USG Corporation Reports 2012 Fourth Quarter and Full Year Results

  USG Corporation Reports 2012 Fourth Quarter and Full Year Results

Fourth Quarter 2012 vs. Fourth Quarter 2011

Consolidated Business Highlights (continuing operations)

  *Sales increased 12 percent to $815 million
  *Operating loss of $8 million compared to operating loss of $43 million
  *Adjusted operating profit of $5 million compared to adjusted operating
    loss of $38 million

Business Unit Highlights (continuing operations)

  *U.S. Gypsum wallboard shipments totaled 1.22 BSF vs. 1.09 BSF
  *U.S. Gypsum average wallboard price of $132.26 per thousand square feet
    vs. $112.59
  *Worldwide Ceilings operating profit decreased 18 percent to $14 million
  *L&W Supply same store net sales increased 13 percent
  *SHEETROCK^® Brand UltraLight Panels accounted for 49 percent of all USG
    wallboard shipments in the United States

Business Wire

CHICAGO -- February 6, 2013

USG Corporation (NYSE:USG), a leading building products company, today
reported fourth quarter 2012 net sales from continuing operations of $815
million, up 12 percent from fourth quarter 2011 net sales from continuing
operations of $726 million. USG’s fourth quarter operating loss from
continuing operations was $8 million compared to a $43 million operating loss
from continuing operations in the fourth quarter of 2011. The fourth quarter
2012 net loss was $13 million, or $0.11 per share. This result compares to a
$100 million net loss in the fourth quarter of 2011, or $0.95 per share.

“Our wallboard results were the strongest we have seen in over three years,
and we achieved our fourth consecutive quarter of positive adjusted operating
profit,” said James S. Metcalf, Chairman, President and CEO. “The results for
Worldwide Ceilings and L&W Supply show the commercial markets remain choppy,
but we continue to see signs of a housing recovery.”

The corporation’s adjusted operating profit from continuing operations was $5
million in the fourth quarter of 2012, which compares to an adjusted operating
loss from continuing operations of $38 million in the fourth quarter of 2011.
A reconciliation of adjusted operating profit to operating profit is set forth
on a schedule attached hereto. The operating profit from continuing operations
in the fourth quarter of 2012 includes $13 million in restructuring and
long-lived asset impairment charges.

The Corporation recorded full year 2012 net sales from continuing operations
of $3.2 billion, an operating profit from continuing operations of $73 million
and a net loss of $126 million. For the full year 2011, net sales from
continuing operations were $2.9 billion, the operating loss from continuing
operations was $206 million and net loss was $390 million.

During the third quarter, the Corporation announced it had entered into a
definitive agreement to sell its European operations. This transaction was
completed on December 27, 2012, resulting in a gain on sale of $55 million.
Results from European operations have been reported as discontinued operations
for all periods presented. Those operations reported net sales of $106 million
and operating profit of $7 million for 2012, and $114 million and $9 million,
respectively, for 2011.

“While I am pleased with the progress on Our Plan to Win in 2012, there is
more work to be done,” Metcalf said. “Our focus remains on achieving positive
net earnings, and I look forward to continued growth in 2013.”

A conference call is being held today at 10:00 A.M. Central Time during which
USG senior management will discuss the corporation’s operating results. The
conference call will be webcast on the USG website, www.usg.com, in the
Investor Relations section. The dial-in number for the conference call is
1-800-315-2944 (1-847-413-2929 for international callers), and the pass code
is 34052563. After the live webcast, a replay of the webcast will be available
on the USG website. In addition, a telephonic replay of the call will be
available until Friday, February 15, 2013. The replay dial-in number is
1-888-843-7419 (1-630-652-3042 for international callers), and the pass code
is 34052563.

USG Corporation is a manufacturer and distributor of high-performance building
systems through its United States Gypsum Company, USG Interiors, LLC, L&W
Supply Corporation and other subsidiaries. Headquartered in Chicago, USG’s
worldwide operations serve the commercial, residential, and repair and remodel
construction markets. USG’s wall, ceiling, flooring and roofing products
provide leading-edge building solutions for customers, while L&W Supply branch
locations efficiently stock and deliver building materials nationwide. For
additional information, visit the USG website at www.usg.com.

