10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2015

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 1-8864

USG CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	36-3329400
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)
550 West Adams Street, Chicago, Illinois	60661-3676
(Address of principal executive offices)	(Zip code)

Registrant’s telephone number, including area code (312) 436-4000

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company (as defined in Rule 12b-2 of the Exchange Act).

Large accelerated filer þ Accelerated filer ¨ Non-accelerated filer ¨ Smaller reporting company ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No þ

The number of shares of the registrant’s common stock outstanding as of June 30, 2015 was 145,448,858.

Table of Contents

		Page
PART I  FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited):
	Consolidated Statements of Operations: Three and Six Months Ended June 30, 2015 and 2014	3
	Consolidated Statements of Comprehensive Income (Loss): Three and Six Months Ended June 30, 2015 and 2014	4
	Consolidated Balance Sheets: As of June 30, 2015 and December 31, 2014	5
	Consolidated Statements of Cash Flows: Six Months Ended June 30, 2015 and 2014	6
	Notes to Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	41
Item 4.	Controls and Procedures	42
PART II.  OTHER INFORMATION
Item 1.	Legal Proceedings	43
Item 1A.	Risk Factors	43
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	43
Item 4.	Mine Safety Disclosures	43
Item 6.	Exhibits	44
	Signatures	45

2

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

USG CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(millions, except per-share and share data)	Three months ended June 30,						Six months ended June 30,
	2015			2014			2015			2014
Net sales	$	970		$	948		$	1,879		$	1,798
Cost of products sold	787			773			1,543			1,480
Gross profit	183			175			336			318
Selling and administrative expenses	79			77			156			154
Gain on disposal of shipping operations, net	(1		)	—			(1		)	—
Operating profit	105			98			181			164
Income from equity method investments	14			5			22			8
Interest expense	(40		)	(45		)	(83		)	(92		)
Interest income	—			—			1			1
Loss on extinguishment of debt	—			—			(19		)	—
Gain on deconsolidation of subsidiaries and consolidated joint ventures	—			—			—			27
Other income, net	1			—			—			—
Income before income taxes	80			58			102			108
Income tax benefit (expense)	(1		)	—			1			(5		)
Income from continuing operations	79			58			103			103
Loss from discontinued operations, net of tax	—			(1		)	—			(1		)
Net income	79			57			$	103		$	102
Earnings (loss) per common share - basic:
Income from continuing operations	$	0.54		$	0.40		$	0.70		$	0.74
Loss from discontinued operations	—			(0.01		)	—			(0.01		)
Net income	$	0.54		$	0.39		$	0.70		$	0.73
Earnings (loss) per common share - diluted:
Income from continuing operations	$	0.54		$	0.39		$	0.70		$	0.72
Loss from discontinued operations	—			(0.01		)	—			(0.01		)
Net income	$	0.54		$	0.38		$	0.70		$	0.71
Average common shares	145,424,853			144,500,682			145,393,548			139,702,728
Average diluted common shares	146,990,178			147,024,196			147,167,248			146,920,294

See accompanying Notes to Consolidated Financial Statements.

3

USG CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

	Three months ended June 30,						Six months ended June 30,
(millions)
	2015			2014			2015			2014
Net income	$	79		$	57		$	103		$	102
Other comprehensive income (loss), net of tax:
Derivatives qualifying as cash flow hedges:
Gain/(loss) on derivatives qualifying as cash flow hedges, net of tax (benefit) of ($1), $0, $0, and $0, respectively	—			(3		)	(1		)	2
Less: Reclassification adjustment for gain (loss) on derivatives included in net income, net of tax of $0 in all periods	(3		)	1			(5		)	3
Net derivatives qualifying as cash flow hedges	3			(4		)	4			(1		)
Pension and postretirement benefits:
Changes in pension and postretirement benefits, net of tax of $0, $1, $1 and $1, respectively	(8		)	(12		)	(2		)	(9		)
Less: Amortization of prior service credit (cost) included in net periodic pension cost, net of tax (benefit) of $0, ($1), ($1) and ($1), respectively	(2		)	3			(3		)	6
Net pension and postretirement benefits	(6		)	(15		)	1			(15		)
Foreign currency translation:
Changes in foreign currency translation, net of tax of $0 in all periods	(5		)	15			(39		)	11
Less: Translation gains realized upon the deconsolidation of foreign subsidiaries, net of tax of $0 in all periods	—			—			—			5
Net foreign currency translation	(5		)	15			(39		)	6
Other comprehensive loss, net of tax	$	(8	)	$	(4	)	$	(34	)	$	(10	)
Comprehensive income	$	71		$	53		$	69		$	92

See accompanying Notes to Consolidated Financial Statements.

4

USG CORPORATION

CONSOLIDATED BALANCE SHEETS

(millions, except share and per share data)	June 30, 2015			December 31, 2014
	(Unaudited)
Assets
Cash and cash equivalents	$	231		$	228
Short-term marketable securities	61			96
Restricted cash	50			1
Receivables (net of reserves - $20 and $22)	468			404
Inventories	324			329
Income taxes receivable	3			3
Deferred income taxes	42			43
Other current assets	84			48
Total current assets	1,263			1,152
Long-term marketable securities	21			58
Property, plant and equipment (net of accumulated depreciation and depletion - $1,926 and $1,885)	1,826			1,908
Deferred income taxes	17			19
Equity method investments	681			735
Other assets	122			122
Total assets	$	3,930		$	3,994
Liabilities and Stockholders’ Equity
Accounts payable	$	246		$	290
Accrued expenses	205			220
Current portion of long-term debt	—			4
Deferred income taxes	1			—
Income taxes payable	1			1
Litigation settlement accrual	48			48
Total current liabilities	501			563
Long-term debt	2,188			2,205
Deferred income taxes	61			61
Pension and other postretirement benefits	451			491
Other liabilities	253			266
Total liabilities	3,454			3,586
Preferred stock – $1 par value, authorized 36,000,000 shares; outstanding - none	—			—
Common stock – $0.10 par value; authorized 200,000,000 shares; issued: 2015 - 145,570,000 shares; 2014 - 144,768,000 shares	14			14
Treasury stock at cost – 2015 - 121,000 shares; 2014 - 0 shares	(3		)	—
Additional paid-in capital	3,017			3,014
Accumulated other comprehensive loss	(372		)	(338		)
Retained earnings (accumulated deficit)	(2,180		)	(2,283		)
Stockholders’ equity of parent	476			407
Noncontrolling interest	—			1
Total stockholders’ equity including noncontrolling interest	476			408
Total liabilities and stockholders’ equity	$	3,930		$	3,994

See accompanying Notes to Consolidated Financial Statements.

5

USG CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(millions)	Six months ended June 30,
	2015			2014
Operating Activities
Net income	$	103		$	102
Less: Loss from discontinued operations, net of tax	—			(1		)
Income from continuing operations	103			103
Adjustments to reconcile net income to net cash:
Depreciation, depletion and amortization	72			77
Loss on extinguishment of debt	19			—
Share-based compensation expense	6			10
Deferred income taxes	1			4
Gain on asset dispositions	(7		)	(12		)
Income from equity method investments	(22		)	(8		)
Dividends received from equity method investments	18			—
Gain on deconsolidation of subsidiaries and consolidated joint ventures	—			(27		)
(Increase) decrease in working capital, net of deconsolidation of subsidiaries and consolidated joint ventures:
Receivables	(66		)	(54		)
Income taxes receivable	(1		)	(1		)
Inventories	6			(17		)
Other current assets	1			(1		)
Payables	(33		)	(18		)
Accrued expenses	(25		)	(22		)
Decrease in other assets	1			—
Decrease in pension and other postretirement benefits	(40		)	—
Decrease in other liabilities	(4		)	(7		)
Other, net	5			(7		)
Net cash provided by operating activities	$	34		$	20
Investing Activities
Purchases of marketable securities	(32		)	(97		)
Sales or maturities of marketable securities	103			99
Capital expenditures	(48		)	(58		)
Net proceeds from asset dispositions	42			14
Investment in joint ventures, including $23 of cash of contributed subsidiaries in 2014	—			(557		)
Insurance proceeds	2			2
Return (deposit) of restricted cash	(49		)	4
Net cash provided by (used for) investing activities	$	18		$	(593	)
Financing Activities
Issuance of debt	350			3
Repayment of debt	(386		)	(2		)
Payment of debt issuance fees	(6		)	—
Issuance of common stock	4			3
Repurchases of common stock to satisfy employee tax withholding obligations	(8		)	(5		)
Net cash used for financing activities	$	(46	)	$	(1	)
Effect of exchange rate changes on cash	(3		)	—
Net cash used for operating activities - discontinued operations	—			(1		)
Net increase (decrease) in cash and cash equivalents	$	3		$	(575	)
Cash and cash equivalents at beginning of period	228			810
Cash and cash equivalents at end of period	$	231		$	235
Supplemental Cash Flow Disclosures:
Interest paid, net of capitalized interest	$	80		$	86
Income taxes paid, net	1			8
Noncash Investing and Financing Activities:
Amount in accounts payable for capital expenditures	6			6
Contribution of wholly-owned subsidiaries and joint venture investments as consideration for investment in USG Boral Building Products	—			121
Conversion of $75 million of 10% convertible senior notes due 2018, net of discount	—			(73		)
Issuance of common stock upon conversion of debt	—			75
Accrued interest on debt conversion	—			(2		)

See accompanying Notes to Consolidated Financial Statements.

6

USG CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

In the following Notes to Consolidated Financial Statements, “USG,” “we,” “our” and “us” refer to USG Corporation, a Delaware corporation, and its subsidiaries included in the consolidated financial statements, except as otherwise indicated or as the context otherwise requires.

1. Organization, Consolidation and Presentation of Financial Statements

PREPARATION OF FINANCIAL STATEMENTS

We prepared the accompanying unaudited consolidated financial statements of USG Corporation in accordance with applicable United States Securities and Exchange Commission, or SEC, guidelines pertaining to interim financial information. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America, or U.S. GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Actual results could differ materially from those estimates. In the opinion of our management, the financial statements reflect all adjustments, which are of a normal recurring nature, necessary for a fair presentation of our financial results for the interim periods. The results of operations for the three and six months ended June 30, 2015 are not necessarily indicative of the results of operations to be expected for the entire year.

Our investments with Boral Limited in the 50/50 joint ventures, USG Boral Building Products or UBBP, commenced on February 27, 2014, and as a result, four months of results of UBBP was recorded in our accompanying consolidated statement of operations for the six months ended June 30, 2014. See Note 2 for further description of our investment in UBBP.

Our segments are structured around our key products and business units: Gypsum, Ceilings, Distribution and UBBP.

Our Gypsum reportable segment is an aggregation of the operating segments of the gypsum businesses in the United States, Canada, Mexico, and Latin America, our mining operation in Little Narrows, Nova Scotia, Canada, and our shipping company. Gypsum manufactures products throughout the United States, Canada, and Mexico. These products include USG Sheetrock^® brand gypsum wallboard and related products including Sheetrock^® brand joint compound, Durock^® brand cement board, Levelrock^® brand gypsum underlayment, Fiberock^® brand gypsum fiber panels, and Securock^® brand glass mat sheathing used for building exteriors and gypsum fiber and glass mat panels used as roof cover board.

Our Ceilings reportable segment is an aggregation of the operating segments of the ceilings businesses in the United States, Canada, Mexico, Latin America and, through February 27, 2014, the businesses in the Asia-Pacific region. Ceilings manufactures ceiling tile in the United States and ceiling grid in the United States, Canada and, through February 27, 2014, the Asia-Pacific region.

Distribution delivers gypsum wallboard, drywall metal, ceilings products, joint compound and other building products throughout the United States.

UBBP manufactures, distributes and sells certain building products, mines raw gypsum and sells natural and synthetic gypsum throughout Asia, Australasia and the Middle East.

These financial statements and notes are to be read in conjunction with the financial statements and notes included in USG’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014, which we filed with the SEC on February 12, 2015.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In May 2015, the Financial Accounting Standards Board, or FASB, issued Accounting Standard Update, or ASU, 2015-07, "Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent)," which updates the disclosure requirements for investments that are measured at net asset value using the practical expedient. These investments are to be removed from the fair value hierarchy and shown as a reconciling item. The standard will be effective for us in the first quarter of 2016, with early adoption permitted. We do not expect that the adoption of ASU 2015-07 will have a significant impact to our consolidated financial statements or disclosures.

In April 2015, the FASB issued ASU 2015-03, "Simplifying the Presentation of Debt Issuance Costs", which requires costs related to a recognized debt liability to be presented on the balance sheet as a direct deduction from the debt liability rather than as an asset. The standard will be effective for us in the first quarter of 2016, with early adoption permitted. Upon adoption, we would reclassify our deferred debt issuance costs from other assets to long term debt. If adopted as of June 30,

7

2015, we would have recorded a reduction in both other assets and long-term debt of $15 million and would have provided additional disclosure.

In August 2014, the FASB issued ASU 2014-15, "Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern," which requires management to assess, at each annual and interim reporting period, the entity's ability to continue as a going concern within one year of date of the financial statements are issued and provide related disclosures. The new standard will be effective for us for the year ended December 31, 2016, with early adoption permitted. We do not expect that the adoption of ASU 2014-15 will have a significant impact to our consolidated financial statements or disclosures.

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers,” which supersedes the revenue recognition requirements in “Revenue Recognition (Topic 605),” and requires entities to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. There are two transition methods available under the new standard, either cumulative effect or retrospective. In July 2015, the FASB agreed to defer the mandatory effective date by one year. The standard will be effective for us in the first quarter of 2018, with early adoption permitted, but not before the original effective date. We will adopt the new standard using the modified retrospective approach, which requires the standard be applied only to the most current period presented, with the cumulative effect of initially applying the standard recognized at the date of initial application. We do not expect that the adoption of ASU 2014-09 will have a significant impact to our consolidated financial statements or disclosures.

2.    Equity Method Investments

Equity method investments as of June 30, 2015 and December 31, 2014, were as follows:

	June 30, 2015			December 31, 2014
(dollars in millions)	Carrying Value		Ownership Percentage	Carrying Value		Ownership Percentage
USG Boral Building Products	$	673	50%	$	689	50%
Other equity method investments (a)	44		33% - 50%	46		33% - 50%
Total equity method investments	$	717		$	735

(a) This amount includes our investment in Knauf-USG of $36 million which as of June 30, 2015 is classified as assets held for sale and is included in other current assets.

Investment in USG Boral Building Products ("UBBP")

On February 27, 2014, we formed the 50/50 joint ventures, USG Boral Building Products Pte. Limited, a company organized under the laws of Singapore, and USG Boral Building Products Pty Limited, a company organized under the laws of Australia, with Boral Limited ("Boral"). These joint ventures are herein referred to as USG Boral Building Products, or UBBP. UBBP manufactures, distributes and sells certain building products, mines raw gypsum and sells natural and synthetic gypsum throughout Asia, Australasia and the Middle East (the "Territory"). The products that UBBP manufactures and distributes include products for wall, ceiling, floor lining and exterior systems that utilize gypsum, wallboard, referred to as plasterboard in the territory, mineral fiber ceiling tiles, steel grid and studs and joint compound.

As consideration for our 50% ownership in UBBP, we (i) made a cash payment of $515 million to Boral, which includes a $500 million base price and $15 million of customary estimated working capital and net debt adjustments, (ii) contributed to UBBP our subsidiaries and joint venture investments in China, Singapore, India, Malaysia, New Zealand, Australia, the Middle East and Oman, see Note 14, and (iii) granted to UBBP licenses to use certain of our intellectual property rights in the Territory. We funded our cash payments with the net proceeds from our October 2013 issuance of $350 million of 5.875% senior notes and cash on hand.

In the event certain performance targets are satisfied by UBBP, we will be obligated to pay Boral scheduled earnout payments in an aggregate amount up to $75 million, comprised first of $25 million based on performance during the first three years after closing and then up to $50 million based on performance during the first five years after closing. We recorded a liability representing the present value of the first earnout payment. As of June 30, 2015 and December 31, 2014, this liability totaled $24 million and $23 million, respectively, and is included in other liabilities on our accompanying consolidated balance sheets. We are not currently required under applicable accounting guidance to record a liability for the second earnout payment and, as such, a liability has not been recorded on our accompanying consolidated balance sheets as of June 30, 2015 and December 31, 2014.

8

We account for our 50% investment in UBBP using the equity method of accounting, and we initially measured its carrying value at cost of approximately $676 million as of February 27, 2014. Our existing wholly-owned subsidiaries and consolidated variable interest entities that were contributed into the joint ventures were deconsolidated resulting in a gain of $27 million, which is included in our consolidated statement of operations for the six months ended June 30, 2014. Approximately $11 million of the gain relates to the remeasurement of our retained investment in the contributed subsidiaries to a fair value, determined using a discounted cash flow model with several inputs, including a weighted-average discount rate of approximately 11% and a weighted-average long-term growth rate of approximately 2%.

All of our investments accounted for under the equity method of accounting are initially recorded at cost, and subsequently adjusted for our share of the net income or loss and cash contributions and distributions to or from these entities. Because the underlying net assets in our investments are denominated in a foreign currency, translation gains or losses will impact the recorded value of our investments. Translation gains or losses recorded in other comprehensive income were as follows:

	Three months ended June 30,					Six months ended June 30,
(in millions)	2015			2014		2015			2014 (a)
Translation gain (loss)	$	(3	)	$	10	$	(19	)	$	11

During the second quarter of 2015, UBBP's Board of Directors declared and UBBP paid cash dividends on earnings through March 2015 of which our 50% share totaled $18 million. We recorded the cash dividend in operating activities on our cash flow and intend to use the cash dividends to fund the earnout payment described above. As of June 30, 2015, the amount of consolidated retained earnings which represents undistributed earnings from UBBP is $36 million.

Summarized financial information for our equity method investments is as follows:

	Three months ended June 30,				Six months ended June 30,
(in millions)	2015		2014		2015		2014 (a)
USG Boral Building Products:
Net sales	$	264	$	280	$	492	$	369
Gross profit	70		80		131		102
Operating profit	34		16		57		26
Income from continuing operations	28		10		46		17
Net income	28		10		46		17
Net income attributable to USG Boral Building Products	26		9		42		15
USG share of income from investment accounted for using the equity method	13		4		21		7
Other equity method investments:
USG share of income from investments accounted for using the equity method	1		1		1		1
Total income from equity method investments	14		5		22		8

(a) Operating results are presented for UBBP for the four months ended June 30, 2014.

Investment in Knauf-USG

During the second quarter of 2015, our investment in Knauf-USG, our 50/50 joint venture with Gebr. Knauf Verwaltungsgesellschaft KG,, met the asset held for sale criteria, and accordingly, we recorded our investment of $36 million as asset held for sale in other current assets on the consolidated balance sheet as of June 30, 2015. Our equity method income in the Knauf-USG joint venture amounted to $2 million for the year ended December 31, 2014.

9

3.     Segments

Our operations are organized into four reportable segments: Gypsum (previously North American Gypsum), Ceilings (previously Worldwide Ceilings), Distribution (previously Building Products Distribution) and UBBP. See Note 2 for segment results for UBBP. Segment results for our Gypsum, Distribution and Ceilings segments were as follows:

	Three months ended June 30,						Six months ended June 30,
(millions)	2015			2014			2015			2014 (b)
Net Sales:
Gypsum	$	617		$	612		$	1,194		$	1,157
Ceilings (a)	131			130			254			255
Distribution	364			344			698			644
Eliminations	(142		)	(138		)	(267		)	(258		)
Total	$	970		$	948		$	1,879		$	1,798
Operating Profit (Loss):
Gypsum	$	98		$	95		$	166		$	160
Ceilings (a)	25			24			46			39
Distribution	9			4			13			5
Corporate	(24		)	(21		)	(47		)	(42		)
Eliminations	(3		)	(4		)	3			2
Total	$	105		$	98		$	181		$	164

(a) Ceilings' net sales and operating profit for the six months ended June 30, 2014 includes the results, through February 27, 2014, of our wholly-owned subsidiaries and consolidated joint ventures that were contributed to UBBP.

(b) Net sales and operating profit (loss) have been recast for the periods prior to April 1, 2014 to conform with the new presentation of reportable segments.

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4. Earnings Per Share

Basic earnings per share is based on the weighted average number of common shares outstanding. Diluted earnings per share is based on the weighted average number of common shares outstanding plus the dilutive effect, if any, of market share units, or MSUs, performance shares, restricted stock units, or RSUs, stock options, deferred shares associated with our deferred compensation program for non-employee directors and, for the applicable periods, the potential conversion of our 10% convertible senior notes due 2018, which were converted into common stock in December 2013 and April 2014.

The reconciliation of basic earnings per share to diluted earnings per share is shown in the following table.

	Three months ended June 30,					Six months ended June 30,
(millions, except per-share data)	2015		2014			2015		2014
Income from continuing operations	$	79	$	58		$	103	$	103
Loss from discontinued operations	—		(1		)	—		(1		)
Net income	79		57			103		102
Effect of dilutive securities - RSUs, MSUs, performance shares and stock options	—		—			—		—
Effect of dilutive securities - 10% convertible senior notes	—		—			—		2
Effect of dilutive securities - Deferred compensation program for non-employee directors	—		—			—		—
Income available to shareholders	$	79	$	57		$	103	$	104
Average common shares	145.4		144.5			145.4		139.7
Dilutive RSUs, MSUs, performance shares and stock options	1.6		2.3			1.6		2.5
Common shares issuable upon conversion of our 10% convertible senior notes	—		—			—		4.7
Deferred shares associated with a deferred compensation program for non-employee directors	—		0.2			0.2		—
Average diluted common shares	147.0		147.0			147.2		146.9
Earnings (loss) per average common share:
Income from continuing operations	$	0.54	$	0.40		$	0.70	$	0.74
Loss from discontinued operations	—		(0.01		)	—		(0.01		)
Earnings per average common share	$	0.54	$	0.39		$	0.70	$	0.73
Diluted earnings (loss) per average common share:
Income from continuing operations	$	0.54	$	0.39		$	0.70	$	0.72
Loss from discontinued operations	—		(0.01		)	—		(0.01		)
Earnings per average diluted common share	$	0.54	$	0.38		$	0.70	$	0.71

MSUs, performance shares, RSUs, and stock options and deferred shares associated with our deferred compensation program for non-employee directors that were not included in the computation of diluted earnings per share for those periods because their inclusion would be anti-dilutive were as follows:

	Three months ended June 30,		Six months ended June 30,
(millions, common shares)	2015	2014	2015	2014
MSUs, performance shares, RSUs and stock options	1.8	2.1	1.9	2.1
Deferred shares associated with a deferred compensation program for non-employee directors	0.2	—	—	0.2

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5. Marketable Securities

Marketable securities are classified as available-for-sale securities and reported at fair value, with unrealized gains and losses excluded from earnings and reported in accumulated other comprehensive loss on our accompanying consolidated balance sheets. Proceeds received from sales and maturities of marketable securities were $103 million for the six months ended June 30, 2015. Our investments in marketable securities consisted of the following:

	As of June 30, 2015				As of December 31, 2014
(millions)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Corporate debt securities	$	57	$	57	$	93	$	93
U.S. government and agency debt securities	2		2		22		22
Asset-backed debt securities	12		12		17		17
Certificates of deposit	9		9		18		18
Municipal debt securities	2		2		4		4
Total marketable securities	$	82	$	82	$	154	$	154

The realized and unrealized gains and losses for the three and six months ended June 30, 2015 and 2014 were immaterial. Cost basis for securities sold are determined on a first-in-first-out basis.

Contractual maturities of marketable securities as of June 30, 2015 were as follows:

(millions)	Amortized Cost		Fair Value
Due in 1 year or less	$	61	$	61
Due in 1-5 years	21		21
Total marketable securities	$	82	$	82

Actual maturities may differ from the contractual maturities because issuers of the securities may have the right to prepay them.

6.    Intangible Assets

Intangible assets are included in other assets on our accompanying consolidated balance sheets. Intangible assets with definite lives are amortized. These assets are summarized as follows:

	As of June 30, 2015							As of December 31, 2014
(millions)	Gross Carrying Amount		Accumulated Amortization			Net		Gross Carrying Amount		Accumulated Amortization			Net
Intangible Assets with Definite Lives:
Customer relationships	$	70	$	(58	)	$	12	$	70	$	(54	)	$	16
Other	9		(7		)	2		9		(7		)	2
Total	$	79	$	(65	)	$	14	$	79	$	(61	)	$	18

Total amortization expense was $2 million and $4 million for the three and six months ended June 30, 2015 and 2014, respectively. Estimated amortization expense for the remainder of 2015 and for future years is as follows:

(millions)	2015		2016		2017		2018 and thereafter
Estimated future amortization expense	$	4	$	7	$	2	$	1

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Intangible assets with indefinite lives are not amortized. These assets are summarized as follows:

	As of June 30, 2015							As of December 31, 2014
(millions)	Gross Carrying Amount		Accumulated Impairment Charges			Net		Gross Carrying Amount		Accumulated Impairment Charges			Net
Intangible Assets with Indefinite Lives:
Trade names	$	22	$	—		$	22	$	22	$	—		$	22
Other	9		(1		)	8		9		(1		)	8
Total	$	31	$	(1	)	$	30	$	31	$	(1	)	$	30

As of December 31, 2014, approximately $5 million of other indefinite-lived intangible assets met the criteria to be classified as held for sale and therefore were included in other current assets on our accompanying consolidated balance sheet. As of June 30, 2015, these indefinite-lived intangible assets were no longer recorded as held for sale.

7.     Debt

Total debt, including the current portion of long-term debt, consisted of the following:

(millions)	June 30, 2015		December 31, 2014
5.5% senior notes due 2025	$	350	$	—
5.875% senior notes due 2021	350		350
6.3% senior notes due 2016	500		500
7.75% senior notes due 2018, net of discount	500		500
7.875% senior notes due 2020, net of discount	249		249
8.375% senior notes due 2018	—		350
Ship mortgage facility (includes current portion of long-term debt: 2015 - $0, 2014 - $4)	—		21
Industrial revenue bonds (due 2028 through 2034)	239		239
Total	$	2,188	$	2,209

REPURCHASE OF SENIOR NOTES

In the first quarter of 2015, we repurchased $350 million of our 8.375% Senior Notes due in 2018, or the 2018 Senior Notes, through both a cash tender offer and a subsequent notice of redemption of the remaining 2018 Senior Notes. On February 24, 2015, we completed a cash tender offer pursuant to which we repurchased $126 million of the 2018 Senior Notes for aggregate consideration, including tender offer premium and accrued and unpaid interest, of $135 million. On March 26, 2015, we repurchased the remaining $224 million of the 2018 Senior Notes for aggregate consideration, including premiums and accrued and unpaid interest, of $242 million. As a result of the repurchases, we recorded a loss on early extinguishment of debt of $19 million including premiums and write-off of deferred financing fees.

ISSUANCE OF SENIOR NOTES

On February 24, 2015 we issued $350 million of 5.5% senior notes due March 1, 2025, or the 2025 Senior Notes. The net proceeds from the issuance of the 2025 Senior Notes and cash on hand were used to fund the repurchases of the 2018 Senior Notes and all related costs and expenses.

The 2025 Senior Notes were recorded on the accompanying consolidated balance sheets at $350 million. We deferred approximately $6 million of financing costs that are being amortized to interest expense over the term of the notes. Our obligations under the 2025 Senior Notes are guaranteed on a senior unsecured basis by certain of our domestic subsidiaries. The notes are redeemable at any time, or in part from time to time, at our option on or after March 1, 2020 at stated redemption prices, plus any accrued and unpaid interest to the redemption date. In addition, we may redeem the notes at our option at any time after March 1, 2020, in whole or in part, at a redemption price equal to 102.75% of the principal amount of the notes being redeemed plus any accrued and unpaid interest on the principal amount being redeemed to the redemption date.

The 2025 Senior Notes contain a provision the same as or similar to the provision in our other senior notes that requires us to offer to purchase those notes at 101% of their principal amount (plus accrued and unpaid interest) in the event of a change in control.

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The indenture governing the 2025 Senior Notes contains events of default, covenants and restrictions that are substantially the same as those governing our other senior notes, including a limitation on our ability and the ability of certain of our subsidiaries to create or incur secured indebtedness.

SHIP MORTGATE FACILITY

In February 2015, as consideration for the consent of DVB Bank SE, as lender, agent and security trustee of the secured loan facility agreement, to allow Gypsum Transportation Limited, or GTL, to enter into certain future contracts of affreightment, GTL voluntarily repaid $2 million of the outstanding loan balance under its secured loan facility. The repayment provisions of the secured loan facility were not otherwise modified. The voluntary payment was not classified in the current portion of long-term debt on our accompanying consolidated balance sheet as of December 31, 2014. GTL also repaid $1 million in the first quarter of 2015 in accordance with the terms of the original loan facility agreement. In April 2015, in connection with the sale of two self-unloading vessels, GTL repaid the outstanding loan balance of $18 million. See Note 17 for discussion of GTL.

CREDIT FACILITY

Taking into account the most recent borrowing base calculation delivered under the credit facility, which reflects trade receivables and inventory as of June 30, 2015, and outstanding letters of credit, borrowings available under the credit facility were approximately $352 million, including $50 million for CGC. As of June 30, 2015 and during the quarter then-ended, there were no borrowings under the facility. Had there been any borrowings as of that date, the applicable interest rate would have been 2.03% for loans in the US and 2.74% for loans in Canada. Outstanding letters of credit totaled $53 million as of June 30, 2015.

The fair value of our debt was approximately $2.315 billion as of June 30, 2015 and $2.338 billion as of December 31, 2014. The fair values were based on quoted prices for identical or similar liabilities in markets that are not active or valuation models in which all significant inputs and value drivers are observable and, as a result, are classified as Level 2 inputs. See Note 9 for further discussion on fair value measurements and classifications.

As of June 30, 2015, we were in compliance with the covenants contained in our credit facilities.

8. Derivative Instruments

We use derivative instruments to manage selected commodity price and foreign currency exposures as described below. We do not use derivative instruments for speculative trading purposes, and we typically do not hedge beyond three years. Cash flows from derivative instruments are included in net cash used for operating activities in the consolidated statements of cash flows.

COMMODITY DERIVATIVE INSTRUMENTS

As of June 30, 2015, we had 20 million mmBTUs (millions of British Thermal Units) in aggregate notional amount of outstanding natural gas swap contracts to hedge forecasted purchases. All of these contracts mature by December 31, 2017. For contracts designated as cash flow hedges, the net unrealized loss that remained in accumulated other comprehensive income (loss), or AOCI, as of June 30, 2015 was $16 million and as of December 31, 2014 was $20 million. No ineffectiveness was recorded on contracts designated as cash flow hedges in the first six months of both 2015 and 2014. Gains and losses on contracts designated as cash flow hedges are reclassified into earnings when the underlying forecasted transactions affect earnings. For contracts designated as cash flow hedges, we reassess the probability of the underlying forecasted transactions occurring on a quarterly basis. Changes in fair value on contracts not designated as cash flow hedges are recorded to earnings. The fair value of those contracts not designated as cash flow hedges was a $4 million unrealized loss as of June 30, 2015 and a $5 million unrealized loss as of December 31, 2014.

FOREIGN EXCHANGE DERIVATIVE INSTRUMENTS

We have foreign exchange forward contracts to hedge forecasted purchases of products and services denominated in foreign currencies. The notional amount of these contracts was $99 million as of June 30, 2015, and they mature by December 23, 2016. These forward contracts are designated as cash flow hedges and no ineffectiveness was recorded in the first six months of both 2015 and 2014. Gains and losses on the contracts are reclassified into earnings when the underlying transactions affect earnings. The fair value of these contracts that remained in AOCI was an unrealized gain of $4 million and $3 million as of June 30, 2015 and December 31, 2014, respectively.

COUNTERPARTY RISK, MASTER NETTING ARRANGEMENTS AND BALANCE SHEET OFFSETTING

We are exposed to credit losses in the event of nonperformance by the counterparties to our derivative instruments. As of June 30, 2015, our derivatives were in a $16 million net liability position. All of our counterparties have investment grade credit ratings; accordingly, we anticipate that they will be able to fully satisfy their obligations under the contracts.

