Good day, ladies and gentlemen, and welcome to the Fourth Quarter 2007 Owens Corning Earnings Conference Call. My name is Maria, and I will be your audio coordinator for today. At this time, all participants are in listen-only mode. We will be facilitating a question-and-answer session towards the end of today's conference. [Operator Instructions]. As a reminder, this conference is being recorded for replay purposes. I would now like to turn the presentation over to Mr. Scott Deitz, Vice President of Investor Relations and Corporate Communications. Please proceed.

Good morning Maria and thanks to everyone for joining us today for the Owens Corning conference call and review as Maria said, of our business results for the fourth quarter and the full year of 2007. Joining us today are Mike Thaman, our Chairman and Chief Executive Officer and Duncan Palmer, Chief Financial Officer. Following our brief presentation this morning, we'll open this one-hour call to your questions. We ask that you limit yourselves to one question and one follow-up so that we can take as many questions as possible. By now most of you have had an opportunity to review the earnings news release we issued about three hours ago. Also about 15 minutes ago we posted presentation slides that we will refer to during this call. For those of you participating via the internet or sitting near a computer, you can access the slides at www.owenscorning.com. You will find a link on our homepage and there is also a link on the investors section of our website as well. And of course this call and the supporting slides will be available on our website via archives. Before we begin just a few reminders, today's presentation will include forward-looking statements based on our current expectations and assumptions about our business. These statements are subject to risks and uncertainties and our actual results could differ materially. So please refer to the cautionary statements and risk factors identified in our SEC fillings for a more detailed explanation of the inherent limitations of these forward-looking statements. We currently plan to file our 2007 Form 10-K this evening, after the close of the New York Stock Exchange and importantly we ask that you understand that certain data included within this presentation contains non-GAAP financial measures. For example, some of today's prepared remarks will exclude items that affect comparability. Those excluded items are captured in our GAAP to non-GAAP reconciliations found within the financial tables of our earnings release and on our website. During our fourth quarter year end results discussion today, remember that we have undertaken a number of significant strategic changes to our business portfolio, in particular the sale of our Siding Solutions and Fabwell businesses. These divested businesses have been classified as discontinued operations in our financial statements. Therefore, as we present our results today, you should keep that in mind. Depending upon the context, it may reflect total operations, continuing operations, or discontinued ops. When we comment on discontinued operations, we will certainly point that out. For those of you that have the slide presentation in front of you, we will begin on slide 4. Now I am pleased to introduce Chairman and CEO, Mike Thaman, who will then be followed by CFO, Duncan Palmer.

Thank you, Scott. Good morning everyone. And thank you for your continued interest in Owens Corning. Today, we reported fourth quarter and full year 2007 results. Full year revenue came in at $5 billion and adjusted EBIT for ongoing operations finished at $344 million. Duncan will provide you a complete reconciliation of this in his comments. Our performance is slightly better than the guidance we provided on the last call. Cash performance was good. We finished with net debt of slightly more than $1.9 billion. All in we are pleased with the way we finished. Our results were inline with our expectations in what I can only characterize as a very difficult market environment for our North American building material's businesses. 2007 was the year of significant accomplishments for Owens Corning. I'll highlight four particular areas of significance. First, we continued our 6 year track record of safety improvement. Owens Corning has reduced the number of employee injuries by over 80% in this timeframe. This is outstanding performance and its great recognition to Dave Brown, our retired CEO, who brought a passion for safety to Owens Corning that continues today. Second, we completed the most significant acquisition in our company's history with the fourth quarter purchase of the reinforcements and composites business of Saint-Gobain. This acquisition combines the global number 1 and number 2 players into a clear market leader. We are off to a fast start and we are more optimistic everyday that this is a real winner for our customers and our shareholders. Third, we are able to fund this acquisition in large part with the divestitures of our siding and recreation vehicle businesses. We have no regrets about having acted early in 2007 on these businesses where the market outlook and deal environment weakened dramatically in July…

