Profile: USG Corporation (USG)

USG Corporation (USG), through its subsidiaries, is a manufacturer and distributor of building materials, producing a range of products for use in new residential, new nonresidential, and repair and remodel construction, as well as products used in certain industrial processes. The Company is organized into three reportable segments: North American Gypsum, Building Products Distribution and Worldwide Ceilings, the net sales of which accounted for approximately 46%, 38% and 16%, respectively, of its consolidated net sales during the year ended December 31, 2008.

North American Gypsum

North American Gypsum manufactures and markets gypsum and related products in the United States, Canada and Mexico. It includes United States Gypsum Company (U.S. Gypsum), in the United States, the gypsum business of CGC Inc., (CGC), in Canada, and USG Mexico, S.A. de C.V., (USG Mexico), in Mexico. U.S. Gypsum is a manufacturer of gypsum wallboard in the United States and accounted for approximately 29% of total domestic gypsum wallboard sales during 2008. CGC is a manufacturer of gypsum wallboard in eastern Canada. USG Mexico is a manufacturer of gypsum wallboard in Mexico.

North American Gypsum’s products are used in a variety of building applications to finish the interior walls, ceilings and floors in residential, commercial and institutional construction and in certain industrial applications. These products provide aesthetic, as well as sound-dampening, fire-retarding, abuse-resistance and moisture-control value. The majority of these products are sold under the SHEETROCK brand name. A line of joint compounds used for finishing wallboard joints is also sold under the SHEETROCK brand name. The DUROCK line of cement board and accessories provides water-damage-resistant and fire-resistant assemblies for both interior and exterior construction. The FIBEROCK line of gypsum fiber panels includes abuse-resistant wall panels and floor underlayment, as well as sheathing panels usable as a substrate for most exterior systems. The SECUROCK line of products includes glass mat sheathing used for building exteriors and gypsum fiber panels used as roof cover board. The LEVELROCK line of poured gypsum underlayments provides surface leveling and enhanced sound performance for residential and commercial installations.

USG also produces a variety of construction plaster products used to provide a custom finish for residential and commercial interiors. Like SHEETROCK brand gypsum wallboard, these products provide aesthetic, sound-dampening, fire-retarding and abuse-resistance value. Construction plaster products are sold under the brand names RED TOP, IMPERIAL and DIAMOND. It also produces gypsum-based products for agricultural and industrial customers to use in a number of applications, including soil conditioning, road repair, fireproofing and ceramics.

North American Gypsum manufactures products at 46 plants. North American Gypsum’s plants are located throughout the United States, Canada and Mexico. Gypsum rock is mined or quarried at 15 Company-owned locations in North America. In 2008, these locations provided approximately 67% of the gypsum used by its plants in North America. USG owns eight paper mills located across the United States. Its gypsum products are distributed through its wholly owned subsidiary, L&W Supply Corporation, and its subsidiaries (L&W Supply), other specialty wallboard distributors, building materials dealers, home improvement centers and other retailers, and contractors.

In this segment the Company competes with National Gypsum Company, Compagnie de Saint-Gobain SA, Koch Industries, Inc., Eagle Materials Inc., Temple-Inland Forest Products Corporation, Lafarge North America, Inc., PABCO Gypsum, CertainTeed Corporation, Georgia-Pacific and Lafarge North America, Inc., Panel Rey, S.A. and Comex-Lafarge.

Building Products Distribution

Building Products Distribution consists of L&W Supply, a specialty building products distribution business in the United States. During 2008, L&W Supply distributed approximately 12% of all gypsum wallboard in the United States, including approximately 36% of U.S. Gypsum’s wallboard production. L&W Supply is a service-oriented business that stocks a range of construction materials. L&W Supply specializes in the distribution of gypsum wallboard (which accounted for 33% of its 2008 net sales), joint compound and other gypsum products manufactured by U.S. Gypsum and others. It also distributes products manufactured by USG Interiors, Inc., such as acoustical ceiling tile and grid, as well as products of other manufacturers, including drywall metal, insulation, roofing products and accessories. L&W Supply leases approximately 90% of its facilities from third parties. Typical leases have terms of five years and include renewal options. L&W Supply closed 54 centers in 2008, while opening five new centers and served its customers from 198 centers in the United States as of December 31, 2008.

In the Building Products Distribution segment the Company competes with ProBuild Holdings Inc., KCG, Inc., Allied Building Products Corporation.

Worldwide Ceilings

USG’s Worldwide Ceilings segment manufactures and markets interior systems products worldwide. It includes USG Interiors, Inc., (USG Interiors), the international interior systems business managed as USG International, and the ceilings business of CGC. Worldwide Ceilings is a supplier of interior ceilings products used primarily in commercial applications. Worldwide Ceilings manufactures ceiling tile in the United States and ceiling grid in the United States, Canada, Europe and the Asia-Pacific region. It markets ceiling tile and ceiling grid in the United States, Canada, Mexico, Europe, Latin America and the Asia-Pacific region.

Its integrated line of ceilings products provides qualities, such as sound absorption, fire retardation and convenient access to the space above the ceiling for electrical and mechanical systems, air distribution and maintenance. USG Interiors’ brand names include the AURATONE and ACOUSTONE brands of ceiling tile and the DONN, DX, FINELINE, CENTRICITEE, CURVATURA and COMPASSO brands of ceiling grid. Worldwide Ceilings manufactures products at 17 plants located in North America, Europe and the Asia-Pacific region. Principal raw materials used to produce Worldwide Ceilings’ products include mineral fiber, steel, perlite, starch and high-pressure laminates. Worldwide Ceilings sells products primarily in markets related to the construction and renovation of nonresidential buildings. Ceilings products are marketed and distributed through a network of distributors, installation contractors, L&W Supply locations and home improvement centers.

The Company’s principal competitors in ceiling grid include WAVE (a joint venture between Armstrong World Industries, Inc. and Worthington Industries) and Chicago Metallic Corporation, Armstrong World Industries, Inc., OWA Faserplattenwerk GmbH, CertainTeed Corporation and AMF Mineralplatten GmbH Betriebs KG.