This press release contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995 related to management’s
expectations about future conditions. Actual business, market or other
conditions may differ materially from management’s expectations and,
accordingly, may affect our sales and profitability or other results and
liquidity. Actual results may differ materially due to various other factors,
including: economic conditions, such as the levels of new home and other
construction activity, employment levels, the availability of mortgage,
construction and other financing, mortgage and other interest rates, housing
affordability and supply, the levels of foreclosures and home resales,
currency exchange rates and consumer confidence; capital markets conditions
and the availability of borrowings under our credit agreement or other
financings; competitive conditions, such as price, service and product
competition; shortages in raw materials; changes in raw material and energy
costs; volatility in the assumptions used to determine the funded status of
our pension plans; the loss of one or more major customers and our customers’
ability to meet their financial obligations to us; capacity utilization rates
for us and the industry; our ability to expand into new geographic markets and
the stability of such markets; changes in laws or regulations, including
environmental and safety regulations; the satisfactory performance of certain
business functions by third party service providers; our ability to achieve
anticipated savings from cost reduction programs; the outcome in contested
litigation matters; the effects of acts of terrorism or war upon domestic and
international economies and financial markets; and acts of God. We assume no
obligation to update any forward-looking information contained in this press
release.


USG CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in millions except per share data)
(Unaudited)
                                                                  
                 Three months                        Twelve months
                 ended December 31,                  ended December 31,
                 2012              2011 ^(1)         2012              2011 ^(1)
                                                                       
                                                                       
Net sales        $ 815             $ 726             $ 3,224           $ 2,910
                                                                       
Cost of           730             688             2,829           2,752       
products sold
                                                                       
Gross profit       85                38                395               158
                                                                       
Selling and
administrative     80                76                304               289
expenses
                                                                       
Restructuring
and long-lived
asset
impairment        13              5               18              75          
charges
                                                                       
Operating          (8          )     (43         )     73                (206        )
profit (loss)
                                                                       
Interest           52                53                206               211
expense
Interest           (1          )     (1          )     (4          )     (6          )
income
Loss on
extinguishment     -                 -                 41                -
of debt
Other (income)    2               -               -               (1          )
expense, net
                                                                       
Loss from
continuing
operations         (61         )     (95         )     (170        )     (410        )
before income
taxes
                                                                       
Income tax
expense           3               5               12              (14         )
(benefit)
                                                                       
Loss from
continuing         (64         )     (100        )     (182        )     (396        )
operations
                                                                       
Income (loss)
from
discontinued       (3          )     -                 2                 6
operations,
net of tax
Gain on sale
of
discontinued      55              -               55              -           
operations,
net of tax
                                                                       
Net loss         $ (12         )   $ (100        )   $ (125        )   $ (390        )
                                                                       
Less: Net
income
attributable      1               -               1               -           
to
noncontrolling
interest
                                                                       
Net loss
attributable     $ (13         )   $ (100        )   $ (126        )   $ (390        )
to USG
                                                                       
Earnings per
common share -
basic:
Loss from
continuing       $ (0.59       )   $ (0.95       )   $ (1.72       )   $ (3.81       )
operations
Income from
discontinued      0.48            -               0.53            0.05        
operations
^(2)
Net loss
attributable     $ (0.11       )   $ (0.95       )   $ (1.19       )   $ (3.76       )
to USG
                                                                       
Earnings per
common share -
diluted:
Loss from
continuing       $ (0.59       )   $ (0.95       )   $ (1.72       )   $ (3.81       )
operations
Income from
discontinued      0.48            -               0.53            0.05        
operations
^(2)
Net loss
attributable     $ (0.11       )   $ (0.95       )   $ (1.19       )   $ (3.76       )
to USG
                                                                       
Average common     107,791,758       105,361,746       106,382,934       103,902,038
shares
Average
diluted common     107,791,758       105,361,746       106,382,934       103,902,038
shares
                                                                       
(1) Prior-period amounts have been adjusted to reflect our European businesses as
discontinued operations. These businesses were sold on December 27, 2012.
(2) Includes gain on sale of discontinued operations, net of tax


USG CORPORATION
CONSOLIDATED BALANCE SHEETS
(dollars in millions)
(Unaudited)
                                                     
                                 As of                     As of
                                 December 31,              December 31,
                                 2012                      2011 (1)
                                                           
Assets
Current Assets:
Cash and cash equivalents        $     546                 $    365
Short-term marketable                  106                      164
securities
Restricted cash                        1                        1
Receivables (net of                    326                      316
reserves - $16 and $17)
Inventories                            304                      292
Income taxes receivable                2                        8
Deferred income taxes                  2                        4
Other current assets                   40                       54
Assets related to                     -                      35        
discontinued operations
Total current assets                   1,327                    1,239
                                                           
Long-term marketable                   25                       122
securities
Property, plant and
equipment (net of
accumulated
depreciation and depletion             2,100                    2,104
- $1,738 and $1,602)
Deferred income taxes                  38                       25
Other assets                          233                    229       
                                                           
Total Assets                     $     3,723              $    3,719     
                                                           
                                                           
Liabilities and
Stockholders' Equity
Current Liabilities:
Accounts payable                 $     286                 $    226
Accrued expenses                       237                      258
Current portion of                     4                        7
long-term debt
Deferred income taxes                  22                       12
Income taxes payable                   2                        6
Liabilities related to                -                      15        
discontinued operations
Total current liabilities              551                      524
                                                           