Thanks Mike. Let's start on slide 5, where we detail key financial figures for fiscal 2007 and for the fourth quarter. Keep in mind as we complete this review, that our financial results reflect the sale of our Siding Solutions business and our Fabwell unit during the third quarter of 2007. The financial results for these businesses have been segregated and are reported as discontinued operations in the consolidated statement of earnings for all periods presented. Business segment results of composites and other building materials and services exclude the results of Fabwell and Siding Solutions. We will use comparisons to 2006 to illustrate our performance where we think it is useful and important because we emerged from asbestos related chapter 11 at the end of October 2006, our results for that year are reported as both predecessor and successor companies. All the detailed comparisons may of course be found in the financial tables of today's news release and Form 10-K that will be filed after the close of today's U.S. financial markets. Today we reported 2007 consolidated net sales of $5 billion, an 8% decrease compared to 2006. For the fourth quarter consolidated net sales were $1.3 billion which represents 4% increase compared with quarterly sales one year ago. For full year 2007, the overall decline in sales is primarily related to the reduced construction of new homes in the United States and the consequent reduction in sales of insulation of asphalt roofing shingles for new and existing homes. Net earnings totaled $96 million in 2007 which includes $27 million in earnings from continuing operations and $69 million in earnings from discontinued operations. Discontinued operations include a net gain on the sale of businesses of $60 million. Diluted earnings from continuing operations were $0.21 and diluted earnings from discontinued operations…

Thank you, Duncan. Maria, I believe we are ready to pool those participating, or pull those participating, please. Question And Answer

[Operator Instructions]. Your first question comes from the line of Dennis McGill with Zelman. Please proceed.

Good morning guys. How are you?

Good morning, Dennis, how are you?

Doing great, thank you. Just quickly on the point you addressed right at the end of your slide there. On the financing cost, do you have an estimate for what that would be in 2008?

I'd let Duncan speak to that. Duncan?

Yes, I mean, I think, what we were trying to convey there was we saw that as being it was $5 million for that for the last two months of 2007, and we expect that it will be less in 2008 because the amount of alloy we're employing in the business that relates to those leases is going down significantly, so that's how that cost gets written down. So, I mean if you're looking for guidance, it would be essentially that is lower than it was in 2007.

Okay, but you can annualize the 5 million.

Yeah.

Yeah.

Okay. And a bigger picture question, insulation segment, can you talk about the sequential improvement margin in the fourth quarter? What you guys were able to do to drive that higher and then any help you can give on what your expectations are from margin in that segment in '08?

Certainly. Let's start with the fourth quarter and then we will talk a little bit about 2008. I think we've talked in the past about the fact that our insulation business works on a lag to housing starts. And as a result of that, typically our two best quarters from a volume point of view are third and fourth quarter, because those would be the quarters where we are tending to have at least new construction get insulated based on second and third quarter housing starts which seasonally tend to be the greatest levels of activity in housing. 2007 was a little bit different than that because it declined through the year, but we did see on a lag basis that second and third quarter absolute amount of activity was still better than what we have seen in the first quarter. So, we saw some reasonable strength related to the summer starts now coming through our business in the fourth quarter. We also had taken some curtailments in the second and third quarter of the year, as we were adjusting our capacity based on the expectations that the market wasn't going to recover in '07, as a matter of fact it was going to weaken. That hit second quarter and third quarter operating margins, by the fourth quarter we've gotten our capacity and production pretty much back in balance with what we expected in terms of demand. And then I think, finally, as the residential new construction portion of the business has become less material, some of the other portions of the business, the commercial and industrial and our extruded polystyrene foam business have become more material to the result may help margins up a bit. As we look at 2008, if you look at '07, basically each of the…

Okay that's extremely helpful guys, and just it would be fair to say the pricing hasn't hit a floor yet?

You know we talked about this, and we have a pretty good feel, based on history of how pricing reacts to capacity utilization, but I would tell you that our models generally have operated in a range that is much less dramatic than the kind of downturn we have seen in this downturn. So, we have not seen a lot of instances where housing has corrected down 50% that we can model against. So, we really our dealing with somewhat of an extraordinary downturn. I would say given what we've see in terms of this downturn, we think the industry and the way pricing is operating is pretty rational and pretty reasonable. We would expect as prices get further lower that at some point the cost equation of the manufacturers starts to play in towards how much lower prices can go. But we certainly established a mind set in '08 that we would like to do everything to defend the margin structure of our business but given the size of the downturn, we also want to make sure that we maintain our position in the marketplace.

Okay. If I could just make one other just on the composites business, can you elaborate a little bit on what you are hearing from some of your global customers, what they are expecting for next year, and what they are seeing in their end markets, whether you are hearing of any incremental slowing or strengthening in the market?

Sure. I think generally, we are continuing to see reasonable demand growth in composites around the world and we are hearing that from our customers. We have some particular sweet spots in that business. We obviously are quite exposed to wind energy and we talked about that in the past with the acquisition of Vetrotex and their composites business which is their fabrics business or technical fabrics business. We have actually got more exposure to wind energy and we continue to see that business growing and we've in a very strong market leading position there. So, we've seen good strength in wind energy. We continue to see pretty good strength in the infrastructure markets, particularly in the Middle East, obviously with what is going on in oil prices and the wealth creation in the Middle East. We've seen a fair amount of infrastructure investment. I think the broader, more general market applications of composites, we are probably seeing a little bit of weakening but we are not seeing anything would resemble weakness.

