designated as hedging instruments:
 
 
 
 
 
Net investment hedges:
 
 
 
 
 
       Cross-currency swaps
Other liabilities
 
$
5

 
$
17

Cash flow hedges:
 
 
 
 
 
Natural gas forward swaps
Accounts payable and
accrued liabilities
 
$
3

 
$
1

Derivative assets not designated as hedging instruments:
 
 
 
 
 
Foreign exchange forward contracts
Other current assets
 
$
17

 
$
1

Derivative liabilities not designated as hedging instruments:
 
 
 
 
 
Foreign exchange forward contracts
Accounts payable and
accrued liabilities
 
$
1

 
$
8

Consolidated Statements of Earnings Activity
The following table presents the impact and respective location of derivative activities on the Consolidated Statements of Earnings (in millions):
   
   
Three Months Ended 
 March 31,
   
Location
2019
2018
Derivative activity designated as hedging instruments:
 
 
 
Cross-currency swap net investment hedges:
 
 
 
Amount of gain recognized in earnings on derivative amounts excluded from effectiveness testing
Interest expense, net
$
(3
)
$
(3
)
Derivative activity not designated as hedging instruments:
 
 
 
Foreign currency:
 
 
 
Amount of gain recognized in earnings (a)
Other expenses, net
$
(19
)
$
(4
)

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



- 13 -
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

5.        DERIVATIVE FINANCIAL INSTRUMENTS (continued)


Consolidated Statements of Comprehensive Earnings Activity

The following table presents the impact of derivative activities on the Consolidated Statements of Comprehensive Earnings (in millions):
 
 
Amount of (Gain) Loss Recognized in Comprehensive Earnings
 
 
Three Months Ended 
 March 31,
Hedging Type
Derivative Financial Instrument
2019
2018
Net investment hedge
Cross-currency swaps
$
(13
)
$
25

Cash flow hedge
Natural gas forward swaps
$
2

$
(1
)
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 March 31, 2019 , the notional amounts of these natural gas forward swaps was 2 MMBtu (or MMBtu equivalent) based on U.S. and European indices.
Net Investment Hedges
The Company has translation exposure resulting from translating the financial statements of foreign subsidiaries into U.S. Dollars, which is recognized in Currency translation adjustment (a component of AOCI). The Company uses cross-currency forward contracts to hedge a portion of the net investment in foreign subsidiaries against fluctuations in foreign exchange rates. As of March 31, 2019 , the notional amount of these derivative financial instruments was $516 million related to the U.S Dollar and European Euro.
Other Derivatives
The Company uses forward currency exchange contracts to manage existing exposures to foreign exchange risk related to assets and liabilities recorded on the Consolidated Balance Sheets. As of March 31, 2019 , the Company had notional amounts of $735 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, Indian Rupee, Japanese Yen, and South Korean Won. In addition, the Company had notional amounts of $113 million for non-designated derivative financial instruments related to foreign currency exposures in European Euro primarily related to the Russian Ruble, Polish Zloty and Swedish Krona. Lastly, the Company had notional amounts of $5 million for non-designated derivative financial instruments related to foreign currency exposures in Swedish Krona primarily related to the Danish Krone and Norwegian Krone.



- 14 -
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

6.     GOODWILL AND OTHER INTANGIBLE ASSETS
Intangible assets and goodwill consist of the following (in millions):
March 31, 2019
Weighted
Average
Useful Life
 
Gross
Carrying
Amount
Accumulated
Amortization
Net Carrying
Amount
Amortizable intangible assets:
 
 
 
 
 
Customer relationships
20 years
 
$
549

$
(145
)
$
404

Technology
17 years
 
319

(138
)
181

Other
13 years
 
63

(29
)
34

Indefinite-lived intangible assets:
 
 
 
 
 
Trademarks
 
 
1,139

—

1,139

Total intangible assets
 
 
$
2,070

$
(312
)
$
1,758

Goodwill
 
 
$
1,935

 
 
 
December 31, 2018
Weighted
Average
Useful Life
 
Gross
Carrying
Amount
Accumulated
Amortization
Net Carrying
Amount
Amortizable intangible assets:
 
 
 
 
 
Customer relationships
20 years
 
$
554

$
(138
)
$
416

Technology
17 years
 
321

(134
)
187

Other
14 years
 
60

(28
)
32

Indefinite-lived intangible assets:
 
 
 
 
 
Trademarks
 
 
1,144

—

1,144

Total intangible assets
 
 
$
2,079

$
(300
)
$
1,779

Goodwill
 
 
$
1,949

 
 
Goodwill
The Company tests goodwill and indefinite-lived intangible assets for impairment during the fourth quarter of each year, or more frequently should circumstances change or events occur that would more likely than not reduce the fair value of a reporting unit below its carrying amount. No testing was deemed necessary in the first three months of 2019 . The changes in the net carrying amount of goodwill by segment are as follows (in millions):
 
Composites
 
Insulation
 
Roofing
 
Total
Balance at December 31, 2018
$
57

 
$
1,495

 
$
397

 
$
1,949

Foreign currency translation
—

 
(13
)
 
(1
)
 
(14
)
Balance at March 31, 2019
$
57

 
$
1,482

 
$
396

 
$
1,935




- 15 -
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

6.     GOODWILL AND OTHER INTANGIBLE ASSETS (continued)

Other Intangible Assets
The Other category below primarily includes franchise agreements and quarry and emission rights. The changes in the gross carrying amount of intangible assets by asset group are as follows (in millions):
 
Customer Relationships
 
Technology
 
Trademarks
 
Other
 
Total
Balance at December 31, 2018
$
554

 
$
321

 
$
1,144

 
$
60

 
$
2,079

Other additions, net
—

 
—

 
—

 
3

 
3

Foreign currency translation
(5
)
 
(2
)
 
(5
)
 
—

 
(12
)
Balance at March 31, 2019
$
549

 
$
319

 
$
1,139

 
$
63

 
$
2,070

The estimated amortization expense for intangible assets for the next five years is as follows (in millions):
Period
Amortization
2020
$
50

2021
$
49

2022
$
45

2023
$
42

2024
$
39


7.          PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consist of the following (in millions):
 
March 31,
2019
December 31, 2018
Land
$
224

$
224

Buildings and leasehold improvements
1,110

1,091

Machinery and equipment
4,784

4,628

Construction in progress
280

443

 
6,398

6,386

Accumulated depreciation
(2,622
)
(2,575
)
Property, plant and equipment, net
$
3,776

$
3,811

Machinery and equipment includes certain precious metals used in our production tooling, which comprise approximately 11% of total machinery and equipment as of March 31, 2019 and December 31, 2018 . Precious metals used in our production tooling are depleted as they are consumed during the production process, which typically represents an annual expense of about 3% of the outstanding carrying value.



- 16 -
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)



8 .         ACQUISITIONS

Paroc Acquisition

On February 5, 2018, the Company acquired all the outstanding equity of Paroc Group Oy ("Paroc"), a leading producer of mineral wool insulation for building and technical applications in Europe, for $1,121 million , net of cash acquired. The acquisition of Paroc expands the Company's mineral wool technology, grows its presence in the European insulation market, provides access to a variety of new end-use markets and will increase the Insulation segment's geographic sales mix outside of the U.S. and Canada. Paroc's operating results have been included in the Company’s Insulation segment within the Consolidated Financial Statements since the date of the acquisition. During the first three months of 2019 , the Consolidated Statements of Earnings included $38 million in Net Sales attributable to the acquisition (related to the one-year post-acquisition period). The pro forma effect of this acquisition on Net sales and Net earnings attributable to Owens Corning was immaterial. 

The following table details the identifiable indefinite and definite-lived intangible assets acquired, their fair values (in millions) and estimated weighted average useful lives:
Type of Intangible Asset
Fair Value
Weighted Average Useful Life
Customer relationships
$
215

20
Technology - Know-how
61

15
Technology - Patented
12

5
Quarry Rights
7

45
Trademarks
213

Indefinite
Total
$
508

 

Pittsburgh Corning Acquisition

On June 27, 2017, the Company acquired all the outstanding equity of Pittsburgh Corning Corporation and Pittsburgh Corning Europe NV (collectively, "Pittsburgh Corning"), the world’s leading producer of cellular glass insulation systems for commercial and industrial markets, for $563 million , net of cash acquired. This acquisition expands the Company’s position in commercial and industrial product offerings and grows its presence in Europe and Asia. Pittsburgh Corning's operating results since the date of acquisition and purchase price allocation have been included in the Company's Insulation segment in the Consolidated Financial Statements.


9.      LEASES
    
ASU 2016-02 Adoption
On January 1, 2019, we adopted ASU 2016-02, "Leases (Topic 842)," and the related amendments (collectively "ASC 842"). We used the optional transition method of adoption, in which the cumulative effect of initially applying the new standard, as of January 1, 2019, to existing leases was $237 million to record the operating lease right-of-use assets and the related liabilities. Under this method of adoption, the comparative information in the Consolidated Financial Statements has not been revised and continues to be reported under the previously applicable lease accounting guidance (ASC 840). We elected the package of practical expedients permitted under the transition guidance which included the carry-forward of historical lease classification.
As of December 31, 2018, leases classified as capital leases under Accounting Standard Codification (ASC) 840 of $16 million were included in Property, plant and equipment, net. As of March 31, 2019, finance lease right-of-use assets of $15 million , which were previously classified as capital leases under ASC 840, are now included in Other non-current assets. As of both December 31, 2018 and March 31, 2019, liabilities associated with capital leases and finance leases are included in Long-term debt, as they represent indebtedness for bank covenant purposes.


- 17 -
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

9.        LEASES (continued)


Leases
The Company leases certain equipment and facilities under both operating and finance leases expiring on various dates through 2032. 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.
Balance Sheet Classification

The table below presents the lease-related assets and liabilities recorded on the balance sheet (in millions):
Leases
Classification on Balance Sheet
March 31, 2019
Assets
 
 
Operating lease assets
Operating lease right-of-use assets
$
235

Finance lease assets
Other non-current assets
15

Total lease assets
 
$
250

 
 
 
Liabilities
 
 
Current
 
 
Operating
Current liabilities
$
67

Finance
Current liabilities
4

Non-Current
 
 
Operating
Non-current operating lease liabilities
168

Finance
Long-term debt, net of current portion
16

Total lease liabilities
 
$
255


Lease Costs

For the three months ended March 31, 2019 , the Company recorded $20 million of operating lease expense and $3 million of short-term lease expense. The Company had an immaterial amount of finance lease expense and variable lease expense. Cash paid for operating leases approximated operating lease expense and non-cash right-of-use asset amortization for the three months ended March 31, 2019 . We added $18 million of operating lease liabilities as a result of obtaining operating lease right-of-use assets in three months ended March 31, 2019 .



- 18 -
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

9.        LEASES (continued)


Other Information

The tables below present supplemental information related to leases for the three months ended March 31, 2019 (in millions):
Weighted-average remaining lease term (years)
March 31, 2019
Operating leases
4.5
Finance leases
4.7
Weighted-average discount rate
March 31, 2019
Operating leases
3.54
%
Finance leases
7.61
%
Maturities of Lease Liabilities
As presented in our 2018 Form 10-K, the minimum future rental commitments under ASC 840 for non-cancelable operating leases with initial maturities greater than one year, payable over the remaining lives of the leases at December 31, 2018 were (in millions):
Period
Minimum Future Rental Commitments
2019
$
83

2020
$
64

2021
$
47

2022
$
31

2023
$
18

2024 and beyond
$
27

Total rent expense was $106 million , $87 million and $79 million in the years ended December 31, 2018, 2017 and 2016, respectively.
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 March 31, 2019 (in millions):
 
Operating Leases
Finance Leases
2019
$
79

$
4

2020
69

5

2021
53

5

2022
35

4

2023
20

3

2024 and beyond
31

2

Total minimum lease payments
287

23

Less: implied interest
52

3

Present value of future minimum lease payments
235

20

Less: current lease obligations
67

4

Long-term lease obligations
$
168

$
16

As of March 31, 2019 , we have an immaterial amount of leases that have not yet commenced.



- 19 -
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)


10 . WARRANTIES
The Company records a liability for warranty obligations at the date the related products are sold. Adjustments are made as new information becomes available. Please refer to Note 1 of our 2018 Form 10-K for information about our separately-priced extended warranty contracts. A reconciliation of the warranty liability is as follows (in millions):
   
Three Months Ended March 31,
 
2019
2018
Beginning balance
$
60

$
55

Amounts accrued for current year
4

5

Settlements of warranty claims
(3
)
(2
)
Ending balance
$
61

$
58


11 .      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.

Restructuring Costs

Pittsburgh Corning Acquisition-Related Restructuring
Following the acquisition of 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 throughout 2019.

2017 Cost Reduction Actions
During the second quarter of 2017, the Company took actions to avoid future capital outlays and reduce costs in its Composites segment, mainly through decisions to close certain sub-scale manufacturing facilities in Asia Pacific (including Doudian, Peoples Republic of China and Thimmapur, India) and North America (Mexico City, Mexico and Brunswick, Maine) and to reposition assets in its Chambery, France operation. During the first three months of 2019 , the Company recorded a $3 million non-cash gain related to a lease termination in Mexico City, Mexico. The Company expects to recognize approximately $7 million of incremental costs throughout 2019.

Consolidated Statements of Earnings Classification
The following table presents the impact and respective location of total restructuring costs on the Consolidated Statements of Earnings, which are included within Corporate, Other and Eliminations (in millions):
   
 
Three Months Ended March 31,
Type of cost
Location
2019
2018
Accelerated depreciation
Cost of sales
$
—

$
5

Other exit costs
Cost of sales
1

2

Severance
Other expenses, net
—

1

Other exit gains
Other expenses, net
(3
)
(3
)
Total restructuring (gains)/costs
 
$
(2
)
$
5




- 20 -
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

11.
RESTRUCTURING AND ACQUISITION-RELATED COSTS (continued)

Summary of Unpaid Liabilities
The following table summarizes the status of the unpaid liabilities from the Company's restructuring activities (in millions):
 
2017 Cost Reduction Actions
Pittsburgh Corning Acquisition-Related Restructuring
Total
Balance at December 31, 2018
$
10

$
7

$
17

Restructuring gains
(2
)
—

(2
)
Payments
(5
)
(2
)
(7
)
Non-cash items and reclassifications to other accounts
3

—

3

Balance at March 31, 2019
$
6

$
5

$
11

Cumulative charges incurred
$
46

$
20

$
66


As of March 31, 2019 , the remaining liability balance is comprised of $11 million of severance, inclusive of $2 million of non-current severance and $9 million of severance the Company expects to pay over the next twelve months.


- 21 -
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)




12 .     DEBT

Details of the Company’s outstanding long-term debt, as well as the fair values, are as follows (in millions):
 
March 31, 2019
 
December 31, 2018
 
Carrying Value
Fair Value
 
Carrying Value
Fair Value
4.20% senior notes, net of discount and financing fees, due 2022
$
598

103
%
 
$
598

99
%
4.20% senior notes, net of discount and financing fees, due 2024
394

101
%
 
393

99
%
3.40% senior notes, net of discount and financing fees, due 2026
396

95
%
 
396

90
%
7.00% senior notes, net of discount and financing fees, due 2036
400

114
%
 
400

112
%
4.30% senior notes, net of discount and financing fees, due 2047
588

81
%
 
588

76
%
4.40% senior notes, net of discount and financing fees, due 2048
390

83
%
 
389

77
%
Senior revolving credit facility, maturing in 2024 (a)
172

100
%
 
—

n/a

Accounts receivables securitization facility, maturing in 2022 (a)
270

100
%
 
75

100
%
Various finance leases, due through 2032 (a) (b)
20

100
%
 
24

100
%
Term loan borrowing, maturing in 2021 (a)
500

100
%
 
500

100
%
Other
8

n/a

 
8

n/a

Total long-term debt
3,736

n/a

 
3,371

n/a

Less – current portion (a)
25

100
%
 
9

100
%
Long-term debt, net of current portion
$
3,711

n/a

 
$
3,362

n/a


(a) The Company determined that the book value of the above noted long-term debt instruments approximates fair value.
(b) Amounts reflected for December 31, 2018 represent capital lease obligations as recorded under ASC 840.

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 $400 million of 2048 senior notes on January 25, 2018. Interest on the notes is payable semiannually in arrears on January 30 and July 30 each year, beginning on July 30, 2018. The proceeds from these notes were used, along with borrowings on a $600 million term loan commitment and borrowings on the Receivables Securitization Facility (as defined below), to fund the purchase of Paroc in the first quarter of 2018.
The Company issued $600 million of 2047 senior notes on June 26, 2017. Interest on the notes is payable semiannually in arrears on January 15 and July 15 each year, beginning on January 15, 2018. A portion of the proceeds from these notes was used to fund the purchase of Pittsburgh Corning in 2017 and for general corporate purposes. The remaining proceeds were used to repay $144 million of our 2019 senior notes and $140 million of our 2036 senior notes.
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.


- 22 -
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

12.    DEBT (continued)

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 senior notes above are referred to as the “Senior Notes.” The Senior Notes are general unsecured obligations of the Company and rank pari passu with all existing and future senior unsecured indebtedness of the Company.
The Company has the option to redeem all or part of the Senior Notes at any time at a “make-whole” redemption price. The Company is subject to certain covenants in connection with the issuance of the Senior Notes that it believes are usual and customary. The Company was in compliance with these covenants as of March 31, 2019 .
In the first quarter of 2016, the Company terminated interest rate swaps designated to hedge a portion of the 4.20% senior notes due 2022. The residual fair value of the swaps is recognized in Long-term debt, net of current portion on the Consolidated Balance Sheets as an unamortized interest rate swap basis adjustment and accounts for $5 million of the Other balance in the above table as of March 31, 2019 and December 31, 2018 .
Senior Revolving Credit Facility
The Company has an $800 million Senior Revolving Credit Facility 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. In April 2019, the Company entered into an amendment to extend the maturity date of the Senior Revolving Credit Facility by one year to 2024.
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 March 31, 2019 . Please refer to the Credit Facility Utilization paragraph below for liquidity information as of March 31, 2019 .
Term Loan Borrowing
The Company obtained a term loan borrowing 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 $600 million 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 $600 million Term Loan requires partial quarterly principal repayments and full repayment by February 2021. As of March 31, 2019 , the Term Loan had $500 million outstanding. In March 2019, the Term Loan was amended to reduce the applicable interest rate on outstanding borrowings.
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. The Company was in compliance with these covenants as of March 31, 2019 .
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.


- 23 -
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

12.    DEBT (continued)

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 March 31, 2019 . Please refer to the Credit Facility Utilization section below for liquidity information as of March 31, 2019 .
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.
Credit Facility Utilization
The following table shows how the Company utilized its primary sources of liquidity (in millions):
 
Balance at March 31, 2019
 
Senior Revolving Credit Facility
Receivables Securitization Facility
Facility size or borrowing limit
$
800

$
280

Collateral capacity limitation on availability
—

8

Outstanding borrowings
172

270

Outstanding letters of credit
9

2

Availability on facility
$
619

$
—

Short-Term Debt
Short-term borrowings were $3 million and $16 million as of March 31, 2019 and December 31, 2018 , 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 11.0% and 3.0% for March 31, 2019 and December 31, 2018 , respectively.