Long-term debt                         2,005                    1,997
Long-term debt - related               300                      300
party
Deferred income taxes                  5                        7
Pension and other                      573                      521
postretirement benefits
Other liabilities                     270                    214       
Total liabilities                     3,704                  3,563     
                                                           
Stockholders' Equity:
Preferred stock                        -                        -
Common stock                           11                       10
Treasury stock                         -                        -
Additional paid-in capital             2,595                    2,561
Accumulated other                      (233      )              (174      )
comprehensive loss
Retained earnings                     (2,367    )             (2,241    )
(accumulated deficit)
Stockholders' equity of                6                        156
parent
Noncontrolling interest               13                     -         
Total stockholders' equity
including noncontrolling              19                     156       
interest
                                                           
Total Liabilities and            $     3,723              $    3,719     
Stockholders' Equity
                                                       
Other Information:
Total cash and cash
equivalents and marketable       $     677                 $    651
securities
Borrowing availability                197                    183       
from lines of credit
Total Liquidity                 $     874               $    834       
                                                           
(1) Prior-period amounts have been adjusted to reflect our European businesses
as discontinued operations. These businesses were sold on December 27, 2012.

                                                                
USG CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in millions)
(Unaudited)
                                                                    
                                                     Twelve months
                                                     ended December 31,
                                                     2012           2011 (1)
                                                                    
Operating Activities
Net loss                                             $  (125  )     $  (390  )
Less: Income from discontinued operations, net of       2              6
tax
Less: Gain from sale of discontinued operations,       55           -     
net of tax
Loss from continuing operations                         (182  )        (396  )
                                                                    
Adjustments to reconcile loss from continuing
operations to net cash:
Depreciation, depletion and amortization                156            164
Loss on extinguishment of debt                          41             -
Long-lived asset impairment charges                     8              53
Share-based compensation expense                        17             21
Deferred income taxes                                   4              (8    )
Gain on asset dispositions                              (8    )        (6    )
(Increase) decrease in working capital:
Receivables                                             13             (6    )
Income taxes receivable                                 6              (5    )
Inventories                                             (12   )        (17   )
Prepaid expenses                                        5              (3    )
Payables                                                27             17
Accrued expenses                                        14             (10   )
Decrease (increase) in other assets                     1              (2    )
(Decrease) increase in other liabilities                (21   )        (6    )
Other, net                                             (1    )       (1    )
Net cash provided by (used for) operating              68           (205  )
activities - continuing operations
                                                                    
Investing Activities
Purchases of marketable securities                      (137  )        (355  )
Sales or maturities of marketable securities            291            345
Capital expenditures                                    (70   )        (54   )
Acquisition of mining rights                            (16   )        -
Net proceeds from asset dispositions                    14             9
Net proceeds from sale of business                      73
Investments in joint ventures                           (14   )        -
Loan to joint venture                                   (4    )        (4    )
Insurance proceeds                                      -              2
(Deposit) return of restricted cash                    1            2     
Net cash provided by (used for) investing              138          (55   )
activities - continuing operations
                                                                    
Financing Activities
Issuance of debt                                        248            -
Repayment of debt                                       (283  )        (6    )
Payment of debt issuance fees                           (5    )        -
Loan from venture partner                               4              -
Issuance of common stock                                4              -
Repurchases of common stock to satisfy employee
tax withholding obligations                            (6    )       (3    )
Net cash used for financing activities -               (38   )       (9    )
continuing operations
                                                                    
Effect of exchange rate change on cash                  4              (5    )
                                                                    
Net cash provided by operating activities -             10             11
discontinued operations
Net cash used for investing activities -               (1    )       (1    )
discontinued operations
                                                                    
Net increase (decrease) in cash and cash                181            (264  )
equivalents
Cash and cash equivalents at beginning of period       365          629   
Cash and cash equivalents at end of period           $  546        $  365   
                                                                    
Supplemental Cash Flow Disclosures:
Interest paid                                        $  200         $  196
Income taxes paid, net of refunds received              1              6
Amount in accounts payable for capital                  10             5
expenditures
                                                                    
(1) Prior-period amounts have been adjusted to reflect our European businesses
as discontinued operations.