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All of our derivative contracts are governed by master netting agreements negotiated between us and the counterparties that reduce our counterparty credit exposure. The agreements outline the conditions (such as credit ratings and net derivative fair values) upon which we, or the counterparties, are required to post collateral. As required by certain of our agreements, we had $25 million of collateral posted with our counterparties related to our derivatives as of June 30, 2015. Amounts paid as cash collateral are included in receivables on our accompanying consolidated balance sheet.

We have not adopted an accounting policy to offset fair value amounts related to derivative contracts under our master netting arrangements; therefore, individual derivative contracts are reflected on a gross basis, as either assets or liabilities, on our consolidated balance sheets, based on their fair value as of the balance sheet date.

FINANCIAL STATEMENT INFORMATION

The following are the pretax effects of derivative instruments on the consolidated statements of operations for the three months ended June 30,2015 and 2014.

	Amount of Gain or (Loss) Recognized in Other Comprehensive Income on Derivatives (Effective Portion)						Location of Gain or (Loss)  Reclassified from AOCI into Income (Effective Portion)	Amount of Gain or (Loss) Reclassified from AOCI into Income (Effective Portion)
(millions)	2015			2014				2015			2014
Derivatives in Cash Flow Hedging Relationships
Commodity contracts	$	1		$	(1	)	Cost of products sold	$	(4	)	$	1
Foreign exchange contracts	(2		)	(2		)	Cost of products sold	1			—
Total	$	(1	)	$	(3	)		$	(3	)	$	1

	Location of Gain or (Loss)  Recognized in Income on Derivatives	Amount of Gain or (Loss) Recognized in Income on Derivatives
(millions)		2015		2014
Derivatives Not Designated as Hedging Instruments
Commodity contracts	Cost of products sold	$	—	$	—
Total		$	—	$	—

The following are the pretax effects of derivative instruments on the consolidated statements of operations for the six months ended June 30,2015 and 2014.

	Amount of Gain or (Loss) Recognized in Other Comprehensive Income on Derivatives (Effective Portion)					Location of Gain or (Loss)  Reclassified from AOCI into Income (Effective Portion)	Amount of Gain or (Loss) Reclassified from AOCI into Income (Effective Portion)
(millions)	2015			2014			2015			2014
Derivatives in Cash Flow Hedging Relationships
Commodity contracts	$	(4	)	$	2	Cost of products sold	$	(7	)	$	2
Foreign exchange contracts	3			—		Cost of products sold	2			1
Total	$	(1	)	$	2		$	(5	)	$	3

	Location of Gain or (Loss)  Recognized in Income on Derivatives	Amount of Gain or (Loss) Recognized in Income on Derivatives
(millions)		2015			2014
Derivatives Not Designated as Hedging Instruments
Commodity contracts	Cost of products sold	$	(1	)	$	1
Total		$	(1	)	$	1

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The following are the fair values of derivative instruments and the location on our accompanying consolidated balance sheets as of June 30, 2015 and December 31, 2014.

	Balance Sheet Location	Fair Value				Balance Sheet Location	Fair Value
(millions)		6/30/15		12/31/14			6/30/15		12/31/14
Derivatives in Cash Flow Hedging Relationships
Commodity contracts	Other current assets	$	1	$	1	Accrued expenses	$	11	$	14
Commodity contracts	Other assets	—		—		Other liabilities	6		7
Foreign exchange contracts	Other current assets	4		3		Accrued expenses	—		—
Total derivatives in cash flow hedging relationships		$	5	$	4		$	17	$	21

Derivatives Not Designated as Hedging Instruments
Commodity contracts	Other current assets	$	—	$	—	Accrued expenses	$	3	$	4
Commodity contracts	Other assets	—		—		Other liabilities	1		1
Total derivatives not designated as hedging instruments		$	—	$	—		$	4	$	5
Total derivatives	Total assets	$	5	$	4	Total liabilities	$	21	$	26

As of June 30, 2015, we had no derivatives designated as fair value hedges or net investment hedges.

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9.     Fair Value Measurements

Certain assets and liabilities are required to be recorded at fair value. There are three levels of inputs that may be used to measure fair value. Level 1 is defined as quoted prices for identical assets and liabilities in active markets. Level 2 is defined as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. Level 3 is defined as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. Certain assets and liabilities are measured at fair value on a nonrecurring basis rather than on an ongoing basis, but are subject to fair value adjustments in certain circumstances, such as when there is evidence of impairment or when a new liability is being established that requires fair value measurement.

The cash equivalents shown in the table below primarily consist of money market funds that are valued based on quoted prices in active markets and, as a result, are classified as Level 1. Equity mutual funds are valued based on quoted markets in active markets and, as a result, are classified as Level 1. We use quoted prices, other readily observable market data and internally developed valuation models when valuing our marketable securities and derivatives and have classified them as Level 2. Marketable securities are valued using income and market value approaches and values are based on quoted prices or other observable market inputs received from data providers. The valuation process may include pricing matrices, or prices based upon yields, credit spreads or prices of securities of comparable quality, coupon, maturity and type. Derivatives are valued using the income approach including discounted-cash-flow models or a Black-Scholes option pricing model and readily observable market data. The inputs for the valuation models are obtained from data providers and include end-of-period spot and forward natural gas prices, foreign currency exchange rates, natural gas price volatility and LIBOR and swap rates for discounting the cash flows implied from the derivative contracts.

Our assets and liabilities measured at fair value on a recurring basis were as follows:

	Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)						Significant Unobservable Inputs (Level 3)				Total
(millions)	6/30/15		12/31/14		6/30/15			12/31/14			6/30/15		12/31/14		6/30/15			12/31/14
Cash equivalents	$	129	$	93	$	19		$	32		$	—	$	—	$	148		$	125
Equity mutual funds	4		4		—			—			—		—		4			4
Marketable securities:
Corporate debt securities	—		—		57			93			—		—		57			93
U.S. government and agency debt securities	—		—		2			22			—		—		2			22
Asset-backed debt securities	—		—		12			17			—		—		12			17
Certificates of deposit	—		—		9			18			—		—		9			18
Municipal debt securities	—		—		2			4			—		—		2			4
Derivative assets	—		—		5			4			—		—		5			4
Derivative liabilities	—		—		(21		)	(26		)	—		—		(21		)	(26		)

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10.    Employee Retirement Plans

The components of net pension and postretirement benefits costs are summarized in the following table:

	Three months ended June 30,						Six months ended June 30,
(millions)	2015			2014			2015			2014
Pension:
Service cost of benefits earned	$	12		$	9		$	25		$	18
Interest cost on projected benefit obligation	17			17			34			33
Expected return on plan assets	(21		)	(20		)	(42		)	(40		)
Net amortization	10			6			19			12
Net pension cost	$	18		$	12		$	36		$	23
Postretirement:
Service cost of benefits earned	$	—		$	—		$	1		$	1
Interest cost on projected benefit obligation	2			2			3			4
Net amortization	(8		)	(9		)	(16		)	(18		)
Net postretirement benefit	$	(6	)	$	(7	)	$	(12	)	$	(13	)

During the first six months of 2015, we made cash contributions of $50 million to the USG Corporation Retirement Plan Trust, $6 million to our pension plan in Canada, and $2 million, in aggregate, to certain other domestic pension plans. We expect to make total contributions to our pension plans in 2015 of approximately $61 million.

11.    Share-Based Compensation

During the first six months of 2015, we granted share-based compensation in the form of market share units, or MSUs, performance shares, and restricted stock units, or RSUs, to eligible participants under our Long-Term Incentive Plan. We recognize expense on all share-based grants over the service period, which is the shorter of the period until the employees’ retirement eligibility dates and the service period of the award for awards expected to vest. Expense is generally reduced for estimated forfeitures. Awards granted during the first six months of 2015 and assumptions used to determine fair value were as follows:

	MSUs			Performance Shares			RSUs
Awards granted	473,728			147,290			48,000
Weighted average fair value	$	30.06		$	30.63		$	27.69
Expected volatility	42.70		%	42.70		%	N/A
Risk-free rate (a)	1.09		%	1.09		%	N/A
Expected term (in years) (b)	2.95			2.95			N/A
Expected dividends	—			—			N/A

(a) The risk-free rate was based on zero coupon U.S. government issues at the time of grant.

(b) The expected term represents the period from the valuation date to the end of the performance period.

MARKET SHARE UNITS

The MSUs granted during the first six months of 2015 generally vest after a three-year period based on our actual stock price performance during such period. The number of MSUs earned will vary from zero to 150% of the number of MSUs awarded depending on the actual performance of our stock price. In the case of termination of employment due to death, disability or retirement during the performance period, vesting will be pro-rated based on the number of full months employed in 2015. Awards earned will be issued at the end of the three-year period. MSUs may vest earlier in the case of a change in control in most circumstances only if there is also a related loss of employment or diminution of duties. Each MSU earned will be settled in common stock.

We estimated the fair value of each MSU granted on the date of grant using a Monte Carlo simulation that used the assumptions noted in the table above. Volatility was based on stock price history immediately prior to grant for a period commensurate with the remaining life of the plan.

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PERFORMANCE SHARES

The performance shares granted during the first six months of 2015 generally vest after a three-year period based on our total stockholder return relative to the performance of the Dow Jones U.S. Construction and Materials Index, with adjustments to that index in certain circumstances, for the three-year period. The number of performance shares earned will vary from zero to 200% of the number awarded depending on that relative performance. Generally, vesting will be pro-rated based on the number of full months employed during the performance period in the case of death, disability, or retirement, and pro-rated awards earned will be issued at the end of the three-year period. Each performance share earned will be settled in common stock.

We estimated the fair value of each performance share granted on the date of grant using a Monte Carlo simulation that used the assumptions noted in the table above. Volatility was based on stock price history immediately prior to grant for a period commensurate with the remaining life of the plan.

RESTRICTED STOCK UNITS

The RSUs granted during the first six months of 2015 vest after a specified number of years from the date of grant or at a specified date. Generally, RSUs may vest earlier in the case of death, disability, or a change in control, provided that RSUs granted after 2012 will vest upon a change in control in most circumstances only if there is also a related loss of employment or diminution of duties. Each RSU is settled in a share of our common stock after the vesting period. The fair value of each RSU granted is equal to the closing price of our common stock on the date of grant.

12.    Supplemental Balance Sheet Information

INVENTORIES

Total inventories consisted of the following:

(millions)	June 30, 2015		December 31, 2014
Finished goods	$	218	$	232
Work in progress	36		35
Raw materials	70		62
Total	$	324	$	329

ASSET RETIREMENT OBLIGATIONS

Changes in the liability for asset retirement obligations consisted of the following:

	Six months ended June 30,
(millions)	2015			2014
Balance as of January 1	$	123		$	132
Accretion expense	4			4
Liabilities incurred	—			—
Changes in estimated cash flows (a)	(1		)	(10		)
Liabilities settled	(1		)	(2		)
Foreign currency translation	(2		)	(1		)
Balance as of June 30	$	123		$	123

(a) Changes in estimated cash flows for the six months ended June 30, 2014 included changes in estimates primarily for our gypsum quarry and ship loading facility in Windsor, Nova Scotia, Canada, which we permanently closed during the third quarter of 2011, and our mining operation in Little Narrows, Nova Scotia, Canada as a result of receiving regulatory approval of a revised reclamation plan in 2014.

ACCRUED INTEREST

Interest accrued on our debt as of both June 30, 2015 and December 31, 2014 was $45 million and is included in accrued expenses on our accompanying consolidated balance sheets.

ASSETS HELD FOR SALE

As of June 30, 2015, assets held for sale totaled $42 million, which included port facilities in Mexico and our investment in the Knauf USG joint venture. As of December 31, 2014, assets held for sale totaled $5 million, which reflected other indefinite-lived intangible assets. Assets held for sale are classified as other current assets in our accompanying consolidated balance sheets.

In June 2014, we sold surplus property for a gain of $12 million which is included in cost of goods in our statement of operations.

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13.    Accumulated Other Comprehensive Income (Loss)

Changes in the balances of each component of AOCI for the six months ended June 30,2015 and 2014 were as follows:

	Derivatives						Defined Benefit Plans						Foreign Currency Translation					AOCI
(millions)	2015			2014			2015			2014			2015			2014		2015			2014
Balance as of January 1	$	16		$	35		$	(302	)	$	(32	)	$	(52	)	$	21	$	(338	)	$	24
Other comprehensive income (loss) before reclassifications, net of tax	(1		)	2			(2		)	(9		)	(39		)	11		(42		)	4
Less: Amounts reclassified from AOCI, net of tax	(5		)	3			(3		)	6			—			5		(8		)	14
Net other comprehensive income (loss)	4			(1		)	1			(15		)	(39		)	6		(34		)	(10		)
Balance as of June 30	$	20		$	34		$	(301	)	$	(47	)	$	(91	)	$	27	$	(372	)	$	14

Amounts reclassified from AOCI, net of tax, for the six months ended June 30, 2015 and 2014, were as follows:

	Three months ended June 30,						Six months ended June 30,
(millions)	2015			2014			2015			2014
Derivatives
Net reclassification from AOCI for cash flow hedges included in cost of products sold	$	(3	)	$	1		$	(5	)	$	3
Less: Income tax expense on reclassification from AOCI included in income tax expense (benefit)	—			—			—			—
Net amount reclassified from AOCI	$	(3	)	$	1		$	(5	)	$	3
Defined Benefit Plans
Net reclassification from AOCI for amortization of prior service cost included in cost of products sold	$	(1	)	$	1		$	(2	)	$	3
Net reclassification from AOCI for amortization of prior service cost included in selling and administrative expenses	(1		)	1			(2		)	2
Less: Income tax expense on reclassification from AOCI included in income tax expense (benefit)	—			(1		)	(1		)	(1		)
Net amount reclassified from AOCI	$	(2	)	$	3		$	(3	)	$	6
Foreign Currency Translation
Net reclassification from AOCI for translation gains realized upon the deconsolidation of foreign subsidiaries included in selling and administrative expenses	$	—		$	—		$	—		$	5
Less: Income tax expense on reclassification from AOCI included in income tax expense (benefit)	—			—			—			—
Net amount reclassified from AOCI	$	—		$	—		$	—		$	5

We estimate that we will reclassify a net $8 million after-tax loss on derivatives from AOCI to earnings within the next 12 months.

14. Oman Investment

In June of 2012, we entered into a strategic partnership with the Zawawi Group in Oman to establish a mining operation by acquiring 55% of Zawawi Gypsum LLC, or ZGL, which holds the mining rights to a gypsum quarry in Salalah, Oman. Quarry mining operations commenced in October 2013. The second phase of the partnership is a 50/50 manufacturing venture, USG-Zawawi Drywall LLC, or ZDL, that now operates a low cost wallboard plant in Oman.

We accounted for the acquisition of the mining rights as an asset acquisition and measured our interest in the mining rights at our cost. We determined that both entities were variable interest entities (VIEs), and, as such, we consolidated the VIEs through February 27, 2014 when our interests in ZGL and ZDL were contributed to UBBP. See Note 2, Equity Method Investments.

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15. Income Taxes

In the second quarter of 2015, we recorded income tax expense of approximately $1 million from foreign, state and local jurisdictions. In the United States, we are in a net operating loss carryforward position and our deferred income tax assets are subject to a valuation allowance. Therefore, any domestic income or loss before income taxes does not generate a corresponding income tax expense or benefit.

In the six months ended June 30, 2015, we had income tax benefit of approximately $1 million. The income tax benefit for the six months reflects audit closures in certain foreign jurisdictions offset slightly by state and local jurisdiction tax expense.

As of June 30, 2015, we had federal net operating loss, or NOL, carryforwards of approximately $1.833 billion that are available to offset future federal taxable income and will expire in the years 2026 through 2032, none of which are subject to Internal Revenue Code limitations under Section 382. In addition, as of that date, we had federal Alternative Minimum Tax, or AMT, credit carryforwards of approximately $46 million that are available to reduce future regular federal income taxes over an indefinite period. In order to fully realize these U.S. federal net deferred tax assets, taxable income of approximately $1.963 billion would need to be generated during the period before their expiration. In addition, we have federal foreign tax credit carryforwards of $8 million that will expire if unused in 2015.

As of June 30, 2015, we had a gross deferred tax asset related to our state NOLs and tax credit carryforwards of $242 million, of which $1 million will expire in 2015. The remainder will expire if unused in years 2016 through 2033. We also had NOL and tax credit carryforwards in various foreign jurisdictions in the amount of $1 million as of June 30, 2015, against which we have maintained a valuation allowance.

During periods prior to 2015, we established a valuation allowance against our deferred tax assets totaling $1.023 billion. During the first six months of 2015, we recorded a decrease in the valuation allowance against our deferred tax assets of $43 million resulting in a deferred tax asset valuation allowance of $980 million as of June 30, 2015.

In assessing the requirement for, and amount of, a valuation allowance in accordance with the more-likely-than-not standard, we give appropriate consideration to all positive and negative evidence related to the realization of the deferred tax assets. During 2015, we may realize a four year cumulative accounting profit in the U.S. If this occurs, we will also consider all other positive and negative evidence to determine the realizability of our deferred tax assets and the need for a full, or partial, valuation allowance. Any reversal of our valuation allowance will favorably impact our results of operations in the period of reversal.

The Internal Revenue Code imposes limitations on a corporation’s ability to utilize NOLs if it experiences an “ownership change.” In general terms, an ownership change may result from transactions increasing the ownership of certain stockholders in the stock of a corporation by more than 50 percentage points over a three-year period. If we were to experience an ownership change, utilization of our NOLs would be subject to an annual limitation determined by multiplying the market value of our outstanding shares of stock at the time of the ownership change by the applicable long-term tax-exempt rate, which was 2.50% for June 2015. Any unused annual limitation may be carried over to later years within the allowed NOL carryforward period. The amount of the limitation may, under certain circumstances, be increased or decreased by built-in gains or losses held by us at the time of the change that are recognized in the five-year period after the change. Many states have similar limitations. If an ownership change had occurred as of June 30, 2015, our annual U.S. federal NOL utilization would have been limited to approximately $101 million per year.

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16. Litigation

WALLBOARD PRICING CLASS ACTION LAWSUITS

In late 2012, USG Corporation and United States Gypsum Company were named as defendants in putative class action lawsuits alleging that since at least September 2011, U.S. wallboard manufacturers conspired to fix and raise the price of gypsum wallboard sold in the United States and to effectuate the alleged conspiracy by ending the practice of providing job quotes on wallboard. These lawsuits are consolidated for pretrial proceedings in multi-district litigation in the United States District Court for the Eastern District of Pennsylvania, under the title In re: Domestic Drywall Antitrust Litigation, MDL No. 2437. One group of plaintiffs brings their claims on behalf of a class of entities that purchased gypsum wallboard in the United States directly from any of the defendants or their affiliates from January 1, 2012 to the present. The second group of plaintiffs brings their claims on behalf of indirect purchasers of gypsum wallboard who from January 1, 2012 through the present indirectly purchased wallboard in the United States from the defendants or their affiliates for end use and not for resale. Similar lawsuits have been filed in Quebec, Ontario and British Columbia courts on behalf of purchasers of wallboard in Canada. The Canadian lawsuits also name as defendants CGC Inc., our Canadian operating subsidiary, as well as other Canadian and U.S. wallboard manufacturers.

USG has denied the allegations made in these wallboard pricing lawsuits, believes these cases are without merit, and that USG’s pricing and selling policies were and are made independently and in full compliance with the law. Class action antitrust litigation in the United States, however, is expensive, protracted, and carries the risk of triple damages and joint and several liability. To avoid the expense, risk and further distraction of management, in late 2014, we entered into settlement agreements in principle with the attorneys representing the direct and indirect purchaser plaintiff classes in the U.S. wallboard pricing lawsuits. The settlements were memorialized in final settlement agreements and, in the third quarter of 2014, USG recorded a $48 million charge for the settlements. The settlement agreements, in which we deny all wrongdoing, also include releases by participating class members of USG, and its subsidiaries, affiliates, and other related parties, for all conduct concerning any of the matters alleged, or that could have been alleged, in the lawsuits for the time period prior to and including November 30, 2014. The Court preliminarily approved the settlements, and notice of the settlements was then provided to potential class members who could elect to opt out of the settlements (and potentially file their own claims) or participate in the settlements. The number of potential class members who opted out of the settlements was not significant. The Court recently held a hearing on final approval of the settlements but has not yet issued a final judgment order. If the Court enters the final judgment order approving the settlements as expected, the settlements will become final and effective thirty days after entry of the order, assuming no appeal. If we are unable to resolve the U.S. wallboard class action litigation under the terms set forth in the settlement agreements, or at all, there can be no assurance that the outcome of these lawsuits will not have a material effect on our business, financial condition, operating results or cash flows.

The settlement of the U.S. class action lawsuits described above does not include the Canadian lawsuits. At this stage of the Canadian lawsuits, we are not able to estimate the amount, if any, of any reasonably possible loss or range of reasonably possible losses. We believe, however, that these Canadian lawsuits will not have a material effect on our business, financial condition, operating results or cash flows.

In addition to the class action lawsuits, in the first quarter of 2015, USG and seven other wallboard manufacturers were named as defendants in a lawsuit filed in federal court in California by twelve homebuilders asserting individual claims similar to the claims asserted in the U.S. class action lawsuits. These homebuilders opted out of the class action settlements, and their lawsuit has been transferred to the United States District Court for the Eastern District of Pennsylvania that is presiding over the U.S. class action lawsuits. We believe that the cost, if any, of resolving these homebuilders’ claims will not materially increase the $48 million agreed to in the class action settlements.

ENVIRONMENTAL LITIGATION

We have been notified by state and federal environmental protection agencies of possible involvement as one of numerous “potentially responsible parties” in a number of Superfund sites in the United States. As a potentially responsible party, we may be responsible to pay for some part of the cleanup of hazardous waste at those sites. In most of these sites, our involvement is expected to be minimal. In addition, we are involved in environmental cleanups of other property that we own or owned. As of both June 30, 2015 and December 31, 2014, we had an accrual of $16 million for our probable and reasonably estimable liability in connection with these matters. Our accruals take into account all known or estimated undiscounted costs associated with these sites, including site investigations and feasibility costs, site cleanup and remediation, certain legal costs, and fines and penalties, if any. However, we continue to review these accruals as additional information becomes available and revise them as appropriate. Based on the information known to us, we believe these environmental matters will not have a material effect on our business, financial condition, operating results or cash flows.

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OTHER LITIGATION

We are named as defendants in other claims and lawsuits arising from our operations, including claims and lawsuits arising from the operation of our vehicles, product performance or warranties, personal injury and commercial disputes. We believe that we have properly accrued for our probable liability in connection with these claims and suits, taking into account the probability of liability, whether our exposure can be reasonably estimated and, if so, our estimate of our liability or the range of our liability. We do not expect these or any other litigation matters involving USG to have a material effect on our business, financial condition, operating results or cash flows.

17. Gypsum Transportation Limited

In April 2015, we completed the sale of our two self-unloading ocean vessels owned by Gypsum Transportation Limited, or GTL, for $42 million and recorded a gain of $7 million on the disposition. With a portion of the proceeds from the sale, GTL repaid the outstanding loan balance of $18 million under GTL’s secured loan facility agreement with DVB Bank SE and paid applicable selling costs. Additionally, we returned the third vessel leased by GTL and paid $7 million of early termination costs which were previously accrued for in the fourth quarter of 2014. In the second quarter 2015, GTL incurred charges of $6 million to exit our shipping operations.

The net impact of the gain on the sale of the vessels and charges incurred to wind down the shipping operations of $1 million is recorded in “Gain on disposal of shipping operations, net” on the consolidated statement of operations. Per the terms of the sale agreement, $2 million of the cash proceeds was held in escrow. This was recorded as restricted cash as of June 30, 2015 and was subsequently released in July 2015.

GTL recorded operating profit of $1 million for each of the three and six months ended June 30, 2015 compared with operating profit of $6 million and $14 million for the three and six months ended June 30, 2014, respectively.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

In the following Management’s Discussion and Analysis of Financial Condition and Results of Operations, “USG,” “we,” “our” and “us” refer to USG Corporation, a Delaware corporation, and its subsidiaries included in the consolidated financial statements, except as otherwise indicated or as the context otherwise requires.

Overview

We are a leading manufacturer and distributor of building materials. We produce a wide range of products for use in new residential, new nonresidential, and residential and nonresidential repair and remodel construction as well as products used in certain industrial processes. We estimate that during the first six months of 2015:

• residential and nonresidential repair and remodel activity accounted for approximately 53% of our net sales,

• new residential construction accounted for approximately 18% of our net sales,

• new nonresidential construction accounted for approximately 24% of our net sales, and

• other activities accounted for approximately 5% of our net sales.

SEGMENTS

Our operations are organized into four segments: Gypsum, Ceilings, Distribution and USG Boral Building Products, or UBBP.

Gypsum: Our Gypsum segment manufactures and markets gypsum and related products in the United States, Canada, Mexico and Latin America. It includes United States Gypsum Company, or U.S. Gypsum, in the United States, the gypsum business of CGC Inc., or CGC, in Canada, USG Mexico, S.A. de C.V., or USG Mexico, and Latin America. Gypsum’s products are used in a variety of building applications to finish the walls, ceilings and floors in residential, commercial and institutional construction and in certain industrial applications. The major product lines within the Gypsum segment are:

Wallboard	Sheetrock® brand gypsum wallboard portfolio and Securock® glass mat sheathing
Surfaces	Sheetrock® brand joint compound, corner bead, joint tape, plaster
Substrates	Durock® cement backerboard, Fiberock® backerboard, Levelrock® flooring, Securock® glass mat roofing and commercial roof board, and industrial gypsum

Ceilings: Our Ceilings segment manufactures and markets interior systems products in the United States, Canada, Mexico and Latin America. Ceilings includes USG Interiors, LLC, or USG Interiors, the ceilings business of CGC, USG Mexico and Latin America. In addition, through February 27, 2014, it also included our businesses in the Asia-Pacific region (see paragraph below regarding UBBP), which were included in USG International. Ceilings is a leading supplier of interior ceilings products used primarily in commercial applications. Ceilings manufactures ceiling tile in the United States and ceiling grid in the United States, Canada and, through February 27, 2014, in the Asia-Pacific region. It markets ceiling tile and ceiling grid in the United States, Canada, Mexico, Latin America and, through February 27, 2014, in the Asia-Pacific region.

As discussed below under USG Boral Building Products, or UBBP, on February 27, 2014, we invested with Boral Limited, or Boral, in UBBP, and in connection therewith contributed to UBBP our operations in the Asia-Pacific region. As such, Ceilings includes the results and activities of our subsidiaries in the Asia-Pacific region only through February 27, 2014.

Distribution: Our Distribution segment consists of L&W Supply Corporation and its subsidiaries, or L&W Supply, a leading distributor of gypsum wallboard and other building materials in the United States. It is a service-oriented business that stocks a wide range of construction materials. It delivers less-than-truckload quantities of construction materials to job sites and places them in areas where work is being done, thereby reducing the need for handling by contractors.

USG Boral Building Products (UBBP): On February 27, 2014, we and certain of our subsidiaries formed the 50/50 joint ventures, USG Boral Building Products Pte. Limited, a company organized under the laws of Singapore, and USG Boral Building Products Pty Limited, a company organized under the laws of Australia, with Boral. These joint ventures are herein referred to as USG Boral Building Products. UBBP manufactures, distributes and sells certain building products, mines raw gypsum and sells natural and synthetic gypsum throughout Asia, Australasia and the Middle East (the "Territory"). UBBP

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manufactures and distributes products for wall, ceiling, floor lining and exterior systems that utilize gypsum, wallboard, referred to as plasterboard in the region, mineral fiber ceiling tiles, steel grid and studs and joint compound.

As consideration for our 50% ownership in UBBP, we (i) made a $515 million cash payment to Boral, which included a $500 million base price and $15 million of customary estimated working capital and net debt adjustments, (ii) contributed to UBBP our subsidiaries and joint venture investments in China, Singapore, India, Malaysia, New Zealand, Australia, the Middle East and Oman, and (iii) granted to UBBP licenses to use certain of our intellectual property rights in the Territory. In the event certain performance targets are satisfied by UBBP, we will be obligated to pay Boral scheduled earnout payments in an aggregate amount up to $75 million, comprised of $25 million based on performance during the first three years after closing and up to $50 million based on performance during the first five years after closing. We recorded a liability representing the present value of the first earnout payment. As of June 30, 2015 and December 31, 2014, this liability totaled $24 million and $23 million, respectively, and is included in other liabilities on our accompanying consolidated balance sheets.

UBBP is currently targeting the distribution of at least 50% of combined after tax profits to USG and Boral in proportion to the respective ownership interests; provided, however, that UBBP will not pay dividends if such payments are, among other things, restricted pursuant to the terms of the credit facilities maintained by UBBP, inconsistent with the then-applicable strategic plan, or illegal. Through June 30, 2015, cash dividends of $36 million have been declared by UBBP's Board of Directors and paid by UBBP. Our share of these dividends is $18 million, which we intend to use to pay the earnout payment described above.

Since formation, UBBP has been funded from its net cash flows from operations and third-party financing, and it is our intent that as an ongoing operation, UBBP will continue to self-fund.

As a result of the contribution of our wholly-owned subsidiaries in Singapore, India, Malaysia, New Zealand and Australia and our consolidated joint ventures in Oman, the net sales and operating profit attributable to these entities are no longer included in those corresponding line items on our consolidated statement of operations subsequent to February 27, 2014. Instead, our share of the equity income from UBBP is shown within income from equity method investments.

Our investment in UBBP is accounted for as an equity method investment and was initially measured at cost. Our existing wholly-owned subsidiaries and consolidated variable interest entities that were contributed into the joint ventures were deconsolidated, which resulted in a gain of $27 million during the first quarter of 2014. Our investments in UBBP consummated on February 27, 2014, and as a result, only four months of our share of equity income from UBBP is reflected in income from equity method investments for the six months ended June 30, 2014.

Geographic Information: For the first six months of 2015, we recorded $1.879 billion of net sales in our consolidated statement of operations, of which approximately 85% were attributable to the United States, approximately 10% were attributable to Canada and other foreign countries accounted for the remaining 5%. Net sales for UBBP for the first six months of 2015 were $492 million, which were comprised of 33% to Australia, 21% to South Korea, 12% to China, 15% to Thailand, with other foreign countries accounted for the remaining 19%.

MARKET CONDITIONS AND OUTLOOK

Our businesses are cyclical in nature and sensitive to changes in general economic conditions, including conditions in the North American housing and construction-based markets and the markets in Asia, Australasia and the Middle East, which are our most significant markets. Our expansion via UBBP into the markets of Asia, Australasia, and the Middle East has significantly increased our exposure to the economic conditions in those areas. The markets we serve can be broadly categorized as new residential construction, new nonresidential construction and repair and remodel activity, which includes both residential and nonresidential construction.

For the new residential construction market in the United States, housing starts are a very good indicator of demand for our gypsum products. Installation of our gypsum products typically follows a housing start by 90 to 120 days. In June 2015, the seasonally-adjusted annualized rate of housing starts reported by the U.S. Census Bureau was 1,174,000 units, an increase from 1,069,000 units reported for May 2015 and a decrease from 1,190,000 units reported for April 2015. In comparison, housing starts for all of 2014 were 1,003,000 units. Most industry analysts believe that the recovery in new residential construction will continue, although the recovery over the next few years may be uneven and modest, and that over the longer term housing starts will begin to reach historical averages. Industry analysts’ forecasts for 2015 housing starts in the United States included in the most recent Blue Chip Economic Indicators are 1,030,000 to 1,170,000 units, based on the average of the bottom ten and top ten forecasts included in the report, respectively. We currently estimate that 2015 housing starts in the United States will be in the middle of the range of 1,000,000 to 1,200,000.

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Demand for our products from new nonresidential construction is determined by floor space for which contracts are signed. Installation of gypsum and ceilings products typically follows signing of construction contracts by about 12 to 18 months. According to the most recent construction market forecast from Dodge Data & Analytics (formerly known as McGraw-Hill Construction), total floor space for which new nonresidential construction contracts were signed in the United States increased10% in 2014 compared with 2013. This followed a 12%increase in 2013 compared with 2012 and an 11%increase in 2012 compared with 2011. Dodge Data & Analytics forecasts that total floor space for which new nonresidential construction contracts in the United States are signed will increase approximately 10% in 2015 from the 2014 level. Dodge Data & Analytic's forecast includes several building types which do not generate significant demand for our products; therefore, we anticipate new nonresidential construction growth in our business sectors in 2015 compared to 2014 will be in the mid-single digits.

