Owens Corning

2. DISCONTINUED OPERATIONS

During the fourth quarter of 2024, the Company determined that certain asset groups should be tested for recoverability, primarily as a result of the progression of the strategic review of GR. Recoverability of the long-lived assets was measured by comparing the carrying amount of the asset groups to the future net undiscounted cash flows expected to be generated by the asset groups. Specifically for the GR asset group, the Company used an undiscounted cash flow model giving consideration to probability weighted cash flows of differing outcomes of the strategic review. The comparison indicated that one of the asset groups, the GR asset group, was not recoverable.

Fair value of the GR asset group was calculated using a discounted cash flow model and market information obtained through the strategic review to estimate the fair value of the asset group, with weighting applied. As a result of the analysis performed, the Company recorded pre-tax asset impairment charges for the amount by which the carrying value exceeded its fair value of $483 million for the year ended December 31, 2024, which was included in Impairment due to strategic review on the Consolidated Statements of Earnings within our 2024 Form 10-K. These charges include $439 million related to property, plant and equipment, $30 million related to operating lease right-of-use assets and $14 million related to definite-lived intangible assets.

On February 13, 2025, the Company entered into a definitive agreement ("GR Agreement") for the sale of GR for a purchase price of approximately $436 million, less costs to sell. As of June 30, 2025, the estimated purchase price was $515 million, net of cash, less costs to sell. The change since signing is due to the changes in customary and transaction-specific price adjustments which are subject to further changes through the date of the final closing adjustments. The purchase price is inclusive of $225 million of promissory notes to be issued to the Company by the purchasers. The GR business, historically part of the Company’s Composites segment, manufactures, fabricates, and sells glass fiber reinforcements for a wide variety of applications in wind energy, infrastructure, industrial, transportation and consumer markets.

The transaction represented a strategic shift that has a major effect on the Company's operations and financial results and therefore, beginning with the quarterly report on Form 10-Q for the period ended March 31, 2025, and including this quarterly report on Form 10-Q for the period ended June 30, 2025, GR’s financial results are reflected in the Company’s consolidated financial statements as discontinued operations for all periods presented.

As a result of classifying GR as a discontinued operation, a portion of the Goodwill from our former Composites reporting unit was allocated to the balance sheets of the discontinued operation. As of the date of classification of GR as a discontinued operation, the Company determined the amount of Goodwill to allocate based on the relative fair values of the discontinued operation and the former Composites reporting unit. This resulted in an allocation of $98 million of Goodwill to the discontinued operation.

After allocating Goodwill to the discontinued operation, as well as at the end of each subsequent quarter, the Company compared the carrying value of the discontinued operation to the fair value of the discontinued operation, defined as the sale price less estimated selling costs. During the three and six months ended June 30, 2025, the Company incurred a pre-tax loss on classification as discontinued operations of $19 million and $381 million, respectively. The loss is presented within Net earnings (loss) from discontinued operations attributable to Owens Corning, net of tax, on the Consolidated Statements of Earnings. An estimated valuation allowance of $354 million is recorded within Non-current assets of discontinued operations, on the Consolidated Balance Sheets.

The following table summarizes Earnings from discontinued operations attributable to Owens Corning, net of tax included within the Consolidated Statements of Earnings:

Major classes of assets and liabilities of discontinued operations include the following:

Cash flows related to discontinued operations are included within the Consolidated Statements of Cash Flows. Selected financial information related to cash flows from discontinued operations are below: