PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS

12 Months Ended

Dec. 31, 2011

Defined Benefit Pension Plans And Defined Benefit Postretirement Plans Disclosure Abstract

PENSION PLANS AND OTHER POSTRETIREMENT BENEFITS

16.       PENSION PLANS

The Company is committed to providing a competitive benefit package to employees. On August 31, 2009 the Company elected to reorganize its postemployment benefit package, by which the Company enhanced its 401(k) Plan and froze a portion of the United States Pension Plan for all salaried employees and a significant portion of hourly employees, effective January 1, 2010.

The following tables provides a reconciliation of the change in the projected benefit obligation, the change in plan assets and the net amount recognized in the Consolidated Balance Sheets for the years ended December 31, 2011 and 2010 (in millions):
	Dec. 31, 2011						Dec. 31, 2010
	U.S.		Non-U.S.		Total		U.S.		Non-U.S.		Total
Change in Projected Benefit Obligation
Benefit obligation at beginning of period	$	1,050	$	488	$	1,538	$	983	$	468	$	1,451
Service cost		9		5		14		9		5		14
Interest cost		53		25		78		55		23		78
Actuarial loss		81		18		99		85		14		99
Currency (gain) loss		-		(7)		(7)		-		2		2
Benefits paid		(87)		(21)		(108)		(81)		(19)		(100)
Settlements / Curtailments		(1)		(3)		(4)		-		-		-
Other		-		(2)		(2)		(1)		(5)		(6)
Benefit obligation at end of period	$	1,105	$	503	$	1,608	$	1,050	$	488	$	1,538
Change in Plan Assets
Fair value of assets at beginning of period	$	767	$	364	$	1,131	$	744	$	334	$	1,078
Actual return on plan assets		38		1		39		87		33		120
Currency gain (loss)		-		(5)		(5)		-		3		3
Company contributions		94		23		117		17		15		32
Benefits paid		(87)		(21)		(108)		(81)		(19)		(100)
Settlements		-		(2)		(2)		-		-		-
Other		-		-		-		-		(2)		(2)
Fair value of assets at end of period	$	812	$	360	$	1,172	$	767	$	364	$	1,131
Funded status	$	(293)	$	(143)	$	(436)	$	(283)	$	(124)	$	(407)

	Dec. 31, 2011						Dec. 31, 2010
	U.S.		Non-U.S.		Total		U.S.		Non-U.S.		Total
Amounts Recognized in the Consolidated Balance Sheets
Prepaid pension cost	$	-	$	4	$	4	$	-	$	3	$	3
Accrued pension cost - current		-		(5)		(5)		(19)		(13)		(32)
Accrued pension cost - non-current		(293)		(142)		(435)		(264)		(114)		(378)
Net amount recognized	$	(293)	$	(143)	$	(436)	$	(283)	$	(124)	$	(407)
Amounts Recorded in Accumulated OCI
Net actuarial loss	$	(347)	$	(82)	$	(429)	$	(252)	$	(44)	$	(296)

The following table presents information about the projected benefit obligation, accumulated benefit obligation ("ABO") and plan assets of the Company's pension plans (in millions):
		Dec. 31, 2011						Dec. 31, 2010
		U.S.		Non-U.S.		Total		U.S.		Non-U.S.		Total
Plans with ABO in excess of fair value
	of plan assets:
Projected benefit obligation		$	1,105	$	500	$	1,605	$	1,050	$	448	$	1,498
Accumulated benefit obligation		$	1,105	$	442	$	1,547	$	1,050	$	425	$	1,475
Fair value of plan assets		$	812	$	354	$	1,166	$	767	$	338	$	1,105
Plans with fair value of assets in
	excess of ABO:
Projected benefit obligation		$	-	$	3	$	3	$	-	$	40	$	40
Accumulated benefit obligation		$	-	$	3	$	3	$	-	$	18	$	18
Fair value of plan assets		$	-	$	6	$	6	$	-	$	26	$	26
Total projected benefit obligation		$	1,105	$	503	$	1,608	$	1,050	$	488	$	1,538
Total accumulated benefit obligation		$	1,105	$	445	$	1,550	$	1,050	$	443	$	1,493
Total plan assets		$	812	$	360	$	1,172	$	767	$	364	$	1,131