- 24 -
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)


13 .
PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS
Pension Plans
The Company sponsors defined benefit pension plans. Under the plans, pension benefits are based on an employee’s years of service and, for certain categories of employees, qualifying compensation. Company contributions to these pension plans are determined by an independent actuary to meet or exceed minimum funding requirements. In our non-U.S. plans, the unrecognized cost of any retroactive amendments and actuarial gains and losses are amortized over the average future service period of plan participants expected to receive benefits. In our U.S. plans, the unrecognized cost of any retroactive amendments and actuarial gains and losses are amortized over the average remaining life expectancy of the inactive participants as substantially all of the plan participants are inactive.
The following tables provide information regarding pension expense recognized (in millions):
 
Three Months Ended March 31,
 
2019
 
2018
   
U.S.
Non-U.S.
Total
 
U.S.
Non-U.S.
Total
Components of Net Periodic Pension Cost
 
 
 
 
 
 
 
Service cost
$
1

$
1

$
2

 
$
2

$
1

$
3

Interest cost
9

3

12

 
9

3

12

Expected return on plan assets
(13
)
(4
)
(17
)
 
(14
)
(5
)
(19
)
Amortization of actuarial loss
3

1

4

 
3

1

4

Net periodic pension cost
$
—

$
1

$
1

 
$
—

$
—

$
—

The Company expects to contribute approximately $25 million in cash to the U.S. pension plans and another $14 million to non-U.S. plans during 2019 . The Company made cash contributions of $8 million to the plans during the three months ended March 31, 2019 .
Postemployment and Postretirement Benefits Other than Pension Plans ("OPEB")
The Company maintains healthcare and life insurance benefit plans for certain retired employees and their dependents. The health care plans in the United States are non-funded and pay either (1) stated percentages of covered medically necessary expenses, after subtracting payments by Medicare or other providers and after stated deductibles have been met, or (2) fixed amounts of medical expense reimbursement.
The following table provides the components of net periodic benefit cost for aggregated U.S. and non-U.S. plans for the periods indicated (in millions):
   
Three Months Ended 
 March 31,
   
2019
2018
Components of Net Periodic Benefit Cost
 
 
Service cost
$
—

$
1

Interest cost
2

2

Amortization of prior service cost
(1
)
(1
)
Amortization of actuarial gain
(2
)
(2
)
Net periodic benefit gain
$
(1
)
$
—





- 25 -
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)


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

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

Environmental Matters

The Company has established policies and procedures designed to ensure that its operations are conducted in compliance with all relevant laws and regulations and that enable the Company to meet its high standards for corporate sustainability and environmental stewardship. Our manufacturing facilities are subject to numerous foreign, federal, state and local laws and regulations relating to the presence of hazardous materials, pollution and protection of the environment, including emissions to air, 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 2020 Sustainability Goals include significant global reductions in energy use, water consumption, waste to landfill, and emissions of greenhouse gases, fine particulate matter and toxic air emissions.

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 March 31, 2019 , the Company was involved with a total of 22 sites worldwide, including 8 Superfund and state equivalent sites and 14 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 March 31, 2019 , the Company had an accrual totaling $14 million for these costs, of which the current portion is $9 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.




- 26 -
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)


15.
STOCK COMPENSATION

Stock Plans

2016 and 2019 Stock Plans

On April 21, 2016, the Company’s stockholders approved the Owens Corning 2016 Stock Plan (the “2016 Stock Plan”) which authorizes grants of stock options, stock appreciation rights, restricted stock awards, restricted stock units, bonus stock awards and performance stock awards. At March 31, 2019 , the number of shares remaining available under the 2016 Stock Plan for all stock awards was approximately 1.7 million .

On April 18, 2019, the Company's stockholders approved the Owens Corning 2019 Stock Plan (the "2019 Stock Plan") which authorizes grants of stock options, stock appreciation rights, restricted stock awards, restricted stock units, bonus stock awards and performance stock awards. Under the 2019 Stock Plan, 2.3 million shares of common stock may be granted in addition to the approximately 1.7 million shares of Company common stock that rolled over from the 2016 Stock Plan as of April 18, 2019. Such shares of common stock include shares that were available but not granted, or which were granted but were not issued or delivered due to expiration, termination, cancellation or forfeiture of such awards. There will be no future grants made under the 2016 Stock Plan.
Stock Options
The Company did not grant any stock options during the three months ended March 31, 2019 . 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 market price of the Company’s common stock on the date of grant, and an option’s maximum term is 10 years.
The Company did not recognize any stock option expense during the three months ended March 31, 2019 . During the three months ended March 31, 2018 , the Company recognized expense of less than $1 million related to the Company's stock options. As of March 31, 2019 , there was no unrecognized compensation cost related to stock options. The total aggregate intrinsic value of options outstanding as of March 31, 2019 was $4 million .
The following table summarizes the Company’s stock option activity:
   
Three Months Ended 
 March 31, 2019
   
Number of
Options
Weighted-
Average
Exercise Price
Beginning Balance
478,875

$
37.18

Exercised
(7,800
)
13.89

Ending Balance
471,075

$
37.57

The following table summarizes information about the Company’s options outstanding and exercisable:
   
Options Outstanding
Options Exercisable
 
Options
Outstanding
Weighted-Average
Number Exercisable at March 31, 2019
Weighted-Average
Range of Exercise Prices
Remaining
Contractual Life
Exercise
Price
Remaining
Contractual Life
Exercise
Price
$25.45 - $42.16
471,075

3.82
$
37.57

471,075

3.82
$
37.57




- 27 -
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

15.
STOCK COMPENSATION (continued)


Restricted Stock Awards and Restricted Stock Units
The Company has granted restricted stock awards and restricted stock units (collectively referred to as “restricted stock”) as a part of its long-term incentive plan. Compensation expense for restricted stock is measured based on the 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.
During the three months ended March 31, 2019 , the Company recognized expense of $7 million related to the Company's restricted stock. During the three months ended March 31, 2018 , the Company recognized expense of $5 million related to the Company's restricted stock. As of March 31, 2019 , there was $52 million of total unrecognized compensation cost related to restricted stock. That cost is expected to be recognized over a weighted-average period of 2.48  years. The total fair value of shares vested during the three months ended March 31, 2019 and 2018 was $18 million and $17 million , respectively.
The following table summarizes the Company’s restricted stock activity:
   
Three Months Ended March 31, 2019
   
Number of Shares/Units
Weighted-Average
Grant-Date
Fair Value
Beginning Balance
1,479,374

$
52.30

Granted
480,167

52.58

Vested
(339,725
)
54.14

Forfeited
(12,300
)
63.00

Ending Balance
1,607,516

$
51.89

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 all performance shares is contingent on meeting internal company-based metrics or an external-based stock performance metric.
In the three months ended March 31, 2019 , the Company granted both internal company-based and external-based metric PSUs.
Internal based metrics
The internal company-based metrics are based on various Company metrics and typically vest over a three-year period. The amount of stock distributed will vary from 0% to 200% of PSUs awarded depending on each award's design and performance versus the internal Company-based metrics.
The initial fair value for all internal Company-based metric PSUs assumes that the performance goals will be achieved and is based on the grant date stock price. This assumption is monitored quarterly and if it becomes probable that such goals will not be achieved or will be exceeded, compensation expense recognized will be adjusted and previous surplus compensation expense recognized will be reversed or additional expense will be recognized. The expected term represents the period from the grant date to the end of the vesting period. Pro-rata vesting may be utilized in the case of death, disability or approved retirement and awards if earned will be paid at the end of the vesting period.
External-based metrics
The external-based metrics vest after a three -year period. Outstanding grants are based on the Company's total stockholder return relative to the performance of the companies constituting the former S&P Building & Construction Industry Index or Dow Jones Construction and Materials Index. The amount of stock distributed will vary from 0% to 200% of PSUs awarded depending on the relative stockholder return performance.


- 28 -
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

15.
STOCK COMPENSATION (continued)


The Company estimated the fair value of the external-based metric performance stock grants using a Monte Carlo simulation. The external-based metric performance stock granted in 2019 uses various assumptions that include expected volatility of 26.7% , and a risk free interest rate of 2.5% , both of which were based on an expected term of 2.90 years. Expected volatility was based on a benchmark study of our peers. The risk-free interest rate was based on zero coupon U.S. Treasury bills at the time of grant. The expected term represents the period from the grant date to the end of the three -year performance period. Compensation expense for external-based metric PSUs is measured based on the grant date fair value and is recognized on a straight-line basis over the vesting period. Pro-rata vesting may be utilized in the case of death, disability or approved retirement, and awards if earned will be paid at the end of the three -year period.
During the three months ended March 31, 2019 and March 31, 2018 , the Company recognized expense of $3 million related to the Company's PSUs. As of March 31, 2019 , there was $22 million of total unrecognized compensation cost related to PSUs. That cost is expected to be recognized over a weighted-average period of 1.97 years.
The following table summarizes the Company’s PSU activity:
   
Three Months Ended 
 March 31, 2019
   
Number
of PSUs
Weighted-Average
Grant-Date
Fair Value
Beginning Balance
360,977

$
75.23

Granted
205,350

58.40

Forfeited
(1,100
)
74.04

Ending Balance
565,227

$
69.12

Employee Stock Purchase Plan
On April 18, 2013, the Company’s stockholders approved the Owens Corning Employee Stock Purchase Plan (ESPP). The 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. At the approval date, 2.0 million shares were available for purchase under the ESPP. As of March 31, 2019 , 0.7 million shares remain available for purchase.
During the three months ended March 31, 2019 and March 31, 2018 , the Company recognized expense of $1 million related to the Company's ESPP. As of March 31, 2019 , there was $1 million of total unrecognized compensation cost related to the ESPP.

 


- 29 -
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)


16.      EARNINGS PER SHARE
The following table is a reconciliation of weighted-average shares for calculating basic and diluted earnings per-share (in millions, except per share amounts):
   
Three Months Ended 
 March 31,
   
2019
2018
Net earnings attributable to Owens Corning
$
44

$
92

Weighted-average number of shares outstanding used for basic earnings per share
109.5

111.5

Non-vested restricted and performance shares
0.4

1.0

Options to purchase common stock
0.2

0.3

Weighted-average number of shares outstanding and common equivalent shares used for diluted earnings per share
110.1

112.8

Earnings per common share attributable to Owens Corning common stockholders:
 
 
Basic
$
0.40

$
0.83

Diluted
$
0.40

$
0.82

For the three months ended March 31, 2019 , the number of shares used in the calculation of diluted earnings per share did not include 0.7 million non-vested restricted shares and 0.1 million non-vested performance shares, due to their anti-dilutive effect. For the three months ended March 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 0.1 million non-vested performance shares, due to their anti-dilutive effect.
On October 24, 2016, the Board of Directors approved a share buy-back program under which the Company is authorized to repurchase up to 10 million shares of the Company’s outstanding common stock (the “Repurchase Authorization”). The Repurchase Authorization enables the Company to repurchase shares through the open market, privately negotiated, or other transactions. The actual number of shares repurchased will depend on timing, market conditions and other factors and is at the Company’s discretion. The Company repurchased 1.0 million shares of its common stock for $48 million during the three months ended March 31, 2019 , under the Repurchase Authorization. As of March 31, 2019 , 3.6 million shares remain available for repurchase under the Repurchase Authorization.

17.      INCOME TAXES

The following table provides the Income tax expense (in millions) and effective tax rate for the periods indicated:
   
Three Months Ended March 31,
   
2019
2018
Income tax expense
$
39

$
11

Effective tax rate
48
%
11
%

The difference between the effective tax rate and the U.S. federal statutory tax rate of 21% for the three months ended March 31, 2019 is primarily due to U.S. state and local income tax expense, the impact of higher foreign tax rates, legislative changes and other discrete adjustments.
On March 6, 2019, the U.S. Treasury and the IRS proposed regulations that provide guidance on determining the amount of a domestic corporation’s deduction for the global intangible low-taxed income (GILTI) and foreign-derived intangible income (FDII) recently added by the U.S. Tax Cuts and Jobs Act of 2017 (the “Tax Act”). The proposed regulations provide special rules in determining the deduction amount which adjusted the Company’s 2018 tax estimate resulting in an increase to tax expense of $12 million for the three months ended March 31, 2019.


- 30 -
OWENS CORNING AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(unaudited)

17.    INCOME TAXES (continued)


The difference between the effective tax rate and the U.S. federal statutory tax rate of 21% for the three months ended March 31, 2018 is primarily due to excess tax benefits related to stock compensation, U.S. state and local income tax expense, the impact of higher foreign tax rates and other discrete adjustments.
The Company continues to assert indefinite reinvestment in accordance with ASC 740 based on the laws as of enactment of the Tax Act.

18.      CHANGES IN ACCUMULATED OTHER COMPREHENSIVE DEFICIT

The following table summarizes the changes in accumulated other comprehensive income (deficit) (in millions):
 
Three Months Ended 
 March 31,
   
   
2019
2018
Currency Translation Adjustment
 
 
Beginning balance
$
(306
)
$
(183
)
Net investment hedge amounts classified into AOCI, net of tax
10

(19
)
Gain on foreign currency translation
1

4

Other comprehensive income/(loss), net of tax
11

(15
)
Ending balance
$
(295
)
$
(198
)
Pension and Other Postretirement Adjustment
 
 
Beginning balance
$
(350
)
$
(331
)
  Amounts reclassified from AOCI to net earnings, net of tax (a)
1

1

  Amounts classified into AOCI, net of tax
(2
)
(3
)
Other comprehensive loss, net of tax
(1
)
(2
)
Ending balance
$
(351
)
$
(333
)
Hedging Adjustment
 
 
Beginning balance
$
—

$
—

  Amounts classified into AOCI, net of tax
(1
)
1

Other comprehensive (loss)/income, net of tax
(1
)
1

Ending balance
$
(1
)
$
1

Total AOCI ending balance
$
(647
)
$
(530
)

(a)
These AOCI components are included in the computation of total Pension and OPEB expense and are recorded in Non-operating income. See Note 13 for additional information.




ITEM 2.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Management’s Discussion and Analysis (MD&A) is intended to help investors understand Owens Corning, our operations and our present business environment. MD&A is provided as a supplement to, and should be read in conjunction with, our Consolidated Financial Statements and the accompanying Notes thereto contained in this report. Unless the context requires otherwise, the terms “Owens Corning,” “Company,” “we” and “our” in this report refer to Owens Corning and its subsidiaries.
GENERAL
Owens Corning is a leading global producer of glass fiber reinforcements and other materials for composites and of residential and commercial building materials. The Company has three reportable segments: Composites, Insulation and Roofing. Through these lines of business, we manufacture and sell products worldwide. We maintain leading market positions in many of our major product categories.
EXECUTIVE OVERVIEW
Net earnings attributable to Owens Corning were $44 million in the first quarter of 2019 , compared to $92 million in the same period of 2018 . The Company reported $118 million in earnings before interest and taxes (EBIT) for the first quarter of 2019 compared to $131 million in the same period of 2018 . The Company generated $116 million in adjusted earnings before interest and taxes (“Adjusted EBIT”) for the first quarter of 2019 compared to $152 million in the same period of 2018 . See the Adjusted Earnings Before Interest and Taxes paragraph of the MD&A for further information regarding EBIT and Adjusted EBIT, including the reconciliation to net earnings attributable to Owens Corning. First quarter of 2019 EBIT performance compared to the same period of 2018 decreased $23 million , $17 million and $3 million in our Roofing, Insulation and Composites segments, respectively. Within our Corporate, Other and Eliminations category, General corporate expense and other decreased by $7 million .
In our Insulation segment, EBIT in the first quarter of 2019 was $15 million compared to $32 million in the same period of 2018 , primarily due to production curtailment actions taken in our North American residential fiberglass business. In our Composites segment, EBIT was $57 million in the first quarter of 2019 compared to $60 million in the same period of 2018 . In our Roofing segment, EBIT in the first quarter of 2019 was $74 million compared to $97 million in the same period in 2018 , primarily due to lower sales volumes.
In the three months ended March 31, 2019 , the Company's operating activities used $151 million of cash flow, compared to $90 million in the same period in 2018 . The change was primarily driven by year-over-year reduction in payables in 2019.

The Company repurchased 1.0 million shares of its common stock for $48 million in the first quarter of 2019 under a previously announced repurchase authorization (the "Share Repurchase Authorization"). As of March 31, 2019 , 3.6 million shares remained available for repurchase under the Share Repurchase Authorization.




Table of Contents
- 32 -

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


RESULTS OF OPERATIONS
Consolidated Results (in millions)
   
Three Months Ended 
 March 31,
   
2019
2018
Net sales
$
1,667

$
1,691

Gross margin
$
325

$
355

% of net sales
19
%
21
%
Marketing and administrative expenses
$
182

$
185

Earnings before interest and taxes
$
118

$
131

Interest expense, net
$
36

$
28

Income tax expense
$
39

$
11

Net earnings attributable to Owens Corning
$
44

$
92

The Consolidated Results discussion below provides a summary of our results and the trends affecting our business, and should be read in conjunction with the more detailed Segment Results discussion that follows.
NET SALES
In the first quarter 2019 , net sales decreased $24 million compared to the same period in 2018 . For the first quarter, the decrease in net sales was driven by the impact of lower sales volumes in our Roofing segment.
GROSS MARGIN
In the first quarter 2019 , gross margin decreased $30 million compared to the same period in 2018 . For the first quarter, the decrease was driven by input cost inflation in all three segments and production curtailment actions taken in our Insulation segment.
MARKETING AND ADMINISTRATIVE EXPENSES
In the first quarter 2019 , marketing and administrative expenses decreased $3 million compared to the same period in 2018 .
INTEREST EXPENSE, NET
In the first quarter 2019 , interest expense, net increased $8 million compared to the same period in 2018 , primarily due to higher long-term debt balances during the first quarter of 2019.
INCOME TAX EXPENSE
Income tax expense for the three months ended March 31, 2019 was $39 million . For the first quarter 2019 , the Company's effective tax rate was 48% .
The difference between the effective tax rate and the U.S. federal statutory tax rate of 21% for the three months ended March 31, 2019 is primarily due to U.S. state and local income tax expense, the impact of higher foreign tax rates, legislative changes and other discrete adjustments.
On March 6, 2019, the U.S. Treasury and the IRS proposed regulations that provide guidance on determining the amount of a domestic corporation’s deduction for the global intangible low-taxed income (GILTI) and foreign-derived intangible income (FDII) recently added by the U.S. Tax Cuts and Jobs Act of 2017 (the “Tax Act”). The proposed regulations provide special rules in determining the deduction amount which adjusted the Company’s 2018 tax estimate resulting in an increase to tax expense of $12 million for the three months ended March 31, 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 $0 million to $3 million .


Table of Contents
- 33 -

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


Income tax expense for the three months ended March 31, 2018 was $11 million . For the first quarter 2018 , the Company's effective tax rate was 11% . The difference between the effective tax rate and the U.S. federal statutory tax rate of 21% for the three months ended March 31, 2018 , was primarily due to excess tax benefits related to stock compensation, U.S. state and local income tax expense, the impact of higher foreign tax rates 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 within Corporate, Other and Eliminations. Please refer to Notes 8 and 11 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 (in millions):
   
 
Three Months Ended March 31,
 
Location
2019
2018
Restructuring costs
Cost of sales
$
(1
)
$
(7
)
Restructuring gains
Other expenses, net
3

2

Acquisition-related costs
Marketing and administrative expenses
—

(5
)
Acquisition-related costs
Other expenses, net
—

(9
)
Recognition of acquisition inventory fair value step-up
Cost of sales
—

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

$
(21
)

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

Adjusting income (expense) items to EBIT are shown in the table below (in millions):
   
Three Months Ended 
 March 31,
  
2019
2018
Restructuring gains (costs)
$
2

$
(5
)
Acquisition-related costs
—

(14
)
Recognition of acquisition inventory fair value step-up
—

(2
)
Total adjusting items
$
2

$
(21
)
 


Table of Contents
- 34 -

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



The reconciliation from Net earnings attributable to Owens Corning to EBIT and to Adjusted EBIT is shown in the table below (in millions):
   
Three Months Ended 
 March 31,
   
2019
2018
NET EARNINGS ATTRIBUTABLE TO OWENS CORNING
$
44

$
92

Net earnings attributable to noncontrolling interests
—

—

NET EARNINGS
44

92

Equity in net earnings of affiliates
1

—

Income tax expense
39

11

EARNINGS BEFORE TAXES
82

103

Interest expense, net
36

28

EARNINGS BEFORE INTEREST AND TAXES
118

131

Adjusting items from above
2

(21
)
ADJUSTED EBIT
$
116

$
152

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

The table below provides a summary of net sales, EBIT and depreciation and amortization expense for the Composites segment (in millions):
   
Three Months Ended 
 March 31,
   
2019
2018
Net sales
$
513

$
511

% change from prior year
—
%
—
%
EBIT
$
57

$
60

EBIT as a % of net sales
11
%
12
%
Depreciation and amortization expense
$
39

$
37


NET SALES

In our Composites segment, net sales in the first quarter 2019 increased $2 million compared to the same period in 2018 . Higher sales volumes of about 4% were offset by the negative impact of translating sales denominated in foreign currencies into United States dollars.

EBIT

In our Composites segment, EBIT in the first quarter of 2019 decreased $3 million compared to the same period in 2018 . The negative impact of input cost inflation and transportation costs of $10 million was partially offset by the favorable impact of higher sales volumes and improved manufacturing performance.



