USG Corporation Reports 2013 Full Year and Fourth Quarter Results, Generating Full Year Net Income for the First Time since

  USG Corporation Reports 2013 Full Year and Fourth Quarter Results,
  Generating Full Year Net Income for the First Time since 2007

Business Wire

CHICAGO -- February 6, 2014

USG Corporation (NYSE:USG):

Fourth Quarter 2013 vs. Fourth Quarter 2012

Consolidated Business Highlights

  *Sales increased 12 percent to $915 million
  *Operating profit of $60 million compared to an operating loss of $8
    million
  *GAAP net loss of $3 million compared to GAAP net loss of $13 million
  *Adjusted net income of $22 million compared to adjusted net loss of $52
    million

Business Unit Highlights

  *U.S. Gypsum wallboard shipments totaled 1.38 BSF vs. 1.22 BSF
  *U.S. Gypsum average wallboard price of $155.09 per thousand square feet
    vs. $132.26
  *Worldwide Ceilings operating profit increased 36 percent to $19 million
  *L&W operating profit of $4 million compared to operating loss of $10
    million
  *SHEETROCK^® Brand UltraLight Panels accounted for 59 percent of all USG
    wallboard shipments in the United States

USG Corporation (NYSE:USG), a leading building products company, today
reported fourth quarter 2013 net sales of $915 million, up 12 percent from
fourth quarter 2012 net sales of $815 million. USG’s fourth quarter 2013
operating profit was $60 million compared to an $8 million operating loss in
the fourth quarter of 2012. Fourth quarter 2013 net loss was $3 million or
$0.03 per diluted share. This result compares to a $13 million net loss or a
net loss of $0.11 per diluted share in the fourth quarter of 2012.

The corporation’s adjusted net income was $22 million in the fourth quarter of
2013 compared to an adjusted net loss of $52 million in the fourth quarter of
2012. Adjusted net loss in the fourth quarter of 2013 excluded, among other
items, a $16 million pension settlement charge related to a lump-sum payout to
terminated employees which lowered the pension obligation by approximately $80
million. The adjusted net loss in the fourth quarter of 2012 excluded, among
other items, the $55 million gain from the sale of the corporation’s European
operations. Fourth quarter 2013 adjusted earnings per share was $0.19 compared
to adjusted loss per share of $0.48 during the fourth quarter of 2012. A full
reconciliation of adjusted net income (loss) to net income (loss) and adjusted
earnings (loss) per share to earnings (loss) per share is set forth on a
schedule attached hereto.

“We’re pleased to have delivered a fourth consecutive quarter of positive
operating results with improved performances in all major businesses” said
James S. Metcalf, Chairman, President and CEO. “Our Plan to Win is working and
we expect to improve upon our results as we capitalize on the increasing
opportunity in our end markets.”

USG recorded full year 2013 net sales of $3.6 billion, an operating profit of
$258 million, net income of $47 million, and earnings per share of $0.43, with
adjusted net income of $73 million and adjusted earnings per share of $0.67.
For the full year 2012, net sales were $3.2 billion, operating profit was $73
million, net loss was $126 million, and loss per share was $1.19, with
adjusted net loss of $124 million and adjusted loss per share of $1.17. A full
reconciliation of adjusted net income (loss) to net income (loss) and adjusted
earnings (loss) per share to earnings (loss) per share is set forth on a
schedule attached hereto.

“2013 was a foundational year for USG, however our work is not done” Mr.
Metcalf said. “We remain committed to keeping our breakeven low and delevering
our balance sheet, while seeking organic growth opportunities as we build the
USG of the future.”

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
1-888-771-4371 (1-847-585-4405 for international callers), and the pass code
is 36379657. 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 Thursday, February 13, 2014. The replay dial-in number is
1-888-843-7419 (1-630-652-3042 for international callers), and the pass code
is 36379657.

USG Corporation

USG Corporation is a manufacturer and distributor of innovative,
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, enabling our
customers to build the outstanding spaces where people live, work and play.
USG wall, ceiling, exterior sheathing, flooring underlayment and roofing
systems provide leading-edge building solutions, while L&W Supply branch
locations efficiently stock and deliver building materials throughout the
United States. USG and its subsidiaries are proud sponsors of the U.S. Olympic
and Paralympic teams and the Canadian Olympic team. For additional
information, visit www.usg.com.

Non-GAAP Financial Measures

In this press release, the corporation’s financial results are provided both
in accordance with accounting principles generally accepted in the United
States of America (GAAP) and using certain non-GAAP financial measures. In
particular, the corporation presents the non-GAAP financial measures adjusted
net income (loss) and adjusted net income (loss) per share which exclude
certain charges. These results are included as a complement to results
provided in accordance with GAAP because management believes these non-GAAP
financial measures help investors’ ability to analyze underlying trends in the
corporation’s business, evaluate its performance relative to other companies
in its industry and provide useful information to both management and
investors by excluding certain items that may not be indicative of the
corporation’s core operating results. In addition, the corporation uses
adjusted net income (loss) as a component of the measurement of incentive
compensation. These measures should not be considered a substitute for or
superior to GAAP results and may vary from others in the industry. For further
information related to the Company’s use of non-GAAP financial measures, see
the schedules attached hereto.

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; our substantial indebtedness and our ability to incur substantial
additional indebtedness; 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; our ability to
successfully enter into and operate the joint venture with Boral Limited,
including risks that our joint venture partner, Boral Limited, may not fulfill
its obligations as an investor or may take actions that are inconsistent with
our objectives; our ability to protect our intellectual property and other
proprietary rights; changes in laws or regulations, including environmental
and safety regulations; the satisfactory performance of certain business
functions by fourth 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. Additional information concerning these and other factors may be
found in our filings with the Securities and Exchange Commission, including
the “Risk Factors” in our most recent Annual Report on Form 10-K and Quarterly
Report on Form 10-Q.

                                                                  
USG CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in millions except share and per share data)
(Unaudited)
                                                                       
                 Three months                        Twelve months
                 ended December 31,                  ended December 31,
                 2013              2012              2013              2012
                                                                       
                                                                       
Net sales        $ 915             $ 815             $ 3,570           $ 3,224
Cost of           764             730             2,989           2,829       
products sold
                                                                       
Gross profit       151               85                581               395
                                                                       
Selling and
administrative     91                80                320               304
expenses
Restructuring
and long-lived
asset             -               13              3               18          
impairment
charges
                                                                       
Operating          60                (8          )     258               73
profit (loss)
                                                                       
Interest           52                52                203               206
expense
Interest           -                 (1          )     (3          )     (4          )
income
Loss on
extinguishment     -                 -                 -                 41
of debt
Other (income)    1               2               (1          )    -           
expense, net
                                                                       
Income (loss)
from
continuing         7                 (61         )     59                (170        )
operations
before income
taxes
                                                                       
Income tax        10              3               11              12          
expense
                                                                       
Income (loss)
from               (3          )     (64         )     48                (182        )
continuing
operations
                                                                       
Income (loss)
from
discontinued       (1          )     (3          )     (2          )     2
operations,
net of tax
Gain on sale
of
discontinued      -               55              -               55          
operations,
net of tax
                                                                       
Net income       $ (4          )   $ (12         )   $ 46             $ (125        )
(loss)
                                                                       
Less: Net
income (loss)
attributable      (1          )    1               (1          )    1           
to
noncontrolling
interest
                                                                       
Net income
(loss)           $ (3          )   $ (13         )   $ 47             $ (126        )
attributable
to USG
                                                                       
Earnings per
common share -
basic:
Income (loss)
from             $ (0.02       )   $ (0.59       )   $ 0.45            $ (1.72       )
continuing
operations
Income (loss)
from              (0.01       )    0.48            (0.02       )    0.53        
discontinued
operations (1)
Net income       $ (0.03       )   $ (0.11       )   $ 0.43           $ (1.19       )
(loss)
                                                                       
Earnings per
common share -
diluted:
Income (loss)
from             $ (0.02       )   $ (0.59       )   $ 0.44            $ (1.72       )
continuing
operations
Income (loss)
from              (0.01       )    0.48            (0.02       )    0.53        
discontinued
operations (1)
Net income       $ (0.03       )   $ (0.11       )   $ 0.42           $ (1.19       )
(loss)
                                                                       
Average common     113,536,253       107,791,758       108,891,703       106,382,934
shares
Average
diluted common     113,536,253       107,791,758       111,434,543       106,382,934
shares
                                                                       
(1) In 2012, 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,
                                                   2013           2012
Assets
Current Assets:
Cash and cash equivalents                          $  810         $  546
Short-term marketable securities                      82             106
Restricted cash                                       5              1
Receivables (net of reserves - $12 and $16)           369            326
Inventories                                           332            304
Income taxes receivable                               3              2
Deferred income taxes                                 52             2
Other current assets                                 47           40      
Total current assets                                  1,700          1,327
                                                                  
Long-term marketable securities                       60             25
Property, plant and equipment (net of
accumulated depreciation and depletion - $1,840       2,103          2,100
and $1,738)
Deferred income taxes                                 17             38
Other assets                                         241          233     
                                                                  
Total Assets                                       $  4,121      $  3,723   
                                                                  
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable                                   $  284         $  286
Accrued expenses                                      216            237
Current portion of long-term debt                     63             4
Deferred income taxes                                 -              22
Income taxes payable                                 5            2       
Total current liabilities                             568            551
                                                                  
Long-term debt                                        2,238          2,016
Long-term debt - related party                        54             289
Deferred income taxes                                 66             5
Pension and other postretirement benefits             277            573
Other liabilities                                    256          270     
Total liabilities                                    3,459        3,704   
                                                                  
Stockholders' Equity:
Preferred stock                                       -              -
Common stock                                          14             11
Treasury stock                                        -              -
Additional paid-in capital                            2,920          2,595
Accumulated other comprehensive income (loss)         24             (233    )
Retained earnings (accumulated deficit)              (2,320  )     (2,367  )
Stockholders' equity of parent                        638            6
Noncontrolling interest                              24           13      
Total stockholders' equity including                 662          19      
noncontrolling interest
                                                                  
Total Liabilities and Stockholders' Equity         $  4,121      $  3,723   
                                                              
Other Information:
Total cash and cash equivalents and marketable     $  952         $  677
securities
Borrowing availability under existing credit         314          197     
facilities
Total Liquidity                                   $  1,266     $  874     

                                                                   
USG CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in millions)
(Unaudited)
                                                                      
                                                           Twelve months
                                                           ended December 31,
                                                           2013       2012
Operating Activities
Net income (loss)                                          $ 46       $ (125 )
Less: Income (loss) from discontinued operations, net of     (2   )     2
tax
Less: Gain from sale of discontinued operations, net of     -        55   
tax
Income (loss) from continuing operations                     48         (182 )
                                                                      
Adjustments to reconcile income (loss) from continuing
operations to net cash:
Depreciation, depletion and amortization                     155        156
Loss on extinguishment of debt                               -          41
Long-lived asset impairment charges                          -          8
Share-based compensation expense                             19         17
Deferred income taxes                                        2          4
Provision for bad debt                                       -          7
Gain on asset dispositions                                   (1   )     (8   )
Pension settlement                                           16         -
(Increase) decrease in working capital:
Receivables                                                  (44  )     6
Income taxes receivable                                      (1   )     6
Inventories                                                  (28  )     (12  )
Other current assets                                         (4   )     5
Payables                                                     (4   )     27
Accrued expenses                                             (23  )     14
(Increase) decrease in other assets                          (6   )     1
Decrease in pension and other postretirement benefits        (63  )     (16  )
Decrease in other liabilities                                (6   )     (5   )
Other, net                                                  20       (1   )
Net cash provided by operating activities - continuing      80       68   
operations
                                                                      
Investing Activities
Purchases of marketable securities                           (205 )     (137 )
Sales or maturities of marketable securities                 194        291
Capital expenditures                                         (124 )     (70  )
Acquisition of mining rights                                 (17  )     (16  )
Net proceeds from asset dispositions                         2          14
Net proceeds from sale of business                           -          73
Investments in joint ventures                                (5   )     (14  )
Loan to joint venture                                        -          (4   )
Insurance proceeds                                           2          -
(Deposit) return of restricted cash                         (4   )    1    
Net cash (used for) provided by investing activities -      (157 )    138  
continuing operations
                                                                      
Financing Activities
Issuance of debt                                             361        248
Repayment of debt                                            (4   )     (283 )
Payment of debt issuance fees                                (6   )     (5   )
Loans from venture partner                                   4          4
Issuance of common stock                                     4          4
Repurchases of common stock to satisfy employee tax         (9   )    (6   )
withholding obligations
Net cash provided by (used for) financing activities -      350      (38  )
continuing operations
                                                                      
Effect of exchange rate changes on cash                      (7   )     4
                                                                      
Net cash (used for) provided by operating activities -       (2   )     10
discontinued operations
Net cash used for investing activities - discontinued        -          (1   )
operations
                                                                      
Net increase in cash and cash equivalents                    264        181
Cash and cash equivalents at beginning of period            546      365  
Cash and cash equivalents at end of period                 $ 810     $ 546  
                                                                      
Supplemental Cash Flow Disclosures:
Interest paid, net of capitalized interest                 $ 192      $ 200
Income taxes paid, net of refunds received                   10         1
Amount in accounts payable for capital expenditures          13         10
                                                                      
Noncash Financing Activities:
Conversion of $325 million of 10% convertible senior       $ (314 )     -
notes, net of discount
Issuance of common stock upon conversion of debt             313        -
Acceleration of deferred financing fee amortization to       1          -
additional paid-in capital

                                                            
USG CORPORATION
CORE BUSINESS RESULTS
(dollars in millions)
(Unaudited)
                                                                  
                    Three months                  Twelve months
                    ended December 31,            ended December 31,
                    2013           2012           2013            2012
Net Sales:
                                                                  
North American
Gypsum:
United States       $  455         $  381         $  1,758        $  1,512
Gypsum Company
CGC Inc.               90             88             348             336
(gypsum)
USG Mexico, S.A.       45             44             177             166
de C.V.
Other                  33             24             89              63
subsidiaries (1)
Eliminations          (33   )       (29   )       (123   )       (114   )
Total                 590          508          2,249         1,963  
                                                                  
Worldwide
Ceilings:
USG Interiors,         113            102            467             455
Inc.
USG                    38             33             144             128
International
CGC Inc.               14             15             61              64
(ceilings)
Eliminations          (11   )       (9    )       (47    )       (47    )
Total                 154          141          625           600    
                                                                  
Building
Products
Distribution:
L&W Supply            314          282          1,245         1,145  
Corporation
                                                                  
Eliminations          (143  )       (116  )       (549   )       (484   )
Total USG           $  915        $  815        $  3,570       $  3,224  
Corporation
                                                                  
                                                                  
Operating Profit
(Loss):
                                                                  
North American
Gypsum:
United States       $  51          $  12          $  216          $  89
Gypsum Company
CGC Inc.               6              4              17              12
(gypsum)
USG Mexico, S.A.       6              5              22              20
de C.V.
Other                  12             (4    )        10              (5     )
subsidiaries (1)
Eliminations          -            -            (1     )       (1     )
Total                 75           17           264           115    
                                                                  
Worldwide
Ceilings:
USG Interiors,         16             10             81              71
Inc.
USG                    1              1              2               1
International
CGC Inc.              2            3            11            11     
(ceilings)
Total                 19           14           94            83     
                                                                  
Building
Products
Distribution:
L&W Supply            4            (10   )       6             (33    )
Corporation
                                                                  
Corporate              (30   )        (26   )        (92    )        (83    )
Eliminations          (8    )       (3    )       (14    )       (9     )
Total USG           $  60         $  (8    )     $  258         $  73     
Corporation
                                                                  
(1) Includes our mining operation in Little Narrows, Nova Scotia, Canada, and
our shipping company.

                                                                  
USG CORPORATION
RECONCILIATION of NON-GAAP MEASURE TO GAAP MEASURE
(dollars in millions, except share and per share data)
(Unaudited)
                                                                       
                 Three months                        Twelve months
                 ended December 31,                  ended December 31,
                 2013              2012              2013              2012
                                                                       
                                                                       
Net income
(loss)
attributable     $ (3          )   $ (13         )   $ 47              $ (126        )
to USG - GAAP
measure
                                                                       
Adjustments:
Loss (income)
from
discontinued       1                 3                 2                 (2          )
operations,
net of tax
Gain on sale
of
discontinued       -                 (55         )     -                 (55         )
operations,
net of tax
Restructuring
and long-lived
asset              -                 13                3                 18
impairment
charges
Pension
settlement         16                -                 16                -
charge
Reduction in
valuation
allowance for      -                 -                 (3          )     -
deferred tax
assets
Withholding
taxes on
dividends          6                 -                 6                 -
between
foreign
entities
Bridge loan
commitment         2                 -                 2                 -
financing fee
Loss on
extinguishment     -                 -                 -                 41
of debt
                                                                    
Adjusted net
income (loss)    $ 22             $ (52         )   $ 73             $ (124        )
- Non-GAAP
measure
                                                                       
                                                                       
Earnings
(loss) per
average common   $ (0.03       )   $ (0.11       )   $ 0.43            $ (1.19       )
share - GAAP
measure
                                                                       
Adjustments
per average
common share:
Loss (income)
from
discontinued       0.01              0.03              0.02              (0.02       )
operations,
net of tax
Gain on sale
of
discontinued       -                 (0.51       )     -                 (0.52       )
operations,
net of tax
Restructuring
and long-lived
asset              -                 0.11              0.03              0.17
impairment
charges
Pension
settlement         0.14              -                 0.15              -
charge
Reduction in
valuation
allowance for      -                 -                 (0.03       )     -
deferred tax
assets
Withholding
taxes on
dividends          0.05              -                 0.05              -
between
foreign
entities
Bridge loan
commitment         0.02              -                 0.02              -
financing fee
Loss on
extinguishment     -                 -                 -                 0.39
of debt
                                                                    
Adjusted
earnings per
common share -   $ 0.19           $ (0.48       )   $ 0.67           $ (1.17       )
Non-GAAP
measure
                                                                       
Average common     113,536,253       107,791,758       108,891,703       106,382,934
shares

                                                                                   
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
2013   $153.07   1.11    $153.77   1.29     $154.04   1.37     $155.09   1.38     $154.04   5.14
                                                                                            
2012   $130.43   1.16    $132.09   1.15     $131.97   1.20     $132.26   1.22     $131.70   4.72
                                                                                            
Wallboard price reflects amount per one thousand square feet.
Volume expressed in billions of square feet.

Contact:

USG Corporation
Media
Robert Williams
(312) 436-4356
rewilliams@usg.com
or
Investors
Matthew Ackley
(312) 436-6263
investorrelations@usg.com
 
Press spacebar to pause and continue. Press esc to stop.