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Press release from Business Wire

USG Corporation Reports 2010 Fourth Quarter and Full Year Results

Wednesday, January 26, 2011

USG Corporation Reports 2010 Fourth Quarter and Full Year Results08:30 EST Wednesday, January 26, 2011 CHICAGO (Business Wire) -- USG Corporation (NYSE:USG): Fourth Quarter 2010 vs. Fourth Quarter 2009 Consolidated Business Highlights Sales declined 3.3 percent to $696 millionOperating loss of $95 million compared to $11 millionAdjusted operating loss of $39 million compared to $77 million Business Unit Highlights U.S. Gypsum wallboard shipments totaled 945 MMSF vs. 1.06 BSFU.S. Gypsum average wallboard price of $111.95 per thousand feet vs. $109.86Worldwide Ceilings operating profit increased $7 millionL&W same store net sales declined 3.4 percent, total sales declined 7.4 percent USG Corporation (NYSE:USG), a leading building products company, today reported fourth quarter 2010 net sales of $696 million, an operating loss of $95 million and a net loss of $121 million, or $1.17 per diluted share based on 102.9 million average diluted shares outstanding. In last year's fourth quarter, the operating loss was $11 million and the net loss was $598 million, or $6.02 per diluted share based on 99.3 million average diluted shares. The company recorded full year 2010 net sales of $2.9 billion, an operating loss of $260 million and a net loss of $405 million. For the full year 2009, net sales were $3.2 billion, the operating loss was $185 million and net loss was $787 million. “Our adjusted operating results improved in a declining U.S. market, we added to our liquidity and we continued to drive down costs,” said James S. Metcalf, President and CEO. The corporation's adjusted operating loss was $39 million in the fourth quarter of 2010, which compares to an adjusted operating loss of $77 million in the fourth quarter of 2009. The adjusted operating loss for the fourth quarter of 2010 excludes $56 million of restructuring and asset impairment charges. The adjusted operating loss for the fourth quarter of 2009 excludes $31 million of restructuring and asset impairment charges and $97 million of income from the settlement of litigation. “While 2011 is likely to be another difficult year, we think the worst may be behind us,” Metcalf continued. “There is still a high degree of uncertainty about the shape and timing of the recovery, but we know that our operating strategies are working and that the fundamentals underlying our core businesses are solid.” Looking ahead, Metcalf said, “We remain optimistic about the long-term. Basic demographics, the aging domestic housing stock, and a general economic recovery in the U.S. will ultimately stimulate demand for our products. The company is poised to capture the significant operating leverage in our business when market demand rebounds from the historic lows experienced recently.” 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 Web site, 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 28775512. After the live webcast, a replay of the webcast will be available on the USG Web site. In addition, a telephonic replay of the call will be available until Friday, February 4, 2011. The replay dial-in number is 1-888-843-7419 (1-630-652-3042 for international callers), and the pass code is 28775512. USG Corporation is a manufacturer and distributor of high-performance building systems through its United States Gypsum Company, USG Interiors, Inc., L&W Supply Corporation and other subsidiaries. Headquartered in Chicago, USG's worldwide operations serve the residential and non-residential construction markets, repair and remodel construction markets, and industrial processes. USG's wall, ceiling, flooring and roofing products provide leading-edge building solutions for customers, while L&W Supply center locations efficiently stock and deliver building materials nationwide. For additional information, visit the USG Web site 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 from management's expectations and, accordingly, may affect our sales and profitability or other results and liquidity. Actual results may differ 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, energy, transportation and employee benefit costs; the loss of one or more major customers and our customers' ability to meet their financial obligations to us; capacity utilization rates; changes in laws or regulations, including environmental and safety regulations; 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 CORPORATIONCONSOLIDATED STATEMENT OF EARNINGS(dollars in millions except per share data)(Unaudited)   Three MonthsTwelve Monthsended December 31,ended December 31,2010200920102009     Net sales $ 696 $ 720 $ 2,939 $ 3,235   Cost of products sold   652     712     2,775     3,090     Gross profit 44 8 164 145   Selling and administrative expenses 83 85 314 304   Litigation settlement income - (97 ) - (97 )   Restructuring and long-lived asset impairment charges 56 29 110 80   Goodwill and other intangible asset impairment charges   -     2     -     43     Operating loss (95 ) (11 ) (260 ) (185 )   Interest expense 49 45 183 165   Interest income (2 ) (1 ) (5 ) (4 )   Other expense (income), net   1     1     1     (9 )   Loss before income taxes (143 ) (56 ) (439 ) (337 )   Income tax expense (benefit)   (22 )   542     (34 )   450     Net loss $ (121 ) $ (598 ) $ (405 ) $ (787 )   Basic loss per common share $ (1.17 ) $ (6.02 ) $ (4.03 ) $ (7.93 ) Diluted loss per common share $ (1.17 ) $ (6.02 ) $ (4.03 ) $ (7.93 )   Average common shares 102,872,914 99,294,920 100,471,635 99,238,400 Average diluted common shares 102,872,914 99,294,920 100,471,635 99,238,400   Other Information: Depreciation, depletion and amortization $ 44 $ 46 $ 178 $ 203 Capital expenditures $ 21 $ 8 $ 39 $ 44   Average common shares and average diluted common shares outstanding are calculated in accordance with Accounting Standards Codification 260, "Earnings Per Share."         