Table of Contents
- 35 -

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


OUTLOOK

Global glass reinforcements market demand has historically grown on average with global industrial production and we believe this relationship will continue. In 2019 , we expect continued global industrial production growth.
Insulation
The table below provides a summary of net sales, EBIT and depreciation and amortization expense for the Insulation segment (in millions):
 
  
Three Months Ended 
 March 31,
  
2019
2018
Net sales
$
591

$
596

% change from prior year
-1
 %
49
%
EBIT
$
15

$
32

EBIT as a % of net sales
3
 %
5
%
Depreciation and amortization expense
$
49

$
45

NET SALES
In our Insulation segment, net sales in the first quarter of 2019 decreased $5 million compared to the same period in 2018 . Lower sales volumes of about 8% and the unfavorable impact of translating sales denominated in foreign currencies into United States dollars was partially offset by higher selling prices of $22 million and the $38 million impact of our acquisition of Paroc (related to the one-year post-acquisition period).
EBIT
In our Insulation segment, EBIT in the first quarter of 2019 decreased by $17 million compared to the same period in 2018 . The impact of higher selling prices was largely offset by the impact of lower sales volumes. Production curtailment actions taken in our North American residential fiberglass business in the first quarter of 2019 resulted in $16 million of lower fixed cost absorption on lower production volumes compared to the same period in 2018. Favorable manufacturing performance of $10 million was more than offset by higher input cost inflation of $7 million, higher selling, general and administrative costs and the unfavorable impact of translating sales denominated in foreign currencies into United States dollars.
OUTLOOK
The outlook for Insulation demand is driven by new North American residential construction, remodeling and repair activity; and commercial and industrial construction activity in the United States, Canada, Europe and Asia-Pacific. Demand for commercial and industrial insulation markets is most closely correlated to industrial production growth in the global markets we serve. Demand for residential insulation is most closely correlated to U.S. housing starts. During the first quarter of 2019 , the average Seasonally Adjusted Annual Rate (SAAR) of U.S. housing starts was approximately 1.193 million, down from an annual average of approximately 1.317 million starts in the first quarter of 2018 .
While the outlook for U.S. housing starts growth in 2019 remains uncertain, we believe the geographic, product and channel mix of our portfolio may continue to moderate the impact of any market demand-driven variability associated with the U.S. housing market.


Table of Contents
- 36 -

ITEM 2.    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):
  
Three Months Ended 
 March 31,
  
2019
2018
Net sales
$
614

$
642

% change from prior year
-4
 %
2
%
EBIT
$
74

$
97

EBIT as a % of net sales
12
 %
15
%
Depreciation and amortization expense
$
13

$
12

NET SALES
In our Roofing segment, net sales in the first quarter of 2019 decreased by $28 million compared to the same period in 2018 . The decrease was primarily driven by lower sales volumes of about 10% on lower shingle volumes, partially offset by $33 million of higher selling prices and favorable customer mix.
EBIT
In our Roofing segment, EBIT in the first quarter of 2019 decreased by $23 million compared to the same period in 2018 . Higher selling prices more than offset $28 million of input cost inflation, primarily asphalt. The impact of lower sales volumes drove the year-over-year EBIT decrease. The unfavorable impact of lower production volumes was partially offset by favorable customer mix.
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.
Corporate, Other and Eliminations
The table below provides a summary of EBIT and depreciation and amortization expense for the Corporate, Other and Eliminations category (in millions):
   
Three Months Ended 
 March 31,
  
2019
2018
Restructuring gains (costs)
$
2

$
(5
)
Acquisition-related costs
—

(14
)
Recognition of acquisition inventory fair value step-up
—

(2
)
General corporate expense and other
(30
)
(37
)
EBIT
$
(28
)
$
(58
)
Depreciation and amortization
$
12

$
15

 
EBIT
In Corporate, Other and Eliminations, EBIT losses for the first quarter 2019 were lower by $30 million compared to the same period in 2018 . EBIT improvement in the first quarter of 2019 was primarily driven by lower restructuring and acquisition-related costs. See details of these costs in the table above and further explained in both the Restructuring and Acquisition-Related Costs paragraph of MD&A and Note 11 of the Consolidated Financial Statements.


Table of Contents
- 37 -

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


General corporate expense and other for the first quarter 2019 was lower by $7 million compared to the same period in 2018 , primarily driven by lower general corporate expenses.
DEPRECIATION AND AMORTIZATION
Depreciation and amortization in the first quarter of 2019 was lower by $3 million compared to the same periods in 2018 , primarily due to higher accelerated depreciation recorded in 2018 related to our restructuring actions.
OUTLOOK
In 2019 , we expect general corporate expenses to range between $140 million and $150 million .
LIQUIDITY, CAPITAL RESOURCES AND OTHER RELATED MATTERS
Liquidity
The Company's primary external sources of liquidity are its Senior Revolving Credit Facility and its Receivables Securitization Facility (each as defined below).

The Company has an $800 million senior revolving credit facility (the "Senior Revolving Credit Facility") that has been amended from time to time with a maturity date 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.
The following table shows how the Company utilized its primary sources of liquidity (in millions):
 
Balance at March 31, 2019
 
Senior Revolving Credit Facility
Receivables Securitization Facility
Facility size or borrowing limit
$
800

$
280

Collateral capacity limitation on availability
—

8

Outstanding borrowings
172

270

Outstanding letters of credit
9

2

Availability on facility
$
619

$
—

The Receivables Securitization Facility and Senior Revolving Credit Facility mature in 2022 and 2024, respectively. The Company also has a term loan (the "Term Loan"), which requires minimum quarterly principal repayments and full repayment by February 2021. As of March 31, 2019 , the Term Loan had $500 million outstanding. The company has no significant debt maturities of senior notes before 2022. As of March 31, 2019 , the Company had $3.7 billion of total debt and cash and cash equivalents of $82 million .
Cash and cash equivalents held by foreign subsidiaries may be subject to foreign withholding taxes upon repatriation to the U.S. As of March 31, 2019 , and December 31, 2018 , the Company had $80 million and $67 million , respectively, in cash and cash equivalents in certain of our foreign subsidiaries. The Company continues to assert indefinite reinvestment in accordance with ASC 740 based on the laws as of enactment of the tax legislation commonly known as the U.S. Tax Cuts and Jobs Act of 2017.
As a holding company, we have no operations of our own and most of our assets are held by our direct and indirect subsidiaries. Dividends and other payments or distributions from our subsidiaries will be used to meet our debt service and other obligations and to enable us to pay dividends to our stockholders. Please refer to page 13 of the Risk Factors disclosed in Item 1A of the Company's Form 10-K for the year ended December 31, 2018 (the " 2018 Form 10-K") for details on the factors that could inhibit our subsidiaries' ability to pay dividends or make other distributions to the parent company.
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 Receivables Securitization Facility, will provide ample liquidity to enable us to meet our


Table of Contents
- 38 -

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


cash requirements. 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 reducing outstanding amounts under the Senior Revolving Credit Facility, Receivables Securitization Facility and Term Loan.
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 agreements governing our Senior Revolving Credit Facility, Receivables Securitization Facility and Term Loan 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 March 31, 2019 .
Cash Flows
The following table presents a summary of our cash balance, cash flows, and availability on credit facilities (in millions):
   
Three Months Ended 
 March 31,
   
2019
2018
Cash and cash equivalents
$
82

$
140

Net cash flow used for operating activities
$
(151
)
$
(90
)
Net cash flow used for investing activities
$
(95
)
$
(1,207
)
Net cash flow provided by financing activities
$
241

$
1,201

Availability on the Senior Revolving Credit Facility
$
619

$
670

Availability on the Receivables Securitization Facility
$
—

$
—

Operating activities : For the three months ended March 31, 2019 , the Company's operating activities used $151 million of cash compared to $90 million used in the same period in 2018 . The change in cash used by operating activities was primarily due to a larger increase in operating assets and liabilities (mainly from lower payables) in 2019 compared to the same period of 2018 .
Investing activities: Net cash flow used for investing activities decreased $1,112 million for the three months ended March 31, 2019 compared to the same period of 2018 , primarily driven by spending on acquisitions in the prior year.
Financing activities: Net cash provided by financing activities was $241 million for the three months ended March 31, 2019 , compared to $1,201 million in the same period in 2018 . The change of $960 million was primarily due to higher long-term debt inflows to fund the purchase of Paroc in the first quarter of 2018 (see Note 12 of the Consolidated Financial Statements and the Liquidity section above for further discussion of activities related to debt).
2019 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 2019 are expected to be approximately $500 million , which is roughly $50 million greater than expected depreciation and amortization. Capital spending in excess of depreciation and amortization is primarily due to growth projects in our Composites and Insulation segments, including the construction of a Paroc mineral wool insulation manufacturing line in Poland that was in progress at the date of acquisition. The Company will also continue to evaluate projects and acquisitions that provide opportunities for growth in our businesses, and invest in them when they meet our strategic and financial criteria.
Tax Net Operating Losses and U.S Foreign Tax Credits
There have been no material changes to the disclosure in our 2018 Form 10-K.


Table of Contents
- 39 -

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


Pension Contributions
Please refer to Note 13 of the Consolidated Financial Statements. The Company expects to contribute $39 million in cash to its global pension plans during 2019 . 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 5 of the Consolidated Financial Statements.
Fair Value Measurement

Please refer to Notes 5 and 12 of the Consolidated Financial Statements.
Contractual Obligations
In the normal course of business, we enter into contractual obligations to make payments to third parties. During the three months ended March 31, 2019 , there were no material changes to such contractual obligations outside the ordinary course of our business.
SAFETY
Working safely is a condition of employment at Owens Corning. We believe this organization-wide expectation provides for a safer work environment for employees, improves our manufacturing processes, reduces our costs and enhances our reputation. Furthermore, striving to be a world-class leader in safety provides a platform for all employees to understand and apply the resolve necessary to be a high-performing global organization. We measure our progress on safety based on Recordable Incidence Rate (“RIR”) as defined by the United States Department of Labor, Bureau of Labor Statistics. For the three months ended March 31, 2019 , our RIR was 0.54 as compared to 0.51 in the same period a year ago.
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:
 
•
levels of residential and commercial construction activity;
•
relationships with key customers and customer concentration in certain areas;
•
competitive and pricing factors;
•
levels of global industrial production;


Table of Contents
- 40 -

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


•
demand for our products;
•
industry and economic conditions that affect the market and operating conditions of our customers, suppliers or lenders;
•
domestic and international economic and political conditions, policies or other governmental actions, legislation and related regulations or interpretations, in the United States or elsewhere;
•
changes to tariff, trade or investment policies or laws;
•
foreign exchange and commodity price fluctuations;
•
our level of indebtedness;
•
weather conditions;
•
issues involving implementation and protection of information technology systems;
•
availability and cost of credit;
•
the level of fixed costs required to run our business;
•
availability and cost of energy and raw materials;
•
labor disputes or shortages, or loss of key employees;
•
environmental, product-related or other legal and regulatory liabilities, proceedings or, actions;
•
our ability to utilize our net operating loss carryforwards;
•
research and development activities and intellectual property protection;
•
interest rate movements;
•
uninsured losses;
•
issues related to acquisitions, divestitures and joint ventures;
•
achievement of expected synergies, cost reductions and/or productivity improvements;
•
levels of goodwill or other indefinite-lived intangible assets;
•
defined benefit plan funding obligations; and
•
price volatility in certain wind energy markets in the U.S.
All forward-looking statements in this report should be considered in the context of the risks and other factors described above and in Item 1A - Risk factors in Part I of our 2018 Form 10-K. 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.



Table of Contents
- 41 -

ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There has been no material change in our exposure to market risk during the three months ended March 31, 2019 . Please refer to "Quantitative and Qualitative Disclosures about Market Risk" contained in Part II, Item 7A of our 2018 Form 10-K for a discussion of our exposure to market risk.
 
ITEM 4.    CONTROLS AND PROCEDURES
The Company maintains (a) disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act), and (b) internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act).
The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by this report. Based on such evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company’s disclosure controls and procedures are effective.
There has been no change in the Company's internal control over financial reporting during the quarter ended March 31, 2019 that materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.


Table of Contents
- 42 -

PART II
 
ITEM 1.    LEGAL PROCEEDINGS

Information required by this item is incorporated by reference to Note 14 of the Consolidated Financial Statements, Contingent Liabilities and Other Matters.
 
ITEM 1A.    RISK FACTORS
There have been no material changes to the risk factors disclosed in Item 1A of the Company’s 2018 Form 10-K.
 
ITEM 2.    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities
None.
Issuer Purchases of Equity Securities
The following table provides information about Owens Corning’s purchases of its common stock for each month during the quarterly period covered by this report:
 
Period
Total Number of
Shares (or
Units)
Purchased
 
Average
Price Paid
per Share
(or Unit)
Total Number of
Shares (or
Units)
Purchased as
Part of Publicly
Announced
Plans or
Programs**
Maximum Number (or Approximate Dollar Value) of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs**
January 1-31, 2019
23,015

 
$
52.39

—

4,581,726

February 1-28, 2019
436,855

 
51.33

180,000

4,401,726

March 1-31 ,2019
820,728

 
47.63

820,000

3,581,726

Total
1,280,598

* 
$
48.98

1,000,000

3,581,726

 
*
The Company retained an aggregate of 280,598 shares surrendered to satisfy tax withholding obligations in connection with the vesting of restricted shares granted to our employees.
**
On October 24, 2016, the Board of Directors approved a share buy-back program under which the Company is authorized to repurchase up to 10 million shares of the Company’s outstanding common stock (the “Repurchase Authorization”). The Repurchase Authorization enables the Company to repurchase shares through the open market, privately negotiated transactions, or other transactions. The actual number of shares repurchased will depend on timing, market conditions and other factors and is at the Company’s discretion. The Company repurchased 1.0 million shares of its common stock for $48 million during the three months ended March 31, 2019 under the Repurchase Authorization. As of March 31, 2019 , 3.6 million shares remain available for repurchase under the Repurchase Authorization.

ITEM 3.    DEFAULTS UPON SENIOR SECURITIES
None.
 
ITEM 4.    MINE SAFETY DISCLOSURES
Not applicable.



Table of Contents
- 43 -

ITEM 5.    OTHER INFORMATION

Approval of Owens Corning 2019 Stock Plan

At the 2019 Annual Meeting of Stockholders of the Company held on April 18, 2019, the stockholders of the Company approved the Owens Corning 2019 Stock Plan (the “2019 Stock Plan”). In general, the 2019 Stock Plan will be administered by the Compensation Committee (the “Compensation Committee”) of the Company’s Board of Directors (the “Board”). The 2019 Stock Plan provides for participation by non-employee directors of the Company and officers and other employees of the Company and its subsidiaries and certain affiliates, and authorizes grants of stock options, stock appreciation rights, restricted stock, restricted stock units, bonus stock, performance shares, performance share units and dividend equivalents, as determined by the Compensation Committee in accordance with the terms of the 2019 Stock Plan. The 2019 Stock Plan succeeds the Owens Corning 2016 Stock Plan (the “2016 Stock Plan”).

The number of shares of common stock available under the 2019 Stock Plan is 2,300,000 shares plus the number of shares that as of April 18, 2019 were available under the 2016 Stock Plan, subject to adjustment as provided in the 2019 Stock Plan and to the 2019 Stock Plan’s share counting rules. These shares may be shares of original issuance or treasury shares, or a combination of both, including shares acquired on the open market in Canada. Shares underlying certain awards under the 2019 Stock Plan and the 2016 Stock Plan that expire, are terminated, cancelled, forfeited, unearned, or settled in cash, will again be available under the 2019 Stock Plan, as further described in the 2019 Stock Plan. The Compensation Committee may provide for continued vesting or accelerated vesting for awards under the 2019 Stock Plan upon certain events, including in connection with or following a participant’s death, disability, retirement, other termination of service or a change in control of the Company, as described in the 2019 Stock Plan.

The 2019 Stock Plan provides that, subject to adjustment as described in the 2019 Stock Plan: (1) the maximum number of shares of common stock available for incentive stock options will not exceed 2,300,000 shares; and (2) in no event will any non-employee director of the Company in any one calendar year be granted compensation for such service having an aggregate maximum value (measured at the date of grant as applicable, and calculating the value of any awards based on the grant date fair value for financial reporting purposes) in excess of $500,000. The 2019 Stock Plan generally has a term of ten years, but may be terminated prior to the expiration of the term by the Board. The Compensation Committee generally will be able to amend the 2019 Stock Plan, subject to stockholder approval in certain circumstances as described in the 2019 Stock Plan.

The 2019 Stock Plan permits the Compensation Committee to make certain performance-based awards to participants, which awards will be earned based upon the achievement of one or more performance measures. A non-exhaustive list of performance measures that could be used for such performance-based awards includes the following: total stockholder return (based on the change in the price of a share of the Company’s common stock and dividends paid); brand recognition or acceptance; cost savings or waste elimination; earnings before interest, taxes and amortization; earnings before interest and taxes; earnings before interest, taxes, depreciation and amortization; operating income before interest and taxes; operating income before interest, taxes, depreciation and amortization; earnings per share; income; operating income; market share or market segment share; net income; new product innovation; operating profit or net operating profit; operating margins or profit margins; profits or gross profits; product cost reductions; product release schedules; return on stockholder’s equity; return on assets; return on capital employed; return on invested capital; return on operating revenue; revenue or revenue growth; sales or segment sales; share price performance; strategic corporate objectives relating to: increase in revenue with certain customers, customer groups, or customer types; revenues, synergies or savings related to corporate transactions; safety performance; sustainability or environmental performance); economic value added; cash flows (including, but not limited to, operating cash flow, free cash flow, cash flow return on equity and cash flow return on investment); and working capital or changes in working capital over any time period.

The foregoing description is qualified in its entirety by reference to the 2019 Stock Plan, a copy of which is attached hereto as Exhibit 10.1 and is incorporated herein by reference.

Submission of Matters to a Vote of Security Holders

At the 2019 Annual Meeting of Stockholders of the Company held on April 18, 2019, the Company's stockholders cast their votes as described below on four proposals described in the Company’s definitive proxy statement filed with the U.S. Securities and Exchange Commission on March 14, 2019.


Table of Contents
- 44 -


Proposal 1
The following directors were elected to serve until the 2020 Annual Meeting of Stockholders and until their successors are elected and qualified pursuant to the following vote:
Name
Votes For
Votes Against
Abstentions
Broker Non-Votes
Adrienne D. Elsner
88,381,931

60,779

67,914

6,115,378

J. Brian Ferguson
88,225,208

218,810

66,606

6,115,378

Ralph F. Hake
86,273,843

2,170,399

66,382

6,115,378

Edward F. Lonergan
87,194,286

1,247,996

68,342

6,115,378

Maryann T. Mannen
88,386,558

59,116

64,950

6,115,378

W. Howard Morris
87,743,575

700,580

66,469

6,115,378

Suzanne P. Nimocks
80,862,869

7,582,496

65,259

6,115,378

Michael H. Thaman
87,793,539

648,001

69,084

6,115,378

John D. Williams
88,275,635

165,625

69,364

6,115,378

Proposal 2
Company stockholders ratified the selection of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for 2019 pursuant to the following vote:
Votes For
Votes Against
Abstentions
Broker Non-Votes
93,360,141

1,195,893

69,968

—

Proposal 3
Company stockholders approved, on an advisory basis, the 2018 compensation paid to the Company’s named executive officers pursuant to the following vote:
Votes For
Votes Against
Abstentions
Broker Non-Votes
82,663,870

5,745,478

101,276

6,115,378

Proposal 4
Company stockholders approved the Company’s 2019 Stock Plan pursuant to the following vote:
Votes For
Votes Against
Abstentions
Broker Non-Votes
82,295,093

6,178,245

37,286

6,115,378





Table of Contents
- 45 -

ITEM 6.    EXHIBITS
 
Exhibit
Number
Description
 
 
 
 
10.1
 
 
10.2

 
 
10.3
 
 
10.4
 
 
31.1
 
 
31.2
 
 
32.1
 
 
32.2
 
 
101.INS
XBRL Instance Document
 
 
101.SCH
XBRL Taxonomy Extension Schema
 
 
101.CAL
XBRL Taxonomy Extension Calculation Linkbase
 
 
101.DEF
XBRL Taxonomy Extension Definition Linkbase
 
 
101.LAB
XBRL Taxonomy Extension Label Linkbase
 
 
101.PRE
XBRL Taxonomy Extension Presentation Linkbase
*Denotes management contract or compensatory plan or arrangement required to be filed as an exhibit pursuant to Form 10-K.