The repair and remodel market includes renovation of both residential and nonresidential buildings. As a result of the low levels of new home construction in recent years, this market currently accounts for the largest portion of our sales. Many buyers begin to remodel an existing home within two years of purchase. According to the National Association of Realtors, sales of existing homes in the United States were approximately 4.93 million units in 2014, reflecting a 3%decrease from the 2013 level of 5.09 million units. The seasonally adjusted annual rate of existing home sales was 5.49 million units in June 2015, the highest level since February 2007. This was 3% higher than the May 2015 rate of 5.32 million units, and 10% higher than the June 2014 revised rate of 5.01 million units. Sales have increased year-over-year for six consecutive months. The generally rising levels of existing home sales and home resale values in recent years have contributed to an increase in demand for our products from the residential repair and remodel market. We currently estimate that overall repair and remodel spending growth in 2015, compared to 2014, will be in the low- to mid-single digits.

The rate of recovery in the new residential construction market, new nonresidential construction market and the repair and remodel market still remains uncertain and will depend on broader economic issues such as employment, household formation, housing price trends, availability of mortgage financing, interest rates, consumer confidence, job growth and discretionary business investment.

We expect improvement over the next twelve months in the construction industries of our largest international markets in North America of Canada and Mexico. Emerging markets, including those that are within the UBBP territory, provide opportunities for our operations to serve the increasing demand for products in these regions. Several market forecasters have predicted that China will lead construction materials demand growth over the next several years. Several other countries, including South Korea and Australia, are forecasted to experience steady growth as well. Although the rate of growth in certain emerging markets has slowed, we expect the growth in these markets to exceed the improvements in North America. We anticipate that the results from UBBP will enable us to dampen some of the future cyclicality in our business.

The housing and construction-based markets we serve are affected by broader economic issues such as employment, the availability of credit, lending practices, interest rates, availability of mortgage financing, income tax policy and consumer confidence and preference. An increase in levels of unemployment, restrictive lending practices, a decrease in consumer confidence or other economic conditions could have a material effect on our business, financial condition, operating results and cash flows. Our businesses are also affected by a variety of other factors beyond our control, including the inventory of unsold homes, the level of foreclosures, home resale rates, housing affordability, office and retail vacancy rates and foreign currency exchange rates. Since we operate in a variety of geographic markets, our businesses are subject to the economic conditions in each of these geographic markets. General economic downturns or localized downturns or financial concerns in the regions where we have operations may have a material adverse effect on our business, financial condition, results of operations and cash flows.

Our Gypsum segment has improved with the modest recovery in residential housing over the last three years, although, it continues to be adversely affected by the low level of residential and other construction activity compared to historical averages. Our Distribution segment, which serves the residential and commercial markets, and our Ceilings segment, which primarily serves the commercial markets, have both showed some improvements. However, they continue to be adversely affected by the low levels of new commercial construction activity.

Industry shipments of gypsum board in the United States (including gypsum wallboard, other gypsum-related paneling products and imports), as reported by the Gypsum Association, were an estimated 10.6 billion square feet in the first six months of 2015, up approximately 7% compared with 9.9 billion square feet in the first six months of 2014. We estimate that industry shipments in the United States for all of 2015 will be approximately 23 billion, up approximately 6% from 21.8 billion square feet in 2014.

There is excess wallboard production capacity industry-wide in the United States. Industry capacity in the United States was approximately 32.8 billion square feet as of January 1, 2015. We estimate that the industry capacity utilization rate was

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approximately 63% and 60% during the first six months of 2015 and 2014, respectively, and 74% in the fourth quarter of 2014. Based on current industry trends and forecasts, demand for gypsum wallboard is expected to increase in 2015, but the magnitude of any increase will depend on the levels of housing starts and repair and remodel activity. We project that the industry capacity utilization rate will experience a modest increase in 2015 compared to 2014. Despite our realization of improvement in our average wallboard selling price, we could experience pressure on gypsum wallboard selling prices and our gross margins at such low levels of capacity utilization. In early 2015, U.S. Gypsum implemented a price increase for wallboard with the new not to exceed price being set for January 1, 2015 through October 31, 2015. However, it is uncertain that we will be able to maintain the increase in our gypsum wallboard selling prices. If we are unable to maintain our price increases, our net sales and operating profit may be materially and adversely impacted.

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Consolidated Results of Operations

(dollars in millions, except per-share data)	2015			2014			$ Favorable (Unfavorable)			% Favorable (Unfavorable)
Three months ended June 30:
Net sales	$	970		$	948		$	22		2	%
Cost of products sold	787			773			(14		)	(2	)%
Gross profit	183			175			8			5	%
Selling and administrative expenses	79			77			(2		)	(3	)%
Gain on disposal of shipping operations, net	(1		)	—			1			*
Operating profit	105			98			7			7	%
Income from equity method investments	14			5			9			*
Interest expense	(40		)	(45		)	5			11	%
Other income, net	1			—			1			*
Income from continuing operations before income taxes	80			58			22			38	%
Income tax benefit (expense)	(1		)	—			(1		)	*
Income from continuing operations	79			58			21			36	%
Loss from discontinued operations, net of tax	—			(1		)	1			100	%
Net income	$	79		$	57		$	22		39	%
Diluted earnings per share	$	0.54		$	0.38		$	0.16		42	%
Six months ended June 30:
Net sales	$	1,879		$	1,798		$	81		5	%
Cost of products sold	1,543			1,480			(63		)	(4	%)
Gross profit	336			318			18			6	%
Selling and administrative expenses	156			154			(2		)	(1	)%
Gain on disposition of shipping operations, net	(1		)	—			1			*
Operating profit	181			164			17			10	%
Income from equity method investments	22			8			14			*
Interest expense	(83		)	(92		)	9			10	%
Interest income	1			1			—			—	%
Loss on extinguishment of debt	(19		)	—			(19		)	*
Gain on deconsolidation of subsidiaries and consolidated joint ventures	—			27			(27		)	(100	)%
Income from continuing operations before income taxes	102			108			(6		)	(6	%)
Income tax benefit (expense)	1			(5		)	6			*
Income from continuing operations	103			103			—			—	%
Loss from discontinued operations, net of tax	—			(1		)	1			100	%
Net income	$	103		$	102		$	1		1	%
Diluted earnings per share	$	0.70		$	0.71		$	(0.01	)	(1	%)
*not meaningful

NET SALES

Consolidated net sales for the second quarter of 2015increased$22 million, or 2%, compared with the second quarter of 2014. This reflects higher net sales for our Gypsum and Distributions segments of 1% and 6%, respectively. Net sales for our Ceilings segment remained relatively flat. The higher levels of net sales for our Gypsum segment reflected higher volume and selling prices, offset by a decrease in sales by GTL of $19 million including intra-segment eliminations. The increased sales for our Distribution segment was due to higher volumes and selling prices.

Consolidated net sales for the first six months of 2015 increased $81 million, or 5%, compared with the first six months of 2014. The increase reflects higher sales for our Gypsum and Distribution segments of 3% and 8%, respectively. Sales for our Ceilings segment remained relatively flat over the comparative period. The higher levels of net sales for our Gypsum segment reflected higher volume and, to a lesser extent, higher selling prices, offset by a decrease in sales by GTL of $30 million including intra-segment eliminations. The increased sales for our Distribution segment was due to higher volume and, to a lesser extent, higher selling prices. Net sales in 2014 for our Ceilings segment included $7 million in sales for our subsidiaries

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in Asia-Pacific, India and Oman that were contributed to UBBP on February 27, 2014. Excluding that impact, net sales for our Ceilings segment increased 2%, primarily driven by higher volumes and selling prices of ceiling tile in the United States.

GROSS PROFIT

Gross profit for the second quarter of 2015increased$8 million, or 5%, compared with the second quarter of 2014. Gross profit as a percentage of net sales was 18.9% for the second quarter of 2015, compared with 18.5% for the second quarter of 2014. Gross profit in the second quarter of 2014 included a $12 million gain for the sale of surplus property and $6 million of higher gross profit for GTL. Excluding these amounts, gross profit increased $26 million, which was due to higher volume and selling prices and lower cost for U.S. Gypsum’s Sheetrock^® brand gypsum wallboard and joint compound, higher gross profit for substrates products, and higher selling prices and lower cost for ceiling tile.

Gross profit for the first six months of 2015increased$18 million, or 6%, compared with the first six months of 2014. Gross profit as a percentage of net sales was 17.9% for the first six months of 2015, compared with 17.7% for the first six months of 2014. Gross profit in the first six months of 2014 included a $12 million gain for the sale of surplus property, a $7 million noncash reversal of an asset retirement obligation and $15 million of higher gross profit for GTL. Excluding these amounts, gross profit increased $52 million due to higher volume and selling prices and lower cost for U.S. Gypsum’s Sheetrock^® brand gypsum wallboard and joint compound, higher gross profit for substrates products, higher selling prices and lower cost for ceiling tile, and higher volume and selling prices for ceiling grid.

SELLING AND ADMINISTRATIVE EXPENSES

Selling and administrative expenses totaled $79 million in the second quarter of 2015 compared to $77 million in the second quarter of 2014. As a percentage of net sales, selling and administrative expenses remained unchanged at 8.1% for each of the comparative quarters.

Selling and administrative expenses totaled $156 million in the first six months of 2015 compared to $154 million in the first six months of 2014. As a percentage of net sales, selling and administrative expenses were 8.3% for the first six months of 2015 compared to 8.6% for the first six months of 2014. The decrease as a percentage of sales reflects management's focus on cost savings including the deferral of projects that were started when the recovery was anticipated to reach the same level as past recoveries in the United States in the near term.

GAIN ON DISPOSAL OF SHIPPING OPERATIONS, NET

During the second quarter of 2015, we recorded a net gain on the disposal of our shipping operations of $1 million. This reflects a gain on sale of our two self-unloading vessels of $7 million and charges to wind down our shipping operations of $6 million. We do not expect GTL to have a financial impact going forward.

INCOME FROM EQUITY METHOD INVESTMENTS

Income from equity method investments in the second quarter of 2015 was $14 million, an increase of $9 million from the second quarter of 2014. We recorded $13 million of equity income from UBBP, an increase of $9 million over the comparative quarter in 2014. The improved results from the joint venture reflect an improvement in operating profit as a result of a decrease in variable costs, advertising and administrative expenses offset by an unfavorable impact of foreign currency. Additionally, the joint venture continues to make progress on realizing targeted synergy savings and improved market adoption rate of lightweight products. Further contributing to the increase is the absence of our share of both $7 million of restructuring charges and $3 million of facility damage costs incurred in the second quarter of 2014.

Income from equity method investments in the first six months of 2015 was $22 million, an increase of $14 million from the first six months of 2014. The results for six months of 2015 include six months of activity while the results for the six months of 2014 included four months of activity, as the joint ventures with Boral did not commence until February 27, 2014. The improved results for the year-to-date period are reflective of the improvements discussed above.

INTEREST EXPENSE

Interest expense was $40 million in the second quarter of 2015, down $5 million, or 11%, from the second quarter of 2014 and was $83 million in the first six months of 2015, down $9 million, or 10%, from the first six months of 2014. The decrease in interest expense for both comparative periods primarily reflects lower debt levels and lower interest rates on our outstanding debt. The decline in both periods was driven by the conversion of $75 million of our 10% convertible senior notes into common stock in April 2014, the August 2014 repayment of $59 million of our 9.75% Senior Notes, the February 2015 repurchase of our 8.375% Senior Notes due 2018, the repayment of our ship mortgage facility and lower amortization of deferred administrative fees and debt discounts.

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LOSS ON EXTINGUISHMENT OF DEBT

In the first quarter of 2015, we recorded a $19 million loss on the extinguishment of debt, including premiums and write-off of deferred financing fees, in connection with the tender offer and repurchase of our 8.375% Senior Notes due 2018.

GAIN ON DECONSOLIDATION OF SUBSIDIARIES

In the first quarter of 2014, we recognized a gain on the deconsolidation of subsidiaries of $27 million as a result of our contribution of our wholly-owned subsidiaries in Singapore, India, Malaysia, New Zealand and Australia and our consolidated joint ventures in Oman into UBBP.

INCOME TAX EXPENSE / (BENEFIT)

We recorded an income tax expense of $1 million in the second quarter of 2015 from foreign, state and local jurisdictions compared to $0 million for the second quarter of 2014. We recorded an income tax benefit of $1 million in the first six months of 2015. The income tax benefit for the first six months of 2015 reflects audit closures in certain foreign jurisdictions offset slightly by state and local jurisdiction tax expense.

Segment Results of Operations

GYPSUM

Net sales and operating profit (loss) for the businesses comprising our Gypsum segment were as follows:

	Three months ended June 30:											Six months ended June 30:
							Favorable (Unfavorable)											Favorable (Unfavorable)
(millions)	2015			2014			$			%		2015			2014(a)			$			%
Net sales:
United States	$	516		$	488		$	28		6	%	$	993		$	920		$	73		8	%
Canada	87			90			(3		)	(3	)%	163			166			(3		)	(2	)%
Mexico / Latin America	48			48			—			—	%	96			95			1			1	%
Gypsum Transportation Limited	—			21			(21		)	(100	)%	10			42			(32		)	(76	)%
Canadian Mining	2			1			1			100	%	2			1			1			100	%
Eliminations	(36		)	(36		)	—			—	%	(70		)	(67		)	(3		)	(4	)%
Total	$	617		$	612		$	5		1	%	$	1,194		$	1,157		$	37		3	%
Operating profit (loss):
United States	$	91		$	83		$	8		10	%	$	157		$	131		$	26		20	%
Canada	3			5			(2		)	(40	)%	4			8			(4		)	(50	)%
Mexico / Latin America	5			4			1			25	%	9			8			1			13	%
Gypsum Transportation Limited	1			6			(5		)	(83	)%	1			14			(13		)	(93	)%
Canadian Mining	(2		)	(3		)	1			33	%	(5		)	(1		)	(4		)	*
Total	$	98		$	95		$	3		3	%	$	166		$	160		$	6		4	%

* Not meaningful

(a) Results for the first three months of 2014 have been recast to reflect our change in segments.

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United States: Net sales in the second quarter of 2015 were $516 million, up $28 million, or 6%, compared with the second quarter of 2014. The increase in net sales was due to the following:

	Sales				Volume				Price
(millions)	$		%		$		%		$		%
Change to Q2 2015 from Q2 2014
Sheetrock® brand gypsum wallboard	$	12	6	%	$	9	4	%	$	3	2	%
Sheetrock® brand joint compound	4		5	%	2		3	%	2		2	%
Roof board	4		29	%	4		29	%	—		—	%
Other	8
Total increase in net sales	$	28	6	%

The increase of $12 million from the second quarter of 2014 to the second quarter of 2015 in Sheetrock^® brand gypsum wallboard reflected increases in both shipments and average selling prices. The increased shipments reflect higher opportunity and greater demand from big box retailers and specialty dealers. Our premium Sheetrock^® Brand UltraLight Panels accounted for 64% of all of our wallboard shipments during the second quarter of 2015, compared to 62% in the second quarter of 2014.

Sales of Sheetrock^® brand joint compound increased $4 million on both increased volume and price. Sales of roof board increased $4 million which reflected higher volume of Gyp-Fiber roof boards and Glass-Mat roof boards. The increase in Other reflected higher sales of Levelrock^® brand gypsum underlayment of $3 million and of other products of $5 million. The increase in Levelrock^® was due to increased market share and accessory products. The increase in other products, which was due to product mix, reflected higher sales of substrates products, none of which were individually significant.

Operating profit of $91 million was recorded in the second quarter of 2015 compared with operating profit of $83 million in the second quarter of 2014. The increase of $8 million in operating profit reflected the following:

	Operating Profit			Volume		Price		Cost
(millions)	$			$		$		$
Change to Q2 2015 from Q2 2014
Sheetrock® brand gypsum wallboard	$	14		$	4	$	3	$	7
Sheetrock® brand joint compound	4			1		2		1
Roof board	1			1		—		—
Other	(11		)
Total increase in operating profit	$	8

The increase in operating profit reflected gross profit improvement for Sheetrock^® brand gypsum wallboard, Sheetrock^® brand joint compound and Gyp-Fiber and Glass-Mat roof board. The increased gross profit for Sheetrock^® brand gypsum wallboard reflected higher shipments and higher gross margin due to the price increase discussed above and increased sales of higher margin Sheetrock^® brand UltraLight Panel products. The decrease in cost of $7 million also contributed to the operating profit improvement and reflected a decrease in per unit cost totaling $2 million, $2 million of savings in synthetic gypsum and $3 million in other product costs. The lower per unit cost for U.S. Gypsum’s Sheetrock^® brand gypsum wallboard in the second quarter of 2015 as compared with the second quarter of 2014 was due to the net impact of a per unit decrease of 7% for energy, primarily natural gas, and 1% for raw materials, primarily paper, offset by a per unit cost increase of 3% in fixed costs.

The decrease of $11 million in Other reflected the absence of a $12 million gain recorded in the second quarter of 2014 for the sale of surplus property, which is partially offset by improved profitability of our substrates products. Also impacting operating profit is an increase in selling and administrative costs of $3 million driven primarily by an increase in sales commission expense.     

Canada: Net sales in the second quarter of 2015 were $87 million, a decrease of $3 million from $90 million in the second quarter of 2014. The change in sales reflects an increase in gypsum wallboard of $7 million offset by an unfavorable impact of currency translation of $10 million. An increase of 9% in volume and an increase of 6% in average selling prices of gypsum wallboard contributed to increased sales. Operating profit in the second quarter of 2015 was $3 million, a decrease of

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$2 million from the second quarter of 2014. The decrease reflects an unfavorable impact of currency translation of $1 million and increase in other costs and selling and administrative expenses of $1 million.

Mexico / Latin America: Net sales for our gypsum businesses in Mexico and Latin America were unchanged from $48 million in the second quarter of 2015 compared to the second quarter of 2014. Mexico's net sales were negatively impacted by currency of $5 million which was offset by increases in sales of gypsum wallboard of $2 million, joint treatment of $1 million, Durock^® of $1 million and other products of $1 million. Operating profit increased to $5 million in the second quarter of 2015 from $4 million in the second quarter of 2014. The increase of $1 million reflects improved margins on gypsum wallboard in Mexico.

Gypsum Transportation Limited: There were no sales for our shipping company, Gypsum Transportation Limited, or GTL, for the second quarter of 2015 compared to $21 million in the second quarter of 2014. Operating profit was $1 million in the second quarter of 2015 compared to an operating profit of $6 million in the second quarter of 2014. The decrease in both net sales and operating profit reflected the cessation of shipping activity under a long-term shipping contract in the fourth quarter of 2014. No sales were recorded in the second quarter of 2015 as our short-term shipping contract ended in March 2015 and we sold our two self-unloading vessels in April 2015. The $1 million of operating profit in second quarter of 2015 reflects the gain recorded on the sale of our ships offset by charges incurred to wind down our shipping operations.

Canadian Mining: Net sales for our mining operation in Little Narrows, Nova Scotia, Canada, were $2 million for the second quarter of 2015 and $1 million for the second quarter of 2014. Operating loss was $2 million in the second quarter of 2015 compared to an operating loss of $3 million in the second quarter of 2014.

CEILINGS

Net sales and operating profit for the businesses comprising our Ceilings segment were as follows:

	Three months ended June 30:											Six months ended June 30:
							Favorable (Unfavorable)											Favorable (Unfavorable)
(millions)	2015			2014			$			%		2015			2014(a)(b)			$			%
Net sales:
United States	$	121		$	120		$	1		1	%	$	236		$	228		$	8		4	%
USG International (a)	—			—			—			—	%	—			7			(7		)	(100	)%
Canada	14			15			(1		)	(7	)%	28			28			—			—	%
Mexico / Latin America	8			7			1			14	%	17			17			—			—	%
Eliminations	(12		)	(12		)	—			—	%	(27		)	(25		)	(2		)	(8	)%
Total	$	131		$	130		$	1		1	%	$	254		$	255		$	(1	)	—	%
Operating profit:
United States	$	23		$	21		$	2		10	%	$	42		$	32		$	10		31	%
USG International (a)	—			—			—			—	%	—			—			—			—	%
Canada	1			2			(1		)	(50	)%	2			4			(2		)	(50	)%
Mexico / Latin America	1			1			—			—	%	2			3			(1		)	(33	)%
Total	$	25		$	24		$	1		4	%	$	46		$	39		$	7		18	%

(a) USG International’s net sales and operating profit for the six months ended June 30, 2014 include the results of our wholly-owned subsidiaries and consolidated joint ventures that were contributed to UBBP on February 27, 2014.

(b) Results for the first three months of 2014 have been recast to reflect our change in segments.

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United States: Net sales for our domestic ceilings business in the second quarter of 2015 were $121 million, an increase of$1 million, or 1%, from the second quarter of 2014. The increase reflected the following:

	Sales					Volume					Price
(millions)	$			%		$			%		$		%
Change to Q2 2015 from Q2 2014
Ceiling grid	$	(1	)	(3	)%	$	(1	)	(3	)%	$	—	—	%
Ceiling tile	2			2	%	1			1	%	1		1	%
Total increase in net sales	$	1		1	%

The decrease of $1 million in sales of ceiling grid reflected lower volumes. The increase of $2 million in ceiling tile reflected increases in both volume and average selling price. The higher volume was driven by increased sales of premium tile products and the higher average selling price was driven by a price increase implemented in the first quarter of 2015.

Operating profit was $23 million for the second quarter of 2015, an increase of $2 million, or 10%, from the second quarter of 2014. The increase reflected the following:

	Operating Profit			Volume		Price		Cost
(millions)	$			$		$		$
Change to Q2 2015 from Q2 2014
Ceiling grid	$	(1	)	$	—	$	—	$	(1	)
Ceiling tile	3			—		1		2
Total increase in operating profit	$	2

The increase in operating profit reflects an increase in gross profit for ceiling tile offset by a decrease in gross profit for ceiling grid. The increase in ceiling tile was driven primarily by a price increase implemented in the first quarter of 2015 and lower costs due to lower energy and raw material costs.

USG International: As a result of our change in segments, as discussed above, USG International consists only of the results of our wholly-owned subsidiaries in the Asia-Pacific region and India and our consolidated joint ventures in Oman that were contributed in February 2014 as part of our investment in UBBP; therefore, results for USG International in the first quarter of 2014 represent the net sales and operating profit (loss) for those entities. Results for our Latin America businesses, previously included within USG International, are now included in "Mexico / Latin America" within Gypsum or Ceilings, as applicable.

Canada:  Net sales of $14 million for the second quarter of 2015 was a decrease of $1 million compared to the second quarter of 2014. The decrease reflected an unfavorable impact of currency translation of $1 million. Operating profit of $1 million decreased $1 million compared to the second quarter of 2014. The decrease primarily reflects the impact of foreign currency translation and lower margins on ceiling tile.

Mexico / Latin America: Net sales of $8 million for the second quarter of 2015 increased $1 million compared to the second quarter of 2014. The increase reflected higher sales of $1 million in Latin America of ceiling products. Additionally, Mexico recorded higher sales of ceiling tile of $1 million offset by the unfavorable impact of currency translation of $1 million. Operating profit of $1 million remained unchanged from the second quarter of 2014.

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DISTRIBUTION

Net sales and operating profit for our Distribution segment, which consists of L&W Supply, were as follows:

	Three months ended June 30:								Six months ended June 30:
					Favorable (Unfavorable)								Favorable (Unfavorable)
(millions)	2015		2014		$		%		2015		2014		$		%
Net sales	$	364	$	344	$	20	6	%	$	698	$	644	$	54	8	%
Operating profit	9		4		5		*		13		5		8		*
*not meaningful

L&W Supply’s net sales in the second quarter of 2015 were $364 million, up $20 million or 6%, compared with the second quarter of 2014. Same store net sales for the second quarter of 2015 were up 5% compared with the second quarter of 2014. Net sales of gypsum wallboard increased $11 million, or 9%, reflecting an increase in gypsum wallboard volume and price. Net sales of metal products increased $1 million and net sales of all other products increased $8 million.

Operating profit was $9 million in the second quarter of 2015 compared with $4 million in the second quarter of 2014. The $5 million increase in operating profit was attributable to increased gross profit of $5 million on gypsum wallboard driven by an increase in volume of 7% and an increase in margin of 1% and increased gross profit of $4 million for ceilings and other products. Additional improvement in operating profit was related to certain reserve adjustments of $2 million, including changes in our reserves for insurance and workers compensation, bad debt, and inventories. Offsetting the increases were increased delivery expenses of $3 million due to higher sales and higher selling and administrative expenses. Delivery expenses as a percentage of sales were flat quarter over quarter.

L&W Supply served its customers from 146 distribution branches in the United States as of June 30, 2015. In July 2015, L&W announced the closure of two under performing branches in areas that are served by multiple branches.

USG BORAL BUILDING PRODUCTS

Net sales and operating profit for UBBP and our share of the net income of UBBP were as follows:

	Three months ended June 30:									Six months ended June 30:
					Favorable (Unfavorable)									Favorable (Unfavorable)
(millions)	2015		2014		$			%		2015		2014		$		%
Net sales	$	264	$	280	$	(16	)	(6	)%	$	492	$	369	$	123	33	%
Operating profit	34		16		18			*		57		26		31		*
Income from equity method investments - UBBP	$	13	$	4	$	9		*		$	21	$	7	$	14	*
*not meaningful

UBBP is our 50/50 joint ventures with Boral and are accounted for as equity method investments. Our share of the net income of UBBP recorded in income from equity method investments in our consolidated statement of operations increased $9 million to $13 million for the second quarter of 2015 from the second quarter of 2014.

The following is a discussion of UBBP's consolidated results for the second quarter of 2015 as compared to the second quarter of 2014.

Net sales for UBBP were $264 million in the second quarter of 2015 compared to $280 million for the second quarter of 2014, with foreign currency unfavorably impacting sales in the second quarter of 2015. Plasterboard shipments decreased to 1.13 billion square feet for the second quarter of 2015 from 1.16 billion square feet for the second quarter of 2014, primarily due to normalization of plasterboard shipments in Korea. Operating profit was $34 million in the second quarter of 2015 compared to $16 million for the second quarter of 2014. The increase of $18 million in operating profit reflected the absence of costs incurred in the second quarter of 2014 of $7 million of restructuring costs related to initiatives to streamline the operations within the joint venture and $3 million of facility damage costs. Also driving the improvement in operating profit was a decrease in variable costs and advertising and administrative expenses offset by an unfavorable impact of foreign currency of $4 million. Additionally, the joint venture experienced synergy savings and improved market performance of lightweight products. See Note 2 to our consolidated financial statements.

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Net sales in Asia and Australasia made up approximately 65% and 35%, respectively, of total net sales for UBBP. Net sales in South Korea, China, Thailand and Indonesia represented approximately 77% of Asia's net sales and plasterboard revenue accounted for approximately 70% of Asia's net sales.

CORPORATE

The operating loss for Corporate increased to $24 million in the second quarter of 2015 compared with $21 million in the second quarter of 2014 primarily due to a net increase in incentive compensation.

Liquidity and Capital Resources

As of June 30, 2015, we had $313 million of cash and cash equivalents and marketable securities compared with $382 million as of December 31, 2014. See discussion below under Cash Flows for explanation of the change in cash and cash equivalents. Our total liquidity as of June 30, 2015 was $665 million (including $352 million of borrowing availability under our credit facilities) compared to $673 million as of December 31, 2014 (including $291 million of borrowing availability under our credit facilities). The increase in availability under our credit facilities was primarily due to higher accounts receivable balances.

Our cash is invested in cash equivalents and marketable securities pursuant to an investment policy that has preservation of principal as its primary objective. The policy includes provisions regarding diversification, credit quality and maturity profile that are designed to minimize the overall risk profile of our investment portfolio. The securities in the portfolio are subject to normal market fluctuations. See Note 5 to the consolidated financial statements for additional information regarding our investments in marketable securities.

Total debt, consisting of senior notes and industrial revenue bonds amounted to $2.188 billion ($2.189 billion in aggregate principal amount less $1 million of unamortized original issue discount) as of June 30, 2015 and $2.209 billion ($2.210 billion in aggregate principal amount less $1 million of unamortized original issue discount) as of December 31, 2014. As of June 30, 2015 and during the six months then ended, there were no borrowings under our revolving credit facility and no borrowings outstanding.

Our obligations under our credit facility are guaranteed by USG and its significant domestic subsidiaries and secured by their and USG’s trade receivables and inventory. CGC's obligations under the credit facility are secured by trade receivables and inventory of certain subsidiaries. The credit facility matures in October 2019. The credit facility is available to fund working capital needs and for other general corporate purposes.

The credit agreement allows for the borrowing of revolving loans and issuance of letters of credit (up to a maximum of $200 million at any time outstanding, in aggregate) to USG and its subsidiaries. The maximum principal amount of revolving loans and letters of credit that may be borrowed by USG may not exceed the lesser of (1) $450 million and (2) the excess of (a) the domestic borrowing base determined by reference to the trade receivables and inventory of USG and its significant domestic subsidiaries minus (b) the amount, if any, by which of the outstanding balance at CGC exceeds the CGC borrowing base determined by reference to the trade receivables and inventory of CGC and certain Canadian subsidiaries at such time. The maximum principal amount of revolving loans and letters of credit that may be borrowed by CGC at any time may not exceed the lesser of (1) $50 million and (2) the sum of the CGC borrowing base determined by reference to the trade receivables and inventory of CGC and certain Canadian subsidiaries, plus the domestic borrowing base determined by reference to the trade receivables and inventory of USG and its significant domestic subsidiaries, minus the amount outstanding to USG at such time.

The credit agreement contains a financial covenant that would require us to maintain a minimum fixed charge coverage ratio of not less than 1.0 to 1.0 if the excess of the availability (as defined in the credit agreement) is less than an amount equal to 10% of the lesser of (a) the aggregate revolving commitment at such time and (b) the aggregate borrowing base at such time. As of June 30, 2015, our fixed charge coverage ratio was 1.10-to-1.0. Because we currently satisfy the required fixed charge coverage ratio, we are not required to maintain a minimum borrowing availability under the credit facility. Taking into account the most recent borrowing base calculation, borrowings available under the credit facility were approximately $352 million.

In the first quarter of 2015, we repurchased $350 million of our 8.375% Senior Notes due in 2018, or the 2018 Senior Notes through both a cash tender offer and a subsequent redemption of the remaining 2018 Senior Notes. On February 24, 2015, we completed a cash tender offer pursuant to which we repurchased $126 million of the 2018 Senior Notes for aggregate consideration, including tender offer premium and accrued and unpaid interest, of $135 million. On March 26, 2015, we repurchased the remaining $224 million of the 2018 Senior Notes for aggregate consideration, including premium and accrued and unpaid interest, of $242 million.

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Also in the first quarter of 2015, we issued $350 million of 5.50% Senior Notes due 2025, or the 2025 Senior Notes. The net proceeds from the issuance of the 2025 Senior Notes and cash on hand were used to fund the repurchases of the 2018 Senior Notes and all related costs and expenses.

In the second quarter of 2015, we repaid the outstanding balance on our ship mortgage facility of $18 million with the proceeds from the sale of our two self-unloading vessels. We repaid $3 million of this facility in the first quarter of 2015 with cash on hand.

Our undistributed foreign earnings as of June 30, 2015 are considered permanently reinvested with the exception of earnings associated with our shipping operations and those associated with our equity method investment in Knauf-USG. The amount of cash and cash equivalents held by our foreign subsidiaries was $71 million as of June 30, 2015. Any repatriation of these funds to the U.S. would have an immaterial impact on our current tax rate due to our substantial net operating loss, or NOL, carryforwards and related valuation allowance.

CASH FLOWS

The following table presents a summary of our cash flows:

	Six months ended June 30,
(millions)	2015			2014
Net cash provided by (used for):
Operating activities	$	34		$	20
Investing activities	18			(593		)
Financing activities	(46		)	(1		)
Discontinued operations	—			(1		)
Effect of exchange rate changes on cash	(3		)	—
Net increase (decrease) in cash and cash equivalents	$	3		$	(575	)

Operating Activities: The increase in net cash provided by operating activities for the first six months of 2015 compared to the first six months of 2014 reflected the receipt of a cash dividend of $18 million from UBBP for earnings through March 2015 offset by higher outflows due to an increase in working capital compared to the prior year end. The increase in working capital was driven primarily by higher accounts receivable and lower accounts payable.