Weighted-Average Assumptions Used to Determine Benefit Obligation
The following table presents weighted average assumptions used to determine benefit obligations at the measurement dates noted:
		Dec. 31,
		2011	2010
United States Plans
	Discount rate	4.60%	5.30%
	Expected return on plan assets	7.25%	7.75%
Non-United States Plans
	Discount rate	4.65%	5.21%
	Expected return on plan assets	7.23%	7.25%
	Rate of compensation increase	3.75%	3.86%

Components of Net Periodic Pension Cost
The following table presents the components of net periodic pension cost for the periods noted (in millions):
	Twelve Months Ended
	Dec. 31,
	2011		2010		2009
Service cost	$	14	$	14	$	21
Interest cost		78		78		82
Expected return on plan assets		(91)		(87)		(88)
Amortization of actuarial loss		15		3		-
Curtailment/settlement (gain) loss		-		(1)		1
Net periodic benefit cost	$	16	$	7	$	16

Weighted-Average Assumptions Used to Determine Net Periodic Pension Cost
The following table presents weighted-average assumptions used to determine net periodic pension costs for the periods noted:
		Twelve Months Ended
		Dec. 31,
		2011	2010	2009
United States Plans
	Discount rate	5.30%	5.80%	6.85%
	Expected return on plan assets	7.75%	8.00%	8.00%
	Rate of compensation increase	N/A (a)	N/A (a)	5.23%
Non-United States Plans
	Discount rate	5.21%	5.41%	6.36%
	Expected return on plan assets	7.25%	7.25%	7.14%
	Rate of compensation increase	3.86%	3.92%	3.84%
(a) Not applicable due to changes in plan made on August 1, 2009 that were effective beginning January 1, 2010.

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

Accumulated Other Comprehensive Earnings (Deficit)

For the year ended December 31, 2011, the Company recorded a debit of $99 million, net of tax, to OCI. Of the $(429)million balance in OCI, $29 million is expected to be recognized as net periodic pension cost during 2012.For the year ended December 31, 2010, the Company recorded a debit of $21 million, net of tax, to OCI.

Items Measured at Fair Value

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

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

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

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

Plan Assets
The following table summarizes the fair values, and levels within the fair value hierarchy in which the fair value measurements fall under United States pension plan assets at December 31, 2011 and 2010 (in millions):
		2011								2010
Asset Category		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Total
Equity
	Domestic actively managed	$	113	$	-	$	-	$	113	$	124	$	-	$	124
	Domestic passive index		-		49		-		49		-		79		79
	International actively managed		101		-		-		101		119		-		119
	International passive index		-		16		-		16		-		18		18
Fixed income and cash equivalents
	Cash and cash equivalents		15		-		-		15		12		-		12
	Short-term debt		-		3		-		3		-		4		4
	Corporate bonds		-		292		-		292		-		251		251
	Government debt		-		101		-		101		-		81		81
Real estate investment trusts			23		-		-		23		32		-		32
Absolute return strategies			-		21		47		68		-		-		-
Real assets			-		31		-		31		-		47		47
Total United States plan assets		$	252	$	513	$	47	$	812	$	287	$	480	$	767

The above asset allocations are in compliance with the United States pension plan's current investment policy. Level 3 assets include global long/short, event driven, diversified arbitrage, distressed securities, and other multi-strategy hedge fund vehicles. Some securities in these assets are not readily marketable. The fair value of these level 3 assets are determined by a mark to market valuation based on price information, volatility statistics, credit data, liquidity statistics, various risk assessments and other factors.