Table of Contents
- 46 -

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, Owens Corning has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 
 
 
 
 
OWENS CORNING
 
 
 
 
 
 
 
 
 
 
 
Registrant
 
 
 
 
 
 
Date:
 
April 24, 2019
By:
 
/s/ Michael C. McMurray
 
 
 
 
 
Michael C. McMurray
 
 
 
 
 
Senior Vice President and
 
 
 
 
 
Chief Financial Officer
 
 
 
 
 
 
 
 
 
 
 
 
Date:
 
April 24, 2019
By:
 
/s/ Kelly J. Schmidt
 
 
 
 
 
Kelly J. Schmidt
 
 
 
 
 
Vice President and
 
 
 
 
 
Controller



Exhibit 10.1

OWENS CORNING
2019 STOCK PLAN
I. INTRODUCTION
1.1            Purpose . The purpose of the Owens Corning 2019 Stock Plan (the “ Plan ”) is to promote the long-term financial success of Owens Corning (the “ Company ”) by permitting the grant of awards capable of (a) establishing an equity compensation program for Non-Employee Directors and certain employees of the Company and its Subsidiaries; (b) attracting and retaining executive personnel of outstanding ability; (c) strengthening the Company’s capability to develop, maintain and direct a competent management team; (d) motivating executive personnel by means of performance-related incentives to achieve longer-range performance goals; (e) providing incentive compensation opportunities which are competitive with those of other major corporations; (f) enabling Company employees and executive personnel to participate in the long-term growth and financial success of the Company through increased stock ownership and (g) serving as a mechanism to attract, retain and properly compensate Non-Employee Directors. Where the grant of shares of stock under this Plan is restricted or rendered impracticable by foreign local laws and/or regulations, the foregoing purposes will be promoted through some alternative arrangement (or in some cases cash equivalents) as applicable.
1.2            Certain Definitions . In addition to the defined terms set forth elsewhere in this Plan, the terms set forth below, shall, when capitalized, have the following respective meanings.
“ Agreement ” shall mean the written agreement or other type or form of writing or other evidence (including in an electronic medium) approved by the Committee and evidencing an award hereunder between the Company and the recipient of such award.
“ Board ” shall mean the Board of Directors of the Company.
“ Bonus Stock ” shall mean shares of Common Stock that are not subject to a Restriction Period or Performance Measures.
“ Cause ” shall mean, unless otherwise defined in an applicable Agreement, the willful and continued failure to substantially perform the duties assigned by the Company (other than a failure resulting from the optionee’s Disability), the willful engaging in conduct which is demonstrably injurious to the Company or any Subsidiary, monetarily or otherwise, including conduct that, in the reasonable judgment of the Committee, no longer conforms to the standard of the Company’s employees or executives, any act of dishonesty, commission of a felony, or a significant violation of any statutory or common law duty of loyalty to the Company.
“ Change in Control ” shall have the meaning set forth in Section 6.8(c).
“ Code ” shall mean the Internal Revenue Code of 1986, as amended.
“ Committee ” shall mean the Compensation Committee of the Board or a subcommittee thereof, or any other committee designated by the Board to administer this Plan, consisting of two or more members of the Board, each of whom is intended to be (i) a “Non-Employee Director” within the meaning of Rule 16b-3 under the Exchange Act and (ii) an “Independent Director” within the meaning of the rules of the New York Stock Exchange.
“ Common Stock ” shall mean common stock, $.01 par value, of the Company.
“ Disability ” shall mean, unless otherwise defined in an applicable Agreement, the inability of the holder of an award to perform substantially such holder’s duties and responsibilities for a continuous period of at least six months, as determined solely by the Committee. To the extent that Code Section 409A is applicable to a particular award, the term “Disability” shall have the meaning as defined under that Section.
 
“ Exchange Act ” shall mean the Securities Exchange Act of 1934, as amended.
“ Fair Market Value ” shall mean the closing transaction price of a share of Common Stock as reported on the New York Stock Exchange on the date as of which such value is being determined or, if the Common Stock is not listed on the New York Stock Exchange, the closing transaction price of a share of Common Stock on the principal national stock exchange on which the Common Stock is traded on the date as of which such value is being determined or, if there shall be no reported transactions for such date, on the next preceding date for which transactions were reported; provided further, that Fair Market Value may be determined by the Committee by whatever other means or method as the Committee, in the good faith exercise of its discretion, shall at such time deem appropriate. Notwithstanding the foregoing, for any purposes under this Plan including for Plan administrative purposes, the Committee may, in its discretion, apply any other definition of Fair Market Value which is reasonable and consistent with applicable tax, accounting and other rules.


Exhibit 10.1

“ Free-Standing SAR ” shall mean an SAR which is not granted in tandem with, or by reference to, an option, which entitles the holder thereof to receive, upon exercise, shares of Common Stock (which may be Restricted Stock), cash or a combination thereof, as set forth in the Agreement, with an aggregate value equal to the excess of the Fair Market Value of one share of Common Stock on the date of exercise over the base price of such SAR, multiplied by the number of such SARs which are exercised.
“ Incentive Stock Option ” shall mean an option to purchase shares of Common Stock which meets the requirements of Section 422 of the Code, or any successor provision, and which is intended by the Committee to constitute an Incentive Stock Option.
“ Non-Employee Director ” shall mean any director of the Company who is not an officer or employee of the Company or any Subsidiary.
“ Non-Qualified Stock Option ” shall mean an option to purchase shares of Common Stock that is not an Incentive Stock Option.
“ Participant ” shall mean an individual who has been granted an Incentive Stock Option, a Non-Qualified Stock Option, an SAR, a Bonus Stock Award, a Performance Share Award, a Restricted Stock Award or a Restricted Stock Unit Award.
“ Performance Measures ” shall mean the criteria and objectives, established by the Committee, which shall be satisfied or met (i) as a condition to the grant, vesting or exercisability of all or a portion of an option or SAR, (ii) as a condition to the grant or vesting of a Stock Award or (iii) during the applicable Restriction Period or Performance Period as a condition to the holder’s receipt of Common Stock subject to a Restricted Stock Award, Restricted Stock Unit Award, or a Performance Share Award and/or of payment with respect to such award. The Committee may amend or adjust the Performance Measures or other terms and conditions of an outstanding award in recognition of unusual or nonrecurring events affecting the Company or its financial statements or changes in law or accounting.
“ Performance Period ” shall mean any period designated by the Committee during which the Performance Measures applicable to a Performance Share Award shall be measured.
“ Performance Share ” shall mean shares of Common Stock that are subject to forfeiture upon failure to attain specified Performance Measures within a specified Performance Period.
“ Performance Share Unit ” shall mean a right, contingent upon the attainment of specified Performance Measures within a specified Performance Period, to receive one share of Common Stock, which may be Restricted Stock, or in lieu of all or a portion thereof, at the Committee’s discretion, a cash payment based on the Fair Market Value of one share of Common Stock.
“ Performance Share Award ” shall mean an award of Performance Shares or Performance Share Units under this Plan.
 
“ Permanent and Total Disability ” shall, unless otherwise defined in an applicable Agreement, have the meaning set forth in Section 22(e) (3) of the Code or any successor thereto.
“ Prior Plan ” shall mean the Owens Corning 2016 Stock Plan, or any other equity compensation plan maintained by the Company prior to the effective date of this Plan.
“ Restricted Stock ” shall mean shares of Common Stock that are subject to a Restriction Period.
“ Restricted Stock Unit ” shall mean the right to receive one share of Common Stock which shall be contingent upon the expiration of a specified Restriction Period and subject to such additional restrictions as may be contained in the Agreement relating thereto.
“ Restriction Period ” shall mean any period designated by the Committee during which (i) the Common Stock subject to a Restricted Stock Award may not be sold, transferred, assigned, pledged, hypothecated or otherwise encumbered or disposed of, except as provided in this Plan or the Agreement relating to such award or (ii) the conditions to vesting applicable to a Restricted Stock Unit Award shall remain in effect.
“ Retirement ” unless otherwise specifically set forth under the terms of an Agreement, for purposes of this Plan shall mean termination of employment for a reason other than Cause by an employee who is at least 55 years of age and who has at least 10 years of Service with the Company.
“ SAR ” shall mean a stock appreciation right which may be a Free Standing SAR or a Tandem SAR.
“ Service ” shall mean any period of service or employment with the Company or a Subsidiary. This shall include either or both employment as an employee of the Company or a Subsidiary or service on the Board as a Non-Employee Director. Service shall include any such Service with the Company or a Subsidiary or any predecessor of the Company or a Subsidiary. Nothing in


Exhibit 10.1

the Plan, in the grant of any award or in any award Agreement shall confer upon any Participant any right to continue in the Service of the Company or any of its Subsidiaries, or interfere in any way with the right of the Company or any of its Subsidiaries to terminate the Participant’s employment or other service relationship for any reason at any time.
“ Stock Award ” shall mean a Restricted Stock Award, a Restricted Stock Unit Award or a Bonus Stock Award.
“ Subsidiary ” and “ Subsidiaries ” shall have the meanings set forth in Section 1.4.
“ Tandem SAR ” shall mean an SAR which is granted in tandem with, or by reference to, an option (including a Non-Qualified Stock Option granted prior to the date of grant of the SAR), which entitles the holder thereof to receive, upon exercise of such SAR and surrender for cancellation of all or a portion of such option, shares of Common Stock (which may be Restricted Stock), cash or a combination thereof with an aggregate value equal to the excess of the Fair Market Value of one share of Common Stock on the date of exercise over the base price of such SAR, multiplied by the number of shares of Common Stock subject to such option, or portion thereof, which is surrendered.
1.3            Administration . This Plan shall be administered by the Committee. The Committee shall have the authority to determine eligibility for awards hereunder and to determine the form, amount and timing of each award to such persons and, if applicable, the number of shares of Common Stock, and the number of Performance Shares or Performance Share Units subject to such an award, the exercise price or base price associated with the award, the time and conditions of exercise or settlement of the award and all other terms and conditions of the award, including, without limitation, the form of the Agreement evidencing the award. The Committee may, in its sole discretion and for any reason at any time, take action such that (a) any or all outstanding options, Stock Awards, and/or SARs shall become exercisable in part or in full, (b) all or a portion of the Restriction Period applicable to any outstanding award shall lapse, (c) all or a portion of the Performance Period applicable to any outstanding Performance Share Award shall lapse, or (d) the Performance Measures applicable to any outstanding award (if any) shall be deemed to be satisfied at the maximum or any other level.
 
The Committee shall, subject to the terms of this Plan, have the discretionary authority to interpret this Plan and the application thereof, establish rules and regulations it deems necessary or desirable for the administration of this Plan and may impose, incidental to the grant of an award, conditions with respect to the award, such as limiting competitive employment or other activities. All such interpretations, rules, regulations and conditions shall be final, binding and conclusive. The Committee delegates the authority for ministerial administration of the Plan and awards made under the Plan to the Company.
Notwithstanding anything in the Plan to the contrary, in accordance with Section 157 (or any other applicable section) of the Delaware General Corporation Law, the Committee may, by resolution, authorize one or more executive officers of the Company to do one or both of the following: (x) designate non-director and non-executive officer employees of the Company or any of its Subsidiaries to be recipients of awards hereunder; and (y) determine the number of shares of Common Stock subject to awards to be received by such non-director and non-executive officer employees; provided, however, that the resolution so authorizing such executive officer or officers shall specify the total number of shares of Common Stock that such executive officer or officers may so award. The Committee may not delegate its power and authority with regard to the selection for participation in this Plan of an officer, director or other person subject to Section 16 of the Exchange Act or decisions concerning the timing, pricing or amount of an award to such an officer, director or other person.
Notwithstanding anything in the Plan to the contrary, to the extent an award granted hereunder would be subject to the requirements of Section 409A of the Code and the regulations thereunder, then the Agreement for such award and the Plan shall be construed and administered so as the award complies with Section 409A of the Code and the regulations thereunder. Consistent with the foregoing, if the holder of an award granted under this Plan is a “specified employee,” as defined in Section 409A of the Code, as of the date of the holder’s “separation from service,” as defined in Section 409A of the Code, then to the extent any amount payable under such award (i) constitutes the payment of nonqualified deferred compensation, within the meaning of Section 409A of the Code, (ii) is payable upon the holder’s separation from service and (iii) under the terms of the Agreement for such award and this Plan would be payable prior to the six-month anniversary of the holder’s separation from service, such payment shall be delayed until the earlier to occur of (A) the six-month anniversary of the holder’s separation from service or (B) the date of the holder’s death. Neither a Participant nor any of a Participant’s creditors or beneficiaries will have the right to subject any deferred compensation (within the meaning of Section 409A of the Code) payable under this Plan and grants hereunder to any anticipation, alienation, sale, transfer, assignment, pledge, encumbrance, attachment or garnishment. Except as permitted under Section 409A of the Code, any deferred compensation (within the meaning of Section 409A of the Code) payable to a Participant or for a Participant’s benefit under this Plan and grants hereunder may not be reduced by, or offset against, any amount owing by a Participant to the Company or any of its Subsidiaries.
Awards may be granted to Participants in jurisdictions outside the United States (including, as appropriate, under sub-plans (to be considered part of this Plan)). To the extent necessary or advisable to comply with applicable local laws while


Exhibit 10.1

concurrently aiming to achieve the purposes of the Plan it may be determined by the Committee that the terms and conditions applicable to those awards granted to Participants outside the United States are different from those under the Plan.
1.4             Eligibility . Participants in this Plan shall consist of such Non-Employee Directors, officers, and employees of the Company, its subsidiaries and any other entity designated by the Board or the Committee (individually a “ Subsidiary ” and collectively the “ Subsidiaries ”) as the Committee, in its sole discretion, may select from time to time; provided, however, that a Non-Employee Director, officer or employee of a Subsidiary shall be designated a recipient of an option or SAR only if Common Stock qualifies, with respect to such recipient, as “service recipient stock” within the meaning set forth in Section 409A of the Code, and that each Participant satisfies the Form S-8 definition of an “employee.” For purposes of this Plan, reference to employment by the Company shall also mean employment by a Subsidiary, and references to employment shall also mean services as a Non-Employee Director.
 
1.5            Shares Available . Subject to adjustment as provided in Section 6.7, the number of shares of Common Stock available under the Plan shall be 2,300,000, plus the number of shares of Common Stock available under the Prior Plan as of the effective date of the Plan. As of the effective date of the Plan, no further grants may be made under the Prior Plan. To the extent that shares of Common Stock subject to an award (except to the extent shares of Common Stock are issued or delivered by the Company in connection with the exercise of a Tandem SAR) under the Plan or the Prior Plan are not issued or delivered by reason of the expiration, termination, cancellation, forfeiture or unearned nature of such award or the settlement of such award in cash, then such shares of Common Stock shall again be available under the Plan. Notwithstanding any other provision of the Plan to the contrary, any and all of the shares of Common Stock available under this paragraph shall be available for any or all types of awards, including full value stock awards, which are available under the terms of the Plan.
Notwithstanding anything in this Section 1.5 to the contrary, shares of Common Stock subject to an award under this Plan may not be made available for further issuance under this Plan if such shares are: (a) shares that were subject to a stock-settled SAR and were not issued upon the net settlement or net exercise of such SAR, (b) shares used to pay the exercise price of an Incentive Stock Option or Non-Qualified Stock Option, (c) shares delivered to or withheld (or otherwise used) by the Company to pay withholding taxes related to an award under this Plan, or (d) shares repurchased on the open market with the proceeds of an option exercise.
Shares of Common Stock shall be made available from authorized and unissued shares of Common Stock, or authorized and issued shares of Common Stock reacquired and held as treasury shares or otherwise or a combination thereof, including shares acquired on the open market in Canada.
For purposes of grants of Incentive Stock Options under this Plan, the maximum number of shares available for such grant(s) shall be no more than 2,300,000 shares, subject to adjustment as provided in Section 6.7.
Not more than 5% of the shares of Common Stock authorized under the Plan shall be subject to Bonus Stock awards or other awards that vest over a period (or, as applicable, have a Performance Period) shorter than twelve (12) months; provided that such limitation shall not apply to awards granted to Non-Employee Directors. Nothing in this paragraph or otherwise in this Plan, however, shall preclude the Committee, in its sole discretion, from providing for continued vesting or accelerated vesting for any award under the Plan upon certain events, including in connection with or following a Participant’s death, Disability, Retirement, other termination of Service or a Change in Control.
Notwithstanding anything to the contrary contained in this Plan, in no event will any Non-Employee Director in any one calendar year be granted compensation for such service having an aggregate maximum value (measured at the date of grant as applicable, and calculating the value of any awards based on the grant date fair value for financial reporting purposes) in excess of $500,000.
II.
STOCK OPTIONS AND STOCK APPRECIATION RIGHTS
2.1            Stock Options . The Committee may, in its discretion, grant Incentive Stock Options or Non-Qualified Stock Options to such eligible persons under Section 1.4 as may be selected by the Committee.
Options shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with the terms of this Plan, as the Committee shall deem advisable:
(a)           Number of Shares and Purchase Price . The number of shares and the purchase price per share of Common Stock subject to an option shall be determined by the Committee, provided, however, that (except with respect to awards under Section 6.15 of this Plan) the purchase price per share of Common Stock shall not be less than 100% of the Fair Market Value of a share of Common Stock on the date of grant of such option, and provided further, that if an Incentive Stock Option shall be granted to any person who, at the time such option is granted, owns capital stock possessing more than ten percent of the total combined voting power of all classes of capital stock of the Company (or of any parent or subsidiary as defined in Section 424 of the Code) (a “ Ten Percent Holder ”), the purchase price per


Exhibit 10.1

share of Common Stock shall be the price (currently 110% of Fair Market Value) required by the Code in order to constitute an Incentive Stock Option.
(b)           Option Period and Exercisability . The period during which an option may be exercised shall be determined by the Committee; provided, however, that no Incentive Stock Option nor Non-Qualified Stock Option shall be exercised later than ten years after its date of grant; provided further, that if an Incentive Stock Option shall be granted to a Ten Percent Holder, such option shall not be exercised later than five years after its date of grant. Once determined and stated in an Agreement with respect to an option, the period during which an option can be exercised shall not be further extended. The Committee may, in its discretion, establish Performance Measures which shall be satisfied or met as a condition to the grant of an option or to the exercisability of all or a portion of an option. Subject to the vesting provisions in Section 1.5, the Committee shall determine whether an option shall become exercisable in cumulative or non-cumulative installments and in part or in full at any time. An exercisable option, or portion thereof, may be exercised only for whole shares of Common Stock.
(c)           Method of Exercise . An option may be exercised (i) by giving written notice to the Company specifying the number of whole shares of Common Stock to be purchased and accompanied by payment therefor in full (or arrangement made for such payment to the Company’s satisfaction) either (A) by the delivery of cash in the amount of the aggregate purchase price payable by reason of such exercise, (B) for employees other than Canadian employees, by delivery (either actual delivery or by attestation procedures established by the Company) of previously acquired shares of Common Stock that have an aggregate Fair Market Value, determined as of the date of exercise, equal to the aggregate purchase price payable by reason of such exercise, (C) authorizing the Company to withhold whole shares of Common Stock which would otherwise be delivered having an aggregate Fair Market Value, determined as of the date of exercise, equal to the aggregate purchase price payable by reason of such exercise, (D) subject to applicable law, by the delivery of cash in the amount of the aggregate purchase price payable by reason of such exercise by a broker-dealer acceptable to the Company to whom the optionee has submitted an irrevocable notice of exercise, or (E) a combination of (A), (B) and (C), in each case to the extent set forth in the Agreement relating to the option, (ii) if applicable, by surrendering to the Company any Tandem SARs which are cancelled by reason of the exercise of the option and (iii) by executing such documents as the Company may reasonably request. Any fraction of a share of Common Stock which would be required to pay such purchase price shall be disregarded and the remaining amount due shall be paid in cash by the optionee. No shares of Common Stock shall be issued and no certificate representing Common Stock shall be delivered until the full purchase price therefore has been paid (or arrangement made for such payment to the Company’s satisfaction). Options may not provide for any dividends or dividend equivalents thereon.
 