As of June 30, 2015, working capital (current assets less current liabilities) amounted to $762 million, and the ratio of current assets to current liabilities was 2.52-to-1. As of December 31, 2014, working capital amounted to $589 million, and the ratio of current assets to current liabilities was 2.05-to-1.

Investing Activities: Net cash provided by investing activities during the first six months of 2015 was $18 million compared to net cash used for investing activities of $593 million during the first six months of 2014. The change reflects a cash outflow in February 2014 of $557 million for our investment in UBBP, consisting of a $500 million base purchase price, $13 million of customary estimated working capital and net debt adjustments, $21 million of transaction costs and $23 million of cash held by the wholly-owned subsidiaries that we contributed to UBBP.

Additionally, in the first half of 2015, we deposited $48 million into settlement fund escrow accounts pursuant to the settlement agreements with the direct and indirect purchaser class settlements. The net activity of purchases and sales or maturities for marketable securities increased to a cash inflow of $71 million for the six months ended June 30, 2015 from a cash inflow of $2 million for the six months ended June 30, 2014. Capital expenditures amounted to $48 million in the first six months of 2015 compared with $58 million in the first six months of 2014.

Approved capital expenditures for the replacement, modernization and expansion of operations totaled $61 million as of June 30, 2015 compared with $96 million as of December 31, 2014.

Financing Activities: Net cash used for financing activities for the first six months of 2015 was $46 million compared to $1 million in the first six months of 2014. The decrease reflected $365 million paid to repurchase $350 million of our 8.375% Senior Notes due 2018 plus tender premium offset by the $344 million of proceeds received from the issuance of $350 million of 5.50% Senior Notes, net of debt issuance fees and $21 million used to repay our ship mortgage facility.

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DEFINED BENEFIT PLANS

During the first six months of 2015, we made cash contributions of $50 million to the USG Corporation Retirement Plan Trust, $6 million to our pension plan in Canada, and $2 million, in aggregate, to certain other domestic plans. We expect to make total contributions to our pension plans in 2015 of approximately $61 million.

LIQUIDITY OUTLOOK

In the first six months of 2015, our investing cash outflows included $48 million of capital expenditures. In total for 2015, we plan to spend approximately $100 million on capital expenditures in the normal course of business. We expect to fund these expenditures with cash from operations or cash on hand, and, if determined to be appropriate and they are available, borrowings under our revolving credit facilities.

Interest payments, based on our current level of outstanding debt, are expected to decrease to approximately $159 million in 2015 compared with $175 million in 2014 primarily due to the conversion of the remaining $75 million of our 10% convertible senior notes in April 2014, the repayment of our 9.75% senior notes in August 2014, the repurchase of our 2018 Senior Notes in February 2015, the issuance of our 5.50% Senior Notes in the first quarter of 2015, and the repayment of our ship mortgage facility in the second quarter of 2015.

Since formation, UBBP was funded from its net cash flow from operations and third-party financing, and it is our intent that as an ongoing operation, UBBP will continue to self-fund. During the second quarter of 2015, UBBP's Board of Directors declared and UBBP paid cash dividends on earnings through March 2015 of $36 million. Our share of these dividends is $18 million, which we intend to use to pay the earnout payment described in Note 2 to the consolidated financial statements.

In the third quarter of 2014, we recorded a $48 million accrual related to the settlement of the U.S. wallboard pricing class action lawsuit. In the first half of 2015, we paid $48 million into escrow which was recorded as restricted cash as of June 30, 2015 on our accompanying consolidated balance sheet.

We believe that cash on hand, including cash equivalents and marketable securities, cash available from future operations and our credit facilities will provide sufficient liquidity to fund our operations for at least the next 12 months. Cash requirements include, among other things, capital expenditures, working capital needs, employee retirement plans funding, debt repayment and amortization and other contractual obligations.

Realization of Deferred Tax Asset

As of June 30, 2015, we had federal NOL carryforwards of approximately $1.833 billion that are available to offset future federal taxable income and will expire in the years 2026 through 2032. In addition, as of that date, we had federal AMT credit carryforwards of approximately $46 million that are available to reduce future regular federal income taxes over an indefinite period. In addition, we have federal foreign tax credit carryforwards of $8 million that will expire if unused in 2015.

As of June 30, 2015, we had a gross deferred tax asset related to our state NOLs and tax credit carryforwards of $242 million, of which $1 million will expire in 2015. The remainder will expire if unused in years 2016 through 2033. We also had NOL and tax credit carryforwards in various foreign jurisdictions in the amount of $1 million as of June 30, 2015, against which we have maintained a valuation allowance.

For the six months ended June 30, 2015, we decreased our valuation allowance by $43 million which resulted in a deferred tax asset valuation allowance of $980 million as of June 30, 2015. Changes in the valuation allowance will have no impact on our ability to utilize our U.S. federal and state NOL and tax credit carryforwards to offset future U.S. profits. We continue to believe that we ultimately will have sufficient U.S. profitability during the remaining NOL and tax credit carryforward periods to realize substantially all of the economic value of the federal NOLs and some of the state NOLs before they expire.

We reduce the carrying amounts of deferred tax assets by a valuation allowance if, based on the available evidence, it is more likely than not that such assets will not be realized. The need to establish valuation allowances for deferred tax assets is assessed periodically. In assessing the requirement for, and amount of, a valuation allowance in accordance with the more likely-than-not standard, we give appropriate consideration to all positive and negative evidence related to the realization of the deferred tax assets. This assessment considers, among other matters, the nature, frequency and severity of current and cumulative losses, forecasts of future profitability, the duration of statutory carryforward periods, our experience with operating loss and tax credit carryforwards not expiring unused and tax planning alternatives. A history of cumulative losses for a certain threshold period is a significant form of negative evidence used in our assessment. Consistent with practices in the home building and related industries, we have a policy of four years as our threshold period for cumulative losses. During 2015, we

37

may realize a four year cumulative accounting profit in the U.S. If this occurs, we will also consider all other positive and negative evidence to determine the realizability of our deferred tax assets and the need for a full, or partial, valuation allowance. Any reversal of our valuation allowance will favorably impact our results of operations in the period of reversal.

See Note 15 to the consolidated financial statements for additional information regarding income tax matters.

Recently Issued Accounting Pronouncements

In May 2015, the Financial Accounting Standards Board, or FASB, issued Accounting Standard Update, or ASU, 2015-07, "Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent)," which updates the disclosure requirements for investments that are measured at net asset value using the practical expedient. These investments are to be removed from the fair value hierarchy and shown as a reconciling item. The standard will be effective for us in the first quarter of 2016, with early adoption permitted. We do not expect that the adoption of ASU 2015-07 will have a significant impact to our consolidated financial statements or disclosures.

In April 2015, the FASB issued ASU 2015-03, "Simplifying the Presentation of Debt Issuance Costs" which requires costs related to a recognized debt liability to be presented in the balance sheet as a direct deduction from the debt liability rather than as an asset. The standard will be effective for us in the first quarter of 2016, with early adoption permitted. Upon adoption, we would reclassify our deferred debt issuance costs from other assets to long term debt. If adopted as of June 30, 2015, we would have recorded a reduction in both other assets and long-term debt of $15 million and would have provided additional disclosure.

In August 2014, the FASB issued ASU 2014-15, "Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern," which requires management to assess, at each annual and interim reporting period, the entity's ability to continue as a going concern within one year of date of the financial statements are issued and provide related disclosures. The new standard will be effective for us for the year ended December 31, 2016, with early adoption permitted. We do not expect that the adoption of ASU 2014-15 will have a significant impact to our consolidated financial statements or disclosures.

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers,” which supersedes the revenue recognition requirements in “Revenue Recognition (Topic 605),” and requires entities to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. There are two transition methods available under the new standard, either cumulative effect or retrospective. In July 2015, the FASB agreed to defer the mandatory effective date by one year. The standard will be effective for us in the first quarter of 2018, with early adoption permitted, but not before the original effective date. We will adopt the new standard using the modified retrospective approach, which requires the standard be applied only to the most current period presented, with the cumulative effect of initially applying the standard recognized at the date of initial application. We do not expect that the adoption of ASU 2014-09 will have a significant impact to our consolidated financial statements or disclosures.

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Legal Contingencies

We are named as defendants in litigation arising from our operations, including lawsuits arising from the operation of our vehicles and lawsuits arising from product performance or warranties, personal injury, and commercial disputes. USG Corporation, United States Gypsum Company and CGC Inc. have been named as defendants in class action lawsuits alleging that North American wallboard manufacturers conspired to fix the price of wallboard sold in the United States and Canada. We have entered into settlement agreements with attorneys representing the direct and indirect purchaser plaintiff classes in the U.S. wallboard pricing lawsuits, for which USG recorded a $48 million charge in the third quarter of 2014. The Court presiding over the U.S. wallboard pricing lawsuits recently held a hearing on final approval of the settlements but has not yet issued a final judgment order. If the Court enters the final judgment order approving the settlements as expected, the settlements will become final and effective thirty days after entry of the order, assuming no appeal. If we are unable to resolve the U.S. class action litigation under the terms currently contemplated, or at all, there can be no assurance that the outcome of these lawsuits will not have a material effect on our business, financial condition, operating results or cash flows.

The settlement does not include the Canadian lawsuits to which CGC is a party. At this stage of the Canadian lawsuits, we are not able to estimate the amount, if any, of any reasonably possible loss or range of reasonably possible losses. We believe, however, that these Canadian lawsuits will not have a material effect on our results of operations, financial position, or cash flows.

In addition to the class action lawsuits, in the first quarter of 2015, USG and seven other wallboard manufacturers were named as defendants in a lawsuit filed by twelve homebuilders asserting individual claims similar to the claims asserted in the U.S. class action lawsuits. We believe that the cost, if any, of resolving these homebuilders’ claims will not materially increase our exposure from the $48 million agreed to in the class action settlements.

United States Gypsum Company was recently served with a federal grand jury subpoena requesting the production of company records in connection with a federal investigation of the gypsum drywall industry. We believe the investigation, although a separate proceeding, is related to the same events at issue in the litigation discussed above. We intend to fully cooperate with the grand jury investigation   We believe we acted in full compliance with the law, and we do not expect the resolution of this matter to result in any material adverse effect on our business, financial position, liquidity or results of operations; however, we can provide no assurances as to the scope, timing, or outcome of any such investigation. 

See Note 16 to the consolidated financial statements for further information regarding the foregoing lawsuits and other legal matters.

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Critical Accounting Policies

The preparation of our financial statements requires us to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses during the periods presented. Our Annual Report on Form 10-K for the fiscal year ended December 31, 2014, which we filed with the Securities and Exchange Commission on February 12, 2015, includes a summary of the critical accounting policies we believe are the most important to aid in understanding our financial results. There have been no changes to those critical accounting policies that have had a material impact on our reported amounts of assets, liabilities, revenues or expenses during the first six months of 2015.

Forward-Looking Statements

This report 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 operate USG Boral Building Products, including risks that our joint ventures partner, Boral, 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 third 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 report.

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.

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ITEM 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We use derivative instruments to manage certain commodity price and foreign currency exposures. We do not use derivative instruments for speculative trading purposes, and we typically do not hedge beyond three years. See Note 8 to the consolidated financial statements for additional information regarding our financial exposures.

COMMODITY PRICE RISK

We use natural gas swaps and options contracts to manage our exposure to fluctuations in commodity prices associated with anticipated purchases of natural gas. Currently, a significant portion of our anticipated purchases of natural gas for 2015 and 2016 is hedged as well as a portion of our anticipated purchases of natural gas for 2017. The aggregate notional amount of these hedge contracts in place as of June 30, 2015 was 20 million mmBTUs (millions of British Thermal Units). We review our positions regularly and make adjustments as market and business conditions warrant. The fair value of these contracts was an unrealized loss of $16 million as of June 30, 2015. A sensitivity analysis was prepared to estimate the potential change in the fair value of our natural gas hedge contracts assuming a hypothetical 10% change in market prices. Based on the results of this analysis, which may differ from actual results, the potential change in the fair value of our natural gas hedge contracts as of June 30, 2015 was $7 million. This analysis does not consider the underlying exposure.

FOREIGN CURRENCY EXCHANGE RISK

We have foreign exchange forward contracts to hedge forecasted purchases of products and services denominated in foreign currencies. The notional amount of these contracts was $99 million as of June 30, 2015, and they mature by December 23, 2016. The fair value of these contracts was a $4 million unrealized gain as of June 30, 2015.

A sensitivity analysis was prepared to estimate the potential change in the fair value of our foreign exchange forward contracts assuming a hypothetical 10% change in foreign exchange rates. Based on the results of this analysis, which may differ from actual results, the potential change in the fair value of our foreign exchange forward contracts as of June 30, 2015 was $10 million. This analysis does not consider the underlying exposure.

INTEREST RATE RISK

As of June 30, 2015, all of our outstanding debt was fixed-rate debt. A potential change in interest rates would have no effect.    

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ITEM 4. CONTROLS AND PROCEDURES

(a) Evaluation of disclosure controls and procedures.

Our Chief Executive Officer and Chief Financial Officer, after evaluating the effectiveness of our “disclosure controls and procedures” (as defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, or the Act), have concluded that, as of the end of the quarter covered by this report, our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Act is accumulated and communicated to the issuer’s management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

(b) Changes in internal control over financial reporting.

There were no changes in our “internal control over financial reporting” (as defined in Rule 13a-15(f) promulgated under the Act) identified in connection with the evaluation required by Rule 13a-15(d) promulgated under the Act that occurred during the fiscal quarter ended June 30, 2015 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

See Part I, Item 1, Note 16 to the consolidated financial statements for additional information regarding legal proceedings.

ITEM 1A. RISK FACTORS

There is no material change in the information reported under "Part I-Item 1A-Risk Factors" contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2014 except for the Risk Factor which is restated in full below (including a supplement thereto):

Our financial results may be affected by various legal and governmental proceedings, including those involving antitrust, tax, environmental, or other matters.

We are subject to litigation and regulatory and governmental proceedings in the normal course of business and could become subject to additional claims in the future, some of which could become material in the future, including but not limited to the federal grand jury subpoena we recently received in connection with an investigation of the gypsum drywall industry, discussed in Item 2 above. The outcome of existing legal and governmental proceedings may differ from our expectations because the outcomes of litigation and governmental proceedings are often difficult to predict reliably. Various factors and developments can lead to changes in current estimates of liabilities and related insurance receivables, where applicable, or make additional estimates, including new or modified estimates that may be appropriate due to a judicial ruling or judgment, a settlement, regulatory developments or changes in applicable law. A future adverse ruling, settlement or unfavorable development could result in charges that could have a material adverse effect on our results of operations in any particular period. For a more detailed discussion of certain of the legal proceedings in which we are involved, see Item 1, Legal Proceedings, above.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(a) Pursuant to our Deferred Compensation Program for Non-Employee Directors, one of our non-employee directors deferred his quarterly retainer for service as a director that was payable on June 30, 2015 into a total of approximately 990 deferred stock units. These units will increase or decrease in value in direct proportion to the market value of our common stock and will be paid in cash or shares of common stock, at the director’s option, following termination of service as a director. The issuance of these deferred stock units was effected through a private placement under Section 4(2) of the Securities Act of 1933, as amended, and was exempt from registration under Section 5 of that Act.

ITEM 4. MINE SAFETY DISCLOSURES

The information concerning mine safety violations or regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K promulgated by the SEC is included in Exhibit 95 to this report.

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ITEM 6. EXHIBITS

10.1	USG Corporation Management Incentive Plan (as amended and restated effective May 13, 2015) (incorporated by reference to Annex B to the Proxy Statement for the Annual Meeting of Stockholders of USG Corporation held on May 13, 2015, or the 2015 Proxy Statement)
10.2	USG Corporation Long-Term Incentive Plan (as amended and restated effective May 13, 2015 (incorporated by reference to Annex C to the 2015 Proxy Statement)
10.3	Form of Employment Agreement (form used since January 1, 2015) *
31.1	Rule 13a-14(a) Certifications of USG Corporation’s Chief Executive Officer *
31.2	Rule 13a-14(a) Certifications of USG Corporation’s Chief Financial Officer *
32.1	Section 1350 Certifications of USG Corporation’s Chief Executive Officer *
32.2	Section 1350 Certifications of USG Corporation’s Chief Financial Officer *
95	Mine Safety Disclosures *
101	The following financial information from USG Corporation’s Quarterly Report on Form 10-Q for the three and six months ended June 30, 2015, formatted in XBRL (Extensible Business Reporting Language): (1) the consolidated statements of operations for the three and six months ended June 30, 2015 and 2014, (2) the consolidated statements of comprehensive income (loss) for the three and six months ended June 30, 2015 and 2014, (3) the consolidated balance sheets as of June 30, 2015 and December 31, 2014, (4) the consolidated statements of cash flows for the six months ended June 30, 2015 and 2014 and (5) notes to the consolidated financial statements. *

* Filed or furnished herewith

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	USG CORPORATION
	By	/s/ James S. Metcalf
		James S. Metcalf,
		Chairman, President and Chief Executive Officer
	By	/s/ Matthew F. Hilzinger
		Matthew F. Hilzinger,
		Executive Vice President and Chief Financial Officer
	By	/s/ Jeanette A. Press
		Jeanette A. Press,
		Vice President, Controller and Principal Accounting Officer
July 23, 2015

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EXHIBIT INDEX

Exhibit Number	Exhibit
10.1	USG Corporation Management Incentive Plan (as amended and restated effective May 13, 2015) (incorporated by reference to Annex B to the Proxy Statement for the Annual Meeting of Stockholders of USG Corporation held on May 13, 2015, or the 2015 Proxy Statement)
10.2	USG Corporation Long-Term Incentive Plan (as amended and restated effective May 13, 2015 (incorporated by reference to Annex C to the 2015 Proxy Statement)
10.3	Form of Employment Agreement (form used since January 1, 2015) *
31.1	Rule 13a-14(a) Certifications of USG Corporation’s Chief Executive Officer *
31.2	Rule 13a-14(a) Certifications of USG Corporation’s Chief Financial Officer *
32.1	Section 1350 Certifications of USG Corporation’s Chief Executive Officer *
32.2	Section 1350 Certifications of USG Corporation’s Chief Financial Officer *
95	Mine Safety Disclosures *
101	The following financial information from USG Corporation’s Quarterly Report on Form 10-Q for the three and six months ended June 30, 2015, formatted in XBRL (Extensible Business Reporting Language): (1) the consolidated statements of operations for the three and six months ended June 30, 2015 and 2014, (2) the consolidated statements of comprehensive income (loss) for the three and six months ended June 30, 2015 and 2014, (3) the consolidated balance sheets as of June 30, 2015 and December 31, 2014, (4) the consolidated statements of cash flows for the six months ended June 30, 2015 and 2014 and (5) notes to the consolidated financial statements. *

* Filed or furnished herewith

EX-10.3

EXHIBIT 10.3

USG CORPORATION

EMPLOYMENT AGREEMENT

This EMPLOYMENT AGREEMENT (this “Agreement”) is effective as of [DATE] (the “Effective Date”) between USG Corporation, a Delaware corporation (the “Company”), and [NAME] (the “Executive”).

RECITALS:

WHEREAS, the Company desires to continue to employ the Executive and the Executive desires to accept such continued employment with the Company;

WHEREAS, as of the Effective Date, the Company shall employ the Executive on the terms and conditions set forth in this Agreement, and the Executive shall be retained and employed by the Company to perform services under the terms and conditions of this Agreement.

NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

1. Certain Definitions. Certain words or phrases with initial capital letters not otherwise defined herein shall have the meanings set forth in Section 9 hereof.

2. Employment. The Company shall employ the Executive, and the Executive accepts employment with the Company, as of the Effective Date, upon the terms and conditions set forth in this Agreement for the period beginning on the Effective Date and ending as provided in Section 5 hereof (the “Employment Period”).

3. Position and Duties. During the Employment Period, the Executive shall serve as the [TITLE] of the Company effective [DATE] and shall have the normal duties, responsibilities and authority of an executive serving in such position, subject to the power of the Chief Executive Officer to expand or limit such duties, responsibilities and authority, either generally or in specific instances. The Executive shall perform the Executive’s duties and responsibilities to the best of the Executive’s abilities in a diligent, trustworthy, businesslike and efficient manner.

4. Compensation and Benefits.

(a) Salary. The Company agrees to pay the Executive a salary (“Base Salary”) during the Employment Period in installments based on the Company’s practices as may be in effect

from time to time. The Executive’s initial Base Salary shall be at the rate of [$ ] per year. The Executive’s Base Salary shall be reviewed annually and may be increased from time to time.

(b) Incentive Plans. The Executive shall be eligible to participate in the Company’s annual and long-term incentive plans, on a basis comparable to other similarly situated executives of the Company.

(c) Expense Reimbursement. The Company shall reimburse the Executive for all reasonable expenses incurred by the Executive during the Employment Period in the course of performing the Executive’s duties under this Agreement that are consistent with the Company’s policies in effect from time to time with respect to travel, entertainment and other business expenses, subject to the Company’s requirements applicable generally with respect to reporting and documentation of such expenses. To the extent that the right to receive such reimbursement would constitute a “deferral of compensation” under Section 409A of the Code, any such reimbursement shall be made not later than the last day of the Executive’s tax year following the year in which the Executive incurs the expense. In no event will the amount of expenses so reimbursed by the Company in one year affect the amount of expenses eligible for reimbursement to be provided in any other taxable year.

(d) Standard Executive Benefits. The Executive shall be entitled during the Employment Period to participate (on the same basis as other similarly situated executives of the Company) in the Company’s benefit plans (including health and life insurance, retirement and investment plans (including supplements thereto), vacation, perquisites and other benefits, but excluding, except as hereinafter provided in Section 6, any severance pay program or policy of the Company) for which substantially all other similarly situated executives of the Company are from time to time generally eligible, as determined from time to time by the Board or a committee of the Board.

(e) Indemnification. The Executive shall be eligible to enter into the Company’s standard Indemnification Agreement that is entered into with other similarly situated senior executives of the Company.

5. Employment Period.

(a) Except as hereinafter provided, the Employment Period shall begin on the Effective Date and shall extend until [DATE], with automatic one-year renewals thereafter unless either party notifies the other at least 120 days before the scheduled expiration date that the Employment Period is not to renew.

(b) Notwithstanding (a) above, the Employment Period shall end early upon the first to occur of any of the following events:

(i) the Executive’s death;

(ii) the Company’s termination of the Executive’s employment on account of Disability;

(iii) a Termination for Cause;

(iv) a Termination without Cause; or

(v) a Voluntary Termination.

6. Post-Employment Period Payments.

(a) At the end of the Employment Period for any reason, the Executive shall cease to have any rights to salary, bonus, expense reimbursements or other benefits, except that the Executive shall be entitled to receive: (i) on the sixty-first (61^st) day after the Termination Date, any Base Salary which has accrued but is unpaid, any reimbursable expenses which have been incurred but are unpaid, and payment for any unexpired vacation days which have accrued under the Company’s or a Subsidiary’s vacation policy but are unused, as of the end of the Employment Period, (ii) any plan benefits which by their terms extend beyond termination of the Executive’s employment (but only to the extent provided in any such benefit plan in which the Executive has participated as an employee of the Company or a Subsidiary and excluding, except as hereinafter provided in Section 6, any severance pay program or policy of the Company or a Subsidiary), (iii) payments or benefits payable pursuant to the terms of any annual and/or long-term incentive plan of the Company or a Subsidiary in accordance with the terms thereof, and (iv) any benefits to which the Executive is entitled under Part 6 of Subtitle B of Title I of the Employee Retirement Income Security Act of 1974, as amended (“COBRA”). In addition, the Executive shall be entitled to the additional benefits and amounts described in the succeeding subsectionsof this Section 6, in the circumstances described in such subsections.

(b) If the Employment Period ends pursuant to Section 5 hereof on account of death, a Voluntary Termination, a Termination for Cause or a termination on account of the Executive’s Disability, the Company shall make no further payments to the Executive except as contemplated in Section 6(a) above.

(c) If the Employment Period ends early pursuant to Section 5 on account of a Termination without Cause, the Executive shall be entitled to the payments contemplated in Section 6(a) above and as set forth below:

(i) On the sixty-first (61^st) day after the Termination Date, the Executive shall be entitled to a lump sum payment in an amount equal to [one (1)/two (2)]¹ times the sum of (A) Base Salary (at the highest rate in effect for any period within two years prior to the Termination Date), plus (B) annual bonus (in an amount equal to target annual bonus for the year in which the Termination Date occurs).

(ii) On the sixty-first (61^st) day after the Termination Date, the Executive shall be entitled to a lump sum payment equal to the total cost (including both the Executive’s and the Company’s portion of such costs as paid while the Executive was employed) of continuing the medical, dental, vision, long-term disability and life insurance benefits (excluding benefits under the executive death benefit plan) substantially similar to those that the Executive was receiving or entitled to receive immediately prior to the Termination Date for a period of eighteen (18) months; provided, however, if any benefit described in this Section 6(c)(ii) is subject to tax, the Company will pay to the Executive, at the same time the lump sum cash payment is made, an additional amount such that after payment by the Executive or the Executive’s dependents or beneficiaries, as the case may be, of all taxes so imposed, the recipient retains an amount equal to such taxes.

(iii) The Executive shall be entitled to outplacement services for a time period (not less than six (6) months) established by the Company, by a firm selected by the Company in its sole discretion, and at the expense of the Company; provided, however, that all such outplacement services must be completed by December 31 of the second calendar year following the calendar year in which the Termination Date occurs and the Company will be required to make all payments to the Executive for such outplacement services by December 31 of the third calendar year following the calendar year in which the Termination Date occurs.

(iv) Notwithstanding anything to the contrary contained in this Agreement, if any payment or reimbursement, or the provision of any benefit under this Agreement that is paid or provided upon the Executive's "separation from service" with the Company and its Subsidiaries within the meaning of Section 409A(a)(2)(A)(i) of the Code would constitute a “deferral of compensation” under Section 409A of the Code and the Executive is a “specified employee” (as determined pursuant to procedures adopted by the Company in compliance with Section 409A of the Code) on the date of the Executive’s “separation from service” with the Company and its Subsidiaries within the meaning of Section 409A(a)(2)(A)(i) of the Code, the

¹ Two (2) times for any Vice President or above who serves on the Executive Committee of the Company; one (1) times for all others.

Executive (or the Executive’s beneficiary) will receive payment or reimbursement of such amounts or the provision of such benefits upon the earlier of (i) the first day of the seventh month following the date of the Executive’s “separation from service” with the Company and its Subsidiaries within the meaning of Section 409A(a)(2)(A)(i) of the Code or (ii) the Executive’s death. In addition, if payment to the Executive of any amount pursuant to Section 6(a) or this Section 6(c) would constitute a “deferral of compensation” under Section 409A of the Code and if the Executive’s termination does not constitute a “separation from service” with the Company and its Subsidiaries within the meaning of Section 409A(a)(2)(A)(i) of the Code, then payment of such amount shall be made, to the extent necessary to comply with Section 409A of the Code and subject to the preceding sentence, to the Executive on the later of (i) the payment date identified in the applicable paragraph of this Section 6 or (ii) on the earlier of (A) the Executive’s “separation from service” with the Company and its Subsidiaries within the meaning of Section 409A(a)(2)(A)(i) of the Code, (B) the Executive's disability (within the meaning of Section 409A of the Code), (C) a change in control of the Company within the meaning of Section 409A of the Code or (D) the Executive’s death.

(d) It is expressly understood that the Company’s payment obligations under Section 6(c) shall cease in the event the Executive breaches any of his or her agreements in Section 7 hereof and, in the event of any such breach, the Executive shall repay in cash immediately to the Company any amounts previously paid to the Executive under Section 6(c) of this Agreement.

(e) The Executive shall not be required to mitigate the amount of any payment or benefit provided for in this Agreement by seeking other employment or otherwise.

7. Competitive Activity; Confidentiality; Nonsolicitation.

(a) Acknowledgements and Agreements. The Executive hereby acknowledges and agrees that in the performance of the Executive’s duties for the Company during the Employment Period, the Executive will be brought into frequent contact, either in person, by telephone or through the mails, with existing and potential customers of the Company throughout the United States. The Executive also agrees that trade secrets and confidential information of the Company, more fully described in Section 7(i) of this Agreement, gained by the Executive during the Executive’s association with the Company, have been developed by the Company through substantial expenditures of time, effort and money and constitute valuable and unique property of the Company. The Executive further understands and agrees that the foregoing makes it necessary for the protection of the business of the Company that the Executive not compete with the Company during the Employment

Period and not compete with the Company for a reasonable period thereafter, as further provided in the following subsections.

(b) Covenants During the Employment Period. During the Employment Period, the Executive will not compete with the Company anywhere that the Company conducts its business. In accordance with this restriction, but without limiting its terms, during the Employment Period, the Executive will not:

(v) enter into or engage in any business which competes with the business of the Company;

(vi) solicit customers, business, patronage or orders for, or sell, any products and services in competition with, or for any business that competes with, the business of the Company;

(vii) divert, entice or otherwise take away any customers, business, patronage or orders of the Company or attempt to do so; or

(viii) promote or assist, financially or otherwise, any person, firm, association, partnership, corporation or other entity engaged in any business which competes with the business of the Company.

(c) Covenants Following Termination. For a period of two (2) years following the termination of the Executive’s employment for any reason, unless the Executive is entitled to severance benefits under a severance agreement between the Executive and the Company providing for payment of benefits upon a termination of employment following a change in control of the Company and containing covenants made by the Executive with respect to the subject matter of this Section 7(c) (a “Severance Agreement”), in which case those covenants contained in such Severance Agreement shall apply to the Executive in lieu of the application of this Section 7, the Executive will not:

(i) enter into or engage in any business which competes with the Company’s business within the United States;

(ii) solicit customers, business, patronage or orders for, or sell, any products and services in competition with, or for any business, wherever located, that competes with, the Company’s business within the United States;

(iii) divert, entice or otherwise take away any customers, business, patronage or orders of the Company within the United States, or attempt to do so; or

(iv) promote or assist, financially or otherwise, any person, firm, association, partnership, corporation or other entity engaged in any business which competes with the Company’s business within the United States.

(d) Indirect Competition. For the purposes of Sections 7(b) and 7(c), but without limitation thereof, the Executive will be in violation thereof if the Executive engages in any or all of the activities set forth therein directly as an individual on the Executive’s own account, or indirectly as a general partner, joint venturer, employee, agent, salesperson, consultant, officer and/or director of any firm, association, partnership, corporation or other entity, or as a limited partner, member or stockholder of any limited partnership, limited liability company, or corporation in which the Executive or the Executive’s spouse, child or parent owns, directly or indirectly, individually or in the aggregate, more than five percent (5%) of the limited partnership interests, limited liability company interests or outstanding stock, as the case may be.

(e) The Company. For purposes of this Section 7, the Company shall include any and all Subsidiaries of the Company.

(f) The Company’s Business. For the purposes of Sections 7(b), 7(c), 7(j) and 7(k), the Company’s business is defined to be the manufacture and distribution of gypsum wallboard, joint compound and related gypsum products, cement board, gypsum fiber panels, ceiling panels and grid, the distribution of building products and any future businesses the Company may enter, as further described in any and all manufacturing, marketing and sales manuals and materials of the Company as the same may be altered, amended, supplemented or otherwise changed from time to time, or of any other products or services substantially similar to or readily substitutable for any such described products and services.

(g) Extension. If it shall be judicially determined that the Executive has violated any of the Executive’s obligations under Section 7(c), then the period applicable to each obligation that the Executive shall have been determined to have violated shall automatically be extended by a period of time equal in length to the period during which such violation(s) occurred.

(h) Non-Solicitation. Until the expiration of three (3) years following the Termination Date, the Executive will not directly or indirectly at any time solicit or induce or attempt to solicit or induce any employee(s), sales representative(s), agent(s) or consultant(s) of the Company and/or of its Subsidiaries to terminate their employment, representation or other association with the Company and/or its Subsidiaries.