USG CORPORATIONCORE BUSINESS RESULTS(dollars in millions)(Unaudited)   Three MonthsTwelve Monthsended December 31,ended December 31,2010200920102009Net Sales:   North American Gypsum: United States Gypsum Company $ 302 $ 315 $ 1,295 $ 1,432 CGC Inc. (gypsum) 69 73 290 267 USG Mexico, S.A. de C.V. 41 36 151 142 Other subsidiaries* 11 10 33 40 Eliminations   (30 )   (27 )   (111 )   (111 ) Total   393     407     1,658     1,770     Building Products Distribution: L&W Supply Corporation   250     270     1,061     1,289     Worldwide Ceilings: USG Interiors, Inc. 94 90 422 429 USG International 51 55 224 222 CGC Inc. (ceilings) 14 14 62 56 Eliminations   (10 )   (13 )   (48 )   (44 ) Total   149     146     660     663     Eliminations   (96 )   (103 )   (440 )   (487 ) Total USG Corporation $ 696   $ 720   $ 2,939   $ 3,235       Operating Profit (Loss):   North American Gypsum: United States Gypsum Company $ (61 ) $ 57 $ (160 ) $ (20 ) CGC Inc. (gypsum) 1 5 17 7 USG Mexico, S.A. de C.V. 5 3 17 12 Other subsidiaries*   (21 )   (2 )   (39 )   (8 ) Total   (76 )   63     (165 )   (9 )   Building Products Distribution: L&W Supply Corporation   (12 )   (63 )   (97 )   (172 )   Worldwide Ceilings: USG Interiors, Inc. 10 5 57 53 USG International (1 ) (2 ) 7 2 CGC Inc. (ceilings)   3     2     10     7   Total   12     5     74     62     Corporate (19 ) (18 ) (69 ) (71 ) Eliminations   -     2     (3 )   5   Total USG Corporation $ (95 ) $ (11 ) $ (260 ) $ (185 )   * Includes a shipping company in Bermuda, and a mining operation in Nova Scotia.     USG CORPORATIONCONSOLIDATED BALANCE SHEETS(dollars in millions)(Unaudited)   As ofAs ofDecember 31,December 31,20102009   Assets Current Assets: Cash and cash equivalents $ 629 $ 690 Short-term marketable securities 128 - Restricted cash 4 2 Receivables (net of reserves - $17 and $16) 327 357 Inventories 290 289 Income taxes receivable 3 20 Deferred income taxes 6 2 Other current assets   50     71   Total current assets 1,437 1,431   Long-term marketable securities 150 - Property, plant and equipment (net of accumulated depreciation and depletion - $1,546 and $1,558) 2,266 2,427 Other assets   234     239     Total Assets $ 4,087   $ 4,097       Liabilities and Stockholders' Equity Current Liabilities: Accounts payable $ 218 $ 205 Accrued expenses 294 273 Current portion of long-term debt 7 7 Income taxes payable   10     7   Total current liabilities 529 492   Long-term debt 2,301 1,955 Deferred income taxes 7 17 Other liabilities 631 703 Commitments and contingencies   Stockholders' Equity: Preferred stock - - Common stock 10 10 Treasury stock (55 ) (194 ) Capital received in excess of par value 2,565 2,640 Accumulated other comprehensive loss (50 ) (80 ) Retained earnings (deficit)   (1,851 )   (1,446 ) Total stockholders' equity   619     930     Total Liabilities and Stockholders' Equity $ 4,087   $ 4,097     Other Information: Total cash and cash equivalents and marketable securities 907 690 Borrowing availability from lines of credit   156     118   Total Liquidity $ 1,063   $ 808           USG CORPORATIONRECONCILIATION of ADJUSTED OPERATING LOSS to REPORTED GAAP OPERATING LOSS(dollars in millions)(Unaudited)   Three MonthsTwelve Monthsended December 31ended December 312010200920102009   Adjusted Operating Profit (Loss): North American Gypsum $ (23 ) $ (33 ) $ (72 ) $ (81 ) Building Products Distribution (11 ) (38 ) (82 ) (92 ) Worldwide Ceilings 13 9 75 69 Corporate (18 ) (17 ) (68 ) (60 ) Eliminations   -     2     (3 )   5   Total   (39 )   (77 )   (150 )   (159 )     Restructuring and Long-LivedAsset Impairment Charges: North American Gypsum 53 1 93 25 Building Products Distribution 1 25 15 39 Worldwide Ceilings 1 2 1 5 Corporate   1     1     1     11   Total   56     29     110     80       Litigation Settlement Income: North American Gypsum - (97 ) - (97 ) Building Products Distribution - - - - Worldwide Ceilings - - - - Corporate   -     -     -     -   Total   -     (97 )   -     (97 )     Goodwill and Other IntangibleAsset Impairment Charges: North American Gypsum - - - - Building Products Distribution - - - 41 Worldwide Ceilings - 2 - 2 Corporate   -     -     -     -   Total   -     2     -     43       Reported GAAP Operating Profit (Loss): North American Gypsum (76 ) 63 (165 ) (9 ) Building Products Distribution (12 ) (63 ) (97 ) (172 ) Worldwide Ceilings 12 5 74 62 Corporate (19 ) (18 ) (69 ) (71 ) Eliminations   -     2     (3 )   5   Total   (95 )   (11 )   (260 )   (185 )   References to Adjusted Operating 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 COMPANYGYPSUM WALLBOARD REALIZED SELLING PRICES & SHIPMENTS       1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Full Year Year Price   Volume Price   Volume Price   Volume Price   Volume Price   Volume 2010 $106.58 1.15 $114.17 1.07 $114.45 1.03 $111.95 0.95 $111.66 4.19   2009 $121.42 1.31 $120.79 1.18 $115.33 1.17 $109.86 1.06 $117.16 4.72   Wallboard price reflects amount per one thousand square feet. Volume expressed in billions of square feet. USG CorporationMedia Inquiries: 312/436-4356Investor Relations: 312/436-4110