Okay. Thanks again guys. Good luck.

Thanks Dennis.

Your next question comes from the line of Jack Kasprzak with BB&T Capital Market. Please proceed. John Kasprzak - BB&T Capital Markets: Thanks and good morning everyone.

Good morning Jack. John Kasprzak - BB&T Capital Markets: The NOL's, that $3 billion that I mentioned on page 12, what... can you update us on what do you think the present value of those are right now?

I think we guided last year that the present value was round about $500 million to $600 million and I think you know as we look forward also that's a function when we see the NOL getting used up against our U.S. taxes. I don't think we can give you a new and present... net present value but I think it will be fair to say that we see our U.S. cash taxes being probably more deferred in time than they were when we gave the guidance at the beginning of last year. So I am not giving you precise number and I am not sure we have a precise number to give you but I think you could model on that kind of basis. John Kasprzak - BB&T Capital Markets: Okay. And when you guys made the Saint-Gobain acquisition I think in the press release you said it was, composites was now 2.2 billion sales pro forma. I think Duncan mentioned in his remarks you got 160 million of sales in November and December so maybe that means it resulted in the 2 billion range and if you can come close to that double-digit EBIT margin that would imply maybe 200 million of EBIT from just composites. So with regard to the '08 guidance, I know you have corporate expense underneath that but that would seem to imply a pretty dramatic decline in the assumptions, profit assumptions for the other segments. Is this sort of a worst case scenario in your mind? It obviously reflects a lot of the uncertainty out there with housing but maybe if you could maybe talk a little bit more about that?

Yes, happy to do that. I think that... let me start with some of the revenue numbers related to composites. What we've said previously is with the Vetrotex acquisition we've acquired about $900 million of revenue. We've also said that the Battice and Birkeland divestiture which we expect to complete really at the end of this quarter, we would sell off about $300 million of revenue. So it is a net add to the business of about $600 million of revenue. So your basic math and the conclusion you came to about the improved operating margins and composites is a reasonable conclusion and I think if you take, the pieces of the puzzle which we've been laying out and then you take the $30 million of synergies that we talked about today building to 100 million overtime as we transformed the melters and get to further integration that we not only see margin improvement in composites in '08 but we see continued margin improvement in the business as synergies come through. Related to the conclusion about what this means for the rest of Owens Corning, the Building Material side of the house, if you look at the Insulation numbers from '06 to '07, we saw a de-levering in that business of about $250 million of EBIT from '06 to '07 and really as we talk about our market outlook for '08 we are expecting the overall market to be down about the same amount in '08, 25% as what we saw in '07. Had we not taken a lot of the cost actions that I talked about in my opening remarks, I think it's conceivable we would even be talking about potential in Insulation business that would loose in 2008, based on where we see housing activity or we don't…

Thanks Jack.

Your next question comes from the line of Mary Gilbert with Imperial Capital, please proceed.

Thank you. I wanted to follow-up on the composite solutions business in the guidance that we are talking and incorporating Saint-Gobain. So it sounds like when we are looking at 2008 we're probably looking at revenues of somewhere around $2.1 billion to $2.15 billion, somewhere in that range, does that sound about right, incorporating in Saint-Gobain less the plants that you have sold?

That's probably a little bit on the low end from our view. I mean we did $1.7 billion in '07 Mary and if you add kind of an additional $600 million on top of that you get a number like 2, 3. That's probably closer to where we would see the business.

Okay and then we use like a 10% margin, so we're about $230 million right?

I mean if you listen very carefully and we're pretty careful on our comments today, we said 200 basis point improvement approaching 10%. I don't know that we've yet said that we believe we will achieve 10% in 2008, although that's far.

Okay and that incorporates the $30 million of synergies right?

It does.

Okay and then for D&A, what would we use for D&A incorporating Saint-Gobain, we had a $104 million last year for this segment so how much would be associated with Saint-Gobain?

You know what Mary, I will tell you what, I don't have a good number for you right now. Why don't you continue with your next question and I am sure by the time you get to the end of that answer, I will have a number for you.

Okay, great. And then the other thing that I wanted to find out in looking at composites is the treatment in the metals. It sounded like what you said is that there is $320 million value of metals, but that's through the way you're transitioning the business there, you expect to reduce the amount that you will need from 320 million by 50%, right?

That's right.

Okay. So when we are looking at the $5 million lease rate, was that the full leased rate for the two months?

Yes, that was the full lease rate for two months for the full 320 million.

Right, so that's about $30 million annually, so that should be reduced to about $15 million and where we're going to see that number flow through, because it sounds like you're adding it back?

Well, let me make sure that you don't come to a bad conclusion about how much lease cost we'd expect to see in 2008. We are kind of going now, the two winds [ph] that we used in our composite operation, we referred to as bushings.

Okay.

And in order to get the metal reductions you have bushing by bushing and when they come out of usage which they last certain amount of time, a fairly long period of time but we don't disclose on that. Each time a bushing comes out of fabrication it gets brought back to our metal processing facility and we re-fabricate a new bushing. So, our opportunity to put new bushings into the fleet only occurs each time if bushing comes out of its useful life and we've new bushing designs that we are now introducing in. So, it will take a year or more for us to work some of these bushing designs through our metal operations and then into our facilities. So, I don't think it's fair to take the $30 million which is the $5 million annualized and just take half of that against 2008. I do think it's fair though as you build the long-term valuation to come to the conclusion that we would have less metal required in that business and therefore our leasing cost might be $15 million or less. Towards the Duncan, in terms of how we want to go and handle the accounting and I think he also an answer for you on the depreciation, amortization and composite.

Okay.

So, depreciation, amortization and composites is a whole... I mean thinking of it as above 130 wouldn't be a bad way of thinking about it.

Okay, great. That's very helpful there.

So, on leases, well a couple of things on leases one is that, I think what Mike was saying about the rates at which these expenses would come down is very valid. I'll see there is a couple of things that I want on accounting. The accounting... the lease expense is a permanent asset as a piece of tooling essentially in our business, so as a lease expense it goes into our EBIT, into our segment EBIT, it goes into our reported EBIT because... we will manage it as a financing cost, although we will have to chose to own alloy or lease alloy over time and that could cost some ups and downs of lease expenses just because of how we choose to finance it. We will provide some transparency to that and when we can calculate adjusted EBIT we will exclude alloy expense from that so that you can see what the underlying business is making as owned alloy essentially.

Okay

So that's kind of the way we will think about it.

That's fair enough, it is very helpful, the other --

So just the --

Right, Duncan.

Yes, which is that lease expense over time is also function of the prices of the underlying precious metal that go into the alloy and therefore there is potentially some volatility in that expense overtime as well.

Right, okay, great. That makes a lot of sense, thank you on that. And then I wondered if you could talk about going back to composites and what you are seeing. You know, obviously you are getting good demands from the wind side of the business from the infrastructure in the Middle East and then you said that you were seeing some general weakness in some of the other areas, could you expand on that and talk about how we should look at the overall growth rate?

Well, we often said about that business that we think the long term growth is 1.5 to 2 times global GDP. I was probably in artful in the way I described our current outlook to the market. We are not seeing weakness, what we are seeing is we have pretty robust demand in 2006, 2007. I think our feeling is with just some of the inflationary pressures and other things we seen in countries like China that, we are probably going to see a bit of a slow down in some of those economies so we are not counting on quite as aggressive a growth rate in that business in '08 and '09 as what we have seen over the last couple of years. I wouldn't want that interpreted as we are seeing demand weakness.

Okay, so you're still seeing growth but the rate of growth is slower than what you were seeing previously?

I think that's fair especially if you exclude wind energy and the infrastructure supplementary [ph].

So, how should we think about that, should we think about it in like the 2% to 4% type range?

I don't think that we're really good enough to sit and kind of do demand forecasts over a 12 month period. I would say that we're still fairly comfortable saying that 1.5 times to 2 times global GDP is a reasonable near-term and long term outlook. We will expect to see global GDP maybe slow down a little bit certainly with the U.S. slowing down that in itself will slow down global GDP in 2008.

Right, and then also could you talk about what's going on from a competitive standpoint particularly from China and how that's having an effect on pricing especially given that the growth rate is not as robust as it once was?