(i) Further Covenants.

(i) The Executive will keep in strict confidence, and will not, without the prior written consent of the Company or as may otherwise be required by law or legal process, directly or indirectly, at any time during or after the Executive’s employment with the Company, disclose, furnish, disseminate, make available or, except in the course of performing the Executive’s duties of employment, use any trade secrets or non-public confidential business and technical information of the Company or its customers or vendors, including without limitation as to when or how the Executive may have acquired such information before or during employment. Such confidential information shall include, without limitation, the Company’s unique non-public confidential selling, manufacturing and servicing methods and business techniques, training, service and business manuals, promotional materials, training courses and other training and instructional materials, vendor and product information, customer and prospective customer lists, other customer and prospective customer information and other business information. The Executive specifically acknowledges that all such non-public confidential information, whether reduced to writing, maintained on any form of electronic media, or maintained in the Executive’s mind or memory and whether compiled by the Company and/or the Executive, derives independent economic value from not being readily known to or ascertainable by proper means by others who can obtain economic value from its disclosure or use, that reasonable efforts have been made by the Company to maintain the secrecy of such information, that such information is the sole property of the Company and that any retention and use of such information by the Executive during the Executive’s employment with the Company (except in the course of performing the Executive’s duties and obligations to the Company) or after the termination of the Executive’s employment shall constitute a misappropriation of the Company’s trade secrets.

(ii) The Executive agrees that upon termination of the Executive’s employment with the Company, for any reason, the Executive shall return to the Company, in good condition, all property of the Company, including without limitation, the originals and all copies of any materials which contain, reflect, summarize, describe, analyze or refer or relate to any items of information listed in Section 7(i)(i) of this Agreement. In the event that such items are not so returned, the Company will have the right to charge the Executive for all reasonable damages, costs, attorneys’ fees and other expenses incurred in searching for, taking, removing and/or recovering such property.

(j) Discoveries and Inventions; Work Made for Hire.

(i) The Executive hereby assigns and agrees to assign to the Company, its successors, assigns or nominees, all of the Executive’s rights to any discoveries, inventions and improvements, whether patentable or not, made, conceived or suggested, either solely or jointly with others, by the Executive while in the Company’s employ with the use of the Company’s time, material or facilities or in any way within or related to the existing or contemplated scope of the Company’s business. Any discovery, invention or improvement relating to any subject matter with which the Company was concerned during the Executive’s employment and made, conceived or suggested by the Executive, either solely or jointly with others, within one (1) year following termination of the Executive’s employment under this Agreement or any successor agreements shall be irrebuttably presumed to have been so made, conceived or suggested in the course of such employment with the use of the Company’s time, materials or facilities. Upon request by the Company with respect to any such discoveries, inventions or improvements, the Executive will execute and deliver to the Company, at any time during or after the Executive’s employment, all appropriate documents for use in applying for, obtaining and maintaining such domestic and foreign patents as the Company may desire, and all proper assignments therefor, when so requested, at the expense of the Company, but without further or additional consideration.

(ii) The Executive acknowledges that, to the extent permitted by law, all work papers, reports, documentation, drawings, photographs, negatives, tapes and masters therefor, prototypes and other materials (hereinafter, “items”), including without limitation, any and all such items generated and maintained on any form of electronic media, generated by the Executive during the Executive’s employment with the Company shall be considered a “work made for hire” and that ownership of any and all copyrights in any and all such items shall belong to the Company. The item will recognize the Company as the copyright owner, will contain all proper copyright notices, e.g., “(creation date) USG Corporation, All Rights Reserved,” and will be in condition to be registered or otherwise placed in compliance with registration or other statutory requirements throughout the world.

(k) Communication of Contents of Agreement. During the Executive’s employment and for two (2) years thereafter, the Executive will communicate the contents of this Agreement to any person, firm, association, partnership, corporation or other entity which the Executive intends to be employed by, associated with, or represent and which is engaged in a business that is competitive to the business of the Company.

(l) Non-Disparagement. The Executive and his immediate family agree to refrain from criticizing or making disparaging or derogatory comments about the Company or any

Subsidiary and any of their respective officers, directors, employees and agents or any products or services of the Company or any Subsidiary.

(m) Relief. The Executive acknowledges and agrees that the remedy at law available to the Company for breach of any of the Executive’s obligations under this Agreement would be inadequate. The Executive therefore agrees that, in addition to any other rights or remedies that the Company may have at law or in equity, temporary and permanent injunctive relief may be granted in any proceeding which may be brought to enforce any provision contained in Sections 7(b), 7(c), 7(h), 7(i), 7(j) 7(k) and 7(l) of this Agreement, without the necessity of proof of actual damage.

(n) Reasonableness. The Executive acknowledges that the Executive’s obligations under this Section 7 are reasonable in the context of the nature of the Company’s business and the competitive injuries likely to be sustained by the Company if the Executive was to violate such obligations. The Executive further acknowledges that this Agreement is made in consideration of, and is adequately supported by, the agreement of the Company to perform its obligations under this Agreement and by other consideration, which the Executive acknowledges constitutes good, valuable and sufficient consideration.

8. Section 280G. The amounts payable to the Executive under Section 6 may be adjusted as set forth in this Section 8 if the sum (the “combined amount”) of the amounts payable under Section 6 and all other payments or benefits which the Executive has received or has the right to receive from the Company which are defined in Section 280G(b)(2)(A)(i) of the Code, would, but for the application of this Section 8, constitute a “parachute payment” (as defined in Section 280G(b)(2) of the Code). In such event, the combined amount shall be reduced to the minimum extent necessary (but in no event to less than zero) so that no portion of any such payment or benefit, as so reduced, constitutes a parachute payment; provided, however, that the foregoing reduction shall be made only if and to the extent that such reduction would result in an increase in the aggregate payments and benefits to be provided to the Executive, determined on an after-tax basis (taking into account the excise tax imposed pursuant to Section 4999 of the Code, or any successor provision thereto, any tax imposed by any comparable provision of state law, and any applicable federal, state and local income taxes). To the extent the reduction referred to in the second sentence of this Section 8 applies, such reduction shall be made to the combined amount by reduction of the aggregate amount of the lump sum payments described in Sections 6(c)(i) and 6(c)(ii) of this Agreement and, to the extent further reductions are required, in such payments due to the Executive as the Company may determine. Any determinations required to be made under this Section 8 shall be made by the Company’s independent accountants, which shall provide detailed supporting calculations both to the Company and the Executive within 15 business days of the date of termination or such earlier time as is requested by the Company, and shall be made at the expense of the Company. The fact that the Executive’s right to payments or benefits may be

reduced by reason of the limitations contained in this Section 8 shall not of itself limit or otherwise affect any other rights of the Executive under this Agreement.

9. Definitions.

(a) “Board” means the Board of Directors of the Company.

(b) “Cause” means that, prior to the termination of the Employment Period, the Executive shall have:

(i) committed a felony or a fraud;

(ii) engaged in conduct that brings the Company or any of its Subsidiaries into substantial public disgrace or disrepute;

(iii) committed gross negligence or gross misconduct with respect to the Company or any of its Subsidiaries;

(iv) repudiated this Agreement or abandoned employment with the Company;

(v) failed to follow the directives of the Board or the Chief Executive Officer and such failure is not cured within five (5) business days after written notice thereof to the Executive from the Company;

(vi) breached any of the agreements in Section 7 hereof;

(vii) breached a material employment policy of the Company which is not cured within five (5) business days after written notice thereof to the Executive from the Company; or

(viii) committed any other breach of this Agreement which is material and which is not cured within thirty (30) days after written notice thereof to the Executive from the Company.

(c) “Code” means the Internal Revenue Code of 1986, as amended.

(d) “Disability” means the Executive’s having become unable (as determined in good faith by the Chief Executive Officer), with reasonable accommodations, to regularly perform the Executive’s duties hereunder by reason of illness or incapacity.

(e) “Release Agreement” means an agreement, in substantially the form customarily used by the Company for similarly situated executives of the Company in similar instances, pursuant to which the Executive releases, to the extent permitted by law, all current or future claims, known or unknown, arising on or before the date of the release against the Company, its subsidiaries and its officers.

(f) “Subsidiary” means a corporation, company or other entity (i) at least 50 percent of whose outstanding shares or securities (representing the right to vote for the election of directors or other managing authority) are, or (ii) which does not have outstanding shares or securities (as may be the case in a partnership, joint venture or unincorporated association), but at least 50 percent of whose ownership interest representing the right generally to make decisions for such other entity is, now or hereafter, owned or controlled, directly or indirectly, by the Company.

(g) “Termination Date” means the date on which the Executive’s employment is terminated by the Company or any Subsidiary.

(h) “Termination for Cause” means the Company’s termination of the Executive’s employment for Cause.

(i) “Termination without Cause” means the Company’s termination of the Executive’s employment other than a Termination for Cause.

(j) “Voluntary Termination” means Executive’s termination of the Executive’s employment for any reason, including retirement.

10. Representations.

(a) Executive Representations. The Executive represents and warrants to the Company that (i) the execution, delivery and performance of this Agreement by the Executive does not and will not conflict with, breach, violate or cause a default under any contract, agreement, instrument, order, judgment or decree to which the Executive is a party or by which the Executive is bound, (ii) the Executive is not a party to or bound by any employment agreement, noncompete agreement or confidentiality agreement with any other person or entity and (iii) upon the execution and delivery of this Agreement by the Company, this Agreement shall be the valid and binding obligation of the Executive, enforceable in accordance with its terms.

(b) Company Representation. The Company represents and warrants to the Executive that upon the execution and delivery of this Agreement by the Executive, this Agreement shall

be the valid and binding obligation of the Company, enforceable in accordance with its terms.

11. Release Agreement. No payments shall be made under Section 6(c) hereof unless the Executive, on or before the sixtieth (60^th) day following the Executive’s Termination Date, (i) signs and returns the Release Agreement within the number of days that the Company determines is required under applicable law, but in no event more than forty-five (45) days after the Company delivers the Release Agreement to the Executive and (ii) does not revoke the Release Agreement within the time period provided therein, such time period not to exceed seven (7) days. If the Executive becomes entitled to payments under Section 6(c) hereof, the Company shall deliver to the Executive a copy of the Company’s standard form of Release Agreement within seven (7) days of the Executive’s Termination Date.

12. Survival. Subject to any limits on applicability contained therein, Section 7 hereof shall survive and continue in full force in accordance with its terms notwithstanding any termination of the Employment Period.

13. Withholding of Taxes. The Company may withhold from any amounts payable under this Agreement all federal, state, city or other taxes as the Company is required to withhold pursuant to any applicable law, regulation or ruling.

14. Notices. For all purposes of this Agreement, all communications, including without limitation notices, consents, requests or approvals, required or permitted to be given hereunder will be in writing and will be deemed to have been duly given when hand delivered or dispatched by electronic facsimile transmission (with receipt thereof orally confirmed), or five business days after having been mailed by United States registered or certified mail, return receipt requested, postage prepaid, or three business days after having been sent by a nationally recognized overnight courier service such as FedEx or UPS, addressed to the Company (to the attention of the Secretary of the Company) at its principal executive office and to the Executive at the Executive’s principal residence, or to such other address as any party may have furnished to the other in writing and in accordance herewith, except that notices of changes of address will be effective only upon receipt.

15. Severability. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity or unenforceability shall not affect any other provision of this Agreement, but this Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid or unenforceable provision had never been contained herein.

16. Complete Agreement. This Agreement embodies the complete agreement and understanding between the parties with respect to the employment of the Executive and the subject matter hereof

and effective as of its date supersedes and preempts any prior understandings, agreements or representations by or between the parties, written or oral, which may have related to the subject matter hereof in any way, including any prior Employment Agreements between the Company and the Executive. The severance benefits provided in Section 6(c) hereof shall be in lieu of any severance benefits under any plans, programs, policies or practices of the Company; provided, however, that if the Executive is entitled to benefits under this Agreement and a Severance Agreement, the Executive will be entitled to severance benefits under either this Agreement or such Severance Agreement, whichever agreement provides for greater benefits, but will not be entitled to benefits under both agreements.

17. Counterparts. This Agreement may be executed in separate counterparts, each of which shall be deemed to be an original and both of which taken together shall constitute one and the same agreement.

18. Successors and Assigns. This Agreement shall bind and inure to the benefit of and be enforceable by the Executive, the Company and their respective heirs, executors, personal representatives, successors and assigns, except that neither party may assign any rights or delegate any obligations hereunder without the prior written consent of the other party. The Executive hereby consents to the assignment by the Company of all of its rights and obligations hereunder to any successor to the Company by merger or consolidation or purchase of all or substantially all of the Company’s assets, provided such transferee or successor assumes the liabilities of the Company hereunder.

19. Governing Law. The validity, interpretation, construction and performance of this Agreement will be governed by and construed in accordance with the substantive laws of the State of Delaware and federal law, without giving effect to the principles of conflict of laws of such State, except as expressly provided herein.

20. Amendment and Waiver. The provisions of this Agreement may be amended or waived only with the prior written consent of the Company and the Executive, and no course of conduct or failure or delay in enforcing the provisions of this Agreement shall affect the validity, binding effect or enforceability of this Agreement.

21. Section 409A of the Code. Each payment or reimbursement and the provision of each benefit under this Agreement shall be considered to be a separate payment and not one of a series of payments for purposes of Section 409A of the Code. To the extent applicable, it is intended that this Agreement comply with the provisions of Section 409A of the Code, so that the income inclusion provisions of Section 409A(a)(1) of the Code do not apply to the Executive. This Agreement shall be administered in a manner consistent with this intent. Reference to Section 409A of the Code is to Section 409A of the Internal Revenue Code of 1986, as amended, and will also include any regulations or any other formal guidance promulgated with respect to such Section by the U.S. Department of the Treasury or the Internal Revenue Service.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.

USG CORPORATION

By:

Name:

Title:

Executive

EX-31.1

EXHIBIT 31.1

CERTIFICATIONS

I, James S. Metcalf, certify that:

1. I have reviewed this quarterly report on Form 10-Q of USG Corporation (the “Corporation”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Corporation as of, and for, the periods presented in this report;

4. The Corporation’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act rules 13a-15(f) and 15(d)-15(f)) for the Corporation and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Corporation, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the Corporation’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the Corporation’s internal control over financial reporting that occurred during the Corporation’s most recent fiscal quarter (the Corporation’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Corporation’s internal control over financial reporting; and

5. The Corporation’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Corporation’s auditors and the audit committee of the Corporation’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Corporation’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Corporation’s internal control over financial reporting.

July 23, 2015	/s/ James S. Metcalf
	James S. Metcalf
	Chairman, President and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATIONS

I, Matthew F. Hilzinger, certify that:

1. I have reviewed this quarterly report on Form 10-Q of USG Corporation (the “Corporation”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Corporation as of, and for, the periods presented in this report;

4. The Corporation’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act rules 13a-15(f) and 15(d)-15(f)) for the Corporation and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Corporation, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the Corporation’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the Corporation’s internal control over financial reporting that occurred during the Corporation’s most recent fiscal quarter (the Corporation’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Corporation’s internal control over financial reporting; and

5. The Corporation’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Corporation’s auditors and the audit committee of the Corporation’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Corporation’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the Corporation’s internal control over financial reporting.

July 23, 2015	/s/ Matthew F. Hilzinger
	Matthew F. Hilzinger
	Executive Vice President and Chief Financial Officer

EX-32.1

EXHIBIT 32.1

SECTION 1350 CERTIFICATIONS

In connection with the Quarterly Report of USG Corporation (the “Corporation”) on Form 10-Q, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, James S. Metcalf, Chairman, President and Chief Executive Officer of the Corporation, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.

July 23, 2015	/s/ James S. Metcalf
	James S. Metcalf
	Chairman, President and Chief Executive Officer

EX-32.2

EXHIBIT 32.2

SECTION 1350 CERTIFICATIONS

In connection with the Quarterly Report of USG Corporation (the “Corporation”) on Form 10-Q, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Matthew F. Hilzinger, Executive Vice President and Chief Financial Officer of the Corporation, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.

July 23, 2015	/s/ Matthew F. Hilzinger
	Matthew F. Hilzinger
	Executive Vice President and Chief Financial Officer

EX-95

EXHIBIT 95

Mine Safety Disclosures

The operation of our ten mines and quarries in the United States is subject to regulation and inspection under the Federal Mine Safety and Health Act of 1977, or Safety Act. From time to time, inspection of our mines and quarries and their operation results in our receipt of citations or orders alleging violations of health or safety standards or other violations under the Safety Act. We are usually able to resolve the matters identified in the citations or orders with little or no assessments or penalties.

Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and rules promulgated by the Securities and Exchange Commission, or SEC, to implement that Section require that we disclose specified information about mine health and safety in our periodic reports filed with the SEC. The disclosure requirements set forth in Section 1503 and the SEC rules refer to, and are based on, the safety and health requirements applicable to mines under the Safety Act which is administered by the U.S. Labor Department's Mine Safety and Health Administration, or MSHA. Under the Safety Act, MSHA is required to inspect surface mines at least twice a year and underground mines at least four times a year to determine whether there is compliance with health and safety standards or with any citation, order or decision issued under the Safety Act and whether an imminent danger exists. MSHA also conducts spot inspections and inspections pursuant to miners' complaints.

If violations of safety or health standards are found, MSHA inspectors will issue citations to the mine operators. Among other activities under the Safety Act, MSHA also assesses and collects civil monetary penalties for violations of mine safety and health standards.

In addition, an independent adjudicative agency, the Federal Mine Safety and Health Review Commission, or FMSHRC, provides administrative trial and appellate review of legal disputes arising under the Safety Act. Most cases deal with civil penalties proposed by MSHA to be assessed against mine operators and address whether the alleged safety and health violations occurred, as well as the appropriateness of proposed penalties.

During the quarter ended June 30, 2015, we received 7 citations alleging health and safety violations that could significantly and substantially contribute to the cause and effect of a mine safety or health hazard under the Safety Act, or S&S violations, and 16 citations alleging other health and safety violations. We have received proposed assessments from MSHA with respect to 11 of the 23 total citations. The total dollar value of proposed assessments from MSHA with respect to those citations was $4,101. No assessments have yet been made by MSHA with respect to the other 12 citations. Set forth below is information with respect to the gypsum mines for which citations were received during the quarter ended June 30, 2015:

Location of Mines/Quarries	Number of Citations for S&S Violations	Number of Citations for Non S&S Violations	Total Proposed Assessments
Alabaster, Michigan	1	2	$560
Empire, Nevada (closed)	—	—	—
Fort Dodge, Iowa	—	—	—
Plaster City, California	—	—	—
Shoals, Indiana	—	1	—
Sigurd, Utah	2	3	1,150
Southard, Oklahoma	2	2	2,391
Sperry, Iowa	2	8	—
Spruce Pine, North Carolina	—	—	—
Sweetwater, Texas	—	—	—
Totals	7	16	$4,101

We did not receive any citations or orders for unwarrantable failure to comply with mandatory health and safety standards under the Safety Act, any orders under the Safety Act regarding withdrawal from a mine as a result of failure to abate in a timely manner a health and safety violation for which a citation was issued, any imminent danger orders under the Safety Act, any written notice from MSHA of a pattern of violations of mandatory health or safety standards that are of such a nature as could significantly and substantially contribute to the cause and effect of mine health and safety hazards under the Safety Act or any written notice from MSHA of the potential to have such a pattern during the quarter ended June 30, 2015. Also, there were no flagrant violations under the Safety Act and no mining-related fatalities during the quarter ended June 30, 2015, and no legal actions before the FMSHRC were instituted during the quarter ended June 30, 2015 or pending as of June 30, 2015.

XML

Equity Method Investments (Details) - USD ($) $ in Millions	Jun. 30, 2015	Dec. 31, 2014	Feb. 27, 2014
Schedule of Equity Method Investments [Line Items]
Equity method investments	$ 717	$ 735
USG Boral Building Products
Schedule of Equity Method Investments [Line Items]
Equity method investments	$ 673	$ 689	$ 676
Ownership percentage	50.00%	50.00%	50.00%
Other equity method investments
Schedule of Equity Method Investments [Line Items]
Equity method investments	$ 44	$ 46
Other equity method investments | Minimum
Schedule of Equity Method Investments [Line Items]
Ownership percentage	33.00%	33.00%
Other equity method investments | Maximum
Schedule of Equity Method Investments [Line Items]
Ownership percentage	50.00%	50.00%

XML

Debt (Details) - USD ($) $ in Millions	Jun. 30, 2015	Feb. 24, 2015	Dec. 31, 2014	Jun. 30, 2014	Oct. 31, 2013
Debt Instrument [Line Items]
Debt instrument interest rate				10.00%
Current portion of long-term debt	$ 0		$ 4
Total debt	$ 2,188		$ 2,209
5.5% senior notes due 2025
Debt Instrument [Line Items]
Debt instrument interest rate	5.50%		5.50%
Total debt	$ 350	$ 350	$ 0
5.875% senior notes due 2021
Debt Instrument [Line Items]
Debt instrument interest rate	5.875%		5.875%
Total debt	$ 350		$ 350		$ 350
6.3% senior notes due 2016
Debt Instrument [Line Items]
Debt instrument interest rate	6.30%		6.30%
Total debt	$ 500		$ 500
7.75% senior notes due 2018, net of discount
Debt Instrument [Line Items]
Debt instrument interest rate	7.75%		7.75%
Total debt	$ 500		$ 500
7.875% senior notes due 2020, net of discount
Debt Instrument [Line Items]
Debt instrument interest rate	7.875%		7.875%
Total debt	$ 249		$ 249
8.375% senior notes due 2018
Debt Instrument [Line Items]
Debt instrument interest rate	8.375%		8.375%
Total debt	$ 0		$ 350
Ship mortgage facility
Debt Instrument [Line Items]
Current portion of long-term debt	0		4
Total debt	0		21
Industrial revenue bonds (due 2028 through 2034)
Debt Instrument [Line Items]
Total debt	$ 239		$ 239

XML

Marketable Securities (Details 1) - USD ($) $ in Millions	Jun. 30, 2015	Dec. 31, 2014
Contractual maturities of marketable securities
Due in 1 year or less, amortized cost	$ 61
Due in 1-5 years, amortized cost	21
Marketable securities, amortized cost	82	$ 154
Due in 1 year or less, fair value	61
Due in 1-5 years, fair value	21
Marketable securities, fair value	$ 82	$ 154

XML

Oman Investment (Details)	Jun. 30, 2015	Jun. 30, 2012
USG-Zawawi Drywall LLC
Statement [Line Items]
Ownership percentage by parent in noncontrolling interest	50.00%
Percentage of noncontrolling owners in VIE	50.00%
Zawawi Gypsum LLC
Statement [Line Items]
Ownership percentage by parent in noncontrolling interest		55.00%

XML

Debt (Details Textual) - USD ($)		3 Months Ended		6 Months Ended
	Feb. 12, 2015	Jun. 30, 2015	Mar. 31, 2015	Jun. 30, 2015	Jun. 30, 2014	Mar. 26, 2015	Feb. 24, 2015	Dec. 31, 2014
Debt Instrument [Line Items]
Debt instrument interest rate					10.00%
Loss on extinguishment of debt				$ 19,000,000	$ 0
Long-term debt		$ 2,188,000,000		2,188,000,000				$ 2,209,000,000
Deferred financing fees		15,000,000		15,000,000
Fair value of debt		2,315,000,000		2,315,000,000				$ 2,338,000,000
Credit facility
Debt Instrument [Line Items]
Borrowing available under credit facility		352,000,000		352,000,000
Outstanding lines of credit		$ 0		$ 0
Interest rate at period end for line of credit facility		2.03%		2.03%
Amount of letters of credit outstanding		$ 53,000,000		$ 53,000,000
CGC credit facility USD
Debt Instrument [Line Items]
Borrowing available under credit facility		$ 50,000,000		$ 50,000,000
Interest rate at period end for line of credit facility		2.74%		2.74%
8.375% senior notes due 2018
Debt Instrument [Line Items]
Repurchase of outstanding debt		$ 350,000,000		$ 350,000,000		$ 224,000,000	$ 126,000,000
Debt instrument interest rate		8.375%		8.375%				8.375%
Amount paid in consideration of debt repurchase						$ 242,000,000	135,000,000
Long-term debt		$ 0		$ 0				$ 350,000,000
5.5% senior notes due 2025
Debt Instrument [Line Items]
Debt instrument interest rate		5.50%		5.50%				5.50%
Face amount of debt							350,000,000
Long-term debt		$ 350,000,000		$ 350,000,000			$ 350,000,000	$ 0
Deferred financing fees		6,000,000		$ 6,000,000
Redemption price percentage				102.75%
Premium associated with contractual redemption of notes upon change in control				101.00%
Ship mortgage facility
Debt Instrument [Line Items]
Long-term debt		0		$ 0				$ 21,000,000
Voluntary payment of debt	$ 2,000,000
Repayment of debt		$ 18,000,000	$ 1,000,000

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Earnings Per Share (Details Textual)	Jun. 30, 2015	Jun. 30, 2014
Debt Instrument [Line Items]
Debt instrument interest rate		10.00%
Ten Percent Convertible Senior Notes due Two Thousand Eighteen [Member]
Debt Instrument [Line Items]
Debt instrument interest rate	10.00%

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Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2015

Fair Value Disclosures [Abstract]

Assets and liabilities measured at fair value on a recurring basis

Our assets and liabilities measured at fair value on a recurring basis were as follows:

	Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)						Significant Unobservable Inputs (Level 3)				Total
(millions)	6/30/15		12/31/14		6/30/15			12/31/14			6/30/15		12/31/14		6/30/15			12/31/14
Cash equivalents	$	129	$	93	$	19		$	32		$	—	$	—	$	148		$	125
Equity mutual funds	4		4		—			—			—		—		4			4
Marketable securities:
Corporate debt securities	—		—		57			93			—		—		57			93
U.S. government and agency debt securities	—		—		2			22			—		—		2			22
Asset-backed debt securities	—		—		12			17			—		—		12			17
Certificates of deposit	—		—		9			18			—		—		9			18
Municipal debt securities	—		—		2			4			—		—		2			4
Derivative assets	—		—		5			4			—		—		5			4
Derivative liabilities	—		—		(21		)	(26		)	—		—		(21		)	(26		)

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Gypsum Transportation Limited (Details) $ in Millions	1 Months Ended	3 Months Ended			6 Months Ended
	Apr. 30, 2015 USD ($)	Jun. 30, 2015 USD ($) Ocean_vessel	Mar. 31, 2015 USD ($)	Jun. 30, 2014 USD ($)	Jun. 30, 2015 USD ($) Ocean_vessel	Jun. 30, 2014 USD ($)
Long Lived Assets Held-for-sale [Line Items]
Self-unloading ocean vessels | Ocean_vessel		2			2
Net proceeds from asset dispositions	$ 42				$ 42	$ 14
Gain on asset dispositions					7	12
Costs paid for contract termination	7
Business exit costs		$ 6
Gain on disposal of shipping operations, net		1		$ 0	1	0
Restricted cash and cash equivalents		2			2
Operating profit		105		98	181	164	[1]
Ship mortgage facility
Long Lived Assets Held-for-sale [Line Items]
Repayment of debt		18	$ 1
Gypsum Transportation Limited
Long Lived Assets Held-for-sale [Line Items]
Operating profit		$ 1		$ 6	$ 1	$ 14
Self-unloading ocean vessels [Member]
Long Lived Assets Held-for-sale [Line Items]
Gain on asset dispositions	$ 7

[1] Net sales and operating profit (loss) have been recast for the periods prior to April 1, 2014 to conform with the new presentation of reportable segments.

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Derivative Instruments (Details 1) - USD ($) $ in Millions	Jun. 30, 2015	Dec. 31, 2014
Derivatives, Fair Value [Line Items]
Derivative assets	$ 5	$ 4
Derivative liabilities	21	26
Derivatives Not Designated as Hedging Instruments
Derivatives, Fair Value [Line Items]
Derivative assets	0	0
Derivative liabilities	4	5
Derivatives Not Designated as Hedging Instruments | Commodity contracts | Other current assets
Derivatives, Fair Value [Line Items]
Derivative assets	0	0
Derivatives Not Designated as Hedging Instruments | Commodity contracts | Other assets
Derivatives, Fair Value [Line Items]
Derivative assets	0	0
Derivatives Not Designated as Hedging Instruments | Commodity contracts | Accrued expenses
Derivatives, Fair Value [Line Items]
Derivative liabilities	3	4
Derivatives Not Designated as Hedging Instruments | Commodity contracts | Other liabilities
Derivatives, Fair Value [Line Items]
Derivative liabilities	1	1
Cash flow hedging | Derivatives in Cash Flow Hedging Relationships
Derivatives, Fair Value [Line Items]
Derivative assets	5	4
Derivative liabilities	17	21
Cash flow hedging | Derivatives in Cash Flow Hedging Relationships | Commodity contracts | Other current assets
Derivatives, Fair Value [Line Items]
Derivative assets	1	1
Cash flow hedging | Derivatives in Cash Flow Hedging Relationships | Commodity contracts | Other assets
Derivatives, Fair Value [Line Items]
Derivative assets	0	0
Cash flow hedging | Derivatives in Cash Flow Hedging Relationships | Commodity contracts | Accrued expenses
Derivatives, Fair Value [Line Items]
Derivative liabilities	11	14
Cash flow hedging | Derivatives in Cash Flow Hedging Relationships | Commodity contracts | Other liabilities
Derivatives, Fair Value [Line Items]
Derivative liabilities	6	7
Cash flow hedging | Derivatives in Cash Flow Hedging Relationships | Foreign exchange contracts | Other current assets
Derivatives, Fair Value [Line Items]
Derivative assets	4	3
Cash flow hedging | Derivatives in Cash Flow Hedging Relationships | Foreign exchange contracts | Accrued expenses
Derivatives, Fair Value [Line Items]
Derivative liabilities	$ 0	$ 0

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Income Taxes (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014	Dec. 31, 2014
Income Tax Disclosure [Abstract]
Income tax benefit (expense)	$ 1	$ 0	$ (1)	$ 5
Federal net operating loss carryforwards	1,833		1,833
Federal alternative minimum tax credit carryforwards	46		46
Minimum taxable income needed to fully realize the U.S. federal net deferred tax assets	1,963		1,963
Foreign tax credit carryforwards	8		8
Deferred tax assets related to state net operating loss and tax credit carryforwards	242		242
Gross deferred tax assets related to state net operating loss and tax credit carry forwards that will expire in current year	1		1
Net operating loss and tax credit carryforwards in various foreign jurisdictions	1		1
Valuation allowance against deferred tax assets	$ 980		980		$ 1,023
Increase (decrease) in valuation allowance against deferred tax asset			$ 43
Percentage of change in ownership			50.00%
Period of change in ownership			3 years
Long-term tax-exempt rate	2.50%		2.50%
Time period after the change in which amount of the limitation be increased or decreased by built-in gains or losses			5 years
Approximate annual NOL utilization had an ownership change occurred	$ 101		$ 101

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Gypsum Transportation Limited

6 Months Ended

Jun. 30, 2015

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment Disclosure [Text Block]

Gypsum Transportation Limited

In April 2015, we completed the sale of our two self-unloading ocean vessels owned by Gypsum Transportation Limited, or GTL, for $42 million and recorded a gain of $7 million on the disposition. With a portion of the proceeds from the sale, GTL repaid the outstanding loan balance of $18 million under GTL’s secured loan facility agreement with DVB Bank SE and paid applicable selling costs. Additionally, we returned the third vessel leased by GTL and paid $7 million of early termination costs which were previously accrued for in the fourth quarter of 2014. In the second quarter 2015, GTL incurred charges of $6 million to exit our shipping operations.

The net impact of the gain on the sale of the vessels and charges incurred to wind down the shipping operations of $1 million is recorded in “Gain on disposal of shipping operations, net” on the consolidated statement of operations. Per the terms of the sale agreement, $2 million of the cash proceeds was held in escrow. This was recorded as restricted cash as of June 30, 2015 and was subsequently released in July 2015.

GTL recorded operating profit of $1 million for each of the three and six months ended June 30, 2015 compared with operating profit of $6 million and $14 million for the three and six months ended June 30, 2014, respectively.

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Intangible Assets (Details) - USD ($) $ in Millions	Jun. 30, 2015	Dec. 31, 2014
Intangible assets with definite lives
Gross Carrying Amount	$ 79	$ 79
Accumulated Amortization	(65)	(61)
Net	14	18
Customer relationships
Intangible assets with definite lives
Gross Carrying Amount	70	70
Accumulated Amortization	(58)	(54)
Net	12	16
Other
Intangible assets with definite lives
Gross Carrying Amount	9	9
Accumulated Amortization	(7)	(7)
Net	$ 2	$ 2

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Equity Method Investments (Details Textual) - USD ($) $ in Millions		3 Months Ended		6 Months Ended			10 Months Ended	12 Months Ended
	Feb. 27, 2014	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014		Dec. 31, 2014	Dec. 31, 2014	Oct. 31, 2013
Schedule of Equity Method Investments [Line Items]
Payments to acquire equity method investments							$ 515
Long-term debt		$ 2,188		$ 2,188			2,209	$ 2,209
Debt instrument interest rate			10.00%		10.00%
Present value of contingent liability for contingent consideration for equity method investment		24		24			23	23
Equity method investments		717		717			735	735
Gain on deconsolidation of subsidiaries and consolidated joint ventures		0	$ 0	0	$ 27
Gain (loss) on revaluation of retained investment on deconsolidation					$ 11
Weighted average discount rate					11.00%
Weighted average long-term growth rate					2.00%
Dividends received from equity method investments				18	$ 0
Assets held-for-sale		42		42			$ 5	$ 5
Income from equity method investments		$ 14	5	$ 22	8
USG Boral Building Products
Schedule of Equity Method Investments [Line Items]
Ownership percentage	50.00%	50.00%		50.00%			50.00%	50.00%
Range of outcomes in contingent consideration arrangements, value, high	$ 75
Contingent consideration for first performance period	$ 25
First performance period for contingent consideration	3 years
Contingent consideration for second performance period	$ 50
Second performance period for contingent consideration	5 years
Equity method investments	$ 676	$ 673		$ 673			$ 689	$ 689
Dividends received from equity method investments				18
Undistributed earnings		36		36
Income from equity method investments		13	$ 4	21	$ 7	[1]
Knauf USG [Member]
Schedule of Equity Method Investments [Line Items]
Assets held-for-sale		36		36
Income from equity method investments								2
Boral Limited | USG Boral Building Products
Schedule of Equity Method Investments [Line Items]
Ownership percentage by joint venture partner of equity method investment	50.00%
5.875% senior notes due 2021
Schedule of Equity Method Investments [Line Items]
Long-term debt		$ 350		$ 350			$ 350	$ 350	$ 350
Debt instrument interest rate		5.875%		5.875%			5.875%	5.875%
Base purchase price
Schedule of Equity Method Investments [Line Items]
Payments to acquire equity method investments							$ 500
Adjustments to purchase price
Schedule of Equity Method Investments [Line Items]
Payments to acquire equity method investments							$ 15

[1] Operating results are presented for UBBP for the four months ended June 30, 2014.

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Accumulated Other Comprehensive Income (Loss) (Tables)

6 Months Ended

Jun. 30, 2015

Equity [Abstract]

Changes in the balances of each component of AOCI

Changes in the balances of each component of AOCI for the six months ended June 30,2015 and 2014 were as follows:

	Derivatives						Defined Benefit Plans						Foreign Currency Translation					AOCI
(millions)	2015			2014			2015			2014			2015			2014		2015			2014
Balance as of January 1	$	16		$	35		$	(302	)	$	(32	)	$	(52	)	$	21	$	(338	)	$	24
Other comprehensive income (loss) before reclassifications, net of tax	(1		)	2			(2		)	(9		)	(39		)	11		(42		)	4
Less: Amounts reclassified from AOCI, net of tax	(5		)	3			(3		)	6			—			5		(8		)	14
Net other comprehensive income (loss)	4			(1		)	1			(15		)	(39		)	6		(34		)	(10		)
Balance as of June 30	$	20		$	34		$	(301	)	$	(47	)	$	(91	)	$	27	$	(372	)	$	14

Amounts reclassified from AOCI, net of tax

Amounts reclassified from AOCI, net of tax, for the six months ended June 30, 2015 and 2014, were as follows:

	Three months ended June 30,						Six months ended June 30,
(millions)	2015			2014			2015			2014
Derivatives
Net reclassification from AOCI for cash flow hedges included in cost of products sold	$	(3	)	$	1		$	(5	)	$	3
Less: Income tax expense on reclassification from AOCI included in income tax expense (benefit)	—			—			—			—
Net amount reclassified from AOCI	$	(3	)	$	1		$	(5	)	$	3
Defined Benefit Plans
Net reclassification from AOCI for amortization of prior service cost included in cost of products sold	$	(1	)	$	1		$	(2	)	$	3
Net reclassification from AOCI for amortization of prior service cost included in selling and administrative expenses	(1		)	1			(2		)	2
Less: Income tax expense on reclassification from AOCI included in income tax expense (benefit)	—			(1		)	(1		)	(1		)
Net amount reclassified from AOCI	$	(2	)	$	3		$	(3	)	$	6
Foreign Currency Translation
Net reclassification from AOCI for translation gains realized upon the deconsolidation of foreign subsidiaries included in selling and administrative expenses	$	—		$	—		$	—		$	5
Less: Income tax expense on reclassification from AOCI included in income tax expense (benefit)	—			—			—			—
Net amount reclassified from AOCI	$	—		$	—		$	—		$	5

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Intangible Assets (Details 2) - USD ($) $ in Millions	Jun. 30, 2015	Dec. 31, 2014
Intangible assets with indefinite lives
Gross Carrying Amount	$ 31	$ 31
Accumulated Impairment Charges	(1)	(1)
Net	30	30
Trade names
Intangible assets with indefinite lives
Gross Carrying Amount	22	22
Accumulated Impairment Charges	0	0
Net	22	22
Other
Intangible assets with indefinite lives
Gross Carrying Amount	9	9
Accumulated Impairment Charges	(1)	(1)
Net	$ 8	$ 8

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Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Beginning balance			$ (338)	$ 24
Other comprehensive income (loss) before reclassifications, net of tax			(42)	4
Less: Amounts reclassified from AOCI, net of tax			(8)	14
Other comprehensive loss, net of tax	$ (8)	$ (4)	(34)	(10)
Ending balance	(372)	14	(372)	14
Derivatives
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Beginning balance			16	35
Other comprehensive income (loss) before reclassifications, net of tax			(1)	2
Less: Amounts reclassified from AOCI, net of tax			(5)	3
Other comprehensive loss, net of tax			4	(1)
Ending balance	20	34	20	34
Defined Benefit Plans
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Beginning balance			(302)	(32)
Other comprehensive income (loss) before reclassifications, net of tax			(2)	(9)
Less: Amounts reclassified from AOCI, net of tax			(3)	6
Other comprehensive loss, net of tax			1	(15)
Ending balance	(301)	(47)	(301)	(47)
Foreign Currency Translation
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Beginning balance			(52)	21
Other comprehensive income (loss) before reclassifications, net of tax			(39)	11
Less: Amounts reclassified from AOCI, net of tax			0	5
Other comprehensive loss, net of tax			(39)	6
Ending balance	$ (91)	$ 27	$ (91)	$ 27

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Employee Retirement Plans (Details Textual) $ in Millions	6 Months Ended
	Jun. 30, 2015 USD ($)
United States pension plan
Defined Benefit Plan Disclosure [Line Items]
Contribution by employer	$ 50
Canada pension plan
Defined Benefit Plan Disclosure [Line Items]
Contribution by employer	6
Other domestic pension plan
Defined Benefit Plan Disclosure [Line Items]
Contribution by employer	2
Pension
Defined Benefit Plan Disclosure [Line Items]
Estimated total contributions in current year	$ 61

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Marketable Securities (Details) - USD ($) $ in Millions	Jun. 30, 2015	Dec. 31, 2014
Investments in marketable securities
Amortized Cost	$ 82	$ 154
Fair Value	82	154
Corporate debt securities
Investments in marketable securities
Amortized Cost	57	93
Fair Value	57	93
U.S. government and agency debt securities
Investments in marketable securities
Amortized Cost	2	22
Fair Value	2	22
Asset-backed debt securities
Investments in marketable securities
Amortized Cost	12	17
Fair Value	12	17
Certificates of deposit
Investments in marketable securities
Amortized Cost	9	18
Fair Value	9	18
Municipal debt securities
Investments in marketable securities
Amortized Cost	2	4
Fair Value	$ 2	$ 4

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Organization, Consolidation and Presentation of Financial Statements

6 Months Ended

Jun. 30, 2015

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization, Consolidation and Presentation of Financial Statements

Organization, Consolidation and Presentation of Financial Statements

PREPARATION OF FINANCIAL STATEMENTS

We prepared the accompanying unaudited consolidated financial statements of USG Corporation in accordance with applicable United States Securities and Exchange Commission, or SEC, guidelines pertaining to interim financial information. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America, or U.S. GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Actual results could differ materially from those estimates. In the opinion of our management, the financial statements reflect all adjustments, which are of a normal recurring nature, necessary for a fair presentation of our financial results for the interim periods. The results of operations for the three and six months ended June 30, 2015 are not necessarily indicative of the results of operations to be expected for the entire year.

Our investments with Boral Limited in the 50/50 joint ventures, USG Boral Building Products or UBBP, commenced on February 27, 2014, and as a result, four months of results of UBBP was recorded in our accompanying consolidated statement of operations for the six months ended June 30, 2014. See Note 2 for further description of our investment in UBBP.

Our segments are structured around our key products and business units: Gypsum, Ceilings, Distribution and UBBP.

Our Gypsum reportable segment is an aggregation of the operating segments of the gypsum businesses in the United States, Canada, Mexico, and Latin America, our mining operation in Little Narrows, Nova Scotia, Canada, and our shipping company. Gypsum manufactures products throughout the United States, Canada, and Mexico. These products include USG Sheetrock^® brand gypsum wallboard and related products including Sheetrock^® brand joint compound, Durock^® brand cement board, Levelrock^® brand gypsum underlayment, Fiberock^® brand gypsum fiber panels, and Securock^® brand glass mat sheathing used for building exteriors and gypsum fiber and glass mat panels used as roof cover board.

Our Ceilings reportable segment is an aggregation of the operating segments of the ceilings businesses in the United States, Canada, Mexico, Latin America and, through February 27, 2014, the businesses in the Asia-Pacific region. Ceilings manufactures ceiling tile in the United States and ceiling grid in the United States, Canada and, through February 27, 2014, the Asia-Pacific region.

Distribution delivers gypsum wallboard, drywall metal, ceilings products, joint compound and other building products throughout the United States.

UBBP manufactures, distributes and sells certain building products, mines raw gypsum and sells natural and synthetic gypsum throughout Asia, Australasia and the Middle East.

These financial statements and notes are to be read in conjunction with the financial statements and notes included in USG’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014, which we filed with the SEC on February 12, 2015.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In May 2015, the Financial Accounting Standards Board, or FASB, issued Accounting Standard Update, or ASU, 2015-07, "Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent)," which updates the disclosure requirements for investments that are measured at net asset value using the practical expedient. These investments are to be removed from the fair value hierarchy and shown as a reconciling item. The standard will be effective for us in the first quarter of 2016, with early adoption permitted. We do not expect that the adoption of ASU 2015-07 will have a significant impact to our consolidated financial statements or disclosures.

In April 2015, the FASB issued ASU 2015-03, "Simplifying the Presentation of Debt Issuance Costs", which requires costs related to a recognized debt liability to be presented on the balance sheet as a direct deduction from the debt liability rather than as an asset. The standard will be effective for us in the first quarter of 2016, with early adoption permitted. Upon adoption, we would reclassify our deferred debt issuance costs from other assets to long term debt. If adopted as of June 30, 2015, we would have recorded a reduction in both other assets and long-term debt of $15 million and would have provided additional disclosure.

In August 2014, the FASB issued ASU 2014-15, "Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern," which requires management to assess, at each annual and interim reporting period, the entity's ability to continue as a going concern within one year of date of the financial statements are issued and provide related disclosures. The new standard will be effective for us for the year ended December 31, 2016, with early adoption permitted. We do not expect that the adoption of ASU 2014-15 will have a significant impact to our consolidated financial statements or disclosures.

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers,” which supersedes the revenue recognition requirements in “Revenue Recognition (Topic 605),” and requires entities to recognize revenue in a way that depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. There are two transition methods available under the new standard, either cumulative effect or retrospective. In July 2015, the FASB agreed to defer the mandatory effective date by one year. The standard will be effective for us in the first quarter of 2018, with early adoption permitted, but not before the original effective date. We will adopt the new standard using the modified retrospective approach, which requires the standard be applied only to the most current period presented, with the cumulative effect of initially applying the standard recognized at the date of initial application. We do not expect that the adoption of ASU 2014-09 will have a significant impact to our consolidated financial statements or disclosures.

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Share-Based Compensation (Details) - 6 months ended Jun. 30, 2015 - USD ($)		Total
MSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Awards granted		473,728
Weighted average fair value		$ 30.06
Expected volatility		42.70%
Risk-free rate	[1]	1.09%
Expected term (in years)	[2]	2 years 11 months 11 days
Expected dividends		$ 0
Performance Shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Awards granted		147,290
Weighted average fair value		$ 30.63
Expected volatility		42.70%
Risk-free rate	[1]	1.09%
Expected term (in years)	[2]	2 years 11 months 11 days
Expected dividends		$ 0
RSUs
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Awards granted		48,000
Weighted average fair value		$ 27.69

[1] The risk-free rate was based on zero coupon U.S. government issues at the time of grant.

[2] The expected term represents the period from the valuation date to the end of the performance period.

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Segments (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014	[1]
Net Sales:
Net sales	$ 970	$ 948	$ 1,879	$ 1,798
Operating Profit (Loss):
Operating profit	105	98	181	164
Operating segments | Gypsum
Net Sales:
Net sales	617	612	1,194	1,157
Operating Profit (Loss):
Operating profit	98	95	166	160
Operating segments | Ceilings
Net Sales:
Net sales	131	130	254	255	[2]
Operating Profit (Loss):
Operating profit	25	24	46	39	[2]
Operating segments | Distribution
Net Sales:
Net sales	364	344	698	644
Operating Profit (Loss):
Operating profit	9	4	13	5
Corporate
Operating Profit (Loss):
Operating profit	(24)	(21)	(47)	(42)
Eliminations
Net Sales:
Net sales	(142)	(138)	(267)	(258)
Operating Profit (Loss):
Operating profit	$ (3)	$ (4)	$ 3	$ 2

[1] Net sales and operating profit (loss) have been recast for the periods prior to April 1, 2014 to conform with the new presentation of reportable segments.

[2] Ceilings' net sales and operating profit for the six months ended June 30, 2014 includes the results, through February 27, 2014, of our wholly-owned subsidiaries and consolidated joint ventures that were contributed to UBBP.

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Marketable Securities (Tables)

6 Months Ended

Jun. 30, 2015

Investments, Debt and Equity Securities [Abstract]

Investments in marketable securities

Our investments in marketable securities consisted of the following:

	As of June 30, 2015				As of December 31, 2014
(millions)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Corporate debt securities	$	57	$	57	$	93	$	93
U.S. government and agency debt securities	2		2		22		22
Asset-backed debt securities	12		12		17		17
Certificates of deposit	9		9		18		18
Municipal debt securities	2		2		4		4
Total marketable securities	$	82	$	82	$	154	$	154

Contractual maturities of marketable securities

Contractual maturities of marketable securities as of June 30, 2015 were as follows:

(millions)	Amortized Cost		Fair Value
Due in 1 year or less	$	61	$	61
Due in 1-5 years	21		21
Total marketable securities	$	82	$	82

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Earnings Per Share (Tables)

6 Months Ended

Jun. 30, 2015

Earnings Per Share [Abstract]

Reconciliation of basic earnings per share to diluted earnings per share

The reconciliation of basic earnings per share to diluted earnings per share is shown in the following table.

	Three months ended June 30,					Six months ended June 30,
(millions, except per-share data)	2015		2014			2015		2014
Income from continuing operations	$	79	$	58		$	103	$	103
Loss from discontinued operations	—		(1		)	—		(1		)
Net income	79		57			103		102
Effect of dilutive securities - RSUs, MSUs, performance shares and stock options	—		—			—		—
Effect of dilutive securities - 10% convertible senior notes	—		—			—		2
Effect of dilutive securities - Deferred compensation program for non-employee directors	—		—			—		—
Income available to shareholders	$	79	$	57		$	103	$	104
Average common shares	145.4		144.5			145.4		139.7
Dilutive RSUs, MSUs, performance shares and stock options	1.6		2.3			1.6		2.5
Common shares issuable upon conversion of our 10% convertible senior notes	—		—			—		4.7
Deferred shares associated with a deferred compensation program for non-employee directors	—		0.2			0.2		—
Average diluted common shares	147.0		147.0			147.2		146.9
Earnings (loss) per average common share:
Income from continuing operations	$	0.54	$	0.40		$	0.70	$	0.74
Loss from discontinued operations	—		(0.01		)	—		(0.01		)
Earnings per average common share	$	0.54	$	0.39		$	0.70	$	0.73
Diluted earnings (loss) per average common share:
Income from continuing operations	$	0.54	$	0.39		$	0.70	$	0.72
Loss from discontinued operations	—		(0.01		)	—		(0.01		)
Earnings per average diluted common share	$	0.54	$	0.38		$	0.70	$	0.71

Schedule of anti-dilutive securities excluded from computation of earnings per share

MSUs, performance shares, RSUs, and stock options and deferred shares associated with our deferred compensation program for non-employee directors that were not included in the computation of diluted earnings per share for those periods because their inclusion would be anti-dilutive were as follows:

	Three months ended June 30,		Six months ended June 30,
(millions, common shares)	2015	2014	2015	2014
MSUs, performance shares, RSUs and stock options	1.8	2.1	1.9	2.1
Deferred shares associated with a deferred compensation program for non-employee directors	0.2	—	—	0.2

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Derivative Instruments (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Derivatives in Cash Flow Hedging Relationships | Cash flow hedging
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain or (Loss) Recognized in Other Comprehensive Income on Derivatives (Effective Portion)	$ (1)	$ (3)	$ (1)	$ 2
Amount of Gain or (Loss) Reclassified from AOCI into Income (Effective Portion)	(3)	1	(5)	3
Derivatives in Cash Flow Hedging Relationships | Commodity contracts | Cash flow hedging
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain or (Loss) Recognized in Other Comprehensive Income on Derivatives (Effective Portion)	1	(1)	(4)	2
Derivatives in Cash Flow Hedging Relationships | Commodity contracts | Cost of products sold | Cash flow hedging
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain or (Loss) Reclassified from AOCI into Income (Effective Portion)	(4)	1	(7)	2
Derivatives in Cash Flow Hedging Relationships | Foreign exchange contracts | Cash flow hedging
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain or (Loss) Recognized in Other Comprehensive Income on Derivatives (Effective Portion)	(2)	(2)	3	0
Derivatives in Cash Flow Hedging Relationships | Foreign exchange contracts | Cost of products sold | Cash flow hedging
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain or (Loss) Reclassified from AOCI into Income (Effective Portion)	1	0	2	1
Derivatives Not Designated as Hedging Instruments
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain or (Loss) Recognized in Income on Derivatives	0	0	(1)	1
Derivatives Not Designated as Hedging Instruments | Commodity contracts | Cost of products sold
Derivative Instruments, Gain (Loss) [Line Items]
Amount of Gain or (Loss) Recognized in Income on Derivatives	$ 0	$ 0	$ (1)	$ 1

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Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Earnings Per Share [Abstract]
Income from continuing operations	$ 79	$ 58	$ 103	$ 103
Loss from discontinued operations, net of tax	0	(1)	0	(1)
Net income	79	57	103	102
Effect of dilutive securities - RSUs, MSUs, performance shares and stock options	0	0	0	0
Effect of dilutive securities - 10% convertible senior notes	0	0	0	2
Effect of dilutive securities - Deferred compensation program for non-employee directors	0	0	0	0
Income available to shareholders	$ 79	$ 57	$ 103	$ 104
Average common shares	145,424,853	144,500,682	145,393,548	139,702,728
Dilutive RSUs, MSUs, performance shares and stock options	1,600,000	2,300,000	1,600,000	2,500,000
Common shares issuable upon conversion of our 10% convertible senior notes	0	0	0	4,700,000
Deferred shares associated with a deferred compensation program for non-employee directors	0	200,000	200,000	0
Average diluted common shares	146,990,178	147,024,196	147,167,248	146,920,294
Income from continuing operations, per common share	$ 0.54	$ 0.40	$ 0.70	$ 0.74
Loss from discontinued operations, per common share	0.00	(0.01)	0.00	(0.01)
Earnings per average common share	0.54	0.39	0.70	0.73
Income from continuing operations, per diluted share	0.54	0.39	0.70	0.72
Loss from discontinued operations, per diluted share	0.00	(0.01)	0.00	(0.01)
Earnings per average diluted common share	$ 0.54	$ 0.38	$ 0.70	$ 0.71

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Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible assets with definitive lives

Intangible assets with definite lives are amortized. These assets are summarized as follows:

	As of June 30, 2015							As of December 31, 2014
(millions)	Gross Carrying Amount		Accumulated Amortization			Net		Gross Carrying Amount		Accumulated Amortization			Net
Intangible Assets with Definite Lives:
Customer relationships	$	70	$	(58	)	$	12	$	70	$	(54	)	$	16
Other	9		(7		)	2		9		(7		)	2
Total	$	79	$	(65	)	$	14	$	79	$	(61	)	$	18

Estimated annual amortization expense intangible assets

Estimated amortization expense for the remainder of 2015 and for future years is as follows:

(millions)	2015		2016		2017		2018 and thereafter
Estimated future amortization expense	$	4	$	7	$	2	$	1

Schedule of indefinite-lived intangible assets

Intangible assets with indefinite lives are not amortized. These assets are summarized as follows:

	As of June 30, 2015							As of December 31, 2014
(millions)	Gross Carrying Amount		Accumulated Impairment Charges			Net		Gross Carrying Amount		Accumulated Impairment Charges			Net
Intangible Assets with Indefinite Lives:
Trade names	$	22	$	—		$	22	$	22	$	—		$	22
Other	9		(1		)	8		9		(1		)	8
Total	$	31	$	(1	)	$	30	$	31	$	(1	)	$	30

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Debt (Tables)

6 Months Ended

Jun. 30, 2015

Debt Disclosure [Abstract]

Schedule of long-term debt instruments

Total debt, including the current portion of long-term debt, consisted of the following:

(millions)	June 30, 2015		December 31, 2014
5.5% senior notes due 2025	$	350	$	—
5.875% senior notes due 2021	350		350
6.3% senior notes due 2016	500		500
7.75% senior notes due 2018, net of discount	500		500
7.875% senior notes due 2020, net of discount	249		249
8.375% senior notes due 2018	—		350
Ship mortgage facility (includes current portion of long-term debt: 2015 - $0, 2014 - $4)	—		21
Industrial revenue bonds (due 2028 through 2034)	239		239
Total	$	2,188	$	2,209

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Consolidated Statements of Cash Flows (Unaudited) (Parenthetical) - Jun. 30, 2014 - USD ($) $ in Millions	Total
Statement of Cash Flows [Abstract]
Cash on hand at the subsidiaries contributed to UBBP	$ 23
Debt Instrument Carrying Amount, Amount Converted	$ 75
Debt Instrument, Interest Rate, Stated Percentage	10.00%

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Derivative Instruments (Tables)

6 Months Ended

Jun. 30, 2015

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Pretax effects of derivative instruments on consolidated statements of operations

The following are the pretax effects of derivative instruments on the consolidated statements of operations for the three months ended June 30,2015 and 2014.

	Amount of Gain or (Loss) Recognized in Other Comprehensive Income on Derivatives (Effective Portion)						Location of Gain or (Loss)  Reclassified from AOCI into Income (Effective Portion)	Amount of Gain or (Loss) Reclassified from AOCI into Income (Effective Portion)
(millions)	2015			2014				2015			2014
Derivatives in Cash Flow Hedging Relationships
Commodity contracts	$	1		$	(1	)	Cost of products sold	$	(4	)	$	1
Foreign exchange contracts	(2		)	(2		)	Cost of products sold	1			—
Total	$	(1	)	$	(3	)		$	(3	)	$	1

	Location of Gain or (Loss)  Recognized in Income on Derivatives	Amount of Gain or (Loss) Recognized in Income on Derivatives
(millions)		2015		2014
Derivatives Not Designated as Hedging Instruments
Commodity contracts	Cost of products sold	$	—	$	—
Total		$	—	$	—

The following are the pretax effects of derivative instruments on the consolidated statements of operations for the six months ended June 30,2015 and 2014.

	Amount of Gain or (Loss) Recognized in Other Comprehensive Income on Derivatives (Effective Portion)					Location of Gain or (Loss)  Reclassified from AOCI into Income (Effective Portion)	Amount of Gain or (Loss) Reclassified from AOCI into Income (Effective Portion)
(millions)	2015			2014			2015			2014
Derivatives in Cash Flow Hedging Relationships
Commodity contracts	$	(4	)	$	2	Cost of products sold	$	(7	)	$	2
Foreign exchange contracts	3			—		Cost of products sold	2			1
Total	$	(1	)	$	2		$	(5	)	$	3

	Location of Gain or (Loss)  Recognized in Income on Derivatives	Amount of Gain or (Loss) Recognized in Income on Derivatives
(millions)		2015			2014
Derivatives Not Designated as Hedging Instruments
Commodity contracts	Cost of products sold	$	(1	)	$	1
Total		$	(1	)	$	1

Fair values of derivative instruments and the location on the consolidated balance sheets

he following are the fair values of derivative instruments and the location on our accompanying consolidated balance sheets as of June 30, 2015 and December 31, 2014.

	Balance Sheet Location	Fair Value				Balance Sheet Location	Fair Value
(millions)		6/30/15		12/31/14			6/30/15		12/31/14
Derivatives in Cash Flow Hedging Relationships
Commodity contracts	Other current assets	$	1	$	1	Accrued expenses	$	11	$	14
Commodity contracts	Other assets	—		—		Other liabilities	6		7
Foreign exchange contracts	Other current assets	4		3		Accrued expenses	—		—
Total derivatives in cash flow hedging relationships		$	5	$	4		$	17	$	21

Derivatives Not Designated as Hedging Instruments
Commodity contracts	Other current assets	$	—	$	—	Accrued expenses	$	3	$	4
Commodity contracts	Other assets	—		—		Other liabilities	1		1
Total derivatives not designated as hedging instruments		$	—	$	—		$	4	$	5
Total derivatives	Total assets	$	5	$	4	Total liabilities	$	21	$	26

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Equity Method Investments (Details 1) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Schedule of Equity Method Investments [Line Items]
Changes in AOCI - foreign currency translation	$ (5)	$ 15	$ (39)	$ 11
USG Boral Building Products
Schedule of Equity Method Investments [Line Items]
Changes in AOCI - foreign currency translation	$ (3)	$ 10	$ (19)	$ 11

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Intangible Assets (Details Textual) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014	Dec. 31, 2014
Goodwill and Intangible Assets Disclosure [Abstract]
Amortization expense of intangible assets	$ 2	$ 2	$ 4	$ 4
Assets held-for-sale	$ 42		$ 42		$ 5

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Litigation Litigation (Details Textual) $ in Millions	6 Months Ended
	Jun. 30, 2015 USD ($) Homebuilder Defendants	Dec. 31, 2014 USD ($)
Commitments and Contingencies Disclosure [Abstract]
Litigation settlement charge	$ 48
Number of defendants named in class action lawsuits | Defendants	7
Homebuilders asserting individual claims | Homebuilder	12
Litigation settlement accrual	$ 48	$ 48
Accrual for probable and reasonably estimable liability for environmental cleanup	$ 16	$ 16

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Consolidated Statements of Operations (Unaudited) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Income Statement [Abstract]
Net sales	$ 970	$ 948	$ 1,879	$ 1,798	[1]
Cost of products sold	787	773	1,543	1,480
Gross profit	183	175	336	318
Selling and administrative expenses	79	77	156	154
Gain on disposal of shipping operations, net	(1)	0	(1)	0
Operating profit	105	98	181	164	[1]
Income from equity method investments	14	5	22	8
Interest expense	(40)	(45)	(83)	(92)
Interest income	0	0	1	1
Loss on extinguishment of debt			(19)	0
Gain on deconsolidation of subsidiaries and consolidated joint ventures	0	0	0	27
Other income, net	1	0	0	0
Income before income taxes	80	58	102	108
Income tax benefit (expense)	(1)	0	1	(5)
Income from continuing operations	79	58	103	103
Loss from discontinued operations, net of tax	0	(1)	0	(1)
Net income	$ 79	$ 57	$ 103	$ 102
Earnings (loss) per common share - basic:
Income from continuing operations	$ 0.54	$ 0.40	$ 0.70	$ 0.74
Loss from discontinued operations	0.00	(0.01)	0.00	(0.01)
Earnings per average common share	0.54	0.39	0.70	0.73
Earnings (loss) per common share - diluted:
Income from continuing operations	0.54	0.39	0.70	0.72
Loss from discontinued operations	0.00	(0.01)	0.00	(0.01)
Earnings per average diluted common share	$ 0.54	$ 0.38	$ 0.70	$ 0.71
Average common shares	145,424,853	144,500,682	145,393,548	139,702,728
Average diluted common shares	146,990,178	147,024,196	147,167,248	146,920,294

[1] Net sales and operating profit (loss) have been recast for the periods prior to April 1, 2014 to conform with the new presentation of reportable segments.