USG CORPORATION
CORE BUSINESS RESULTS
(dollars in millions)
(Unaudited)
                                                            
                    Three months                  Twelve months
                    ended December 31,            ended December 31,
                    2012           2011 (1)       2012            2011 (1)
Net Sales:
                                                                  
North American
Gypsum:
United States       $  381         $  325         $  1,512        $  1,297
Gypsum Company
CGC Inc.               88             77             336             307
(gypsum)
USG Mexico, S.A.       44             38             166             161
de C.V.
Other                  24             8              63              32
subsidiaries*
Eliminations          (29   )       (26   )       (114   )       (102   )
Total                 508          422          1,963         1,695  
                                                                  
Worldwide
Ceilings:
USG Interiors,         102            105            455             448
Inc.
USG                    33             32             128             117
International
CGC Inc.               15             15             64              67
(ceilings)
Eliminations          (9    )       (12   )       (47    )       (49    )
Total                 141          140          600           583    
                                                                  
Building
Products
Distribution:
L&W Supply            282          264          1,145         1,060  
Corporation
                                                                  
Eliminations          (116  )       (100  )       (484   )       (428   )
Total USG           $  815        $  726        $  3,224       $  2,910  
Corporation
                                                                  
                                                                  
Operating Profit
(Loss):
                                                                  
North American
Gypsum:
United States       $  12          $  (18   )     $  89           $  (78    )
Gypsum Company
CGC Inc.               4              1              12              (1     )
(gypsum)
USG Mexico, S.A.       5              5              20              21
de C.V.
Other                  (4    )        (9    )        (5     )        (78    )
subsidiaries*
Eliminations          -            -            (1     )       -      
Total                 17           (21   )       115           (136   )
                                                                  
Worldwide
Ceilings:
USG Interiors,         10             15             71              66
Inc.
USG                    1              -              1               3
International
CGC Inc.              3            2            11            13     
(ceilings)
Total                 14           17           83            82     
                                                                  
Building
Products
Distribution:
L&W Supply            (10   )       (15   )       (33    )       (68    )
Corporation
                                                                  
Corporate              (26   )        (20   )        (83    )        (80    )
Eliminations          (3    )       (4    )       (9     )       (4     )
Total USG           $  (8    )     $  (43   )     $  73          $  (206   )
Corporation
                                                                  
(1) Prior-period amounts have been adjusted to reflect our European businesses
as discontinued operations.

* Includes our shipping company, our mining operation in Little Narrows, Nova
Scotia, Canada, and, for 2011, our gypsum quarry and ship loading facility in
Windsor, Nova Scotia, Canada.


USG CORPORATION
RECONCILIATION of ADJUSTED OPERATING PROFIT (LOSS) to REPORTED GAAP OPERATING
PROFIT (LOSS)
(dollars in millions)
(Unaudited)
                                                             
                        Three months                 Twelve months
                        ended December 31,           ended December 31,
                        2012           2011 (1)      2012          2011 (1)
                                                                   
Adjusted Operating
Profit (Loss):
North American          $   28         $  (15  )     $  130        $  (69   )
Gypsum
Worldwide Ceilings          14            17            84            82
Building Products           (10  )        (16  )        (33  )        (61   )
Distribution
Corporate                   (24  )        (20  )        (81  )        (79   )
Eliminations               (3   )       (4   )       (9   )       (4    )
Total                   $   5         $  (38  )     $  91        $  (131  )
                                                                   
                                                                   
Restructuring and
Long-Lived
Asset Impairment
Charges:
North American          $   11         $  6          $  15         $  67
Gypsum
Worldwide Ceilings          -             -             1             -
Building Products           -             (1   )        -             7
Distribution
Corporate                  2           -           2           1     
Total                   $   13        $  5         $  18        $  75    
                                                                   
                                                                   
Reported GAAP
Operating Profit
(Loss):
North American          $   17         $  (21  )     $  115        $  (136  )
Gypsum
Worldwide Ceilings          14            17            83            82
Building Products           (10  )        (15  )        (33  )        (68   )
Distribution
Corporate                   (26  )        (20  )        (83  )        (80   )
Eliminations               (3   )       (4   )       (9   )       (4    )
Total                   $   (8   )     $  (43  )     $  73        $  (206  )
                                                                   
(1) Prior-period amounts have been adjusted to reflect our European businesses
as discontinued operations.

References to Adjusted Operating Profit (Loss) are non-GAAP measures.
Management believes this information provides investors with a more useful
comparison of the corporation's ongoing business performance.


UNITED STATES GYPSUM COMPANY
WALLBOARD REALIZED SELLING PRICES AND SHIPMENTS
                                                                                             
                                                                                                                   
                                                                                                                   
             1st Quarter            2nd Quarter            3rd Quarter            4th Quarter            Full Year
  Year       Price    Volume       Price    Volume       Price    Volume       Price    Volume       Price    Volume
  2012       $130.43   1.16         $132.09   1.15         $131.97   1.20         $132.26   1.22         $131.70   4.72
                                                                                                                   
  2011       $109.15   0.99         $111.55   0.99         $111.66   1.05         $112.59   1.09         $111.27   4.11
                                                                                                                   
  Wallboard price reflects amount per one thousand square feet.
  Volume expressed in billions of square feet.

Contact:

USG Corporation
Media Inquiries – Robert Williams: 312/436-4356
Investor Relations – Ken Banas: 312/436-6098