That's a good question Mary, let me talk about that for a second. We have seen and I think we talked about on this call and in some investor conferences. I mean we have seen some aggressive growth in competitors in China. In particular we've seen kind of three groups develop in China if we were not just actors in China but kind of actors on the world stage now in this business. We certainly saw in the kind of 2002 to 2005 or 2006 time frame that their investment and growth and capacity was putting pressure on global pricing and as a result of that despite the fact that we delivered... we think very, very good productivity during that period of time, we had some inflation, we had pressure from pricing that was coming from China and as a result we didn't make much progress on operating margins over kind of that four-five year period of time. I think we disclosed today that we saw some positive on pricing in '07 that we're expecting to see again, a little bit of positive on pricing in '08. Partly that's industry structured and inflation related and I think partly we're seeing a little bit more balance in China today from the Chinese producers, the cost of doing business in China is going up. Some of the export duties that they were enjoying which gave them incentives to build an export are going away. And so we're, I think in the past we characterized that as some headwind against the business we had inflationary headwind and also competition from China, that was creating some headwind in the business. I don't know yet that we are ready to declare we've got tailwind but I think in a minimum we are seeing some of the headwinds, may be die down just a bit which is probably underpinning what gave us some confidence to give some guidance around operating margins and deposits for '08. We feel like the market is relatively stable, our position in the market is well defined as a market leader, we've got line of sight to good synergies and we think we'll see good performance out of that business in '08.

Okay, great. Thanks, that's very helpful. One thing on the wind energy side, with the new technology that you introduced last year, is that in production this year and are you able to use it or transfer that technology onto the Saint-Gobain platform, since they are so big in fabric?

I'll take that question and then we are going to move on to another questioner, and make sure everyone has some time. The technology announcement that Mary is talking about is, last year we announced a full product line of high strength materials which were higher strength glass than our standard advantech [ph] glass. Some of the applications for that are the ballistics and armor type applications. We also believe that there are applications for that in wind energy, generally trying to bridge the gap between fiber glass and composites. I mean, fiber glass and carbon composites. We've seen some progress in that. I think generally what we have learnt is that some of the qualification times and some of the times in getting that product line to qualify with the end user, has been a little bit longer than we expected. We continue to see opportunity there. Saint-Gobain actually had its own high strength glass product platform, so now we are combining the best of the two technologies. While we think that's a good opportunity for the business, we don't think that is material of 2008 results.

Okay, thank you.

Thanks Mary.

[Operator Instructions]. Your next question comes from the line of Ken Zener with Merrill Lynch. Please proceed.

Good morning.

Hey Ken.

It seems as though from your press release when you talked about the Delta end profit for your Insulation business, you are implying about 28% to 30% contribution margins?

Okay. I don't think --

I am affirming that?

We may not have disclosed that but you may have some how worked to that conclusion based on our disclosure.

Okay, good. So, you were saying a third of the profit decline was due to volume. So, it seems like you could easily be looking at record low margins in Insulation. I just wanted to kind of confirm the language that you were describing?

Well, in our disclosure we tried to frame what is the impact we are seeing in the business. Right now we are seeing impact from both volume loss as well as pricing and those two things go hand-in-hand. The weaker the market gets, the less volume we have which moves our facilities and de-leverages our fixed cost and then also we are seeing pressure on pricing. I think if you look at the 10-K which we will file tonight and look at the MD&A section, we've tried to put reasonably quantified disclosure into our public disclosures in terms of what we are seeing in pricing and what we are seeing in volume. I think in Duncan's prepared comments today, he said about a fourth of the revenue decline was related to pricing.

Right. I think you guys had very good disclosure there, I am not trying to say you didn't. So, I just wanted to affirm it, since I was surprised to see it. Looking at composite, it seems like the Delta and D&A and this was a big piece of our analysis, you said it was Duncan about 104 going to about 130 which implies calling it 25 Delta for the acquired businesses. That seems substantially lower the D&A than what we had seen coming from Saint-Gobain's own... when they owned the business. Could you... which was closure to 100 million on... well I guess a much higher percentage of D&A. Could you explain why it's only 25 given the acquisition assets because it does seem like it's light and that would make obviously 100 million EBITDA contribution a lot more EBIT rather EBITDA, thank you?

Thanks Ken. I mean, as you I am sure you know, when you buy a business like we did, you have evaluation exercise to do under U.S. GAAP generally under purchase accounting. You have to mark all the assets to fair value through the balance sheet on the liabilities and you actually have a period of one year to do that after the acquisition. We have completed evaluation exercise also for our year end, all those assets, and then we have allocated the overall purchase price over the allocated purchase price over the assets according to that fair value in line with U.S. GAAP. As a result of that the dough [ph] that you can get from the business is a function of how much of that purchase price ends up getting allocated to assets which are depreciating. And so, it doesn't necessarily bare relation to the historical EBITDA of the business or the historical book values of the business. It all has to do with what the fair value mix and the purchase and allocation was as you do the purchase accounting exercise.

Okay.

At that point of view you can conclude that the amounts of purchase price consideration that went into the depreciable assets was lower than you were modeling.

Right, and now on the last piece on the composite. The margin, that's again for the third straight year we've seen very high fourth quarter margins backing out metal sales and stuff, can you address why margins peak so much and why that should be forecasted going forward?