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Earnings Per Share (Details 1) - shares shares in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
MSUs, performance shares, RSUs and stock options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share, amount	1.8	2.1	1.9	2.1
Deferred compensation program
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share, amount	0.2	0.0	0.0	0.2

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Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Millions	Jun. 30, 2015	Dec. 31, 2014
Statement of Financial Position [Abstract]
Reserves on receivables	$ 20	$ 22
Accumulated depreciation	$ 1,926	$ 1,885
Preferred stock - par value	$ 1	$ 1
Preferred stock - authorized shares	36,000,000	36,000,000
Preferred stock - outstanding shares	0	0
Common stock - par value	$ 0.10	$ 0.10
Common stock - authorized shares	200,000,000	200,000,000
Common stock - issued shares	145,570,000	144,768,000
Treasury stock - shares	121,000,000	0

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Fair Value Measurements (Details) - USD ($) $ in Millions	Jun. 30, 2015	Dec. 31, 2014
Assets and liabilities measured at fair value on a recurring basis
Cash equivalents	$ 148	$ 125
Equity mutual funds	4	4
Marketable securities, fair value	82	154
Derivative assets	5	4
Derivative liabilities	21	26
Corporate debt securities
Assets and liabilities measured at fair value on a recurring basis
Marketable securities, fair value	57	93
U.S. government and agency debt securities
Assets and liabilities measured at fair value on a recurring basis
Marketable securities, fair value	2	22
Asset-backed debt securities
Assets and liabilities measured at fair value on a recurring basis
Marketable securities, fair value	12	17
Certificates of deposit
Assets and liabilities measured at fair value on a recurring basis
Marketable securities, fair value	9	18
Municipal debt securities
Assets and liabilities measured at fair value on a recurring basis
Marketable securities, fair value	2	4
Quoted Prices in Active Markets for Identical Assets (Level 1)
Assets and liabilities measured at fair value on a recurring basis
Cash equivalents	129	93
Equity mutual funds	4	4
Derivative assets	0	0
Derivative liabilities	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) | Corporate debt securities
Assets and liabilities measured at fair value on a recurring basis
Marketable securities, fair value	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) | U.S. government and agency debt securities
Assets and liabilities measured at fair value on a recurring basis
Marketable securities, fair value	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) | Asset-backed debt securities
Assets and liabilities measured at fair value on a recurring basis
Marketable securities, fair value	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) | Certificates of deposit
Assets and liabilities measured at fair value on a recurring basis
Marketable securities, fair value	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) | Municipal debt securities
Assets and liabilities measured at fair value on a recurring basis
Marketable securities, fair value	0	0
Significant Other Observable Inputs (Level 2)
Assets and liabilities measured at fair value on a recurring basis
Cash equivalents	19	32
Equity mutual funds	0	0
Derivative assets	5	4
Derivative liabilities	21	26
Significant Other Observable Inputs (Level 2) | Corporate debt securities
Assets and liabilities measured at fair value on a recurring basis
Marketable securities, fair value	57	93
Significant Other Observable Inputs (Level 2) | U.S. government and agency debt securities
Assets and liabilities measured at fair value on a recurring basis
Marketable securities, fair value	2	22
Significant Other Observable Inputs (Level 2) | Asset-backed debt securities
Assets and liabilities measured at fair value on a recurring basis
Marketable securities, fair value	12	17
Significant Other Observable Inputs (Level 2) | Certificates of deposit
Assets and liabilities measured at fair value on a recurring basis
Marketable securities, fair value	9	18
Significant Other Observable Inputs (Level 2) | Municipal debt securities
Assets and liabilities measured at fair value on a recurring basis
Marketable securities, fair value	2	4
Significant Unobservable Inputs (Level 3)
Assets and liabilities measured at fair value on a recurring basis
Cash equivalents	0	0
Equity mutual funds	0	0
Derivative assets	0	0
Derivative liabilities	0	0
Significant Unobservable Inputs (Level 3) | Corporate debt securities
Assets and liabilities measured at fair value on a recurring basis
Marketable securities, fair value	0	0
Significant Unobservable Inputs (Level 3) | U.S. government and agency debt securities
Assets and liabilities measured at fair value on a recurring basis
Marketable securities, fair value	0	0
Significant Unobservable Inputs (Level 3) | Asset-backed debt securities
Assets and liabilities measured at fair value on a recurring basis
Marketable securities, fair value	0	0
Significant Unobservable Inputs (Level 3) | Certificates of deposit
Assets and liabilities measured at fair value on a recurring basis
Marketable securities, fair value	0	0
Significant Unobservable Inputs (Level 3) | Municipal debt securities
Assets and liabilities measured at fair value on a recurring basis
Marketable securities, fair value	$ 0	$ 0

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Share-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Awards granted during the period and assumptions used to determine fair value

Awards granted during the first six months of 2015 and assumptions used to determine fair value were as follows:

	MSUs			Performance Shares			RSUs
Awards granted	473,728			147,290			48,000
Weighted average fair value	$	30.06		$	30.63		$	27.69
Expected volatility	42.70		%	42.70		%	N/A
Risk-free rate (a)	1.09		%	1.09		%	N/A
Expected term (in years) (b)	2.95			2.95			N/A
Expected dividends	—			—			N/A

(a) The risk-free rate was based on zero coupon U.S. government issues at the time of grant.

(b) The expected term represents the period from the valuation date to the end of the performance period.

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Supplemental Balance Sheet Information (Details 1) - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Asset Retirement Obligation, Roll Forward Analysis [Roll Forward]
Beginning balance	$ 123	$ 132
Accretion expense	4	4
Liabilities incurred	0	0
Changes in estimated cash flows	(1)	(10)	[1]
Liabilities settled	(1)	(2)
Foreign currency translation	(2)	(1)
Ending balance	$ 123	$ 123

[1] Changes in estimated cash flows for the six months ended June 30, 2014 included changes in estimates primarily for our gypsum quarry and ship loading facility in Windsor, Nova Scotia, Canada, which we permanently closed during the third quarter of 2011, and our mining operation in Little Narrows, Nova Scotia, Canada as a result of receiving regulatory approval of a revised reclamation plan in 2014.

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Oman Investment

6 Months Ended

Jun. 30, 2015

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Oman Investment

Oman Investment

In June of 2012, we entered into a strategic partnership with the Zawawi Group in Oman to establish a mining operation by acquiring 55% of Zawawi Gypsum LLC, or ZGL, which holds the mining rights to a gypsum quarry in Salalah, Oman. Quarry mining operations commenced in October 2013. The second phase of the partnership is a 50/50 manufacturing venture, USG-Zawawi Drywall LLC, or ZDL, that now operates a low cost wallboard plant in Oman.

We accounted for the acquisition of the mining rights as an asset acquisition and measured our interest in the mining rights at our cost. We determined that both entities were variable interest entities (VIEs), and, as such, we consolidated the VIEs through February 27, 2014 when our interests in ZGL and ZDL were contributed to UBBP. See Note 2, Equity Method Investments.

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Supplemental Balance Sheet Information (Tables)

6 Months Ended

Jun. 30, 2015

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of inventories

Total inventories consisted of the following:

(millions)	June 30, 2015		December 31, 2014
Finished goods	$	218	$	232
Work in progress	36		35
Raw materials	70		62
Total	$	324	$	329

Changes in the liability for asset retirement obligations

Changes in the liability for asset retirement obligations consisted of the following:

	Six months ended June 30,
(millions)	2015			2014
Balance as of January 1	$	123		$	132
Accretion expense	4			4
Liabilities incurred	—			—
Changes in estimated cash flows (a)	(1		)	(10		)
Liabilities settled	(1		)	(2		)
Foreign currency translation	(2		)	(1		)
Balance as of June 30	$	123		$	123

(a) Changes in estimated cash flows for the six months ended June 30, 2014 included changes in estimates primarily for our gypsum quarry and ship loading facility in Windsor, Nova Scotia, Canada, which we permanently closed during the third quarter of 2011, and our mining operation in Little Narrows, Nova Scotia, Canada as a result of receiving regulatory approval of a revised reclamation plan in 2014.

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Litigation

6 Months Ended

Jun. 30, 2015

Commitments and Contingencies Disclosure [Abstract]

Litigation

Litigation

WALLBOARD PRICING CLASS ACTION LAWSUITS

In late 2012, USG Corporation and United States Gypsum Company were named as defendants in putative class action lawsuits alleging that since at least September 2011, U.S. wallboard manufacturers conspired to fix and raise the price of gypsum wallboard sold in the United States and to effectuate the alleged conspiracy by ending the practice of providing job quotes on wallboard. These lawsuits are consolidated for pretrial proceedings in multi-district litigation in the United States District Court for the Eastern District of Pennsylvania, under the title In re: Domestic Drywall Antitrust Litigation, MDL No. 2437. One group of plaintiffs brings their claims on behalf of a class of entities that purchased gypsum wallboard in the United States directly from any of the defendants or their affiliates from January 1, 2012 to the present. The second group of plaintiffs brings their claims on behalf of indirect purchasers of gypsum wallboard who from January 1, 2012 through the present indirectly purchased wallboard in the United States from the defendants or their affiliates for end use and not for resale. Similar lawsuits have been filed in Quebec, Ontario and British Columbia courts on behalf of purchasers of wallboard in Canada. The Canadian lawsuits also name as defendants CGC Inc., our Canadian operating subsidiary, as well as other Canadian and U.S. wallboard manufacturers.

USG has denied the allegations made in these wallboard pricing lawsuits, believes these cases are without merit, and that USG’s pricing and selling policies were and are made independently and in full compliance with the law. Class action antitrust litigation in the United States, however, is expensive, protracted, and carries the risk of triple damages and joint and several liability. To avoid the expense, risk and further distraction of management, in late 2014, we entered into settlement agreements in principle with the attorneys representing the direct and indirect purchaser plaintiff classes in the U.S. wallboard pricing lawsuits. The settlements were memorialized in final settlement agreements and, in the third quarter of 2014, USG recorded a $48 million charge for the settlements. The settlement agreements, in which we deny all wrongdoing, also include releases by participating class members of USG, and its subsidiaries, affiliates, and other related parties, for all conduct concerning any of the matters alleged, or that could have been alleged, in the lawsuits for the time period prior to and including November 30, 2014. The Court preliminarily approved the settlements, and notice of the settlements was then provided to potential class members who could elect to opt out of the settlements (and potentially file their own claims) or participate in the settlements. The number of potential class members who opted out of the settlements was not significant. The Court recently held a hearing on final approval of the settlements but has not yet issued a final judgment order. If the Court enters the final judgment order approving the settlements as expected, the settlements will become final and effective thirty days after entry of the order, assuming no appeal. If we are unable to resolve the U.S. wallboard class action litigation under the terms set forth in the settlement agreements, or at all, there can be no assurance that the outcome of these lawsuits will not have a material effect on our business, financial condition, operating results or cash flows.

The settlement of the U.S. class action lawsuits described above does not include the Canadian lawsuits. At this stage of the Canadian lawsuits, we are not able to estimate the amount, if any, of any reasonably possible loss or range of reasonably possible losses. We believe, however, that these Canadian lawsuits will not have a material effect on our business, financial condition, operating results or cash flows.

In addition to the class action lawsuits, in the first quarter of 2015, USG and seven other wallboard manufacturers were named as defendants in a lawsuit filed in federal court in California by twelve homebuilders asserting individual claims similar to the claims asserted in the U.S. class action lawsuits. These homebuilders opted out of the class action settlements, and their lawsuit has been transferred to the United States District Court for the Eastern District of Pennsylvania that is presiding over the U.S. class action lawsuits. We believe that the cost, if any, of resolving these homebuilders’ claims will not materially increase the $48 million agreed to in the class action settlements.

ENVIRONMENTAL LITIGATION

We have been notified by state and federal environmental protection agencies of possible involvement as one of numerous “potentially responsible parties” in a number of Superfund sites in the United States. As a potentially responsible party, we may be responsible to pay for some part of the cleanup of hazardous waste at those sites. In most of these sites, our involvement is expected to be minimal. In addition, we are involved in environmental cleanups of other property that we own or owned. As of both June 30, 2015 and December 31, 2014, we had an accrual of $16 million for our probable and reasonably estimable liability in connection with these matters. Our accruals take into account all known or estimated undiscounted costs associated with these sites, including site investigations and feasibility costs, site cleanup and remediation, certain legal costs, and fines and penalties, if any. However, we continue to review these accruals as additional information becomes available and revise them as appropriate. Based on the information known to us, we believe these environmental matters will not have a material effect on our business, financial condition, operating results or cash flows.

OTHER LITIGATION

We are named as defendants in other claims and lawsuits arising from our operations, including claims and lawsuits arising from the operation of our vehicles, product performance or warranties, personal injury and commercial disputes. We believe that we have properly accrued for our probable liability in connection with these claims and suits, taking into account the probability of liability, whether our exposure can be reasonably estimated and, if so, our estimate of our liability or the range of our liability. We do not expect these or any other litigation matters involving USG to have a material effect on our business, financial condition, operating results or cash flows.

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Accumulated Other Comprehensive Income (Loss) (Details 1) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Net reclassification from AOCI included in cost of products sold	$ 787	$ 773	$ 1,543	$ 1,480
Net reclassification from AOCI included in selling and administrative expenses	79	77	156	154
Less: Income tax expense on reclassification from AOCI included in income tax expense (benefit)	(1)	0	1	(5)
Net amount reclassified from AOCI	79	57	103	102
Derivatives | Amounts reclassified from AOCI, net of tax
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Net reclassification from AOCI included in cost of products sold	(3)	1	(5)	3
Less: Income tax expense on reclassification from AOCI included in income tax expense (benefit)	0	0	0	0
Net amount reclassified from AOCI	(3)	1	(5)	3
Defined Benefit Plans | Amounts reclassified from AOCI, net of tax
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Net reclassification from AOCI included in cost of products sold	(1)	1	(2)	3
Net reclassification from AOCI included in selling and administrative expenses	(1)	1	(2)	2
Less: Income tax expense on reclassification from AOCI included in income tax expense (benefit)	0	(1)	(1)	(1)
Net amount reclassified from AOCI	(2)	3	(3)	6
Foreign Currency Translation | Amounts reclassified from AOCI, net of tax
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Net reclassification from AOCI included in selling and administrative expenses	0	0	0	5
Less: Income tax expense on reclassification from AOCI included in income tax expense (benefit)	0	0	0	0
Net amount reclassified from AOCI	$ 0	$ 0	$ 0	$ 5

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Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Operating Activities
Net income	$ 103	$ 102
Loss from discontinued operations, net of tax	0	(1)
Income from continuing operations	103	103
Adjustments to reconcile net income to net cash:
Depreciation, depletion and amortization	72	77
Loss on extinguishment of debt	19	0
Share-based compensation expense	6	10
Deferred income taxes	1	4
Gain on asset dispositions	7	12
Income from equity method investments	(22)	(8)
Dividends received from equity method investments	18	0
Gain on deconsolidation of subsidiaries and consolidated joint ventures	0	(27)
(Increase) decrease in working capital, net of deconsolidation of subsidiaries and consolidated joint ventures:
IncreaseDecreaseInReceivables	66	54
Income taxes receivable	(1)	(1)
Inventories	6	(17)
Other current assets	1	(1)
Payables	(33)	(18)
Accrued expenses	(25)	(22)
Decrease in other assets	1	0
Decrease in pension and other postretirement benefits	(40)	0
Decrease in other liabilities	(4)	(7)
Other, net	5	(7)
Net cash provided by operating activities	34	20
Investing Activities
Purchases of marketable securities	(32)	(97)
Sales or maturities of marketable securities	103	99
Capital expenditures	(48)	(58)
Net proceeds from asset dispositions	42	14
Investment in joint ventures, including $23 of cash of contributed subsidiaries in 2014	0	(557)
Insurance proceeds	2	2
Return (deposit) of restricted cash	(49)	4
Net cash provided by (used for) investing activities	18	(593)
Financing Activities
Issuance of debt	350	3
Repayment of debt	(386)	(2)
Payment of debt issuance fees	(6)	0
Issuance of common stock	4	3
Repurchases of common stock to satisfy employee tax withholding obligations	(8)	(5)
Net cash used for financing activities	(46)	(1)
Effect of exchange rate changes on cash	(3)	0
Net cash used for operating activities - discontinued operations	0	(1)
Net increase (decrease) in cash and cash equivalents	3	(575)
Cash and cash equivalents at beginning of period	228	810
Cash and cash equivalents at end of period	231	235
Supplemental Cash Flow Disclosures:
Interest paid, net of capitalized interest	80	86
Income taxes paid, net	1	8
Noncash Investing and Financing Activities:
Amount in accounts payable for capital expenditures	6	6
Contribution of wholly-owned subsidiaries and joint venture investments as consideration for investment in USG Boral Building Products	0	121
Conversion of $75 million of 10% convertible senior notes due 2018, net of discount	0	(73)
Issuance of common stock upon conversion of debt	0	75
Accrued interest on debt conversion	$ 0	$ (2)

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Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Statement of Comprehensive Income [Abstract]
Net income	$ 79	$ 57	$ 103	$ 102
Derivatives qualifying as cash flow hedges:
Gain/(loss) on derivatives qualifying as cash flow hedges, net of tax (benefit) of ($1), $0, $0, and $0, respectively	0	(3)	(1)	2
Less: Reclassification adjustment for gain (loss) on derivatives included in net income, net of tax of $0 in all periods	(3)	1	(5)	3
Net derivatives qualifying as cash flow hedges	3	(4)	4	(1)
Pension and postretirement benefits:
Changes in pension and postretirement benefits, net of tax of $0, $1, $1 and $1, respectively	(8)	(12)	(2)	(9)
Less: Amortization of prior service credit (cost) included in net periodic pension cost, net of tax (benefit) of $0, ($1), ($1) and ($1), respectively	(2)	3	(3)	6
Net pension and postretirement benefits	(6)	(15)	1	(15)
Foreign currency translation:
Changes in foreign currency translation, net of tax of $0 in all periods	(5)	15	(39)	11
Less: Translation gains realized upon the deconsolidation of foreign subsidiaries, net of tax of $0 in all periods	0	0	0	5
Net foreign currency translation	(5)	15	(39)	6
Other comprehensive loss, net of tax	(8)	(4)	(34)	(10)
Comprehensive income	$ 71	$ 53	$ 69	$ 92

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Fair Value Measurements

6 Months Ended

Jun. 30, 2015

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

Certain assets and liabilities are required to be recorded at fair value. There are three levels of inputs that may be used to measure fair value. Level 1 is defined as quoted prices for identical assets and liabilities in active markets. Level 2 is defined as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. Level 3 is defined as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. Certain assets and liabilities are measured at fair value on a nonrecurring basis rather than on an ongoing basis, but are subject to fair value adjustments in certain circumstances, such as when there is evidence of impairment or when a new liability is being established that requires fair value measurement.

The cash equivalents shown in the table below primarily consist of money market funds that are valued based on quoted prices in active markets and, as a result, are classified as Level 1. Equity mutual funds are valued based on quoted markets in active markets and, as a result, are classified as Level 1. We use quoted prices, other readily observable market data and internally developed valuation models when valuing our marketable securities and derivatives and have classified them as Level 2. Marketable securities are valued using income and market value approaches and values are based on quoted prices or other observable market inputs received from data providers. The valuation process may include pricing matrices, or prices based upon yields, credit spreads or prices of securities of comparable quality, coupon, maturity and type. Derivatives are valued using the income approach including discounted-cash-flow models or a Black-Scholes option pricing model and readily observable market data. The inputs for the valuation models are obtained from data providers and include end-of-period spot and forward natural gas prices, foreign currency exchange rates, natural gas price volatility and LIBOR and swap rates for discounting the cash flows implied from the derivative contracts.

Our assets and liabilities measured at fair value on a recurring basis were as follows:

	Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)						Significant Unobservable Inputs (Level 3)				Total
(millions)	6/30/15		12/31/14		6/30/15			12/31/14			6/30/15		12/31/14		6/30/15			12/31/14
Cash equivalents	$	129	$	93	$	19		$	32		$	—	$	—	$	148		$	125
Equity mutual funds	4		4		—			—			—		—		4			4
Marketable securities:
Corporate debt securities	—		—		57			93			—		—		57			93
U.S. government and agency debt securities	—		—		2			22			—		—		2			22
Asset-backed debt securities	—		—		12			17			—		—		12			17
Certificates of deposit	—		—		9			18			—		—		9			18
Municipal debt securities	—		—		2			4			—		—		2			4
Derivative assets	—		—		5			4			—		—		5			4
Derivative liabilities	—		—		(21		)	(26		)	—		—		(21		)	(26		)

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Document and Entity Information - Jun. 30, 2015 - shares	Total
Document and Entity Information [Abstract]
Entity Registrant Name	USG CORP
Entity Central Index Key	0000757011
Document Type	10-Q
Document Period End Date	Jun. 30, 2015
Amendment Flag	false
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q2
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding	145,448,858

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Employee Retirement Plans

6 Months Ended

Jun. 30, 2015

Compensation and Retirement Disclosure [Abstract]

Employee Retirement Plans

Employee Retirement Plans

The components of net pension and postretirement benefits costs are summarized in the following table:

	Three months ended June 30,						Six months ended June 30,
(millions)	2015			2014			2015			2014
Pension:
Service cost of benefits earned	$	12		$	9		$	25		$	18
Interest cost on projected benefit obligation	17			17			34			33
Expected return on plan assets	(21		)	(20		)	(42		)	(40		)
Net amortization	10			6			19			12
Net pension cost	$	18		$	12		$	36		$	23
Postretirement:
Service cost of benefits earned	$	—		$	—		$	1		$	1
Interest cost on projected benefit obligation	2			2			3			4
Net amortization	(8		)	(9		)	(16		)	(18		)
Net postretirement benefit	$	(6	)	$	(7	)	$	(12	)	$	(13	)

During the first six months of 2015, we made cash contributions of $50 million to the USG Corporation Retirement Plan Trust, $6 million to our pension plan in Canada, and $2 million, in aggregate, to certain other domestic pension plans. We expect to make total contributions to our pension plans in 2015 of approximately $61 million.

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Consolidated Statements of Comprehensive Income (Loss) (Unaudited) (Parentheticals) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Derivatives Qualifying as Hedges, Tax:
Loss on derivatives qualifying as cash flow hedges, tax expense (benefit)	$ (1)	$ 0	$ 0	$ 0
Less: Reclassification adjustment for loss on derivatives included in net income, tax expense (benefit)	0	0	0	0
Pension and Other Postretirement Benefit Plans, Tax:
Changes in pension and postretirement benefits, tax expense (benefit)	0	1	1	1
Less: Amortization of prior service benefit (cost) included in net periodic pension cost, tax expense (benefit)	0	(1)	(1)	(1)
Foreign Currency Translation Adjustment, Tax:
Changes in foreign currency translation, tax expense (benefit)	0	0	0	0
Less: Translation gains realized upon sale of foreign entities, tax expense (benefit)	$ 0	$ 0	$ 0	$ 0

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Earnings Per Share

6 Months Ended

Jun. 30, 2015

Earnings Per Share [Abstract]

Earnings Per Share

Earnings Per Share

Basic earnings per share is based on the weighted average number of common shares outstanding. Diluted earnings per share is based on the weighted average number of common shares outstanding plus the dilutive effect, if any, of market share units, or MSUs, performance shares, restricted stock units, or RSUs, stock options, deferred shares associated with our deferred compensation program for non-employee directors and, for the applicable periods, the potential conversion of our 10% convertible senior notes due 2018, which were converted into common stock in December 2013 and April 2014.

The reconciliation of basic earnings per share to diluted earnings per share is shown in the following table.

	Three months ended June 30,					Six months ended June 30,
(millions, except per-share data)	2015		2014			2015		2014
Income from continuing operations	$	79	$	58		$	103	$	103
Loss from discontinued operations	—		(1		)	—		(1		)
Net income	79		57			103		102
Effect of dilutive securities - RSUs, MSUs, performance shares and stock options	—		—			—		—
Effect of dilutive securities - 10% convertible senior notes	—		—			—		2
Effect of dilutive securities - Deferred compensation program for non-employee directors	—		—			—		—
Income available to shareholders	$	79	$	57		$	103	$	104
Average common shares	145.4		144.5			145.4		139.7
Dilutive RSUs, MSUs, performance shares and stock options	1.6		2.3			1.6		2.5
Common shares issuable upon conversion of our 10% convertible senior notes	—		—			—		4.7
Deferred shares associated with a deferred compensation program for non-employee directors	—		0.2			0.2		—
Average diluted common shares	147.0		147.0			147.2		146.9
Earnings (loss) per average common share:
Income from continuing operations	$	0.54	$	0.40		$	0.70	$	0.74
Loss from discontinued operations	—		(0.01		)	—		(0.01		)
Earnings per average common share	$	0.54	$	0.39		$	0.70	$	0.73
Diluted earnings (loss) per average common share:
Income from continuing operations	$	0.54	$	0.39		$	0.70	$	0.72
Loss from discontinued operations	—		(0.01		)	—		(0.01		)
Earnings per average diluted common share	$	0.54	$	0.38		$	0.70	$	0.71

MSUs, performance shares, RSUs, and stock options and deferred shares associated with our deferred compensation program for non-employee directors that were not included in the computation of diluted earnings per share for those periods because their inclusion would be anti-dilutive were as follows:

	Three months ended June 30,		Six months ended June 30,
(millions, common shares)	2015	2014	2015	2014
MSUs, performance shares, RSUs and stock options	1.8	2.1	1.9	2.1
Deferred shares associated with a deferred compensation program for non-employee directors	0.2	—	—	0.2

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Segments

6 Months Ended

Jun. 30, 2015

Segment Reporting [Abstract]

Segments

Segments

Our operations are organized into four reportable segments: Gypsum (previously North American Gypsum), Ceilings (previously Worldwide Ceilings), Distribution (previously Building Products Distribution) and UBBP. See Note 2 for segment results for UBBP. Segment results for our Gypsum, Distribution and Ceilings segments were as follows:

	Three months ended June 30,						Six months ended June 30,
(millions)	2015			2014			2015			2014 (b)
Net Sales:
Gypsum	$	617		$	612		$	1,194		$	1,157
Ceilings (a)	131			130			254			255
Distribution	364			344			698			644
Eliminations	(142		)	(138		)	(267		)	(258		)
Total	$	970		$	948		$	1,879		$	1,798
Operating Profit (Loss):
Gypsum	$	98		$	95		$	166		$	160
Ceilings (a)	25			24			46			39
Distribution	9			4			13			5
Corporate	(24		)	(21		)	(47		)	(42		)
Eliminations	(3		)	(4		)	3			2
Total	$	105		$	98		$	181		$	164

(a) Ceilings' net sales and operating profit for the six months ended June 30, 2014 includes the results, through February 27, 2014, of our wholly-owned subsidiaries and consolidated joint ventures that were contributed to UBBP.

(b) Net sales and operating profit (loss) have been recast for the periods prior to April 1, 2014 to conform with the new presentation of reportable segments.

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Income Taxes

6 Months Ended

Jun. 30, 2015

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

In the second quarter of 2015, we recorded income tax expense of approximately $1 million from foreign, state and local jurisdictions. In the United States, we are in a net operating loss carryforward position and our deferred income tax assets are subject to a valuation allowance. Therefore, any domestic income or loss before income taxes does not generate a corresponding income tax expense or benefit.

In the six months ended June 30, 2015, we had income tax benefit of approximately $1 million. The income tax benefit for the six months reflects audit closures in certain foreign jurisdictions offset slightly by state and local jurisdiction tax expense.

As of June 30, 2015, we had federal net operating loss, or NOL, carryforwards of approximately $1.833 billion that are available to offset future federal taxable income and will expire in the years 2026 through 2032, none of which are subject to Internal Revenue Code limitations under Section 382. In addition, as of that date, we had federal Alternative Minimum Tax, or AMT, credit carryforwards of approximately $46 million that are available to reduce future regular federal income taxes over an indefinite period. In order to fully realize these U.S. federal net deferred tax assets, taxable income of approximately $1.963 billion would need to be generated during the period before their expiration. In addition, we have federal foreign tax credit carryforwards of $8 million that will expire if unused in 2015.

As of June 30, 2015, we had a gross deferred tax asset related to our state NOLs and tax credit carryforwards of $242 million, of which $1 million will expire in 2015. The remainder will expire if unused in years 2016 through 2033. We also had NOL and tax credit carryforwards in various foreign jurisdictions in the amount of $1 million as of June 30, 2015, against which we have maintained a valuation allowance.

During periods prior to 2015, we established a valuation allowance against our deferred tax assets totaling $1.023 billion. During the first six months of 2015, we recorded a decrease in the valuation allowance against our deferred tax assets of $43 million resulting in a deferred tax asset valuation allowance of $980 million as of June 30, 2015.

In assessing the requirement for, and amount of, a valuation allowance in accordance with the more-likely-than-not standard, we give appropriate consideration to all positive and negative evidence related to the realization of the deferred tax assets. During 2015, we may realize a four year cumulative accounting profit in the U.S. If this occurs, we will also consider all other positive and negative evidence to determine the realizability of our deferred tax assets and the need for a full, or partial, valuation allowance. Any reversal of our valuation allowance will favorably impact our results of operations in the period of reversal.

The Internal Revenue Code imposes limitations on a corporation’s ability to utilize NOLs if it experiences an “ownership change.” In general terms, an ownership change may result from transactions increasing the ownership of certain stockholders in the stock of a corporation by more than 50 percentage points over a three-year period. If we were to experience an ownership change, utilization of our NOLs would be subject to an annual limitation determined by multiplying the market value of our outstanding shares of stock at the time of the ownership change by the applicable long-term tax-exempt rate, which was 2.50% for June 2015. Any unused annual limitation may be carried over to later years within the allowed NOL carryforward period. The amount of the limitation may, under certain circumstances, be increased or decreased by built-in gains or losses held by us at the time of the change that are recognized in the five-year period after the change. Many states have similar limitations. If an ownership change had occurred as of June 30, 2015, our annual U.S. federal NOL utilization would have been limited to approximately $101 million per year.

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Share-Based Compensation

6 Months Ended

Jun. 30, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Share-Based Compensation

Share-Based Compensation

During the first six months of 2015, we granted share-based compensation in the form of market share units, or MSUs, performance shares, and restricted stock units, or RSUs, to eligible participants under our Long-Term Incentive Plan. We recognize expense on all share-based grants over the service period, which is the shorter of the period until the employees’ retirement eligibility dates and the service period of the award for awards expected to vest. Expense is generally reduced for estimated forfeitures. Awards granted during the first six months of 2015 and assumptions used to determine fair value were as follows:

	MSUs			Performance Shares			RSUs
Awards granted	473,728			147,290			48,000
Weighted average fair value	$	30.06		$	30.63		$	27.69
Expected volatility	42.70		%	42.70		%	N/A
Risk-free rate (a)	1.09		%	1.09		%	N/A
Expected term (in years) (b)	2.95			2.95			N/A
Expected dividends	—			—			N/A

(a) The risk-free rate was based on zero coupon U.S. government issues at the time of grant.

(b) The expected term represents the period from the valuation date to the end of the performance period.

MARKET SHARE UNITS

The MSUs granted during the first six months of 2015 generally vest after a three-year period based on our actual stock price performance during such period. The number of MSUs earned will vary from zero to 150% of the number of MSUs awarded depending on the actual performance of our stock price. In the case of termination of employment due to death, disability or retirement during the performance period, vesting will be pro-rated based on the number of full months employed in 2015. Awards earned will be issued at the end of the three-year period. MSUs may vest earlier in the case of a change in control in most circumstances only if there is also a related loss of employment or diminution of duties. Each MSU earned will be settled in common stock.

We estimated the fair value of each MSU granted on the date of grant using a Monte Carlo simulation that used the assumptions noted in the table above. Volatility was based on stock price history immediately prior to grant for a period commensurate with the remaining life of the plan.

PERFORMANCE SHARES

The performance shares granted during the first six months of 2015 generally vest after a three-year period based on our total stockholder return relative to the performance of the Dow Jones U.S. Construction and Materials Index, with adjustments to that index in certain circumstances, for the three-year period. The number of performance shares earned will vary from zero to 200% of the number awarded depending on that relative performance. Generally, vesting will be pro-rated based on the number of full months employed during the performance period in the case of death, disability, or retirement, and pro-rated awards earned will be issued at the end of the three-year period. Each performance share earned will be settled in common stock.

We estimated the fair value of each performance share granted on the date of grant using a Monte Carlo simulation that used the assumptions noted in the table above. Volatility was based on stock price history immediately prior to grant for a period commensurate with the remaining life of the plan.

RESTRICTED STOCK UNITS

The RSUs granted during the first six months of 2015 vest after a specified number of years from the date of grant or at a specified date. Generally, RSUs may vest earlier in the case of death, disability, or a change in control, provided that RSUs granted after 2012 will vest upon a change in control in most circumstances only if there is also a related loss of employment or diminution of duties. Each RSU is settled in a share of our common stock after the vesting period. The fair value of each RSU granted is equal to the closing price of our common stock on the date of grant.

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Debt

6 Months Ended

Jun. 30, 2015

Debt Disclosure [Abstract]

Debt

Debt

Total debt, including the current portion of long-term debt, consisted of the following:

(millions)	June 30, 2015		December 31, 2014
5.5% senior notes due 2025	$	350	$	—
5.875% senior notes due 2021	350		350
6.3% senior notes due 2016	500		500
7.75% senior notes due 2018, net of discount	500		500
7.875% senior notes due 2020, net of discount	249		249
8.375% senior notes due 2018	—		350
Ship mortgage facility (includes current portion of long-term debt: 2015 - $0, 2014 - $4)	—		21
Industrial revenue bonds (due 2028 through 2034)	239		239
Total	$	2,188	$	2,209

REPURCHASE OF SENIOR NOTES

In the first quarter of 2015, we repurchased $350 million of our 8.375% Senior Notes due in 2018, or the 2018 Senior Notes, through both a cash tender offer and a subsequent notice of redemption of the remaining 2018 Senior Notes. On February 24, 2015, we completed a cash tender offer pursuant to which we repurchased $126 million of the 2018 Senior Notes for aggregate consideration, including tender offer premium and accrued and unpaid interest, of $135 million. On March 26, 2015, we repurchased the remaining $224 million of the 2018 Senior Notes for aggregate consideration, including premiums and accrued and unpaid interest, of $242 million. As a result of the repurchases, we recorded a loss on early extinguishment of debt of $19 million including premiums and write-off of deferred financing fees.

ISSUANCE OF SENIOR NOTES

On February 24, 2015 we issued $350 million of 5.5% senior notes due March 1, 2025, or the 2025 Senior Notes. The net proceeds from the issuance of the 2025 Senior Notes and cash on hand were used to fund the repurchases of the 2018 Senior Notes and all related costs and expenses.

