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USG REPORTS HIGHER SALES, LOWER OPERATING PROFIT FOR SECOND QUARTER 1992 VERSUS LAST YEAR, PROGRESS ON DEBT RESTRUCTURING

 USG REPORTS HIGHER SALES, LOWER OPERATING PROFIT FOR


SECOND QUARTER 1992 VERSUS LAST YEAR, PROGRESS ON DEBT RESTRUCTURING
 CHICAGO, July 23 /PRNewswire/ -- USG Corp. (NYSE: USG) today reported a second quarter 1992 operating profit of $28 million on net sales of $441 million. After applying net interest expense of $84 million (pre-tax), a net loss of $48 million, or $0.87 per share, was incurred.
 These results compare with a second quarter 1991 operating profit of $37 million, net sales of $434 million and a net loss of $49 million, or $0.88 per share. The 1991 net loss includes a $20 million, or $0.36 per share, after-tax charge related to the September 1991 divestiture of DAP Inc.
 Net sales increased for the corporation's wholly owned subsidiaries, U.S. Gypsum Company and L&W Supply Corp., in the second quarter over the prior-year period due to increases in volume and selling prices for gypsum wallboard, as well as improved results for other products used in new residential construction. However, nonresidential construction activity continued at low levels during the second quarter, which adversely affected USG's interior systems results, and Canadian gypsum wallboard prices continued to decline. Together, these negative factors offset the improvement in the corporation's domestic gypsum related businesses, resulting in a $9 million, or 24 percent, decline in consolidated operating profit for the quarter.
 The continued high level of interest expense associated with the corporation's capital structure, combined with the low level of operating profit, contributed to USG's net loss for the first half of 1992. For the first six month of 1992, USG reported an operating profit of $48 million, net sales of $867 million and a net loss of $98 million, or $1.76 per share. In 1991, first six months operating profit was $69 million on net sales of $850 million, while the net loss was $85 million, or $1.54 per share.
 Commenting on results for the first half of 1992, USG Chairman Eugene B. Connolly said, "The steady improvement in sales for gypsum wallboard and gypsum-related products, as well as higher U.S. gypsum wallboard prices, is further indication that the residential construction industry 'bottomed-out' in late 1991/early 1992. However, we remain wary as there has been no clear indication that the economy will support a sustained recovery," he said. "Nonresidential construction activity is expected to continue to be sluggish, and the pace of housing activity during the second quarter was slower than in
the first. While notable improvement in residential construction activity has occurred, the industry is climbing out of a 14-year low in terms of pricing. We anticipate gypsum wallboard pricing will move toward more profitable levels with sustained improvement in construction activity."
 Connolly pointed out that domestic gypsum wallboard prices rose from $67.77 in the first quarter of 1992, to $72.20 in the second quarter, due to a price increase implemented during the second quarter of 1992. Prices during the first and second quarter of 1991 were $77.05 and $71.93, respectively.
 USG said that it has signed an agreement in principle with the agents for the bank group on the terms of its debt restructuring. Management is engaged in discussions with the subordinated bondholder committees to finalize the equity allocation among the 13-1/4 percent Senior Subordinated bondholders, 16 percent Junior Subordinated bondholders and the current shareholders, along with related issues. When management concludes these discussions, it intends to file a disclosure statement with the SEC detailing the terms of the restructuring.
 As previously announced, management has been exploring, with the relevant creditor committees, the alternative of implementing this restructuring plan via a prepackaged holding-company-only Chapter 11 proceeding. This implementation alternative should allow the corporation to restructure its debt quickly and ensure that trade suppliers and other creditors of both its subsidiaries and holding company will remain unimpaired and not be involved in the bankruptcy process. As of June 30, 1992, USG had a consolidated cash position of $149 million to support its trade credit and supplier relationships, excluding $86 million in restricted cash from the sale of DAP.
 USG is a Fortune 250 building products manufacturer whose subsidiaries are market leaders in gypsum wallboard, joint compound and related gypsum products, ceiling tile and grid, and building products distribution.
 USG CORP.
 Condensed Consolidated Statement of Earnings
 (in millions of dollars except per-share figures)
 Periods ended Three months Six months
 June 30 1992 1991 1992 1991
 Net sales $441 $434 $867 $850
 Gross profit 81 85 152 165
 Selling and
 administrative
 expenses 53 48 104 96
 Operating profit 28 37 48 69
 Interest expense,
 net 84 81 167 159
 Other expense,
 net 1 1 (1) 3
 Taxes on income/
 (income tax
 benefit) (9) (14) (20) (27)
 Loss from
 continuing
 operations (48) (31) (98) (66)
 Discontinued Operations:
 Operating earnings,
 net of taxes - 2 - 1
 Reserve for DAP Inc.
 divestiture, net
 of taxes - (20) - (20)
 Net loss (48) (49) (98) (85)
 Loss Per Common Share:
 Continuing
 operations (0.87) (0.56) (1.76) (1.19)
 Discontinued
 operations - (0.32) - (0.35)
 Net loss per
 common share (0.87) (0.88) (1.76) (1.54)
 Average number of
 common shares
 outstanding 55,770,507 55,823,734 55,778,527 55,501,102
 -0- 7/23/92
 /CONTACT: USG Corporate Communications Dept., 312-606-4124; Investor Communications Dept., 312-606-5594/
 (USG) CO: USG Corp. ST: Illinois IN: SU: ERN


SH -- NY087 -- 2616 07/23/92 14:15 EDT
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Date:Jul 23, 1992
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