Well, Ken this is Mike. There is a little bit of seasonality in the composites business. I think generally particularly given how international the business is and how much of our asset base and our business is in Europe we tend to see the business be a little bit weak in the third quarter, kind of in the August timeframe when Europe slows down. Our piece of the business that's in the U.S. tends to cycle a little bit like the roofing market and we disclosed today that 10% of our... of the volume in our composites business is related to residential construction in North America. That tends to be fairly weak in the first quarter of the year and then maybe pickup steam a little bit to the second third and fourth quarter. So I think, its one of those cases where kind of each quarter has its own story and then the fourth quarter probably has the lease story of others. But as we plan the business, I think our internal planning generally has the margins a little bit flatter through the year and its just worked out that way the last couple of years that's its picked up a little bit at year end. I think what you're seeing particularly in this fourth quarter is the result of the additive effect of bringing Vetrotex on Board combined with the fact we have not yet divested Battice and Birkeland, so we really got a business that we intend to get running on all eight cylinders actually ran on 10 for the last two months of the fourth quarter.

Thank you.

Thanks Ken.

Your next question comes from the line of David MacGregor with Longbow Research. Please proceed.

Hi, this is Garret Poses [ph] for David. Just wondering if you could talk about the inventory situation. During the quarter, they shot back up after you saw a decline in the September quarter, can you just give us some color on that?

I think our inventories we felt were in good control throughout the year. I think what you're probably seeing when you look at the fourth quarter is the impact of the acquisition. We consolidated the Vetrotex business in the fourth quarter, the composites business because of the complexity of its product line, and you know we really do make multiple products forms for our different customer bases around the world and given kind of the global nature of that business and the number of facilities and footprints. That business runs at a little bit higher level of inventory then say roofing or insulation would. So you are seeing a bit of mix but fundamentally what you're seeing is growth because of the acquisition and because of the growth in our composite business we are now supporting that with a bit more inventory.

Okay, so the increase in inventory unlike this time last year was indeed a roofing in the absence of another hurricane season this year?

No, we were... I think that is one of the things that we are pretty proud of when we look at 2007. If you remember back to this call last year, 2006 the roofing business went pretty well upside down and it did that because there was this big inventory over build in the third quarter, there were no storms, and we characterized third and fourth quarter demand in roofing as you know kind of world class week. What we actually saw in the second half of '07 is the roofing volumes that we shipped were actually lower than what we shipped in the second half of '06 and we are able to do that and make more money than we made in the second half of '06 and have our inventory under control and not need to take a lot of inventory adjustments or dramatic curtailments of our manufacturing. So I think our operating model in roofing has dramatically improved and over the last 18 months that team has made a lot of really good progress and putting their arms around how to meet market demand and how to make sure we don't get over our ski tips [ph] on inventory.

Great, thank you very much.

Thanks

Maria, we are approaching the top of the hour but if you could let's go out of respect for those still in the queue lets go an additional 5 minutes please.

All right, your next question comes from the line of Keith Hughes with SunTrust. Please proceed.

Thank you. Your comments here earlier regarding inventory and roofing and some of the competitive situation there, as we move into the first quarter during the early buy period is that kind of de-inventoring still continuing from competitors in the roofing market or has that improved?

It's still continuing and it has improved so I guess that would answer your question on yes and yes. When we saw GAF and Elk go together in early 2007, they had multiple product lines they needed to work their way through, the distributors had multiple product lines, and we really spent a lot of '07 trying to move the industry did... trying to move multiple product lines through the channel and get down to a unified product line for GAF-Elk and is obviously Owens Corning certainty and some of the others playing very similar to the way they played in the past. I think that there was still pressure on inventory at year end but it wasn't the same kind of challenges that we saw as we faced these issues throughout 2007. We're seeing asphalt prices go up. There were some price increase announcements in the first quarter that did get deferred based on some buyers so we didn't achieve the kind of pricing that we needed in the first quarter. Obviously with asphalt prices going up, the big challenge for us is going to be can we get pricing to begin catching up with some of the asphalt inflation we expect to see. We don't see a reason why it wouldn't, so we are obviously committed to trying to make sure that we get the operating margins of that business to an acceptable level based on our standards and based on investor requirements. We're hopeful that will happen in the second quarter but the industry doesn't have a great track record on that one right now. I think we're a little bit in wait and see mode.

Okay. And then final question on to beat the leases in to the ground a little more. When you make the... I believe some of your metals, you made the decision to own them and I believe there is no amortization associated with that due to the fact they last or not much amortization that last in the perpetuity, is that correct?

We amortize a small amount through the P&L because I talked about the cycle where we make a bushing, we ship it out to the plant, the plant has that bushing operation for a sizeable period of time. What happens is you kind of lose tolerances on your tooling and the tooling is no longer capable of making a product that meets quality spec. When it gets sent back to be refurbished and rebuilt, there has been some small amount of metal loss due to corrosion and that's run through the P&L as a part of our cost of goods. It is not... relative to the overall size of our metal portfolio it is not material in terms of the metal loss.

That's why I am surprised you made the decision to lease the metal associated with the Saint-Gobain acquisition, if you could just briefly kind of go through the thought process there?

Well; right now its pretty cheap capital to be honest. I mean, if you run through the numbers we said that they were leasing around $320 million of metal at the time of the acquisition. If you annualize that it's about $30 million of annual costs.

So, under 30%, okay.

The lease market as of today is not real expensive and then based on some of our productivity programs, we think our need for that metal is only temporary. So rather than buy it in and take a bunch of price risks and then wonder what the metal market is going to be in the future when we potentially have excess metal, it makes sense for us to bridge at least on that half of it, that we think we can offset with productivity. On the other half of it I think it's a capital decision. Duncan and the Treasury team spent a lot of time looking at what our cost of capital should be and what's the right thing to bring on balance sheet and what's the right thing to lease. And I think at this point in time it is on our revolver to buy in the metal just doesn't look like it's a winner for us.

Alright, thank you.

Thanks.

Your next question comes from the line Nithin Dahia [ph] with Lehman Brothers, please proceed.

What is the pro forma adjusted EBITDA once you adjust for one time items and factor in full year impact of acquisitions?

For 2008, Nithin.

No, for '07 trailing.

Trailing, well based on our disclosure we disclosed 344 as our results for 2007. That would only include, that would take out the discontinued operations portions of Siding and Fabwell. It does however only include 2 months of after tax. If you go back to our prior call in the third quarter, we tried to walk through the puts and takes and what we basically said in that call is, we believe the portfolio of assets that we ended the year operating probably produced around $700 million of EBITDA in 2007 and the transcript of that call still available, where we've reconciled Siding and Fabwell. We took in a 100 million of EBITDA for Vetrotex which is what we disclosed, we believe they did in 2007, we then took out about 40 million of EBITDA from Battice and Birkeland which are now long-term parts of our portfolio and we went through a lot in that call that guided to the fact we think the portfolio produced about 700 million of EBITDA in 2007. You won't find that though in any of our GAAP numbers or any of our adjusted numbers.

And fourth quarter on a comparable basis, you have done only $10 million to $15 million so that should still be ballpark, right?

I think that fair. I didn't follow your math, but I imagine based on the disclosure, you got the right conclusion. If you want to you can call Scott Deitz in Investor Relations.

Yes, I will do that. Secondly on the ratings downgrade, now that the company is not investment grade, does that change your focus in terms of how you look at you target capitalization or leverage levels?

Yes thanks. This is Duncan. I think that as we look at our balance-sheet we remain very pleased with the amount of liquidity we have on it. We have a $1 billion bank revolving credit line which is... has a lot of capacity in it at the moment, we have some sort of debt, bond debt expanded, it comes due in 2016, 2036 and we have a bank note that comes due in 2011. So we've plenty of liquidity. So we feel very comfortable with the level of debt we have at the moment with the liquidity at the balance sheet overall. In terms of thinking about what our target capital structure is, I think we've always said that we think that long-term, we would like to see your capital structure which is consistent with investment grade numbers over the cycle and I think we still believe that's been obviously there. There is opportunity for us to optimize that overtime and optimize through the cycle and look at our capital structure but I don't think the down grade per say makes a big difference to the way we are thinking about it at this stage.

Fair enough and lastly on the net debt you mentioned that you expect net debt to be unchanged for the year. So, does that imply that you are already modeling in the 5% share buyback that's authorized to you, are you modeling that that's going to get executed during the year?

We specifically said actually in my prepared comments that it did not allowance for that.

I am sorry, I missed that.

We specifically said that, so that does not include allowance for that. Obviously it's a treasury tool to be looked at in terms of overall capital structure and our usage of free cash and we monitor we not become infected to... use. We haven't made any repurchases as of the year end and I think our current projections for cash flow that we've disclosed for the year did not include an allowance for that.

Yeah, I think that's why I was a little confused because I was coming with a positive free cash flow number for the year excluding that but if net debt is unchanged I was not sure where the GAAP is but I can follow-up offline.

Yeah, I think our guidance there, you are right that if you take that guidance absolutely literally I would say that we don't generate free cash flow for the year. We do expect that we will generate free cash for the year. I think that what we are really trying to say with our net debt guidance is we wouldn't expect in any circumstance debt to go up in 2008 and obviously to the extent we do generate a lot of free cash flow or some free cash flow we maybe a little bit more aggressive than the guidance we gave today.

Okay. That's helpful. Thank you very much.

Thank you.

And your last question comes from the line of Jim Barrett with CL King & Associates. Please proceed. Jim Barrett - CL King & Associates: Good morning everyone.

Good morning Jim. Jim Barrett - CL King & Associates: Mike, the 240 guidance for '08, actually this might be a better question for Duncan, the 240 guidance, Duncan, how should we model corporate overhead and can you separate out any credits in corporate overhead versus your underlying spending in that area, either by quarter or for the year versus '07?

The changes, it may be useful as we get through the changes in what we think corporate might look like '07 to '08. As we talked about on the slide that was in the presentation, the slide 6, there was a big change year-on-year '06 to '07 and there is a margins in that that will not reoccur '07 to '08, for example, the emergence related adjustment and also there was a big shift in LIFO year-on-year. What we expect going '07 to '08 is one thing that you will notice in '07 was that there was a very low expense, 30 million lower than '06 for incentive payments as result of, obviously the results we are seeing this year. Now as we think about cash flow going forward, I think about 240 guidance where we are including that we pay bonuses to the staff in line with meeting targets. So that's probably, I think we guided that would be in the range of $40 million, more than we've seen in '07. So I think, you might think about that as a changing corporate year-on-year. The other thing that I mentioned was that one of the items we got through corporate every year is the LIFO adjustments and LIFO adjustments tends to get close particularly in, and we see price inflation occurring year-on-year in some of our materials business that are sensitive to price movements and we've seen that... haven't seen a big LIFO charge in 2007. But given where materials inflation we project it to be in 2008, we would see a LIFO charge appearing in corporate and I think we said in my prepared comments that it would be less than $20 million from what we projected. Helps see you model corporate.

Jim, this is Mike. The other piece of that we didn't talk about is in the 105 million of corporate which was a positive in '07. We did have $54 million benefit associated with fresh start accounting. At the same time in the business unit bars on slide 6 we had about an additional $44 million as depreciation primarily in our insulation business that was pushed in. So about half of the 105 which we have on slide 6 was pressed in to the businesses and so as a result it just skewed the numbers that made us aware that we made all our money at corporate last year and in fact about half of that was really made out in the businesses. The other half which is the relief obviously from the incentive compensation we have all of our salaried employees on a global basis on a payout risk program and our view of that is that is the right way to run a shareholder driven enterprise. We did not meet the targets that we had set out for the company in 2007. As a result that was broadly shared by all of our employees in the lack of bonus payments as at the year end. We believe we've set realistic goals for this year and therefore in the guidance today we are budgeting that we will fund the bonus position. Jim Barrett - CL King & Associates: Very good. Well, thank you both.

Okay. Thank you.

Well, thanks everyone for joining the call today. We hope you've found it helpful. Apologies to those that we didn't get to in the Q&A queue. You're certainly welcome to give us a call. And with that I'll turn it over to Mike for any closing comments.

Thanks Scott. In summary we believe that Owens Corning is prepared for 2008. We're excited about our composites business, it's bigger, it's more global, and it will be more profitable. We believe that our portfolio of businesses and our strong global composite presences differentiates us from other building materials companies and will service well this year end and through out the cycle. We do know that the U.S. housing market will one day return to more normal demand levels. When it does, we know that our portfolio of assets and the actions that we are currently taking would drive financial results that will deliver substantial returns for our investors. Your homes will be better insulated perhaps with more fiberglass insulation than ever before. Existing homes will be reinsulated because of the ever increasing need for energy efficiency. And new and existing homes with asphalt shingles and future manufacture of stone veneer products. When housing demands strengthens the performance of our building materials business segments, we will combine with our global composites business to deliver our consolidated business results. In 2008, we will remain focused on those things that we can control and where we can differentiate ourselves. We will demonstrate the promise of our composites business, we will win with our customers and focus on our combined growth, we'll continue to streamline our costs structure and our production capacity. We'll continue our aggressive rate of safety improvement, and we believe that we will deliver financial results that meet or exceed the expectations that we laid out today. As we close this call thank you to all of you for joining us today. We currently have plans to announce our first quarter results on May 7th and we hope you join us there. Have a good day.

Thank you for your participation in today's conference, ladies and gentlemen. All parties may now disconnect, enjoy your day.