A reconciliation of the beginning and ending balance of the plan assets measured at fair value using significant unobservable inputs (Level 3) is as follows:
	Plan Assets Using Significant Unobservable Inputs
	(Level 3)
December 31, 2010	$	-
Purchases, issuances, and settlements (net)		50
Unrealized losses		(3)
Interest and dividend income		-
December 31, 2011	$	47

The following table summarizes the fair values, and levels within the fair value hierarchy in which the fair value measurements fall under non-United States pension plan assets at December 31, 2011, 2010 (in millions):
		2011						2010
Asset Category		Level 1		Level 2		Total		Level 1		Level 2		Total
Equity
	Domestic actively managed	$	32	$	-	$	32	$	41	$	-	$	41
	Domestic passive index		-		98		98		-		23		23
	International actively managed		46		-		46		70		-		70
	International passive index		-		18		18		-		77		77
Fixed income and cash equivalents
	Corporate bonds		-		166		166		-		153		153
Total non-United States plan assets		$	78	$	282	$	360	$	111	$	253	$	364
The above asset allocations are in compliance with the non-United States pension plan's current investment policy. There were no assets valued using Level 3 inputs.

Investment Strategy

The current investment policy for the United States pension plan is to have 38% of assets invested in equities, 3% in real estate, 3% in real assets, and 50% in intermediate and long-term fixed income securities, and 6% in absolute return strategies.  Assets are rebalanced periodically to conform to policy tolerances. The Company actively evaluates the reasonableness of its asset mix given changes in the projected benefit obligation and market dynamics.

Estimated Future Benefit Payments
The following table shows estimated future benefit payments from the Company's pension plans (in millions):
Year	Estimated Benefit Payments
2012	$	95
2013	$	97
2014	$	97
2015	$	98
2016	$	100
2017-2021	$	497

Contributions

Owens Corning expects to contribute $53 million in cash to the United States pension plan during 2012 and another $21 million to non-United States plans. Actual contributions to the plans may change as a result of a variety of factors, including changes in laws that impact funding requirements.

Defined Contribution Plans

The Company sponsors two defined contribution plans which are available to substantially all United States employees. The Company matches a percentage of employee contributions up to a maximum leveland,beginning January 1, 2010,contributes2% of an employee's wages regardless of employee contributions. The Company recognized expense of $27 million, $30 million and$20 million during the years ended December 31, 2011, 2010 and 2009, respectively, related to these plans.

17.       POSTEMPLOYMENT AND POSTRETIREMENT BENEFITS OTHER THAN PENSIONS

The Company maintains health care and life insurance benefit plans for certain retired employees and their dependents. The health care plans in the United States are non-funded and pay either (1) stated percentages of covered medically necessary expenses, after subtracting payments by Medicare or other providers and after stated deductibles have been met, or (2) fixed amounts of medical expense reimbursement.

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

In the fourth quarter of 2011, the Company ratified certain plan amendments which reduced the projected benefit obligation at year end by approximately $30 million. The Company will implement an Employee Group Waiver Plan (EGWP) effective January 1, 2013 to manage its prescription drug benefits for certain retiree groups. The Company also negotiated with certain unionized employees to increase the eligibility age for retiree medical benefits and to eliminate the post-65 retiree reimbursement account benefit for employees retiring on or after January 1, 2014.

The following table provides a reconciliation of the change in the projected benefit obligation and the net amount recognized in the Consolidated Balance Sheets for the years ended December 31, 2011 and 2010 (in millions):
		Dec. 31, 2011						Dec. 31, 2010
		U.S.		Non-U.S.		Total		U.S.		Non-U.S.		Total
Change in Projected Benefit Obligation
Benefit obligation at beginning of period		$	279	$	21	$	300	$	272	$	25	$	297
Service cost			3		-		3		3		-		3
Interest cost			13		1		14		14		1		15
Actuarial loss (gain)			(4)		2		(2)		10		(6)		4
Currency loss (gain)			-		(1)		(1)		-		1		1
Plan amendments			(30)		-		(30)		-		-		-
Benefits paid			(17)		(1)		(18)		(21)		(1)		(22)
Curtailment gain			-		(2)		(2)		-		-		-
Other			-		-		-		1		1		2
Benefit obligation at end of period		$	244	$	20	$	264	$	279	$	21	$	300
Funded status		$	(244)	$	(20)	$	(264)	$	(279)	$	(21)	$	(300)
Amounts Recognized in the Consolidated
	Balance Sheets
Accrued benefit obligation - current		$	(24)	$	(1)	$	(25)	$	(24)	$	(1)	$	(25)
Accrued benefit obligation - non-current			(220)		(19)		(239)		(255)		(20)		(275)
Net amount recognized		$	(244)	$	(20)	$	(264)	$	(279)	$	(21)	$	(300)
Amounts Recorded in Accumulated OCI
Net actuarial gain		$	24	$	5	$	29	$	21	$	8	$	29
Net prior service credit			30		-		30		-		-		-
Net amount recognized		$	54	$	5	$	59	$	21	$	8	$	29

