USG Reports $100 Million Profit in Fourth Quarter

USG achieved a record $5.8 billion in net sales for the full year of 2006, exceeding the previous year's record sales by $671 million, or 13 percent. The corporation recorded net earnings of $288 million for all of 2006 and reported a net loss of $1.4 billion for all of 2005, including the asbestos claims-related provision.

"I am proud of all that USG accomplished in 2006," said USG Corporation Chairman and CEO William C. Foote. "We began the year with a plan to emerge from a five-year bankruptcy and continue building the USG franchise. We accomplished the plan and much more.

"The housing market began the year strong, with the gypsum wallboard industry operating at full capacity. This strength was followed by a rapid dropoff in housing construction in the second half of 2006," added Foote. "In the near term, changes in market demand will have a major impact on our businesses, but we're well positioned to handle it. We have responded by permanently closing some older, higher cost manufacturing capacity and temporarily idling additional lines so as to more fully utilize our newer, more efficient plants. We are assessing all areas for cost reductions, especially those related to manufacturing and administration - and we'll take additional steps as needed. These actions are designed to maintain our strong position with our customers and set the stage for future growth."

The company's United States Gypsum subsidiary realized fourth quarter 2006 net sales of $702 million versus $752 million in the fourth quarter of 2005. Operating profit was $119 million in the fourth quarter of 2006 compared with an operating loss of $2.9 billion in the fourth quarter of 2005, which included the $3.1 billion pretax asbestos claims charge. U.S. Gypsum realized higher selling prices for SHEETROCK(R) Brand gypsum wallboard and for the company's complementary products in the fourth quarter of 2006 compared with the same period a year earlier. However, these higher selling prices were offset by higher costs for energy and raw materials and the unfavorable effects of lower gypsum wallboard production levels.

Wallboard Business Performance
U.S. Gypsum's wallboard shipments in the fourth quarter totaled 2.3 billion square feet, down from 2.8 billion square feet in last year's record fourth quarter. For all of 2006, U.S. Gypsum shipped 10.8 billion square feet of gypsum wallboard, down 4 percent from last year's record level.

Building Products Distribution Performance
L&W Supply Corporation, USG's building products distribution business, reported record fourth quarter 2006 net sales of $551 million, up from the previous record of $542 million in the fourth quarter of 2005. Operating profit fell 9 percent to $39 million.

The improvement in net sales reflects higher selling prices for gypsum wallboard and increased sales of complementary building products such as metal studs, insulation, ceiling products and joint compound. Sales of other products were up 7 percent compared with last year's fourth quarter. Also contributing to higher net sales, as part of its growth plan, L&W Supply added 28 locations during 2006, largely due to acquisitions. The decline in operating profit was primarily attributable to lower shipments of gypsum wallboard, which declined by about 18 percent compared with last year's fourth quarter.

For additional information, visit the USG Web site at http://www.usg.com