Notwithstanding the foregoing, permitted exercise methods may be limited by the terms of the individual Agreement.
2.2            Stock Appreciation Rights . The Committee may, in its discretion, grant SARs to such eligible persons under Section 1.4 as may be selected by the Committee. The Agreement relating to an SAR shall specify whether the SAR is a Tandem SAR or a Free-Standing SAR.
SARs shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with the terms of this Plan, as the Committee shall deem advisable:
(a)           Number of SARs and Base Price . The number of SARs subject to an award shall be determined by the Committee. Any Tandem SAR related to an Incentive Stock Option shall be granted at the same time that such Incentive Stock Option is granted. The base price of a Tandem SAR shall be the purchase price per share of Common Stock of the related option. The base price of a Free-Standing SAR shall be determined by the Committee; provided, however, that (except with respect to awards under Section 6.15 of this Plan) such base price shall not be less than 100% of the Fair Market Value of a share of Common Stock on the date of grant of such SAR.
(b)           Exercise Period and Exercisability . The Agreement relating to an award of SARs shall specify whether such award may be settled in shares of Common Stock (including shares of Restricted Stock) or cash or a combination thereof. The period for the exercise of an SAR shall be determined by the Committee; provided, however, that no SAR may be exercised later than 10 years after its date of grant; provided further, that no Tandem SAR shall be exercised later than the expiration, cancellation, forfeiture or other termination of the related option. Once determined and stated in an Agreement with respect to an SAR, the period during which an SAR can be exercised shall not be further extended. The Committee may, in its discretion, establish Performance Measures which shall be satisfied or met as a condition to the grant of an SAR or to the exercisability of all or a portion of an SAR. Subject to the vesting provisions in Section 1.5, the Committee shall determine whether an SAR may be exercised in cumulative or non-cumulative installments and in part or in full at any time. An exercisable SAR, or portion thereof, may be exercised, in the case of a Tandem SAR, only with respect to whole shares of Common Stock and, in the case of a Free Standing SAR, only with respect to a whole number of SARs. If an SAR is exercised for shares of Restricted Stock, a certificate


Exhibit 10.1

or certificates representing such Restricted Stock shall be issued in accordance with Section 3.2(c), or such shares shall be transferred to the holder in book entry form with restrictions on the Shares duly noted, and the holder of such Restricted Stock shall have such rights of a stockholder of the Company as determined pursuant to Section 3.2(d). Prior to the exercise of an SAR for shares of Common Stock, including Restricted Stock, the holder of such SAR shall have no rights as a stockholder of the Company with respect to the shares of Common Stock subject to such SAR, and SARs may not provide for any dividends or dividend equivalents thereon.
(c)           Method of Exercise . A Tandem SAR may be exercised (i) by giving written notice to the Company specifying the number of whole SARs which are being exercised, (ii) by surrendering to the Company any options which are cancelled by reason of the exercise of the Tandem SAR and (iii) by executing such documents as the Company may reasonably request. A Free-Standing SAR may be exercised (i) by giving written notice to the Company specifying the whole number of SARs which are being exercised and (ii) by executing such documents as the Company may reasonably request.
2.3 Termination of Employment or Service .
(a)           Non-Qualified Stock Options and SARs . All of the terms relating to the exercise period or to the vesting, in whole or in part, or forfeiture and cancellation of such option or SAR award upon a termination of employment or service with the Company of the holder, whether by reason of Disability, Retirement, death or any other reason, shall be determined by the Committee and as set forth
in the Agreement. Notwithstanding the foregoing, age and service requirements set forth in any individual Agreement will be inapplicable in jurisdictions where they are in conflict with implementation of the European Union Age Discrimination Directive.
(b)           Incentive Stock Options . All of the terms relating to the exercise period or to the vesting, in whole or in part, or forfeiture and cancellation of such Incentive Stock Option award upon a termination of employment or service with the Company of the holder, whether by reason of Disability, Retirement, death or any other reason, shall be determined by the Committee and as set forth in the Agreement. Notwithstanding the foregoing, age and service requirements set forth in any individual award Agreement will be inapplicable in jurisdictions where they are in conflict with implementation of the European Union Age Discrimination Directive.
(c)           Continuation of Service as a Non-Employee Director . Unless otherwise set forth in the Agreement, a holder’s employment with the Company will not be deemed to have terminated for purposes of this Section 2.3 if the holder continues to provide services to the Company as a Non-Employee Director. Similarly, a holder’s directorship will not be deemed to have terminated for purposes of awards under this Plan or for purposes of this Section 2.3 if the holder continues to provide services to the Company as an employee of the Company.
2.4            No Repricing . Notwithstanding anything in this Plan to the contrary and subject to Section 6.7, without the approval of the stockholders of the Company the Committee will not amend or replace any previously granted option or SAR in a transaction that constitutes a “repricing,” as such term is used in Section 303A.08 of the Listed Company Manual of the New York Stock Exchange. Further, except in connection with a corporate transaction involving the Company (including, without limitation, any stock dividend, stock split, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination, or exchange of shares), the terms of outstanding awards may not be amended to reduce the exercise price of outstanding Incentive Stock Options, Non-Qualified Stock Options or SARs or cancel outstanding Incentive Stock Options, Non-Qualified Stock Options or SARs in exchange for cash, other awards or Incentive Stock Options, Non-Qualified Stock Options or SARs with an exercise price that is less than the exercise price of the original Incentive Stock Options, Non-Qualified Stock Options or SARs without stockholder approval.
III.
STOCK AWARDS
3.1            Stock Awards . The Committee may, in its discretion, grant Stock Awards to such eligible persons under Section 1.4 as may be selected by the Committee. The Agreement relating to the Stock Award shall specify whether the Stock Award is a Restricted Stock Award, a Restricted Stock Unit Award or Bonus Stock Award.
3.2            Terms of Stock Awards . Stock Awards shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with the terms of this Plan, as the Committee shall deem advisable.
(a)           Number of Shares and Other Terms . The number of shares of Common Stock subject to a Restricted Stock Award, Restricted Stock Unit Award or Bonus Stock Award and the Performance Measures (if any) and Restriction Period applicable to a Restricted Stock Award or Restricted Stock Unit Award shall be determined by the Committee and set forth in the individual award Agreement.


Exhibit 10.1

(b)           Vesting and Forfeiture . Subject to the vesting provisions in Section 1.5, the Agreement relating to a Restricted Stock Award or Restricted Stock Unit Award shall provide, in the manner determined by the Committee in its discretion, and subject to the provisions of this Plan, for the vesting, in whole or in part, of the shares of Common Stock subject to such award, in the case of a Restricted Stock Award, or the vesting of the Restricted Stock Unit Award itself, in the case of Restricted Stock Unit Award, (i) if specified Performance Measures are satisfied or met during the specified Restriction Period or (ii) if the holder of such award remains continuously in the employment
of or service to the Company during the specified Restriction Period, and for the forfeiture of the shares of Common Stock subject to such award in the case of a Restricted Stock Award, or the forfeiture of the Restricted Stock Unit Award itself, in the case of a Restricted Stock Unit Award, (x) if specified Performance Measures are not satisfied or met during the specified Performance Period or (y) if the holder of such award does not remain continuously in the employment of or service to the Company during the specified Restriction Period. Bonus Stock Awards shall not be subject to any Performance Measures or Restriction Periods.
(c)           Stock Issuance . During the Restriction Period, the shares of Restricted Stock shall be held by a custodian in book entry form with restrictions on such shares duly noted or, alternatively, a certificate or certificates representing a Restricted Stock award shall be registered in the holder’s name and may bear a legend, in addition to any legend which may be required pursuant to Section 6.6, indicating that the ownership of the shares of Common Stock represented by such certificate is subject to the restrictions, terms and conditions of this Plan and the Agreement relating to the Restricted Stock award. All such certificates shall be deposited with the Company, together with stock powers or other instruments of assignment (including a power of attorney), each endorsed in blank with a guarantee of signature if deemed necessary or appropriate, which would permit transfer to the Company of all or a portion of the shares of Common Stock subject to the Restricted Stock award in the event such award is forfeited in whole or in part. Upon termination of any applicable Restriction Period (and the satisfaction or attainment of applicable Performance Measures), subject to the payment of any taxes in accordance with Section 6.5, the restrictions shall be removed from the requisite number of any shares of Common Stock that are held in book entry form, and all certificates evidencing ownership of the requisite number of shares of Common Stock shall be delivered to the holder of such award.
(d)           Rights with Respect to Restricted Stock Awards . Unless otherwise set forth in the Agreement relating to a Restricted Stock award, and subject to the terms and conditions of a Restricted Stock award, the holder of such award shall have all rights as a stockholder of the Company, including, but not limited to, voting rights, the right to receive dividends and the right to participate in any capital adjustment applicable to all holders of Common Stock; provided, however, that a distribution with respect to shares of Common Stock shall be deposited with the Company and shall be subject to the same restrictions as the shares of Common Stock with respect to which such distribution was made.
(e)           Rights and Provisions Applicable to Restricted Stock Unit Awards . The Agreement relating to a Restricted Stock Unit award shall specify whether the holder thereof shall be entitled to receive, on a deferred basis, dividend equivalents, or the deemed reinvestment of, any deferred dividend equivalents, with respect to the number of shares of Common Stock subject to such award. Prior to the settlement of a Restricted Stock Unit award, the holder thereof shall not have any rights as a stockholder of the Company with respect to the shares of Common Stock subject to such award, except to the extent that the Committee, in its sole discretion, may grant dividend equivalents on Restricted Stock Unit awards as provided above (provided, that dividend equivalents on Common Stock underlying Restricted Stock Units will be deferred until and paid contingent upon the vesting of such Restricted Stock Units). No shares of Common Stock and no certificates representing shares of Common Stock that are subject to a Restricted Stock Unit award shall be issued upon the grant of a Restricted Stock Unit award. Instead, shares of Common Stock subject to Restricted Stock Unit awards and the certificates representing such shares of Common Stock shall only be distributed at the time of settlement of such Restricted Stock Unit awards in accordance with the terms and conditions of this Plan and the Agreement relating to such Restricted Stock Unit award.
3.3            Termination of Employment or Service . All of the terms relating to the satisfaction of Performance Measures and the termination of the Restriction Period or Performance Period relating to a Stock Award, or any vesting, in whole or in part, or forfeiture and cancellation of such award upon a termination of employment or service with the Company of the holder of such award, whether by reason of Disability, Retirement, death or any other reason, shall be determined by the Committee and as set forth in the Agreement.
Notwithstanding the foregoing, age and service requirements set forth in any individual award Agreement will be inapplicable in jurisdictions where they are in conflict with implementation of the European Union Age Discrimination Directive.
IV.
PERFORMANCE SHARE AWARDS
4.1            Performance Share Awards . The Committee may, in its discretion, grant Performance Share Awards to such eligible persons under Section 1.4 as may be selected by the Committee.


Exhibit 10.1

4.2            Terms of Performance Share Awards . Performance Share Awards shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with the terms of this Plan, as the Committee shall deem advisable.
(a)           Number of Performance Shares, Performance Share Units and Performance Measures . The number of Performance Shares or Performance Share Units subject to any award and the Performance Measures and Performance Period applicable to such award shall be determined by the Committee.
(b)           Vesting and Forfeiture . The Agreement relating to a Performance Share Award shall provide, in the manner determined by the Committee, in its discretion, and subject to the provisions of this Plan, for the vesting of such award, if specified Performance Measures are satisfied or met during the specified Performance Period, and for the forfeiture of such award, if specified Performance Measures are not satisfied or met during the specified Performance Period.
(c)           Stock Issuance . During the Performance Period, Performance Shares shall be held by a custodian in book entry form with restrictions on such shares duly noted or, alternatively, a certificate or certificates representing Performance Shares shall be registered in the holder’s name and may bear a legend, in addition to any legend which may be required pursuant to Section 6.6, indicating that the ownership of the shares of Common Stock represented by such certificate is subject to the restrictions, terms and conditions of this Plan and the Agreement relating to the Performance Shares. All such certificates shall be deposited with the Company, together with stock powers or other instruments of assignment (including a power of attorney), each endorsed in blank with a guarantee of signature if deemed necessary or appropriate, which would permit transfer to the Company of all or a portion of the shares of Common Stock subject to the Performance Share Award in the event such award is forfeited in whole or in part. Upon termination of any applicable Performance Period (and the satisfaction or attainment of applicable Performance Measures), subject to the payment of any taxes in accordance with Section 6.5, the restrictions shall be removed from the requisite number of any shares of Common Stock that are held in book entry form, and all certificates evidencing ownership of the requisite number of shares of Common Stock shall be delivered to the holder of such award.
(d)           Rights with Respect to Performance Shares . Unless otherwise set forth in the Agreement relating to an award of Performance Shares, and subject to the terms and conditions of the applicable Performance Share Award, the holder of such award shall have all rights as a stockholder of the Company, including, but not limited to, voting rights, the right to receive dividends and the right to participate in any capital adjustment applicable to all holders of Common Stock; provided, however, that a distribution with respect to shares of Common Stock shall be deposited with the Company and shall be subject to the same restrictions as the shares of Common Stock with respect to which such distribution was made.
(e)           Settlement of Vested Performance Share Unit Awards . The Agreement relating to a Performance Share Unit award (i) shall specify whether such award may be settled in shares of Common Stock (including shares of Restricted Stock) or cash or a combination thereof and (ii) may specify whether the holder thereof shall be entitled to receive, on a deferred basis, dividend equivalents, and, if determined by the Committee, interest on or the deemed reinvestment of any deferred dividend
equivalents, with respect to the number of shares of Common Stock subject to such award. If a Performance Share Unit award is settled in shares of Restricted Stock, such shares of Restricted Stock shall be issued to the holder in book entry form or a certificate or certificates representing such Restricted Stock shall be issued in accordance with Section 3.2(c) and the holder of such Restricted Stock shall have such rights of a stockholder of the Company as determined pursuant to Section 3.2(d). Prior to the settlement of a Performance Share Unit award in shares of Common Stock, including Restricted Stock, the holder of such award shall have no rights as a stockholder of the Company with respect to the shares of Common Stock subject to such award.
4.3            Termination of Employment or Service . All of the terms relating to the satisfaction of Performance Measures and the termination of the Performance Period relating to a Performance Share Award, or any forfeiture and cancellation of such award upon a termination of employment or service with the Company of the holder of such award, whether by reason of Disability, Retirement, death or any other reason, shall be determined by the Committee.
V.
PROVISIONS RELATING TO NON-EMPLOYEE DIRECTORS
5.1            Equity Awards Granted to Non-Employee Directors . Each Non-Employee Director is eligible to receive awards consisting of Restricted Stock, Restricted Stock Units, options to purchase shares of Common Stock, SARs, Bonus Stock, Performance Shares and/or Performance Share Units in accordance with this Article V and subject to such terms and conditions as shall be established by the Committee consistent with Articles II, III and IV and as set forth in an individual agreement regarding each such award. All options granted under this Article V shall constitute Non-Qualified Stock Options.


Exhibit 10.1

5.2            Non-Employee Director Equity Awards in Lieu of Director Fees . In addition to any award received under Section 5.1 of this Plan, each Non-Employee Director may also from time to time elect, in accordance with procedures to be specified by the Committee and subject to approval of the Committee, to receive in lieu of all or part of a specified percentage of the cash retainer and any meeting fees that would otherwise be payable to such Non-Employee Director (a) shares or deferred units of Common Stock having a Fair Market Value equal to the amount of the forgone retainer and meeting fees, determined as of the date such retainer and meeting fees are payable, (b) Restricted Stock or Restricted Stock Units granted pursuant to Article III having a Fair Market Value equal to the amount of the forgone retainer and meeting fees, determined as of the date on which such retainer or meeting fees otherwise would have been paid to such Non-Employee Director; or (c) options granted pursuant to Article II having a value equal to the amount of the forgone retainer and meeting fees, based on such valuation methodology specified by the Committee. Any election under this paragraph 5.2 shall be made under an appropriate election form and appropriate individual award agreement or agreements and shall have terms and conditions set forth in such agreement and as approved by the Committee. To the extent provided by the Committee from time to time, Non-Employee Directors may elect to defer the receipt of any award granted pursuant to this Section 5.2, other than options, through an appropriate deferral election by the Non-Employee Director.    Any election made under this Section 5.2 must be made prior to the year in which such cash retainer and meeting fees are earned, and shall otherwise be in accordance with the requirements of Section 409A of the Code.
VI.
GENERAL
6.1            Effective Date and Term of Plan . This Plan shall be submitted to the stockholders of the Company for approval and, if approved at the 2016 annual meeting of stockholders, shall become effective on the date of such approval. This Plan shall terminate on the date which is 10 years from the effective date, unless terminated earlier by the Board. Termination of this Plan shall not affect the terms or conditions of any award granted prior to termination. For clarification purposes, the terms and conditions of this Plan will not apply to or otherwise impact previously granted and outstanding awards under the Prior Plan, as applicable.
6.2            Amendments . The Committee may amend this Plan as it shall deem advisable, subject to any requirement of stockholder approval required by applicable law, rule or regulation, including Section 422 of the
Code; provided, however, that no amendment shall be made without stockholder approval if such amendment would (a) increase the maximum number of shares of Common Stock available under this Plan (subject to Section 6.7), (b) effect any change inconsistent with Section 422 of the Code, (c) extend the term of this Plan or (d) reduce the minimum purchase price of a share of Common Stock subject to an option in accordance with Section 2.4. No amendment may impair the rights of a holder of an outstanding award without the consent of such holder.
Awards may be granted to Participants in jurisdictions outside the United States. To the extent necessary or advisable to comply with applicable local laws while concurrently aiming to achieve the purposes of the Plan, it may be determined by the Committee that the terms and conditions applicable to those awards granted to Participants outside the United States are different from those under (but considered part of) the Plan.
6.3            Agreement . Each award under this Plan shall be evidenced by an Agreement setting forth the terms and conditions applicable to such award. No award shall be valid until an Agreement is executed by the Company and the recipient of such award and, upon execution by each party and delivery of the Agreement to the Company, such award shall be effective as of the effective date set forth in the Agreement. All Agreements are subject to the terms of this Plan and shall be interpreted in accordance with the discretionary authority of the Committee under this Plan.
6.4            Non-Transferability of Awards . Unless otherwise specified in the Agreement relating to an award, no award shall be transferable other than by will, the laws of descent and distribution or pursuant to beneficiary designation procedures approved by the Company, and in no event will any award granted under the Plan be transferred for value to any third party, including third party financial institutions. Except to the extent permitted by the foregoing sentence or the Agreement relating to an award, each award may be exercised or settled during the holder’s lifetime only by the holder or the holder’s legal representative or similar person. Except to the extent permitted by the second preceding sentence or the Agreement relating to an award, no award may be sold, transferred, assigned, pledged, hypothecated, encumbered or otherwise disposed of (whether by operation of law or otherwise) or be subject to execution, attachment or similar process. Upon any attempt to so sell, transfer, assign, pledge, hypothecate, encumber or otherwise dispose of any such award, such award and all rights thereunder shall immediately become null and void.
6.5            Tax Withholding . The Company shall have the right to require, prior to the issuance or delivery of any shares of Common Stock or the payment of any cash pursuant to an award made hereunder, payment by the holder of such award of any Federal, state, local or other taxes which may be required to be withheld or paid in connection with such award. An Agreement may provide that (a) the Company shall withhold whole shares of Common Stock which would otherwise be delivered to a holder, having an aggregate Fair Market Value determined as of the date the obligation to withhold or pay taxes arises in connection with an award (the “ Tax Date ”), or withhold an amount of cash which would otherwise be payable to a holder, in the amount necessary to satisfy any such obligation or (b) subject to applicable law, the holder may satisfy any such obligation by any of the following


