Equity Method Investments

Equity method investments were as follows:



	December 31, 2017			December 31, 2016
(millions)	Carrying Value		Ownership Percentage	Carrying Value		Ownership Percentage
USG Boral Building Products	$	679	50%	$	621	50%
Other equity method investments	7		33% - 50%	$	7	33% - 50%
Total equity method investments	$	686		$	628

Investments in USG Boral Building Products (UBBP)

During 2017, UBBP paid cash dividends on earnings through September 2017 of which our 50% share totaled $42 million. As of December 31, 2017, the amount of our consolidated retained earnings which represents undistributed earnings from UBBP is $60 million.

In the event certain U.S. Dollar denominated performance targets are satisfied by UBBP, we are obligated to pay Boral an earnout payment of up to $50 million based on performance through 2019. We have not recorded a liability for this earnout payment as we have concluded that it is currently not probable that the five years performance target will be achieved. In the second quarter of 2016, we reversed a liability with a corresponding reduction to our investment for an earn-out payment that was based on a three years performance target.

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



(millions)	2017		2016			2015
Translation gain (loss)	$	40	$	(30	)	$	(23	)

Transactions with UBBP

Our U.S. Wallboard and Surfaces and U.S. Performance Materials segments sell products to UBBP. Total sales to UBBP for each of the years ended December 31, 2017, 2016 and 2015 were immaterial.

In 2014, in connection with the formation of UBBP, we contributed our ownership interest in a joint venture in China to UBBP but retained our loan receivable from this joint venture. As of December 31, 2017 and 2016, the loan receivable, including interest, totaled $13 million and $15 million, respectively, and is included in "Other assets" on our consolidated balance sheets.

Investment in Knauf-USG Joint Venture

In 2015, we sold our 50% interest in Knauf/USG Verwaltungs GmbH and Knauf/USG Systems GmbH & Co. KG, or collectively the Knauf-USG joint venture, to our joint venture partner, Knauf Aquapanel GmbH, a subsidiary of Gebr. Knauf Verwaltungsgesellschaft KG (Knauf) for €48 million in cash, or approximately $52 million. The Knauf-USG joint venture manufactured and distributed Aquapanel^® brand cement-based panels in Europe (excluding Turkey) and all countries that were part of the former Soviet Union. Affiliates of Knauf are the beneficial owners of approximately 10% of USG's outstanding shares of common stock.

We recorded a gain of approximately $6 million, which is net of $5 million for income taxes payable on the sale. The gross gain and our equity method income in the Knauf-USG joint venture was $13 million for the year ended December 31, 2015 and is recorded in "Income and gain from the sale of equity method investment to related party" in our consolidated statement of income.

Summarized Financial Information

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

Statements of Income



	For the year ended December 31,
(millions)	2017		2016		2015
USG Boral Building Products:
Net sales	$	1,200	$	1,052	$	1,003
Gross profit ^(a)	369		337		278
Operating profit	160		133		124
Net income before taxes	174		142		132
Net income	121		95		101
Net income attributable to USG Boral Building Products	117		99		96
USG share of income from USG Boral Building Products^(b)	59		49		48
Other equity method investments^(c):
USG share of income from other investments accounted for using the equity method	—		—		2

Total income from equity method investments	59		49		50


(a)	Year ended December 31, 2016 includes long-lived asset impairment charges of $8 million for China and of $14 million for Oman.


(b)	Year ended December 31, 2016 includes long-lived asset impairment charges of $4 million for China and of $4 million for Oman.


(c)	Amounts represent our share of income or loss from all equity method investments, other than UBBP.

Balance Sheets



(millions)	December 31, 2017		December 31, 2016
USG Boral Building Products:
Current assets	$	438	$	389
Non-current assets	981		903
Current liabilities^(a)	255		211
Long-term debt	10		37
Other non-current liabilities	12		17
Shareholders' equity^(b)	1,142		1,027


(a)	Includes the current portion of long-term debt of $16 million and $15 million as of December 31, 2017 and 2016, respectively.


(b)	Shareholders' equity includes $66 million and $50 million related to non-controlling interests as of December 31, 2017 and 2016, respectively.