Weighted-Average Assumptions Used to Determine Benefit Obligations
The following table presents the discount rates used to determine the benefit obligations:
	Dec. 31,
	2011		2010
United States plans		4.35%		5.05%
Non-United States plans		4.10%		4.80%

Components of Net Periodic Postretirement Benefit Cost
The following table presents the components of net periodic postretirement benefit cost (in millions):
	Twelve Months Ended
	Dec. 31,
	2011		2010		2009
Service cost	$	3	$	3	$	3
Interest cost		14		15		19
Amortization of actuarial gain		(1)		-		(2)
Curtailment gain		(2)		-		-
Net periodic postretirement benefit cost	$	14	$	18	$	20
Weighted-Average Assumptions Used to Determine Net Periodic Postretirement Benefit Cost
The following table presents the discount rates used to determine net periodic postretirement benefit cost:
	Twelve Months Ended
	Dec. 31,
	2011		2010		2009
United States plans		5.05%		5.60%		7.05%
Non-United States plans		4.80%		5.15%		7.20%

The following table presents health care cost trend rates used to determine net periodic postretirement benefit cost, as well as information regarding the ultimate rate and the year in which their ultimate rate is reached:
		Twelve Months Ended
		Dec. 31,
		2011		2010		2009
United States plans
	Initial rate at end of year		7.00%		7.00%		7.00%
	Ultimate rate		5.00%		5.00%		5.00%
	Year in which ultimate rate is reached		2021		2020		2019
Non-United States plans
	Initial rate at end of year		6.80%		7.00%		9.00%
	Ultimate rate		4.80%		4.80%		5.00%
	Year in which ultimate rate is reached		2019		2019		2019

The health care cost trend rate assumption can have a significant effect on the amounts reported. To illustrate, a one-percentage point change in the December 31, 2011 assumed health care cost trend rate would have the following effects (in millions):
		1-Percentage Point
		Increase		Decrease
Increase (decrease) in total service cost and interest cost components of net
	periodic postretirement benefit cost	$	1	$	(1)
Increase (decrease) of accumulated postretirement benefit obligation		$	10	$	(9)

Accumulated Other Comprehensive Earnings (Deficit)

For the year ended December 31, 2011, the Company recorded a credit of $19 million, net of tax, to OCI. Approximately $6 million of the $59 million balance in accumulated OCI is expected to be recognized as net periodic postretirement benefit cost during 2012. For the year ended December 31, 2010, the Company recorded a debit of $15 million, net of tax, to OCI.

Estimated Future Benefit Payments
The following table shows estimated future benefit payments from the Company's postretirement benefit plans (in millions):
Year	Estimated Benefit Payments Before Medicare Subsidy		Estimated Medicare Subsidy		Estimated Benefit Payments Net of Medicare Subsidy
2012	$	25	$	2	$	23
2013	$	22	$	-	$	22
2014	$	22	$	-	$	22
2015	$	22	$	-	$	22
2016	$	21	$	-	$	21
2017-2021	$	98	$	-	$	98

Postemployment Benefits

The Company may also provide benefits to former or inactive employees after employment but before retirement under certain conditions. These benefits include continuation of benefits such as health care and life insurance coverage. The accrued postemployment benefits liability at December 31, 2011 and 2010was$28 million and $27 million, respectively.The net periodic postemployment benefit expense was $1 million, $1 millionand $4 million for the years ended December 31, 2011, 2010 and 2009, respectively.