Exhibit 10.1

means: (i) a cash payment to the Company in the amount necessary to satisfy any such obligation, (ii) except for Canadian employees, delivery (either actual delivery or by attestation procedures established by the Company) to the Company of shares of Common Stock having an aggregate Fair Market Value, determined as of the Tax Date, equal to the amount necessary to satisfy any such obligation, (iii) authorizing the Company to withhold whole shares of Common Stock which would otherwise be delivered having an aggregate Fair Market Value, determined as of the Tax Date, or withhold an amount of cash which would otherwise be payable to a holder, equal to the amount necessary to satisfy any such obligation, (iv) in the case of the exercise of an Incentive Stock Option or Non-Qualified Stock Option, a cash payment in the amount necessary to satisfy any such obligation by a broker-dealer acceptable to the Company to whom the optionee has submitted an irrevocable notice of exercise or (v) any combination of (i), (ii) and (iii), in each case to the extent set forth in the Agreement relating to the award. Shares of Common Stock to be delivered or withheld may not have an aggregate Fair Market Value in excess of the amount determined by applying the minimum statutory withholding rate unless (x) an additional amount can be withheld and not result in adverse accounting consequences, (y) such additional withholding amount is authorized by the Committee, and (z) the total amount
withheld does not exceed the Participant’s estimated tax obligations attributable to the applicable transaction. Notwithstanding any provision of this Plan or any agreement to the contrary, any fraction of a share of Common Stock which would be required to satisfy the tax withholding obligation may be rounded up to the next whole share.
6.6            Restrictions on Shares . Each award made hereunder shall be subject to the requirement that if at any time the Company determines that the listing, registration or qualification of the shares of Common Stock subject to such award upon any securities exchange or under any law, or the consent or approval of any governmental body, or the taking of any other action is necessary or desirable as a condition of, or in connection with, the exercise or settlement of such award or the delivery of shares thereunder, such award shall not be exercised or settled and such shares shall not be delivered unless such listing, registration, qualification, consent, approval or other action shall have been effected or obtained, free of any conditions not acceptable to the Company. The Company may require that certificates evidencing shares of Common Stock delivered pursuant to any award made hereunder bear a legend indicating that the sale, transfer or other disposition thereof by the holder is prohibited except in compliance with the Securities Act of 1933, as amended, and the rules and regulations thereunder.
6.7            Adjustment . In the event of any stock split, stock dividend, recapitalization, reorganization, merger, consolidation, combination, exchange of shares, liquidation, spin-off or other similar change in capitalization or event, or any distribution to holders of Common Stock other than a regular cash dividend, or any other corporate transaction or event having an effect similar to any of the foregoing, the number and class of securities available under this Plan, the maximum number of shares of Common Stock with respect to which options, SARs, Stock Awards or Performance Share Awards or a combination thereof may be awarded during any calendar year to any one person, the maximum number of shares of Common Stock that may be issued pursuant to awards in the form of Incentive Stock Options, the number and class of securities subject to each outstanding option and the purchase price per security, the terms of each outstanding SAR, the number and class of securities subject to each outstanding Stock Award, and the terms of each outstanding Performance Share or Performance Share Unit, plus the other terms of outstanding awards, shall be appropriately adjusted by the Committee, such adjustments to be made in the case of outstanding options and SARs without an increase in the aggregate purchase price or base price and in accordance with Section 409A of the Code. Moreover, in the event of any such transaction or event, the Committee shall provide in substitution for any or all outstanding awards under this Plan such alternative consideration (including cash), if any, as it, in good faith, shall determine to be equitable in the circumstances and shall require in connection therewith the surrender of all awards so replaced in a manner that complies with Section 409A of the Code. In addition, for each option or SAR with a purchase price or base price, as applicable, greater than the consideration offered in connection with any such transaction or event, the Committee may in its discretion elect to cancel such option or SAR without any payment to the person holding such option or SAR. The decision of the Committee regarding any such adjustment shall be final, binding and conclusive.
6.8           Change in Control .
(a)    Notwithstanding any provision in this Plan or any Agreement, in the event of a Change in Control, (i) all outstanding options and SARs shall immediately become exercisable in full, (ii) the Restriction Period applicable to any outstanding Stock Award shall lapse, (iii) the Performance Period applicable to any outstanding Performance Share Award shall lapse, unless otherwise provided in the award Agreement and subject to the discretion of the Committee and (iv) the Performance Measures applicable to any outstanding award shall be deemed to be satisfied at the maximum level.
(b)    In the event of a Change in Control, the Board (as constituted prior to such Change in Control) may, in its discretion:

(i) require that shares of stock of the corporation resulting from such Change in Control, or a parent corporation thereof, be substituted for some or all of the shares of Common Stock subject


Exhibit 10.1

to an outstanding award, with an appropriate and equitable adjustment to such award as shall be determined by the Board in accordance with Section 6.7; and/or
(ii) require outstanding awards, in whole or in part, to be surrendered to the Company by the Participant, and to be immediately cancelled by the Company, and to provide for the Participant to receive (A) a cash payment in an amount equal to (1) in the case of an option or an SAR, the aggregate number of shares of Common Stock then subject to the portion of such option or SAR surrendered multiplied by the excess, if any, of the Fair Market Value of a share of Common Stock as of the date of the Change in Control, over the purchase price or base price per share of Common Stock subject to such option or SAR, and (2) in the case of a Stock Award or a Performance Share Award, the aggregate number of shares of Common Stock then subject to the portion of such award surrendered to the extent the Performance Measures applicable to such award have been satisfied or are deemed satisfied pursuant to Section 6.8(a), multiplied by the Fair Market Value of a share of Common Stock as of the date of the Change in Control; (B) shares of capital stock of the corporation resulting from or succeeding to the business of the Company pursuant to such Change in Control, or a parent corporation thereof, having a fair market value not less than the amount determined under clause (A) above; or (C) a combination of the payment of cash pursuant to clause (A) above and the issuance of shares pursuant to clause (B) above.
(c)          Unless otherwise defined in an applicable Agreement, “Change in Control” shall mean:
(i) the acquisition by any individual, entity or group (a “ Person ”), including any “person” within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act, of beneficial ownership within the meaning of Rule 13d-3 promulgated under the Exchange Act, of more than 50% of either (A) the then outstanding shares of common stock of the Company (the “ Outstanding Common Stock ”) or (B) the combined voting power of the then outstanding securities of the Company entitled to vote generally in the election of directors (the “ Outstanding Voting Securities ”); excluding, however, the following: (1) any acquisition directly from the Company (excluding any acquisition resulting from the exercise of an exercise, conversion or exchange privilege unless the security being so exercised, converted or exchanged was acquired directly from the Company), (2) any acquisition by the Company, (3) any acquisition by an employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company or (4) any acquisition by any corporation pursuant to a transaction which complies with clauses (A), (B) and (C) of subsection (iii) of this Section 6.8(c); provided further, that for purposes of clause (2), if any Person (other than the Company or any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company) shall become the beneficial owner of more than 50% of the Outstanding Common Stock or more than 50% of the Outstanding Voting Securities by reason of an acquisition by the Company, and such Person shall, after such acquisition by the Company, become the beneficial owner of any additional shares of the Outstanding Common Stock or any additional Outstanding Voting Securities and such beneficial ownership is publicly announced, such additional beneficial ownership shall constitute a Change in Control;
(ii) individuals who, as of the beginning of any consecutive 2-year period constitute the Board of Directors (the “ Incumbent Board ”) cease for any reason to constitute at least a majority of such Board; provided that any individual who subsequently becomes a director of the Company and whose election, or nomination for election by the Company’s stockholders, was approved by the vote of at least a majority of the directors then comprising the Incumbent Board shall be deemed a member of the Incumbent Board; and provided further, that any individual who was initially elected as a director of the Company as a result of an actual or threatened solicitation by a Person other than the Board for the
purpose of opposing a solicitation by any other Person with respect to the election or removal of directors, or any other actual or threatened solicitation of proxies or consents by or on behalf of any Person other than the Board shall not be deemed a member of the Incumbent Board;
(iii) the consummation of a reorganization, merger or consolidation of the Company or sale or other disposition of all or substantially all of the assets of the Company (a “ Corporate Transaction ”); excluding, however, a Corporate Transaction pursuant to which (A) all or substantially all of the individuals or entities who are the beneficial owners, respectively, of the Outstanding Common Stock and the Outstanding Voting Securities immediately prior to such Corporate Transaction will beneficially own, directly or indirectly, more than 50% of, respectively, the outstanding shares of common stock, and the combined voting power of the outstanding securities of such corporation entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Corporate Transaction (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or indirectly) in substantially the same proportions relative to each other as their ownership, immediately prior to such Corporate Transaction, of the Outstanding Common Stock and the


Exhibit 10.1

Outstanding Voting Securities, as the case may be, (B) no Person (other than: the Company; any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company; the corporation resulting from such Corporate Transaction; and any Person which beneficially owned, immediately prior to such Corporate Transaction, directly or indirectly, more than 50% of the Outstanding Common Stock or the Outstanding Voting Securities, as the case may be) will beneficially own, directly or indirectly, more than 50% of, respectively, the outstanding shares of common stock of the corporation resulting from such Corporate Transaction or the combined voting power of the outstanding securities of such corporation entitled to vote generally in the election of directors and (C) individuals who were members of the Incumbent Board will constitute at least a majority of the members of the board of directors of the corporation resulting from such Corporate Transaction; or
(iv) the consummation of a plan of complete liquidation or dissolution of the Company.
(v) To the extent an award is considered deferred compensation that is subject to the requirements of Section 409A of the Code, a Change in Control under the Plan shall not be deemed to have occurred unless such Change in Control is also a “change in control event,” within the meaning of Section 409A of the Code.
6.9            No Right of Participation or Employment . No person shall have any right to participate in this Plan. The Committee’s selection of a person to participate in this Plan at any time shall not require the Committee to select such person to participate in this Plan at any other time. Neither this Plan nor any award made hereunder shall confer upon any person any right to continued employment by the Company, any Subsidiary or any affiliate of the Company or affect in any manner the right of the Company, any Subsidiary or any affiliate of the Company to terminate the employment of any person at any time without liability hereunder.
6.10            Rights as Stockholder . No person shall have any right as a stockholder of the Company with respect to any shares of Common Stock or other equity security of the Company which is subject to an award hereunder unless and until such person becomes a stockholder of record with respect to such shares of Common Stock or equity security.
6.11            Stock Certificates . To the extent that this Plan provides for issuance of certificates to reflect the issuance of shares of Common Stock, the issuance may be effected on a non-certificated basis, to the extent not prohibited by applicable law or the rules of the New York Stock Exchange.
6.12            Governing Law . This Plan, each award hereunder and the related Agreement, and all determinations made and actions taken pursuant thereto, to the extent not otherwise governed by the Code or the laws of the United States, shall be governed by the laws of the State of Delaware and construed in accordance therewith without giving effect to principles of conflicts of laws.
 
6.13            Deferral of Awards Under the Plan . Subject to the requirements of Section 409A of the Code, the Committee or, to the extent delegated by the Committee, the Company may permit all or any portion of any award under this Plan to be deferred consistent with the requirements and restrictions in the applicable jurisdiction. Notwithstanding any other provision of the Plan or any Agreement to the contrary, any such award which is deferred and which would otherwise consists of shares of Restricted Stock may be converted, as required to permit the deferral of taxation, to Restricted Stock Units immediately prior to their becoming granted and such Restricted Stock Units shall be settled in shares as of the specified distribution date. Also, notwithstanding any other provision of the Plan or any Agreement to the contrary, to the extent that a Participant is eligible for Retirement and therefore would be eligible for accelerated, continued or pro-rated vesting upon termination under his or her individual Agreement, any such award which consists of shares of Restricted Stock may be converted, as required to permit the deferral of taxation, to Restricted Stock Units immediately prior to the Participant becoming eligible for Retirement and such Restricted Stock Units shall be settled in shares as of the specified distribution date.
6.14             Awards Subject to Clawback . The awards granted under this Plan and any cash payment or shares of Common Stock delivered pursuant to an award are subject to forfeiture, recovery by the Company or other action pursuant to the applicable Agreement or any clawback or recoupment policy which the Company may adopt from time to time, including without limitation any such policy which the Company may be required to adopt under the Dodd-Frank Wall Street Reform and Consumer Protection Act and implementing rules and regulations thereunder, or as otherwise required by law.
6.15            Stock-Based Awards in Substitution for Awards Granted by Other Company . Notwithstanding anything in this Plan to the contrary:
(a)          Awards may be granted under this Plan in substitution for or in conversion of, or in connection with an assumption of, stock options, stock appreciation rights, restricted stock, restricted stock units or other stock or stock-based awards held by awardees of an entity engaging in a corporate acquisition or merger transaction with the Company or any Subsidiary. Any conversion, substitution or assumption will be effective as of the close of the merger or acquisition, and, to the extent applicable, will be conducted in a manner that complies with Section 409A of the Code. The awards so granted may reflect the original terms


Exhibit 10.1

of the awards being assumed or substituted or converted for and need not comply with other specific terms of this Plan, and may account for Common Stock substituted for the securities covered by the original awards and the number of shares subject to the original awards, as well as any exercise or purchase prices applicable to the original awards, adjusted to account for differences in stock prices in connection with the transaction.
(b)          In the event that a company acquired by the Company or any Subsidiary or with which the Company or any Subsidiary merges has shares available under a pre-existing plan previously approved by stockholders and not adopted in contemplation of such acquisition or merger, the shares available for grant pursuant to the terms of such plan (as adjusted, to the extent appropriate, to reflect such acquisition or merger) may be used for awards made after such acquisition or merger under the Plan; provided, however, that awards using such available shares may not be made after the date awards or grants could have been made under the terms of the pre-existing plan absent the acquisition or merger, and may only be made to individuals who were not employees or directors of the Company or any Subsidiary prior to such acquisition or merger.
(c)          Any Common Stock that is issued or transferred by, or that is subject to any awards that are granted by, or become obligations of, the Company under this Section 6.15 will not reduce the Common Stock available for issuance or transfer under the Plan or otherwise count against the limits contained in Section 1.5 of the Plan. In addition, no Common Stock that is issued or transferred by, or that are subject to any awards that are granted by, or become obligations of, the Company under this Section 6.15 will be added to the aggregate plan limit contained in Section 1.5 of this Plan.
RULES OF THE OWENS CORNING
2019 STOCK PLAN
FOR THE GRANT OF RESTRICTED STOCK UNITS TO
EMPLOYEES IN FRANCE
Dated April 18, 2019
1. Introduction .
The Board of Directors (the “Board”) of Owens Corning (the “Company”) has established the Owens Corning 2019 Stock Plan as (the “U.S. Plan”), for the benefit of certain employees of the Company, its parent and subsidiary companies, including its French subsidiaries for which it holds directly or indirectly at least 10% of the share capital (the “French Entities”).
Sections 1.3 of the U.S. Plan specifically authorizes the committee of Directors who administers the U.S. Plan (the “Administrator”) to adopt, amend, suspend, and revoke rules applicable to stock awards granted under the U.S. Plan (including those in France) as it deems necessary or advisable to administer the U.S. Plan for the purposes of satisfying applicable non-U.S. laws. The Administrator has determined that it is necessary and advisable to establish a sub-plan for the purpose of permitting restricted stock units to qualify for favorable tax and social security treatment in France. The Administrator, therefore, intends to establish a sub-plan of the U.S. Plan for the purpose of granting restricted stock units which qualify for the favorable tax and social security treatment in France applicable to shares granted for no consideration under Sections L. 225-197-1 to L. 225-197-6 of the French Commercial Code, as amended, to qualifying employees who are resident in France for French tax purposes and/or subject to the French social security regime (the “French Participants”). The terms of the U.S. Plan, as set out in Appendix 1 hereto, shall, subject to the limitations in the following rules, constitute the Rules of the Owens Corning 2019 Stock Plan for the Grant of Restricted Stock Units to employees in France (the “French Stock Unit Plan”).
Under the French Restricted Stock Unit Plan, the qualifying employees will be granted only restricted stock units as defined in Section 3 hereunder. The provisions of Section 2 of the U.S. Plan permitting the grant of options, incentive stock options, and stock appreciation rights are not applicable to grants made under this French Restricted Stock Unit Plan. The grant of restricted stock units is authorized under the Section 3 of the U.S. Plan.
2. Definitions .
Capitalized terms not otherwise defined herein used in the French Restricted Stock Unit Plan shall have the same meanings as set forth in the U.S. Plan. The terms set out below will have the following meanings:
(a) Restricted Stock Units.
The term “Restricted Stock Units” shall mean a promise by the Company to a future issuance at the Vesting Date provided the individual remains employed as of the Vesting Date, of one Share of the Company for each unit granted to the French Participant, and subject to specific terms and conditions. Notwithstanding any provisions of the U.S. Plan, Restricted Stock Units granted under the French Restricted Stock Unit Plan will not give rise to dividend equivalent payments prior to the Vesting Date nor shall a French Participant be entitled to receive on vesting an amount in cash in lieu of Shares.


Exhibit 10.1

(b) Grant Date.
The term “Grant Date” shall be the date on which the Administrator both (1) designates the French Participants and (2) specifies the terms and conditions of the Restricted Stock Units, including the number of Shares to be issued at a future date, the conditions for the vesting of the Restricted Stock Units, and the conditions of the transferability of the Shares once issued.
 
(c) Vesting Date.
The term “Vesting Date” shall mean the date on which the Restricted Stock Units become vested, as specified by the Administrator. In principle, the Shares underlying the Restricted Stock Units are issued upon vesting. To qualify for the French favorable tax and social security regime, such Vesting Date shall not occur prior to the first anniversary of the Grant Date, as required under Section L. 225-197-1 of the French Commercial Code, as amended, or in the French Tax Code or in the French Social Security Code, as amended.
(d) Closed Period.
The term “Closed Period” means:
(i) Ten stock exchange trading days preceding and following the disclosure to the public of the consolidated financial statements or the annual statements of the Company; or
(ii) Any period during which the corporate management of the Company possess confidential information which could, if disclosed to the public, significantly impact the quotation price of the Shares, until the end of ten trading days following the date upon which the price information is made public.
If the French Commercial Code is amended after adoption of this French Restricted Stock Units Plan to modify the definition and/or applicability of the Closed Periods to French-qualified Restricted Stock Units, such amendments shall become applicable to any French-qualified Restricted Stock Units granted under this French Restricted Stock Units Plan, to the extent required by French law.
(e) Disability.
The term “Disability” means disability as determined in categories 2 and 3 under Section L. 341-4 of the French Social Security Code as amended.
(f) Filing requirements
The French Participants and their employer shall comply with the filing requirements provided for by French tax law.
3. Entitlement to Participate .
(a) Subject to Sections 3 (b), (c) and (d) below, any French Participant who, on the Grant Date of the Restricted Stock Units and to the extent required under French law, is either employed under the terms and conditions of an employment contract with the Company or a French Entity (“contrat de travail”) or who is a corporate officer of the Company (or of the French entity if the Company is listed on a regulated market), shall be eligible to receive Restricted Stock Units under the French Restricted Stock Unit Plan, provided that he or she also satisfies the eligibility conditions of Section 5.1 of the U.S. Plan.
Stock Units may not be issued to corporate officers of the French Entities, other than the managing directors ( e.g ., Président du Conseil d’Administration, Directeur Général, Directeur Général Délégué, Membre du Directoire, Gérant de Sociétés par actions), unless the corporate officer is an employee of a French Entity as defined by French law and is otherwise eligible to receive awards under Section 5.1 of the U.S. Plan.
(b) Notwithstanding any provisions in the U.S. Plan to the contrary, Restricted Stock Units may not be issued under the French Restricted Stock Unit Plan to employees or corporate officers owning more than ten percent (10%) of the Company’s share capital.
 
(c) Notwithstanding any provisions in the U.S. Plan to the contrary, a grant of Restricted Stock Units may not result in a Company’s employee or officer holding more than ten percent (10%) of the Company’s Shares.
(d) Notwithstanding any provisions in the U.S. Plan to the contrary, the number of shares granted pursuant to Restricted Stock Units may not exceed 10% of the Company’s share capital at any time.
(e) Notwithstanding any provisions in the U.S. Plan to the contrary, Restricted Stock Units may not be granted to corporate officers under the French Restricted Stock Unit Plan, unless employee share plans or profit sharing plans are implemented to the


Exhibit 10.1

benefit of all employees of the French branch of the Company, if any, and at least 90% of the employees of the French Entities, in the conditions described under Section L. 225-197-6 of the French Commercial Code.
4. Conditions of the Restricted Stock Units .
(a) Grant of Restricted Stock Units.
To the extent the French requirement is applicable to the Company, the Restricted Stock Units may be granted for 38 months following the approval of the U.S. Plan by the shareholders of the Company (or any other period stated in the U.S. Plan pursuant to the U.S. law). To the extent the provision does not apply to the Company, the U.S. Plan provision shall apply.
(b) Vesting of Stock Units.
Stock Units will not vest prior to the relevant anniversary of the Grant Date specified by the Administrator and in any case will not vest prior to the first anniversary of the Grant Date as defined under Section 2 above. However, notwithstanding the above, in the event of the death or Disability of a French Participant, all of his or her outstanding Restricted Stock Units shall vest and Shares shall be issued as set forth in Sections 7 and/or 8 of this French Restricted Stock Unit Plan.
(c) Holding of Shares.
The French Participants must hold the Shares issued pursuant to the Restricted Stock Units until the relevant anniversary of the Vesting Date specified by the Administrator, if any, and in any case until the second anniversary of the Grant Date, or such other period as is required to comply with the minimum mandatory holding period applicable to shares underlying French-qualified restricted stock units under Section L. 225-197-1 of the French Commercial Code, as amended or under the French Tax Code or French Social Security Code as amended. This holding period will continue to apply even after the French Participant is no longer an employee or corporate officer of a French Entity.
In addition, notwithstanding any provisions in the U.S. Plan to the contrary, Shares delivered upon the vesting date shall not be sold during certain Closed Periods as provided for by Section L. 225-197-1 of the French Commercial Code, so long as those Closed Periods are applicable to shares underlying French-qualified restricted stock units.
(d) French Participant’s Account.
The Shares issued to a French Participant shall be recorded in an account in the name of the French Participant with the Company or a broker or in such other manner as the Company may otherwise determine to ensure compliance with applicable restrictions provided by law.
(e) Cash Dividends.
French Participants shall not be granted any cash dividends with respect to a Restricted Stock Unit, applicable to the period commencing on the Grant Date and terminating on the Vesting Date.
 
5. Non-transferability of Stock Units .
Notwithstanding any provision in the U.S. Plan to the contrary, the Restricted Stock Unit is not transferable, except by will or by the laws of descent and distribution, and the granting of the Company’s Shares may be claimed during the life of the French Participant by the French Participant.
6. Adjustments and Change of Control .
In the event of adjustment or a Change of Control, adjustment to the terms and conditions of the Restricted Stock Units or underlying Shares may be made in accordance with the U.S. Plan. To the extent that such adjustments would violate applicable French rules, it may result in the disqualification of the Restricted Stock Units for purposes of the French favorable tax and social security regime. In this case, the Administrator may decide at its discretion to lift the restriction on sale of the underlying Shares.
7. Death .
Notwithstanding the provisions set forth in Section 5 above, in the event of the death of a French Participant, the Restricted Stock Units held by the French Participants at the time of death are transferable to the French Participant’s heirs. The Company shall issue the underlying Shares to the French Participant’s heirs, at their request, if such request occurs within six months following the death of the French Participant, as provided for in the Restricted Stock Unit Agreement. If the French Participant’s heirs do not request the issuance of the Shares underlying the Restricted Stock Units within six months following the French Participant’s death, the Restricted Stock Units will be forfeited.


Exhibit 10.1

The French Participant’s heirs may freely sell the Shares notwithstanding the restriction on the sale of Shares set forth in Section 4(c) above to the extent and as long as applicable under French law.
8. Disability .
In the event of the Disability of a French Participant, the Company shall issue the underlying Shares to the French Participant at his/her request as provided for in the Restricted Stock Unit Agreement.
The French Participant may freely sell the shares notwithstanding the restriction on the sale of Shares set forth in Section 4(c) above.
9. Disqualification of French-qualified Restricted Stock Units .
If the Restricted Stock Units are otherwise modified or adjusted in a manner in keeping with the terms of the U.S. Plan or as mandated as a matter of law and the modification or adjustment is contrary to the terms and conditions of this French Restricted Stock Unit Plan, the Restricted Stock Units may no longer qualify as French-qualified Restricted Stock Units. If the Restricted Stock Units no longer qualify as French-qualified Restricted Stock Units, the Administrator may, provided it is authorized to do so under the U.S. Plan, determine to lift, shorten or terminate certain restrictions applicable to the vesting of the Restricted Stock Units or the sale of the Shares which may have been imposed under this French Restricted Stock Unit Plan or in the Restricted Stock Unit Agreement delivered to the French Participant.
10. Interpretation .
It is intended that Restricted Stock Units granted under the French Restricted Stock Unit Plan shall qualify for the favorable tax and social security treatment applicable to Restricted Stock Units granted under Sections L. 225-197-1 to L. 225-197-6 of the French Commercial Code as amended, or under the French Tax Code and the French Social Security Code as amended.
The terms of the French Restricted Stock Unit Plan shall be interpreted accordingly and in accordance with the relevant provisions set forth by French tax and social security laws, as well as the French tax and social
security administrations and the relevant guidelines released by the French tax and social insurance authorities and subject to the fulfillment of legal, tax and reporting obligations.
In the event of any conflict between the provisions of the French Restricted Stock Unit Plan and the U.S. Plan, the provisions of the French Restricted Stock Unit Plan shall control for any grants made to the French Participants under this French Restricted Stock Unit Plan.
Should the Restricted Stock Units not benefit from the French tax and social security favorable regime due to the French Participants’ failure to comply with the provisions of this French Restricted Stock Unit Plan, the French Participant shall be liable for the payment of resulting taxes and social security charges.
11. Employment Rights .
The adoption of this French Restricted Stock Unit Plan shall not confer upon the French Participants or any employees of a French Entity, any employment rights and shall not be construed as part of any employment contracts that a French Entity has with its employees.
12. Amendments .
Subject to the terms of the U.S. Plan, the board reserves the right to amend or terminate this French Stock Unit Plan at any time. Such amendments would only apply to future grants and would not be retroactive.
13. Effective Date .
The French Restricted Stock Unit Plan is adopted and effective as of April 18, 2019.



Exhibit 10.2


2019 LONG TERM INCENTIVE PROGRAM
AWARD AGREEMENT

pursuant to the

OWENS CORNING
2016 STOCK PLAN

RESTRICTED STOCK UNIT AWARD

OWENS CORNING, a Delaware corporation, has granted to [Participant Name] (the “Holder”), as of [Grant Date] (the “Grant Date”), pursuant to the provisions of the Owens Corning 2016 Stock Plan (the “Plan”), [Number of Shares Granted] Restricted Stock Units (the “Units”) relating to shares of Common Stock (“Stock”), upon and subject to the restrictions, terms and conditions set forth below and in the Plan. Each Unit shall provide for the issuance and transfer to the Holder of one share of Stock upon the lapse of the restrictions set forth in Section 1 hereof. Upon issuance and transfer of the Stock subject to the Units following the lapse of the Restriction Period, the Holder shall have all rights incident to ownership of such Stock, including but not limited to voting rights and the right to receive dividends. References to employment by the Company shall also mean employment by a Subsidiary or Company Affiliate. Capitalized terms not defined herein shall have the meanings specified in the Plan.

1. Restriction Period and Vesting .
(a) The Units shall vest and the restrictions shall lapse as follows: (i) 25% of the Units shall vest and restrictions shall lapse on each anniversary of the grant date (the “Vesting Dates”) until the Units are fully vested, or (ii) earlier pursuant to this Agreement or in accordance with Section 6.8 of the Plan (the “Restriction Period”). As used herein, the term “vest” shall mean no longer subject to a substantial risk of forfeiture.
(b) If, prior to the end of the Restriction Period, the Holder’s employment with the Company terminates by reason of death or Disability, the Units that are then unvested shall vest in full, and restrictions shall lapse, as of the date of such termination. If, after twelve months of service have been rendered and prior to the end of the Restriction Period, the Holder’s employment with the Company terminates by reason of Retirement, the portion of the Award that is then unvested shall continue to vest after the date of such termination as if the Holder’s employment with the Company continued until the end of the Restriction Period.
(c) If, prior to the end of the Restriction Period, the Holder’s employment with the Company terminates for any reason other than death or Disability, or Retirement, the Units that are then unvested as of the effective date of the Holder’s termination of employment shall be forfeited by the Holder and such portion shall be cancelled by the Company.
(d) In the event of a Change in Control, as defined in the Plan, the Units shall immediately vest in full and the restrictions shall lapse as provided in Section 6.8 of the Plan; provided, however, that in the event that (i) the Units constitute the payment of nonqualified deferred compensation within the meaning of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), and (ii) the Change in Control does not constitute a “change in control event’ within the meaning of Section 409A of the Code, the Units shall not immediately vest upon such Change in Control, but instead shall vest and be payable in accordance with the vesting schedule set forth in clause (i) of Section 1(a) hereof, or earlier pursuant to Section 1(b) hereof.



2. Rights as a Stockholder .

During the Restriction Period, the Holder shall have the right to accrue cash dividends and other distributions (including, without limitation, a Common Stock dividend or a Common Stock split), unless the award is subject to a deferral election as described in Section 4.13 below, in which case dividend equivalents will be accrued in the form of additional Units, with the increase in the number of Units equal to the number of shares of Stock or fractional shares of Stock that could be purchased with the dividends based on the value of the Stock at the time such dividends are


Exhibit 10.2

paid (“Credited Units”). Such cash dividends or Credited Units shall be subject to the restrictions set forth in Section 1 hereof and shall be paid to the Holder in the time and manner as provided under this Agreement. No dividends will be credited with respect to record dates occurring prior the Grant Date, or with respect to record dates occurring after the Holder forfeits the Units. The Holder shall not be a stockholder of record with respect to the Stock underlying the Units and shall have no voting rights with respect to such Stock during the Restriction Period.
3. Withholding Taxes .
As a condition precedent to the delivery to the Holder of any shares of Stock upon the lapse of the Restriction Period, the Holder agrees that all income or other withholding taxes required under all applicable federal, state, local or other laws or regulations (the “Required Tax Payments”) with respect to such Stock shall be satisfied by the Company withholding from the Stock otherwise to be delivered to the Holder pursuant to the Units having a Fair Market Value, determined as of the Tax Date, equal to the Required Tax Payments. No certificate representing Stock shall be delivered to the Holder until the Required Tax Payments have been satisfied in full.

4. Additional Terms and Conditions of Units .

4.1 Units Subject to Acceptance of Agreement . The Units shall be null and void unless the Holder shall accept this Agreement by executing it in an enforceable manner, including through an electronic acceptance, in such form as is determined to be acceptable within the discretion of the Committee.

4.2 Agreement Not To Compete and Not To Solicit

(a)      In exchange for the consideration provided by the Company in this Agreement, Holder agrees that, during the Covenant Period, Holder shall not, without the prior written consent of the Company: i) become directly or indirectly engaged or involved, as an owner, principal, employee, officer, director, manager, independent contractor, consultant, representative, seller, distributor, agent, advisor, , lender or in any other capacity, with or for any Competitor of the Company or any Subsidiary; ii) participate in the research or development, manufacture, and/or any business, fabrication, marketing, sale or distribution of any products or services that are competitive with or similar to any products or services then being developed, manufactured, fabricated, marketed, sold or distributed by the Company or any Subsidiary; iii) directly or indirectly, on behalf of Holder or any other person or entity , offer, market, sell or distribute, or participate in offering, marketing, selling or distributing any products or services that are competitive with or similar to any products or services then offered , marketed, sold or distributed by the Company or any Subsidiary to any customer of the Company or any Subsidiary, or to Holder’s knowledge, potential customer of the Company or any Subsidiary; or iv) directly or indirectly engage, or attempt to engage, on behalf of any Competitor of the Company or any Subsidiary, any employee, independent contractor, consultant, sales representative, vendor, supplier, distributor, independent contractor, agent or other business relationship of the Company or any Subsidiary, or engage in any other action that would reasonably be expected to terminate or negatively impact any such business relationship of the Company or any Subsidiary; provided, however, that Holder’s direct or indirect ownership of less than 1% of the outstanding capital stock of a company whose capital stock is listed on a national securities exchange or regularly traded in an over-the-counter market, shall not be deemed to be a violation of this Agreement. Notwithstanding any provision of the Plan or of this Agreement to the contrary, any violation of this section by Holder shall result in the immediate forfeiture and cancellation of the portion of the Units which are not vested as of such date.

(b)      If any covenant or other term in this Agreement (including without limitation any covenant in Section 4.2 hereof) is determined by a court of competent jurisdiction to be wholly or partially unenforceable , Holder agrees that: i) this Agreement or any portion hereof may be reformed so that such covenant or other term is enforceable to the maximum extent permitted by law; ii) such determination shall not be a bar to or in any way diminish the Company’s right to enforce any such covenant or other term in any other jurisdiction; and iii) the unaffected provisions of this Agreement shall be unimpaired and shall remain in full force and effect. Without limiting the generality of the foregoing, if any covenant in this Agreement shall be determined by a court of competent jurisdiction to be unenforceable by reason of its extending for too great a period of time or over too great a geographical area or by reason of its being too extensive in any other respect, it will be interpreted to extend only over the maximum period of time for which it may


Exhibit 10.2

be enforceable, over the maximum geographical area as to which it may be enforceable, or to the maximum extend in all other respect as to which it may be enforceable, all as determined by such court..
(c)      Holder agrees that money damages would not be a sufficient remedy for any breach of this Section 4.2 by Holder and that, in addition to all other remedies which may be available to the Company, the Company shall be entitled to specific performance and injunctive or other equitable relief as a remedy for any such breach. Holder further agrees to waive any requirement for the securing or posting of any bond in connection with any such remedy.
(d)      Holder agrees and acknowledges that (i) the services rendered by Holder to the Company are special and of great value to the Company, (ii) the market for the Company’s products and services is worldwide and the Company regularly transacts business on a worldwide basis, (iii) the covenants contained in this Section 4.2 are reasonable and necessary for the protection of the Company’s legitimate business interests, (iv) the grant of the Units to Holder is good and sufficient consideration for such covenants, and (v) Holder’s compliance with such covenants will not preclude or unreasonably restrict Holder from engaging in other activities for the purpose of earning a livelihood.

(e)      As used herein, i) the term “Competitor” means any person, or entity that A) is engaged in, or that has plans to become engaged in the research, development, manufacture, fabrication, marketing, sale or distribution of products or services that are the same as, or serve a substantially similar purpose or function as any products or services that were researched, developed, manufactured, fabricated, marketed, sold, or distributed by any business unit of the Company or any Subsidiary for which Holder performed any work or services at any time during the last twenty-four (24) months during which Holder was employed by Company or any Subsidiary and B) directly or indirectly conducts any business operations anywhere within North America or anywhere else in the world where Holder has engaged in business activities on behalf of the Company or any Subsidiary: and ii) the term “Covenant Period” means the period ending on the second anniversary of the date Holder’s termination of employment with the Company or any Subsidiary, regardless of the circumstances relating to such termination of employment (e.g., resignation, retirement, disability, termination by the Company for cause, or termination by the Company without cause).

4.3 Nontransferability of Units . During the Restriction Period, the Units not then vested may not be transferred by the Holder other than by will, the laws of descent and distribution or pursuant to beneficiary designation procedures approved by the Company. Except to the extent permitted by the foregoing, during the Restriction Period, the Units may not be sold, transferred, assigned, pledged, hypothecated, encumbered or otherwise disposed of (whether by operation of law or otherwise) or be subject to execution, attachment or similar process. Upon any attempt to sell, transfer, assign, pledge, hypothecate or encumber, or otherwise dispose of such Units, the Units shall immediately become null and void.

4.4 Adjustment . In the event of any stock split, stock dividend, recapitalization, reorganization, merger, consolidation, combination, exchange of stock, liquidation, spin-off or other similar change in capitalization or event, or any distribution to holders of Common Stock other than a regular cash dividend, or any other corporate transaction or event having an effect similar to any of the foregoing, the number and class of securities subject to the Units and the other terms of the Units, shall be appropriately adjusted by the Committee. If any adjustment would result in a fractional security being subject to the Units, the Company shall pay the Holder in connection with the vesting, if any, of such fractional security an amount in cash determined by multiplying such fraction (rounded to the nearest hundredth) by the Fair Market Value on the Vesting Date. The decision of the Committee regarding any such adjustment shall be final, binding and conclusive.

4.5 Compliance with Applicable Law . The Units are subject to the condition that if the listing, registration or qualification of the Stock subject to the Units upon any securities exchange or under any law, or the consent or approval of any governmental body, or the taking of any other action is necessary or desirable as a condition of, or in connection with, the vesting or delivery of Stock hereunder, the Stock subject to the Units shall not vest or be delivered, in whole or in part, unless such listing, registration, qualification, consent or approval shall have been effected or obtained, free of any conditions not acceptable to the Company. The Company agrees to use reasonable efforts to effect or obtain any such listing, registration, qualification, consent or approval. Further, Holder agrees that to the extent issuance of Stock in the Holder’s jurisdiction is impossible,


Exhibit 10.2

illegal, unauthorized, or in the Company’s discretion is imprudent or is otherwise impracticable for any reason, that the Company may, in its discretion, either deem the Units to be a cash award of equivalent cash value or may direct the sale of all Stock subject to the Units and settle the Units in cash locally with the Holder.

4.6 Delivery of Certificates . Subject to the foregoing paragraph, promptly following the vesting of the Units, in whole or in part, but in any event not more than two and one-half months thereafter, the Company, subject to the withholding provisions of Section 3, shall deliver or cause to be delivered one or more certificates representing the number of vested shares of Stock represented by the vested Units. The Company shall pay all original issue or transfer taxes and all fees and expenses incident to such delivery, except as otherwise provided in Section 3.

4.7 Award Confers No Rights to Continued Employment . The granting of the Units does not entitle the Holder to any award other than that specifically granted under the Plan, nor to any future award under the Plan or any similar plan. The Units do not become part of the contract of employment or any other employment relationship with the Holder’s employer, and the Units are not a guarantee of continued employment. Moreover, the Units or any future awards do not become a term or condition of employment. The Holder understands and accepts that the Units granted under the Plan are entirely at the discretion of the Company and that the Company retains the right to amend or terminate the Plan and/or the Holder's participation therein, at any time, at the Company’s sole discretion and without notice. The benefits and rights provided under the Plan are not, and should not be considered part of the Holder’s salary or compensation for purposes of any other calculation, including calculating any severance, resignation, redundancy or other end of service payments, vacation, bonuses, long-term service awards, indemnification, pension or retirement benefits, or any other payments, benefits or rights of any kind, except as required by applicable law. The Holder hereby waives any and all rights to compensation or damages as a result of the termination of employment with the Company for any reason whatsoever insofar as those rights result or may result from: (a) the loss or diminution in value of any rights under the Plan; or (b) the Holder ceasing to have any rights under, or ceasing to be entitled to any rights under, the Plan as a result of such termination.

4.8 Decisions of Board or Committee . The Board or the Committee shall have the right to resolve all questions which may arise in connection with the Units and, notwithstanding the default vesting treatment described above, to determine to provide for either continued vesting or accelerated vesting of all or a portion of the Units in the cases of the holder’s death, Disability, or Retirement. Administration of the Units has been delegated to the Company. Any interpretation, determination or other action made or taken by the Board or the Committee, or the Company as its delegate, regarding the Plan or this Agreement shall be final, binding and conclusive.

4.9 Incorporation of the Plan . The Plan, as it exists on the date of this Agreement and as amended from time to time, is hereby incorporated by reference and made a part hereof, and the Units and this Agreement shall be subject to all terms and conditions of the Plan and any subsequent amendments to the Plan. In the event of any conflict between the provisions of this Agreement and the provisions of the Plan, the terms of the Plan shall control. The Holder hereby acknowledges receipt of a copy of the Plan.

4.10 Value of Units and Common Stock . The Company makes no representation as to the value of the Units. The Company is not responsible for any fluctuations in the value of the Common Stock.

4.11 Investment Representation . The Holder hereby represents and covenants that (a) any Stock acquired upon the vesting of the Units will be acquired for investment and not with a view to the distribution thereof within the meaning of the Securities Act of 1933, as amended (the “Securities Act”), unless such acquisition has been registered under the Securities Act and any applicable state securities law; (b) any subsequent sale of any such Stock shall be made either pursuant to an effective registration statement under the Securities Act and any applicable state securities laws, or pursuant to an exemption from registration under the Securities Act and such state securities laws; and (c) if requested by the Company, the Holder shall submit a written statement, in form satisfactory to the Company, to the effect that such representation (i) is true and correct as of the date of acquisition of any shares hereunder or (ii) is true and correct as of the date of any sale


Exhibit 10.2

of any such Stock, as applicable. As a further condition precedent to the delivery to the Holder of any Stock subject to the Units, the Holder shall comply with all regulations and requirements of any regulatory authority having control of or supervision over the issuance of the Stock and, in connection therewith, shall execute any documents which the Board or any committee authorized by the Board shall in its sole discretion deem necessary or advisable.

4.12 Notices and Electronic Delivery . The Company may, in its sole discretion, deliver any documents (other than certificates), notices or other communications related to the Units and the Holder’s participation in the Plan by electronic means. The Holder hereby consents to receive such documents by electronic delivery and, if requested, agrees to participate in the Plan through an on-line or electronic system established and maintained by the Company or another third party designated by the Company.

Any documents, notices or other communications which are not delivered electronically pursuant to this section shall be in writing, and shall be deemed to have been duly given when received, if delivered personally, or when mailed, if sent by first class mail, postage paid, addressed as follows:
(a) if to the Company or the Committee, to the attention of the Vice President, Total Rewards, Owens Corning World Headquarters, One Owens Corning Parkway, Toledo, Ohio 43659, or to the attention of such other person or at such other address as the Company, by notice to the Holder, may designate in writing from time to time, and

(b) if to the Holder, at his address as shown on the records of the Company, or at such other address as the Holder, by notice to the Company, may designate in writing from time to time.


