Highlights for year 2008 include:

Adjusted EBITDA of $377.1 million compared to Adjusted EBITDA of $447.0 million in the year ended December 31, 2007, a decrease of 15.6%.

Operating loss of $836.6 million versus operating income of $82.2 million in the year ended December 31, 2007.

As the global recession unfolded in the fourth quarter, we experienced dramatic and in many ways unprecedented declines in demand for our products, which significantly impacted our Adjusted EBITDA. Despite challenging market conditions, however, we made important progress in 2008 increasing our specialties mix, achieving our cost savings targets and exceeding our goals in working capital reductions, said Jonathan Rich, president and chief executive officer. He added, In 2009, we will remain focused on reducing our costs and saving cash through working capital and capital expenditure reductions.

Net Sales:

The increase in net sales was primarily due to an increase in selling prices and exchange rate fluctuations of 9.5%, partially offset by a decrease in sales volume of 5.0%.

Net sales for our Silicones segment in the year ended December 31, 2008 were $2,383.3 million, compared to $2,264.3 million for the same period in 2007, an increase of 5.3%. The increase was primarily due to an increase in selling prices and exchange rate fluctuations of 8.2%, partially offset by a decrease in sales volume of 4.5%. The selling price improvements were across all regions and volume was down specifically in the US and Western Europe.

Net sales for our Quartz segment in the year ended December 31, 2008 were $255.9 million, compared to $273.5 million for the same period in 2007, a decrease of 6.4%. The decrease was primarily due to lower sales volume in semiconductor related products.

Cost of Sales, Excluding Depreciation:

Cost of sales, excluding depreciation in the year ended December 31, 2008 were $1,837.8 million compared to $1,653.1 million for the same period in 2007, an increase of 11.2%. The increase was primarily due to an increase in inflation on raw material, energy and transportation costs, partially offset by lower sales volume and the inventory fair value step up cost related to purchase accounting of $30.0 million in 2007. In addition, cost of sales was impacted by changes in foreign currency exchange rates.

Gross Profit:

Gross profit in the year ended December 31, 2008 was $801.4 million compared to $884.7 million for the same period in 2007, a decrease of 9.4%. The decrease was primarily due to increased cost of sales, offset by the effects described above in net sales and the purchase accounting item noted above.

Goodwill Impairment Charge:

During the fourth quarter of 2008, we recorded a pre-tax goodwill impairment charge of $700.0 million and $157.5 million for our Silicones and Quartz reporting units, respectively, on the Consolidated Statement of Operations. The changes to fair value in the reporting units that triggered the impairment charges were primarily attributable to the deterioration in economic conditions experienced in late 2008 which also caused management to change the estimates of future results. We factored these current market conditions and estimates into the projected forecasts of sales, operating income and cash flows of each reporting unit through the course of the strategic planning process.

Summary Fourth Quarter 2008 Results:

In the three-month period ended December 31, 2008, net sales and Adjusted EBITDA were $545.3 million and $39.2 million, respectively. This compares to $653.6 million and $108.1 million, respectively, for the same period in 2007, a decrease of 16.6% and 63.7%, respectively. Please note that Adjusted EBITDA quarterly totals previously reported by the Company do not add up to the full year Adjusted EBITDA total presented herein because the latter includes pro-forma effects of certain estimated cost savings reported during the latter half of year 2008 as if implemented on January 1, 2008.

Subsequent Events:

In order to preserve our financial flexibility and access to capital in light of the current volatility of financing markets, we elected to draw down an additional $90.0 million under our revolving credit facility on March 10, 2009. Prior to this additional draw down, on February 28, 2009, our cash balance was about $255.6 million. The outstanding letters of credit under the revolving credit facility and the synthetic credit facility at the time of the draw down were $31.9 million and $27.2 million, respectively, leaving unused capacity of $28.1 million under the revolving credit facility and $7.1 million under the synthetic letter of credit facility at that time.

Business Outlook:

Over the first eleven weeks of the quarter, Momentive continued to see weak demand in all regions across all major product segments and we expect more of the same for the remainder of the quarter. While we have seen deflation in certain raw materials, the impact of this effect has been marginal in comparison to the drop-off in product demand. As a result, Momentive currently expects first quarter 2009 revenue in the range of $410 million to $440 million, GAAP operating loss of $60 million to $75 million and Adjusted EBITDA of $5 million to $15 million. Momentive also expects to have total debt net of cash of between $2,850 million to $2,910 million at the end of the first quarter of 2009.