The 2025 Senior Notes were recorded on the accompanying consolidated balance sheets at $350 million. We deferred approximately $6 million of financing costs that are being amortized to interest expense over the term of the notes. Our obligations under the 2025 Senior Notes are guaranteed on a senior unsecured basis by certain of our domestic subsidiaries. The notes are redeemable at any time, or in part from time to time, at our option on or after March 1, 2020 at stated redemption prices, plus any accrued and unpaid interest to the redemption date. In addition, we may redeem the notes at our option at any time after March 1, 2020, in whole or in part, at a redemption price equal to 102.75% of the principal amount of the notes being redeemed plus any accrued and unpaid interest on the principal amount being redeemed to the redemption date.

The 2025 Senior Notes contain a provision the same as or similar to the provision in our other senior notes that requires us to offer to purchase those notes at 101% of their principal amount (plus accrued and unpaid interest) in the event of a change in control.

The indenture governing the 2025 Senior Notes contains events of default, covenants and restrictions that are substantially the same as those governing our other senior notes, including a limitation on our ability and the ability of certain of our subsidiaries to create or incur secured indebtedness.

SHIP MORTGATE FACILITY

In February 2015, as consideration for the consent of DVB Bank SE, as lender, agent and security trustee of the secured loan facility agreement, to allow Gypsum Transportation Limited, or GTL, to enter into certain future contracts of affreightment, GTL voluntarily repaid $2 million of the outstanding loan balance under its secured loan facility. The repayment provisions of the secured loan facility were not otherwise modified. The voluntary payment was not classified in the current portion of long-term debt on our accompanying consolidated balance sheet as of December 31, 2014. GTL also repaid $1 million in the first quarter of 2015 in accordance with the terms of the original loan facility agreement. In April 2015, in connection with the sale of two self-unloading vessels, GTL repaid the outstanding loan balance of $18 million. See Note 17 for discussion of GTL.

CREDIT FACILITY

Taking into account the most recent borrowing base calculation delivered under the credit facility, which reflects trade receivables and inventory as of June 30, 2015, and outstanding letters of credit, borrowings available under the credit facility were approximately $352 million, including $50 million for CGC. As of June 30, 2015 and during the quarter then-ended, there were no borrowings under the facility. Had there been any borrowings as of that date, the applicable interest rate would have been 2.03% for loans in the US and 2.74% for loans in Canada. Outstanding letters of credit totaled $53 million as of June 30, 2015.

The fair value of our debt was approximately $2.315 billion as of June 30, 2015 and $2.338 billion as of December 31, 2014. The fair values were based on quoted prices for identical or similar liabilities in markets that are not active or valuation models in which all significant inputs and value drivers are observable and, as a result, are classified as Level 2 inputs. See Note 9 for further discussion on fair value measurements and classifications.

As of June 30, 2015, we were in compliance with the covenants contained in our credit facilities.

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Employee Retirement Plans (Details) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Pension
Components of net pension and postretirement benefits costs
Service cost of benefits earned	$ 12	$ 9	$ 25	$ 18
Interest cost on projected benefit obligation	17	17	34	33
Expected return on plan assets	(21)	(20)	(42)	(40)
Net amortization	10	6	19	12
Net pension cost	18	12	36	23
Postretirement
Components of net pension and postretirement benefits costs
Service cost of benefits earned	0	0	1	1
Interest cost on projected benefit obligation	2	2	3	4
Net amortization	(8)	(9)	(16)	(18)
Net pension cost	$ (6)	$ (7)	$ (12)	$ (13)

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Marketable Securities

6 Months Ended

Jun. 30, 2015

Investments, Debt and Equity Securities [Abstract]

Marketable Securities

Marketable Securities

Marketable securities are classified as available-for-sale securities and reported at fair value, with unrealized gains and losses excluded from earnings and reported in accumulated other comprehensive loss on our accompanying consolidated balance sheets. Proceeds received from sales and maturities of marketable securities were $103 million for the six months ended June 30, 2015. Our investments in marketable securities consisted of the following:

	As of June 30, 2015				As of December 31, 2014
(millions)	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Corporate debt securities	$	57	$	57	$	93	$	93
U.S. government and agency debt securities	2		2		22		22
Asset-backed debt securities	12		12		17		17
Certificates of deposit	9		9		18		18
Municipal debt securities	2		2		4		4
Total marketable securities	$	82	$	82	$	154	$	154

The realized and unrealized gains and losses for the three and six months ended June 30, 2015 and 2014 were immaterial. Cost basis for securities sold are determined on a first-in-first-out basis.

Contractual maturities of marketable securities as of June 30, 2015 were as follows:

(millions)	Amortized Cost		Fair Value
Due in 1 year or less	$	61	$	61
Due in 1-5 years	21		21
Total marketable securities	$	82	$	82

Actual maturities may differ from the contractual maturities because issuers of the securities may have the right to prepay them.

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Intangible Assets

6 Months Ended

Jun. 30, 2015

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets

Intangible Assets

Intangible assets are included in other assets on our accompanying consolidated balance sheets. Intangible assets with definite lives are amortized. These assets are summarized as follows:

	As of June 30, 2015							As of December 31, 2014
(millions)	Gross Carrying Amount		Accumulated Amortization			Net		Gross Carrying Amount		Accumulated Amortization			Net
Intangible Assets with Definite Lives:
Customer relationships	$	70	$	(58	)	$	12	$	70	$	(54	)	$	16
Other	9		(7		)	2		9		(7		)	2
Total	$	79	$	(65	)	$	14	$	79	$	(61	)	$	18

Total amortization expense was $2 million and $4 million for the three and six months ended June 30, 2015 and 2014, respectively. Estimated amortization expense for the remainder of 2015 and for future years is as follows:

(millions)	2015		2016		2017		2018 and thereafter
Estimated future amortization expense	$	4	$	7	$	2	$	1

Intangible assets with indefinite lives are not amortized. These assets are summarized as follows:

	As of June 30, 2015							As of December 31, 2014
(millions)	Gross Carrying Amount		Accumulated Impairment Charges			Net		Gross Carrying Amount		Accumulated Impairment Charges			Net
Intangible Assets with Indefinite Lives:
Trade names	$	22	$	—		$	22	$	22	$	—		$	22
Other	9		(1		)	8		9		(1		)	8
Total	$	31	$	(1	)	$	30	$	31	$	(1	)	$	30

As of December 31, 2014, approximately $5 million of other indefinite-lived intangible assets met the criteria to be classified as held for sale and therefore were included in other current assets on our accompanying consolidated balance sheet. As of June 30, 2015, these indefinite-lived intangible assets were no longer recorded as held for sale.

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Derivative Instruments

6 Months Ended

Jun. 30, 2015

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivative Instruments

Derivative Instruments

We use derivative instruments to manage selected commodity price and foreign currency exposures as described below. We do not use derivative instruments for speculative trading purposes, and we typically do not hedge beyond three years. Cash flows from derivative instruments are included in net cash used for operating activities in the consolidated statements of cash flows.

COMMODITY DERIVATIVE INSTRUMENTS

As of June 30, 2015, we had 20 million mmBTUs (millions of British Thermal Units) in aggregate notional amount of outstanding natural gas swap contracts to hedge forecasted purchases. All of these contracts mature by December 31, 2017. For contracts designated as cash flow hedges, the net unrealized loss that remained in accumulated other comprehensive income (loss), or AOCI, as of June 30, 2015 was $16 million and as of December 31, 2014 was $20 million. No ineffectiveness was recorded on contracts designated as cash flow hedges in the first six months of both 2015 and 2014. Gains and losses on contracts designated as cash flow hedges are reclassified into earnings when the underlying forecasted transactions affect earnings. For contracts designated as cash flow hedges, we reassess the probability of the underlying forecasted transactions occurring on a quarterly basis. Changes in fair value on contracts not designated as cash flow hedges are recorded to earnings. The fair value of those contracts not designated as cash flow hedges was a $4 million unrealized loss as of June 30, 2015 and a $5 million unrealized loss as of December 31, 2014.

FOREIGN EXCHANGE DERIVATIVE INSTRUMENTS

We have foreign exchange forward contracts to hedge forecasted purchases of products and services denominated in foreign currencies. The notional amount of these contracts was $99 million as of June 30, 2015, and they mature by December 23, 2016. These forward contracts are designated as cash flow hedges and no ineffectiveness was recorded in the first six months of both 2015 and 2014. Gains and losses on the contracts are reclassified into earnings when the underlying transactions affect earnings. The fair value of these contracts that remained in AOCI was an unrealized gain of $4 million and $3 million as of June 30, 2015 and December 31, 2014, respectively.

COUNTERPARTY RISK, MASTER NETTING ARRANGEMENTS AND BALANCE SHEET OFFSETTING

We are exposed to credit losses in the event of nonperformance by the counterparties to our derivative instruments. As of June 30, 2015, our derivatives were in a $16 million net liability position. All of our counterparties have investment grade credit ratings; accordingly, we anticipate that they will be able to fully satisfy their obligations under the contracts.

All of our derivative contracts are governed by master netting agreements negotiated between us and the counterparties that reduce our counterparty credit exposure. The agreements outline the conditions (such as credit ratings and net derivative fair values) upon which we, or the counterparties, are required to post collateral. As required by certain of our agreements, we had $25 million of collateral posted with our counterparties related to our derivatives as of June 30, 2015. Amounts paid as cash collateral are included in receivables on our accompanying consolidated balance sheet.

We have not adopted an accounting policy to offset fair value amounts related to derivative contracts under our master netting arrangements; therefore, individual derivative contracts are reflected on a gross basis, as either assets or liabilities, on our consolidated balance sheets, based on their fair value as of the balance sheet date.

FINANCIAL STATEMENT INFORMATION

The following are the pretax effects of derivative instruments on the consolidated statements of operations for the three months ended June 30,2015 and 2014.

	Amount of Gain or (Loss) Recognized in Other Comprehensive Income on Derivatives (Effective Portion)						Location of Gain or (Loss)  Reclassified from AOCI into Income (Effective Portion)	Amount of Gain or (Loss) Reclassified from AOCI into Income (Effective Portion)
(millions)	2015			2014				2015			2014
Derivatives in Cash Flow Hedging Relationships
Commodity contracts	$	1		$	(1	)	Cost of products sold	$	(4	)	$	1
Foreign exchange contracts	(2		)	(2		)	Cost of products sold	1			—
Total	$	(1	)	$	(3	)		$	(3	)	$	1

	Location of Gain or (Loss)  Recognized in Income on Derivatives	Amount of Gain or (Loss) Recognized in Income on Derivatives
(millions)		2015		2014
Derivatives Not Designated as Hedging Instruments
Commodity contracts	Cost of products sold	$	—	$	—
Total		$	—	$	—

The following are the pretax effects of derivative instruments on the consolidated statements of operations for the six months ended June 30,2015 and 2014.

	Amount of Gain or (Loss) Recognized in Other Comprehensive Income on Derivatives (Effective Portion)					Location of Gain or (Loss)  Reclassified from AOCI into Income (Effective Portion)	Amount of Gain or (Loss) Reclassified from AOCI into Income (Effective Portion)
(millions)	2015			2014			2015			2014
Derivatives in Cash Flow Hedging Relationships
Commodity contracts	$	(4	)	$	2	Cost of products sold	$	(7	)	$	2
Foreign exchange contracts	3			—		Cost of products sold	2			1
Total	$	(1	)	$	2		$	(5	)	$	3

	Location of Gain or (Loss)  Recognized in Income on Derivatives	Amount of Gain or (Loss) Recognized in Income on Derivatives
(millions)		2015			2014
Derivatives Not Designated as Hedging Instruments
Commodity contracts	Cost of products sold	$	(1	)	$	1
Total		$	(1	)	$	1

The following are the fair values of derivative instruments and the location on our accompanying consolidated balance sheets as of June 30, 2015 and December 31, 2014.

	Balance Sheet Location	Fair Value				Balance Sheet Location	Fair Value
(millions)		6/30/15		12/31/14			6/30/15		12/31/14
Derivatives in Cash Flow Hedging Relationships
Commodity contracts	Other current assets	$	1	$	1	Accrued expenses	$	11	$	14
Commodity contracts	Other assets	—		—		Other liabilities	6		7
Foreign exchange contracts	Other current assets	4		3		Accrued expenses	—		—
Total derivatives in cash flow hedging relationships		$	5	$	4		$	17	$	21

Derivatives Not Designated as Hedging Instruments
Commodity contracts	Other current assets	$	—	$	—	Accrued expenses	$	3	$	4
Commodity contracts	Other assets	—		—		Other liabilities	1		1
Total derivatives not designated as hedging instruments		$	—	$	—		$	4	$	5
Total derivatives	Total assets	$	5	$	4	Total liabilities	$	21	$	26

As of June 30, 2015, we had no derivatives designated as fair value hedges or net investment hedges.

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Supplemental Balance Sheet Information (Details) - USD ($) $ in Millions	Jun. 30, 2015	Dec. 31, 2014
Inventories
Finished goods	$ 218	$ 232
Work in process	36	35
Raw materials	70	62
Total	$ 324	$ 329

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Supplemental Balance Sheet Information (Details Textual) - USD ($) $ in Millions	3 Months Ended
	Jun. 30, 2014	Jun. 30, 2015	Dec. 31, 2014
Supplemental Balance Sheet Information [Abstract]
Interest accrued on debt		$ 45	$ 45
Assets held-for-sale		$ 42	$ 5
Gain on sale of surplus property	$ 12

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Share-Based Compensation (Details Textual) - 6 months ended Jun. 30, 2015	Total
MSUs
Share Based Compensation [Abstract]
Vesting period	3 years
Minimum of range for number of shares earned	0.00%
Maximum of range for number of shares earned	150.00%
Performance Shares
Share Based Compensation [Abstract]
Vesting period	3 years
Minimum of range for number of shares earned	0.00%
Maximum of range for number of shares earned	200.00%

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Employee Retirement Plans (Tables)

6 Months Ended

Jun. 30, 2015

Compensation and Retirement Disclosure [Abstract]

Components of net pension and postretirement benefits costs

The components of net pension and postretirement benefits costs are summarized in the following table:

	Three months ended June 30,						Six months ended June 30,
(millions)	2015			2014			2015			2014
Pension:
Service cost of benefits earned	$	12		$	9		$	25		$	18
Interest cost on projected benefit obligation	17			17			34			33
Expected return on plan assets	(21		)	(20		)	(42		)	(40		)
Net amortization	10			6			19			12
Net pension cost	$	18		$	12		$	36		$	23
Postretirement:
Service cost of benefits earned	$	—		$	—		$	1		$	1
Interest cost on projected benefit obligation	2			2			3			4
Net amortization	(8		)	(9		)	(16		)	(18		)
Net postretirement benefit	$	(6	)	$	(7	)	$	(12	)	$	(13	)

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Intangible Assets (Details 1) $ in Millions	Jun. 30, 2015 USD ($)
Estimated annual amortization expense intangible assets
Estimated future amortization expense, 2015	$ 4
Estimated future amortization expense, 2016	7
Estimated future amortization expense, 2017	2
Estimated future amortization expense, 2018 and thereafter	$ 1

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Accumulated Other Comprehensive Income (Loss)

6 Months Ended

Jun. 30, 2015

Equity [Abstract]

Accumulated Other Comprehensive Income (Loss)

Accumulated Other Comprehensive Income (Loss)

Changes in the balances of each component of AOCI for the six months ended June 30,2015 and 2014 were as follows:

	Derivatives						Defined Benefit Plans						Foreign Currency Translation					AOCI
(millions)	2015			2014			2015			2014			2015			2014		2015			2014
Balance as of January 1	$	16		$	35		$	(302	)	$	(32	)	$	(52	)	$	21	$	(338	)	$	24
Other comprehensive income (loss) before reclassifications, net of tax	(1		)	2			(2		)	(9		)	(39		)	11		(42		)	4
Less: Amounts reclassified from AOCI, net of tax	(5		)	3			(3		)	6			—			5		(8		)	14
Net other comprehensive income (loss)	4			(1		)	1			(15		)	(39		)	6		(34		)	(10		)
Balance as of June 30	$	20		$	34		$	(301	)	$	(47	)	$	(91	)	$	27	$	(372	)	$	14

Amounts reclassified from AOCI, net of tax, for the six months ended June 30, 2015 and 2014, were as follows:

	Three months ended June 30,						Six months ended June 30,
(millions)	2015			2014			2015			2014
Derivatives
Net reclassification from AOCI for cash flow hedges included in cost of products sold	$	(3	)	$	1		$	(5	)	$	3
Less: Income tax expense on reclassification from AOCI included in income tax expense (benefit)	—			—			—			—
Net amount reclassified from AOCI	$	(3	)	$	1		$	(5	)	$	3
Defined Benefit Plans
Net reclassification from AOCI for amortization of prior service cost included in cost of products sold	$	(1	)	$	1		$	(2	)	$	3
Net reclassification from AOCI for amortization of prior service cost included in selling and administrative expenses	(1		)	1			(2		)	2
Less: Income tax expense on reclassification from AOCI included in income tax expense (benefit)	—			(1		)	(1		)	(1		)
Net amount reclassified from AOCI	$	(2	)	$	3		$	(3	)	$	6
Foreign Currency Translation
Net reclassification from AOCI for translation gains realized upon the deconsolidation of foreign subsidiaries included in selling and administrative expenses	$	—		$	—		$	—		$	5
Less: Income tax expense on reclassification from AOCI included in income tax expense (benefit)	—			—			—			—
Net amount reclassified from AOCI	$	—		$	—		$	—		$	5

We estimate that we will reclassify a net $8 million after-tax loss on derivatives from AOCI to earnings within the next 12 months.

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Equity Method Investments (Tables)

6 Months Ended

Jun. 30, 2015

Equity Method Investments and Joint Ventures [Abstract]

Equity Method Investments

Equity method investments as of June 30, 2015 and December 31, 2014, were as follows:

	June 30, 2015			December 31, 2014
(dollars in millions)	Carrying Value		Ownership Percentage	Carrying Value		Ownership Percentage
USG Boral Building Products	$	673	50%	$	689	50%
Other equity method investments (a)	44		33% - 50%	46		33% - 50%
Total equity method investments	$	717		$	735

(a) This amount includes our investment in Knauf-USG of $36 million which as of June 30, 2015 is classified as assets held for sale and is included in other current assets.

Translation gains or losses recorded in other comprehensive income were as follows:

	Three months ended June 30,					Six months ended June 30,
(in millions)	2015			2014		2015			2014 (a)
Translation gain (loss)	$	(3	)	$	10	$	(19	)	$	11

Summarized financial information for our equity method investments is as follows:

	Three months ended June 30,				Six months ended June 30,
(in millions)	2015		2014		2015		2014 (a)
USG Boral Building Products:
Net sales	$	264	$	280	$	492	$	369
Gross profit	70		80		131		102
Operating profit	34		16		57		26
Income from continuing operations	28		10		46		17
Net income	28		10		46		17
Net income attributable to USG Boral Building Products	26		9		42		15
USG share of income from investment accounted for using the equity method	13		4		21		7
Other equity method investments:
USG share of income from investments accounted for using the equity method	1		1		1		1
Total income from equity method investments	14		5		22		8

(a) Operating results are presented for UBBP for the four months ended June 30, 2014.

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Marketable Securities (Details Textual) $ in Millions	6 Months Ended
	Jun. 30, 2015 USD ($)
Investments, Debt and Equity Securities [Abstract]
Sales and maturities of marketable securities	$ 103

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Equity Method Investments (Details 2) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Schedule of Equity Method Investments [Line Items]
USG share of income from investment accounted for using the equity method	$ 14	$ 5	$ 22	$ 8
USG Boral Building Products
Schedule of Equity Method Investments [Line Items]
Gross profit	70	80	131	102	[1]
Net income from continuing operations	28	10	46	17	[1]
Net income	28	10	46	17	[1]
Net income attributable to USG Boral Building Products	26	9	42	15	[1]
USG share of income from investment accounted for using the equity method	13	4	21	7	[1]
Other equity method investments
Schedule of Equity Method Investments [Line Items]
USG share of income from investment accounted for using the equity method	1	1	1	1
USG Boral Building Products | USG Boral Building Products
Schedule of Equity Method Investments [Line Items]
Net sales	264	280	492	369	[1]
Operating profit	$ 34	$ 16	$ 57	$ 26	[1]

[1] Operating results are presented for UBBP for the four months ended June 30, 2014.

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Consolidated Balance Sheets (Unaudited) - USD ($) $ in Millions	Jun. 30, 2015	Dec. 31, 2014
Assets
Cash and cash equivalents	$ 231	$ 228
Short-term marketable securities	61	96
Restricted cash	50	1
Receivables (net of reserves - $20 and $22)	468	404
Inventories	324	329
Income taxes receivable	3	3
Deferred income taxes	42	43
Other current assets	84	48
Total current assets	1,263	1,152
Long-term marketable securities	21	58
Property, plant and equipment (net of accumulated depreciation and depletion - $1,926 and $1,885)	1,826	1,908
Deferred income taxes	17	19
Equity method investments	681	735
Other assets	122	122
Total assets	3,930	3,994
Liabilities and Stockholders’ Equity
Accounts payable	246	290
Accrued expenses	205	220
Current portion of long-term debt	0	4
Deferred income taxes	1	0
Income taxes payable	1	1
Litigation settlement accrual	48	48
Total current liabilities	501	563
Long-term debt	2,188	2,205
Deferred income taxes	61	61
Pension and other postretirement benefits	451	491
Other liabilities	253	266
Total liabilities	3,454	3,586
Preferred stock – $1 par value, authorized 36,000,000 shares; outstanding - none	0	0
Common stock – $0.10 par value; authorized 200,000,000 shares; issued: 2015 - 145,570,000 shares; 2014 - 144,768,000 shares	14	14
Treasury stock at cost – 2015 - 121,000 shares; 2014 - 0 shares	(3)	0
Additional paid-in capital	3,017	3,014
Accumulated other comprehensive loss	(372)	(338)
Retained earnings (accumulated deficit)	(2,180)	(2,283)
Stockholders’ equity of parent	476	407
Noncontrolling interest	0	1
Total stockholders’ equity including noncontrolling interest	476	408
Total liabilities and stockholders’ equity	$ 3,930	$ 3,994

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Equity Method Investments

6 Months Ended

Jun. 30, 2015

Equity Method Investments and Joint Ventures [Abstract]

Equity Method Investments

Equity Method Investments

Equity method investments as of June 30, 2015 and December 31, 2014, were as follows:

	June 30, 2015			December 31, 2014
(dollars in millions)	Carrying Value		Ownership Percentage	Carrying Value		Ownership Percentage
USG Boral Building Products	$	673	50%	$	689	50%
Other equity method investments (a)	44		33% - 50%	46		33% - 50%
Total equity method investments	$	717		$	735

(a) This amount includes our investment in Knauf-USG of $36 million which as of June 30, 2015 is classified as assets held for sale and is included in other current assets.

Investment in USG Boral Building Products ("UBBP")

On February 27, 2014, we formed the 50/50 joint ventures, USG Boral Building Products Pte. Limited, a company organized under the laws of Singapore, and USG Boral Building Products Pty Limited, a company organized under the laws of Australia, with Boral Limited ("Boral"). These joint ventures are herein referred to as USG Boral Building Products, or UBBP. UBBP manufactures, distributes and sells certain building products, mines raw gypsum and sells natural and synthetic gypsum throughout Asia, Australasia and the Middle East (the "Territory"). The products that UBBP manufactures and distributes include products for wall, ceiling, floor lining and exterior systems that utilize gypsum, wallboard, referred to as plasterboard in the territory, mineral fiber ceiling tiles, steel grid and studs and joint compound.

As consideration for our 50% ownership in UBBP, we (i) made a cash payment of $515 million to Boral, which includes a $500 million base price and $15 million of customary estimated working capital and net debt adjustments, (ii) contributed to UBBP our subsidiaries and joint venture investments in China, Singapore, India, Malaysia, New Zealand, Australia, the Middle East and Oman, see Note 14, and (iii) granted to UBBP licenses to use certain of our intellectual property rights in the Territory. We funded our cash payments with the net proceeds from our October 2013 issuance of $350 million of 5.875% senior notes and cash on hand.

In the event certain performance targets are satisfied by UBBP, we will be obligated to pay Boral scheduled earnout payments in an aggregate amount up to $75 million, comprised first of $25 million based on performance during the first three years after closing and then up to $50 million based on performance during the first five years after closing. We recorded a liability representing the present value of the first earnout payment. As of June 30, 2015 and December 31, 2014, this liability totaled $24 million and $23 million, respectively, and is included in other liabilities on our accompanying consolidated balance sheets. We are not currently required under applicable accounting guidance to record a liability for the second earnout payment and, as such, a liability has not been recorded on our accompanying consolidated balance sheets as of June 30, 2015 and December 31, 2014.

We account for our 50% investment in UBBP using the equity method of accounting, and we initially measured its carrying value at cost of approximately $676 million as of February 27, 2014. Our existing wholly-owned subsidiaries and consolidated variable interest entities that were contributed into the joint ventures were deconsolidated resulting in a gain of $27 million, which is included in our consolidated statement of operations for the six months ended June 30, 2014. Approximately $11 million of the gain relates to the remeasurement of our retained investment in the contributed subsidiaries to a fair value, determined using a discounted cash flow model with several inputs, including a weighted-average discount rate of approximately 11% and a weighted-average long-term growth rate of approximately 2%.

All of our investments accounted for under the equity method of accounting are initially recorded at cost, and subsequently adjusted for our share of the net income or loss and cash contributions and distributions to or from these entities. Because the underlying net assets in our investments are denominated in a foreign currency, translation gains or losses will impact the recorded value of our investments. Translation gains or losses recorded in other comprehensive income were as follows:

	Three months ended June 30,					Six months ended June 30,
(in millions)	2015			2014		2015			2014 (a)
Translation gain (loss)	$	(3	)	$	10	$	(19	)	$	11

During the second quarter of 2015, UBBP's Board of Directors declared and UBBP paid cash dividends on earnings through March 2015 of which our 50% share totaled $18 million. We recorded the cash dividend in operating activities on our cash flow and intend to use the cash dividends to fund the earnout payment described above. As of June 30, 2015, the amount of consolidated retained earnings which represents undistributed earnings from UBBP is $36 million.

Summarized financial information for our equity method investments is as follows:

	Three months ended June 30,				Six months ended June 30,
(in millions)	2015		2014		2015		2014 (a)
USG Boral Building Products:
Net sales	$	264	$	280	$	492	$	369
Gross profit	70		80		131		102
Operating profit	34		16		57		26
Income from continuing operations	28		10		46		17
Net income	28		10		46		17
Net income attributable to USG Boral Building Products	26		9		42		15
USG share of income from investment accounted for using the equity method	13		4		21		7
Other equity method investments:
USG share of income from investments accounted for using the equity method	1		1		1		1
Total income from equity method investments	14		5		22		8

(a) Operating results are presented for UBBP for the four months ended June 30, 2014.

Investment in Knauf-USG

During the second quarter of 2015, our investment in Knauf-USG, our 50/50 joint venture with Gebr. Knauf Verwaltungsgesellschaft KG,, met the asset held for sale criteria, and accordingly, we recorded our investment of $36 million as asset held for sale in other current assets on the consolidated balance sheet as of June 30, 2015. Our equity method income in the Knauf-USG joint venture amounted to $2 million for the year ended December 31, 2014.

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Derivative Instruments (Details Textual) MMBTU in Millions	6 Months Ended
	Jun. 30, 2015 USD ($) MMBTU	Jun. 30, 2014 USD ($)	Dec. 31, 2014 USD ($)
Derivative Instruments, Gain (Loss) [Line Items]
Typical hedging period	3 years
Net liability aggregate fair value	$ 16,000,000
Collateral provided to counterparties related to derivatives	$ 25,000,000
Commodity contracts
Derivative Instruments, Gain (Loss) [Line Items]
Nonmonetary notional amount of derivatives | MMBTU	20
Loss on cash flow hedge ineffectiveness	$ 0	$ 0
Fair value of contracts not designated as cash flow hedges	4,000,000		$ 5,000,000
Foreign exchange contracts
Derivative Instruments, Gain (Loss) [Line Items]
Loss on cash flow hedge ineffectiveness	0	$ 0
Notional amounts of foreign exchange forward contracts	99,000,000
Accumulated Net Gain (Loss) from Designated or Qualifying Cash Flow Hedges | Commodity contracts
Derivative Instruments, Gain (Loss) [Line Items]
Unrealized gain (loss) that remained in AOCI from cash flow hedges, net of tax	(16,000,000)		(20,000,000)
Accumulated Net Gain (Loss) from Designated or Qualifying Cash Flow Hedges | Foreign exchange contracts
Derivative Instruments, Gain (Loss) [Line Items]
Unrealized gain (loss) that remained in AOCI from cash flow hedges, net of tax	$ 4,000,000		$ 3,000,000

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Accumulated Other Comprehensive Income (Loss) (Details Textual) $ in Millions	6 Months Ended
	Jun. 30, 2015 USD ($)
Equity [Abstract]
Estimated after-tax loss on derivatives to be reclassified from AOCI to earnings within the next 12 months	$ 8

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Segments (Tables)

6 Months Ended

Jun. 30, 2015

Segment Reporting [Abstract]

Net sales and operating profit (loss) by segment

Segment results for our Gypsum, Distribution and Ceilings segments were as follows:

	Three months ended June 30,						Six months ended June 30,
(millions)	2015			2014			2015			2014 (b)
Net Sales:
Gypsum	$	617		$	612		$	1,194		$	1,157
Ceilings (a)	131			130			254			255
Distribution	364			344			698			644
Eliminations	(142		)	(138		)	(267		)	(258		)
Total	$	970		$	948		$	1,879		$	1,798
Operating Profit (Loss):
Gypsum	$	98		$	95		$	166		$	160
Ceilings (a)	25			24			46			39
Distribution	9			4			13			5
Corporate	(24		)	(21		)	(47		)	(42		)
Eliminations	(3		)	(4		)	3			2
Total	$	105		$	98		$	181		$	164

(a) Ceilings' net sales and operating profit for the six months ended June 30, 2014 includes the results, through February 27, 2014, of our wholly-owned subsidiaries and consolidated joint ventures that were contributed to UBBP.

(b) Net sales and operating profit (loss) have been recast for the periods prior to April 1, 2014 to conform with the new presentation of reportable segments.

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Organization, Consolidation and Presentation of Financial Statements (Details) $ in Millions	Jun. 30, 2015 USD ($)
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Deferred financing fees	$ 15

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Supplemental Balance Sheet Information

6 Months Ended

Jun. 30, 2015

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Supplemental Balance Sheet Information

Supplemental Balance Sheet Information

INVENTORIES

Total inventories consisted of the following:

(millions)	June 30, 2015		December 31, 2014
Finished goods	$	218	$	232
Work in progress	36		35
Raw materials	70		62
Total	$	324	$	329

ASSET RETIREMENT OBLIGATIONS

Changes in the liability for asset retirement obligations consisted of the following:

	Six months ended June 30,
(millions)	2015			2014
Balance as of January 1	$	123		$	132
Accretion expense	4			4
Liabilities incurred	—			—
Changes in estimated cash flows (a)	(1		)	(10		)
Liabilities settled	(1		)	(2		)
Foreign currency translation	(2		)	(1		)
Balance as of June 30	$	123		$	123

(a) Changes in estimated cash flows for the six months ended June 30, 2014 included changes in estimates primarily for our gypsum quarry and ship loading facility in Windsor, Nova Scotia, Canada, which we permanently closed during the third quarter of 2011, and our mining operation in Little Narrows, Nova Scotia, Canada as a result of receiving regulatory approval of a revised reclamation plan in 2014.

ACCRUED INTEREST

Interest accrued on our debt as of both June 30, 2015 and December 31, 2014 was $45 million and is included in accrued expenses on our accompanying consolidated balance sheets.

ASSETS HELD FOR SALE

As of June 30, 2015, assets held for sale totaled $42 million, which included port facilities in Mexico and our investment in the Knauf USG joint venture. As of December 31, 2014, assets held for sale totaled $5 million, which reflected other indefinite-lived intangible assets. Assets held for sale are classified as other current assets in our accompanying consolidated balance sheets.

In June 2014, we sold surplus property for a gain of $12 million which is included in cost of goods in our statement of operations.