4.13 Deferral of Units

i. Deferral Election . If the Holder made an election, in accordance with the terms and conditions prescribed by the Company and Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”), to defer the receipt of the Units that would have otherwise vested pursuant to Section 1, such Units shall be payable at the time and form elected by the Holder.

ii. Dividend Equivalents . Until the distribution of Units deferred pursuant to this Section 4.13 (the “Deferral Period”), the Units shall continue to be credited with dividend equivalents, as described in Section 2 hereof.

4.14 Miscellaneous.

(e) Successors . This Agreement shall be binding upon and inure to the benefit of any successor or successors of the Company and any person or persons who shall, upon the death of the Holder, acquire any right hereunder in accordance with the Plan.
(f) Counterparts . This Agreement may be executed in one or more counterparts, all of which taken together shall constitute one Agreement.
(g) Entire Understanding . The Plan and this Agreement constitute the entire agreement and understanding between the parties with respect to the matter described herein and supersede all prior and contemporaneous agreements and understandings, oral and written, between the parties with respect to such subject matter; provided, however, that the covenants contained in Section 4.2 shall complement and shall be in addition to, and shall not supersede similar covenants made by Holder to the Company or any Subsidiary in the Agreement-Protection of Owens Corning Proprietary Interests or the Intellectual Property Agreement if Holder has executed such an agreement.
(h) Modification . No modification or waiver of any of the provisions of this Agreement shall be effective unless in writing and signed by the party against whom it is sought to be enforced.
(i) Waiver . The failure of any party hereto at any time to require performance by another party of any provision of this Agreement shall not affect the right of such party to require performance of that provision, and any waiver by any party of any breach of any provision of this Agreement shall not be construed as a waiver of any


Exhibit 10.2

continuing or succeeding breach of such provision, a waiver of the provision itself, or a waiver of any right under this Agreement.
(j) Fees and Expenses; Legal Compliance . The Company shall pay all fees and expenses necessarily incurred by the Company in connection with this Agreement and will from time to time use its reasonable efforts to comply with all laws and regulations which, in the opinion of counsel to the Company, are applicable thereto.
(k) Governing Law . This Agreement shall be governed and construed and the legal relationships of the parties determined in accordance with the laws of the State of Delaware without reference to principles of conflict of laws.
(l) Data Privacy . By signing this Agreement, including by way of electronic acceptance by means acceptable to the Company of the Agreement, the Holder explicitly consents to the collection, processing, and transfer (electronically or otherwise) of personal data by the Company, the Holder’s employer, and any third parties as necessary. Moreover, the Holder explicitly acknowledges and agrees that personal data (including but not limited to Holder’s name, home address, telephone number, employment status, tax identification number, and data for tax withholding purposes) may be transferred to third parties assisting the Company with the implementation of the Plan. The Holder expressly authorizes such transfer to and processing by third parties. Furthermore, the Holder explicitly consents to the transfer of the Holder’s personal data to countries other than his or her country of employment. The Company will take reasonable measures to keep the Holder’s personal data private, confidential, and accurate. The Holder may obtain details with respect to the collection and transfer of his or her personal data in relation to the Plan participation and may also request access to and updates of such personal data, if needed, by contacting his or her local Human Resources contact.
(m) Award Subject to Clawback . The Holder hereby acknowledges that these Units are subject to forfeiture, recovery by the Company or other action pursuant to any clawback or recoupment policy which the Company may adopt and maintain from time to time, including without limitation any such policy which the Company may be required to adopt under the Dodd-Frank Wall Street Reform and Consumer Protection Act and implementing rules and regulations thereunder, or as otherwise required by law.
(n) Company to Reserve Stock . The Company shall at all times prior to the expiration or termination of the Units reserve and keep available, either in its treasury or out of its authorized but unissued Stock, the full number of shares of Stock subject to the Units from time to time.
(k)      Compliance with Section 409A of the Code .
(i) To the extent applicable, it is intended that the Agreement and the Plan comply with the provisions of Section 409A of the Code, so that the income inclusion provisions of Section 409A(a)(1) of the Code do not apply to the Holder. The Agreement and the Plan shall be administered in a manner consistent with this intent, and any provision that would cause the Agreement or the Plan to fail to satisfy Section 409A of the Code shall have no force and effect until amended to comply with Section 409A of the Code (which amendment may be retroactive to the extent permitted by Section 409A of the Code and may be made by the Company without the consent of the Holder).
(ii) To the extent the Holder has a right to receive payment pursuant to this Agreement, the payment is subject to Section 409A, and the event triggering the right to payment does not constitute a permitted distribution event under Section 409A(a)(2) of the Code, then notwithstanding anything to the contrary in this Agreement, issuance of Stock in payment of the Units will be made, to the extent necessary to comply with Section 409A of the Code, to the Holder on the earliest of: (1) the date of the end of the Restriction Period with respect to such Stock; (2) the Holder’s “separation from service” with the Company (determined in accordance with Section 409A of the Code), provided, that if the Holder is a “specified employee” (within the meaning of Section 409A of the Code), the Holder’s date of payment of the Units pursuant to this clause (ii) shall be the date that is six months after the date of the Holder’s separation of service with the Company; (3) the Holder’s death; (4) the Holder’s permanent disability (within the meaning of Section 409A(a)(2)(C) of the Code); or (5) a change in control event (within the meaning of Section 409A of the Code).
(iii) Reference to Section 409A of the Code will also include any regulations, or any other guidance, promulgated with respect to such Section by the U.S. Department of the Treasury or the Internal Revenue Service.
5.15      Provisions Relating to Non-U.S. Jurisdictions .


Exhibit 10.2

(o) Local Compliance . The Holder remains personally responsible for any local compliance requirements resulting from his or her receipt, ownership, and subsequent sale of Common Stock, as well as the transfer of funds abroad, the making of a foreign investment, and the opening or use of a U.S. brokerage account in relation to his or her receipt of Common Stock. If the Units under this Agreement are subject to China SAFE regulations, the Holder agrees to abide by applicable requirements for disposal of vested Stock following termination of employment and hereby affirmatively authorizes the Company to direct the sale or disposal of Stock within 6 months following termination of employment in order to comply with these requirements.
(b)      Exchange Rate Fluctuation . The Company is not responsible for any foreign exchange fluctuations between the Holder’s local currency and the U.S. dollar.

(c)      Language Translation . To the extent that the Holder has been provided with a translation of this Agreement, the English language version of this Agreement shall prevail in case of any discrepancies or ambiguities due to translation.

(d)      Cash Settlement Relating to Holders in certain Jurisdictions . The delivery of Stock under this Agreement, if any, shall be effective only at any applicable time as counsel to the Company shall have determined that the issuance and delivery of such Stock is in compliance with all applicable laws and regulations of such jurisdiction and the requirements of any securities exchange on which such Stock is traded. Notwithstanding any other provision of the Plan or this Agreement to the contrary, if at any time it is determined by counsel to the Company that the issuance and delivery of Stock pursuant to this Agreement to a Holder in such jurisdiction would for any reason be unenforceable or prohibited as a matter of law or would result in material adverse consequences for the Company or the Holder, then the Units shall instead be settled in cash in an amount equal to the value of the Stock, determined using the closing price on the Vesting Date, that would have been delivered under the Units.
    

________________________________
Sign Name

________________________________
Print Name

________________________________
Date






Exhibit 10.3


EXECUTION COPY

SECOND AMENDMENT TO TERM LOAN AGREEMENT
This SECOND AMENDMENT TO TERM LOAN AGREEMENT (this “ Amendment ”) is dated as of March 29, 2019 and is by and among
(i)      OWENS CORNING, a Delaware corporation (the “ Borrower ”);
(ii)      the Lenders party to the Credit Agreement which are signatories hereto; and
(iii)      JPMORGAN CHASE BANK, N.A., as Administrative Agent (in such capacity, the “ Administrative Agent ”).
Unless otherwise indicated, all capitalized terms used herein and not otherwise defined herein shall have the respective meanings provided such terms in the Credit Agreement.
W I T N E S S E T H :
WHEREAS, the Borrower, the financial institutions party thereto, and the Administrative Agent are parties to the Term Loan Agreement dated as of October 27, 2017 (as amended, amended and restated, supplemented or otherwise modified prior to the date hereof, including that certain First Amendment to Term Loan Agreement dated as of May 4, 2018, the “ Credit Agreement ”); and
WHEREAS, the parties hereto wish to amend the Credit Agreement on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises set forth above, the terms and conditions contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
1. Amendments to Credit Agreement . Upon the Effective Date (as defined below), the Credit Agreement is hereby amended as follows:
(a) Section 1.1 ( Definitions ) of the Credit Agreement is hereby amended by amending and restating the definition of “Applicable Margin” as follows:
“ Applicable Margin ” shall mean the per annum rate determined as set forth below based on the Debt Rating as set forth below:
Pricing Level
Debt Rating
Ticking Fee
LIBOR +
Base Rate +
I
≥BBB+/Baa1/BBB+
0.125%
0.875%
0.000%
II
BBB/Baa2/BBB
0.150%
1.000%
0.000%
III
BBB-/Baa3/BBB-
0.200%
1.125%
0.125%
IV
BB+/Ba1/BB+
0.250%
1.500%
0.500%
V
≤BB/Ba2/BB
0.300%
1.750%
0.750%

Each change in the Applicable Margin resulting from a publicly announced change in the Debt Rating shall be effective during the period commencing on the date of such public announcement and ending on the date immediately preceding the effective date of the next such publicly announced change. If at any time there is a split in the Debt Ratings issued by the three Rating Agencies (with the Debt Rating for Pricing Level I being the highest and the Debt Rating for Pricing Level V being


Exhibit 10.3

the lowest), and (i) if only one of the Rating Agencies shall have in effect a Debt Rating, then the Pricing Level shall be determined by reference to the Debt Rating most recently in effect; (ii) if only two Rating Agencies shall have in effect a Debt Rating, and such Debt Ratings differ by one level, then the Pricing Level for the higher of the two Debt Ratings shall apply; (iii) if only two Rating Agencies shall have in effect a Debt Rating, and there is a split in Debt Ratings of such Rating Agencies of more than one level, then the Pricing Level that is one level above the lower of the two Debt Ratings shall apply; (iv) if three Rating Agencies shall have in effect a Debt Rating, and any two or three of the Debt Ratings are the same, then the Pricing Level shall be determined by reference to such Debt Ratings; and (v) if three Rating Agencies shall have in effect a Debt Rating, each Debt Rating is in a different level, the Pricing Level that is the middle of the other two Rating Agencies shall apply. In the event of a Rating Agency Disruption with respect to one or more of the Rating Agencies, the Debt Rating shall be determined by reference to the rating most recently in effect prior to such Debt Rating for such Rating Agency until an Alternate Rating Agency is designated in accordance with the definition thereof. In the event of the designation of an Alternate Rating Agency, references in the table set forth above to the Debt Ratings of the replaced Rating Agency shall be deemed to be references to the corresponding Debt Ratings of the Alternate Rating Agency.

2. New Lender and Assignment . The parties hereto hereby acknowledge and agree that:
(a)      Bank of America, N.A. (the “ New Lender ”) agrees to be bound by the provisions of the Credit Agreement and agrees that it shall, on the Effective Date, become a Lender for all purposes of the Credit Agreement, with a Term Loan in the outstanding principal amount as set forth on Annex A attached hereto.
(b)      For an agreed consideration, Citibank, N.A. (the “ Assignor ”) hereby irrevocably sells and assigns to Bank of America, N.A. (the “ Assignee ”), and the Assignee hereby irrevocably purchases and assumes from the Assignor, subject to and in accordance with this Section 2 and the Credit Agreement, as of the Effective Date and concurrently with the effectiveness of this Amendment, (i) all of the Assignor’s rights and obligations in its capacity as a Lender under the Credit Agreement and any other documents or instruments delivered pursuant thereto to the extent related to the amount and percentage interest identified below of all of such outstanding rights and obligations of the Assignor under the Term Loan Facility identified below (including, without limitation, any guarantees included in such facility) and (ii) to the extent permitted to be assigned under applicable law, all claims, suits, causes of action and any other right of the Assignor (in its capacity as a Lender) against any Person, whether known or unknown, arising under or in connection with the Credit Agreement, any other documents or instruments delivered pursuant thereto or the loan transactions governed thereby or in any way based on or related to any of the foregoing, including, but not limited to, contract claims, tort claims, malpractice claims, statutory claims and all other claims at law or in equity related to the rights and obligations sold and assigned pursuant to clause (i) above (the rights and obligations sold and assigned to the Assignee pursuant to clauses (i) and (ii) above being referred to herein collectively as the “ Assigned Interest ”). Each such sale and assignment is without recourse to the Assignor and, except as expressly provided in this Amendment, without representation or warranty by the Assignor.





Exhibit 10.3

Assigned Interest:

Assignor
Assignee
Facility Assigned
Aggregate Amount of Term Loans for all Lenders
Amount of
Term Loans Assigned
Percentage Assigned of Term Loans
CUSIP
Number
Citibank, N.A.
Bank of America, N.A.
Term Loan Facility
$500,000,000
$93,750,000
18.750000000%
 

(c)      The Assignor (1) represents and warrants that (i) it is the legal and beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free and clear of any lien, encumbrance or other adverse claim, (iii) it has full power and authority, and has taken all action necessary, to execute and deliver this Amendment and to consummate the transactions contemplated hereby and (iv) it is not a Defaulting Lender; and (2) assumes no responsibility with respect to (i) any statements, warranties or representations made in or in connection with the Credit Agreement or any other Loan Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan Documents or any collateral thereunder, (iii) the financial condition of the Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in respect of any Loan Document or (iv) the performance or observance by the Borrower, any of its Subsidiaries or Affiliates or any other Person of any of their respective obligations under any Loan Document.
(d)      The Assignee (1) represents and warrants that (i) it has full power and authority, and has taken all action necessary, to execute and deliver this Amendment and to consummate the transactions contemplated hereby and by the Credit Agreement and to become a Lender under the Credit Agreement, (ii) it meets all the requirements to be an assignee under Section 11.9(b) of the Credit Agreement, (iii) from and after the Effective Date, it shall be bound by the provisions of the Credit Agreement as a Lender thereunder and, to the extent of the Assigned Interest, shall have the obligations of a Lender thereunder, (iv) it is sophisticated with respect to decisions to acquire assets of the type represented by the Assigned Interest and either it, or the Person exercising discretion in making its decision to acquire the Assigned Interest, is experienced in acquiring assets of such type, (v) it has received a copy of the Credit Agreement, and has received or has been accorded the opportunity to receive copies of the most recent financial statements delivered pursuant to Section 7.1 thereof, as applicable, and such other documents and information as it deems appropriate to make its own credit analysis and decision to enter into this Amendment (and become party to the Credit Agreement as amended hereby) and to purchase the Assigned Interest, (vi) it has, independently and without reliance upon the Administrative Agent, any arranger of the credit facilities evidenced by the Credit Agreement or any other Lender and their respective Related Parties and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Amendment (and to become a Lender under the Credit Agreement) and to purchase the Assigned Interest, (vii) it has provided any documentation required to be delivered by it pursuant to the terms of the Credit Agreement, duly completed and executed by such Assignee and (viii) it is a Non-Public Lender; and (2) agrees that (i) it will, independently and without reliance on the Administrative Agent, any arranger of the credit facilities evidenced by the Credit Agreement, the Assignor or any other Lender and their respective Related Parties, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Credit Agreement and the other Loan Documents, and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Credit Agreement and the other Loan Documents are required to be performed by it as a Lender.


Exhibit 10.3

(e)      From and after the Effective Date, the Administrative Agent shall make all payments in respect of the Assigned Interest (including payments of principal, interest, fees and other amounts) to the Assignor for amounts which have accrued to but excluding the Effective Date and to the Assignee for amounts which have accrued from and after the Effective Date.

3. Outstanding Term Loans . The parties hereto agree that the aggregate outstanding principal amount of the Term Loans and the outstanding principal amount of each Lender’s Term Loan, in each case as of the Effective Date and after giving effect to the terms of this Amendment, including without limitation Section 2, is as set forth on Annex A attached hereto.
4. Representations and Warranties . The Borrower hereby represents and warrants that:
(a) Each of the representations and warranties contained in Article VI of the Credit Agreement (other than Section 6.5(e) of the Credit Agreement) made by it are true and correct in all material respects on and as of the date hereof with the same effect as if made on and as of such date, except for any representation and warranty made as of an earlier date, which representation and warranty is true and correct in all material respects as of such earlier date; provided , that if a representation and warranty is qualified as to materiality, the materiality qualifier set forth above shall be disregarded with respect to such representation and warranty for purposes of this representation.
(b) No Default or Event of Default has occurred and is continuing as of the date hereof.
5. Effectiveness . This Amendment is a Loan Document and shall become effective upon the execution and delivery hereof by the Borrower, the Administrative Agent and the Lenders (including the New Lender) as well as the Assignor and the Assignee (the date on which the conditions set forth in this Section 5 have been satisfied, the “ Effective Date ”).
6. References; Effect . Upon the effectiveness hereof, each reference to the Credit Agreement in the Credit Agreement or any other Loan Document shall mean and be a reference to the Credit Agreement as modified hereby. Except as specifically amended hereby, the Credit Agreement and the other Loan Documents shall remain in full force and effect and are hereby ratified and confirmed.
7. Counterparts . This Amendment may be executed in any number of counterparts (and by the different parties hereto on separate counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. Delivery of an executed signature page of this Amendment by facsimile or electronic transmission shall be effective as delivery of a manually executed counterpart hereof.
8. Governing Law . THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
9. Headings . Section headings in this Amendment are included herein for convenience of reference only and shall not constitute a part of this Amendment for any other purpose.








Exhibit 10.3

IN WITNESS WHEREOF, the parties hereto have caused their duly authorized signatories to execute and deliver this Amendment as of the date first above written.
OWENS CORNING
By:
/s/Matthew Fortunak
Name: Matthew Fortunak
Title: VP, Treasurer
 
AGENTS AND LENDERS:

JPMORGAN CHASE BANK, N.A. as Administrative Agent and Lender

By: /s/James Shender
Name: James Shender
Title: Vice President

CITIBANK, N.A., as a Lender and as the Assignor

By:
/s/Michael Vondriska
Name: Michael Vondriska
Title: Vice President

WELLS FARGO BANK, NATIONAL ASSOCIATION, as a Lender

By: /s/Kay Reedy
Name: Kay Reedy
Title: Managing Director

BANK OF AMERICA, N.a., as a Lender and as the Assignee

By:
/s/Carlos Morales
Name: Carlos Morales
Title: Director

Annex A

Outstanding Term Loans
as of the Effective Date of (and after giving effect to)
the Second Amendment to Term Loan Agreement

LENDER
OUTSTANDING TERM LOANS
JPMORGAN CHASE BANK, N.A.
$125,000,000
WELLS FARGO BANK, NATIONAL ASSOCIATION
$187,500,000
CITIBANK, N.A.
$93,750,000
BANK OF AMERICA, N.A.
$93,750,000
AGGREGATE OUTSTANDING TERM LOANS
$500,000,000





Exhibit 31.1
CERTIFICATION
I, Brian D. Chambers, certify that:
1.
I have reviewed this quarterly report on Form 10-Q of Owens Corning;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

(c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: April 24, 2019

/s/  Brian D. Chambers 
Brian D. Chambers
Chief Executive Officer





Exhibit 31.2
CERTIFICATION
I, Michael C. McMurray, certify that:
1.
I have reviewed this quarterly report on Form 10-Q of Owens Corning;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;

(c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: April 24, 2019

/s/  Michael C. McMurray  
Michael C. McMurray
Chief Financial Officer





Exhibit 32.1
SECTION 1350 CERTIFICATION
In connection with the Quarterly Report on Form 10-Q of Owens Corning (the “Company”) for the quarterly period ended March 31, 2019 (the “Report”), I, Brian D. Chambers, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:
 
(1)
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)
Information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/  Brian D. Chambers 
Brian D. Chambers
Chief Executive Officer

April 24, 2019




Exhibit 32.2
SECTION 1350 CERTIFICATION
In connection with the Quarterly Report on Form 10-Q of Owens Corning (the “Company”) for the quarterly period ended March 31, 2019 (the “Report”), I, Michael C. McMurray, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:
 
(1)
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)
Information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/  Michael C. McMurray  
Michael C. McMurray
Chief Financial Officer

April 24, 2019