-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VhoizPf8QX7/C5wReqbrgghQ/quEMXN588y+exmpI8fY/zH6jNyuuwGFecb+KYi2 uAcaRDjMhvbVOzTTvrBrIg== 0000950137-00-001474.txt : 20000331 0000950137-00-001474.hdr.sgml : 20000331 ACCESSION NUMBER: 0000950137-00-001474 CONFORMED SUBMISSION TYPE: 11-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000330 FILER: COMPANY DATA: COMPANY CONFORMED NAME: USG CORP CENTRAL INDEX KEY: 0000757011 STANDARD INDUSTRIAL CLASSIFICATION: CONCRETE GYPSUM PLASTER PRODUCTS [3270] IRS NUMBER: 363329400 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 11-K SEC ACT: SEC FILE NUMBER: 001-08864 FILM NUMBER: 588897 BUSINESS ADDRESS: STREET 1: 125 S FRANKLIN ST STREET 2: DEPT. 188 CITY: CHICAGO STATE: IL ZIP: 60606 BUSINESS PHONE: 3126064000 11-K 1 FORM 11-K 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 11-K ANNUAL REPORT PURSUANT TO SECTION 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 (Mark one) X Annual Report pursuant to 15(d) of the Securities Exchange Act of 1934 - ---- (Fee required) For the fiscal year ended December 31, 1999. OR Transition report pursuant to Section 15(d) of the Securities Exchange Act - ---- of 1934 (No fee required) For the transition period from to ----------------- -------------- Commission file number 1-8864. A. Full title of the Plan: USG CORPORATION INVESTMENT PLAN (Formerly USG CORPORATION INVESTMENT PLAN FOR SALARIED EMPLOYEES) B. Name of the issuer of the securities held pursuant to the plan and the address of its principal executive office: USG CORPORATION, 125 SOUTH FRANKLIN STREET, CHICAGO, ILLINOIS 60606 2 REQUIRED INFORMATION Financial Statements: Plan financial statements and schedules prepared in accordance with the financial reporting requirements of ERISA attached hereto, including a Consent of Independent Public Auditors with respect to Form S-8 for 1999. Pursuant to the requirements of the Securities and Exchange Act of 1934, the members of the Pension and Investment Committee administering the Plan have duly caused this annual report to be signed by the undersigned thereunto duly authorized. USG CORPORATION INVESTMENT PLAN By: ---------------------------------- Brian J. Cook Member of Pension and Investment Committee Date: March , 2000 ----- 3 USG CORPORATION INVESTMENT PLAN REPORT ON AUDITED FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES YEARS ENDED DECEMBER 31, 1999 AND 1998 4 TABLE OF CONTENTS
PAGE ---- INDEPENDENT AUDITORS' REPORT 1 FINANCIAL STATEMENTS: Statements of Net Assets Available for Benefits 2 Statements of Changes in Net Assets Available for Benefits 3 Notes to Financial Statements 4 SUPPLEMENTAL SCHEDULES: I. Schedule of Investments Held at Year End 11 II. Schedule of Reportable Transactions 12
5 MEMBER OF THE MEMBER OF THE ILLINOIS CPA AMERICAN INSTITUTE SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS HILL, TAYLOR LLC CERTIFIED PUBLIC ACCOUNTANTS 116 South Michigan Avenue - 11th Floor Chicago, Illinois 60603 312-332-4964 Fax: 312-332-0181 INDEPENDENT AUDITORS' REPORT PENSION AND INVESTMENT COMMITTEE USG CORPORATION We have audited the accompanying statements of net assets available for benefits of the USG Corporation Investment Plan as of December 31, 1999 and 1998, and the related statements of changes in net assets available for benefits for the years then ended. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan as of December 31, 1999 and 1998, and the changes in net assets available for benefits for the years then ended in conformity with generally accepted accounting principles. Our audits were performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedules of investments held at year end as of December 31, 1999, and reportable transactions for the year ended December 31, 1999, are presented for purpose of additional analysis and are not a required part of the basic financial statements but are supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. These supplemental schedules are the responsibility of the Plan's management. The supplemental schedules have been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. March 10, 2000 6 USG CORPORATION INVESTMENT PLAN STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS DECEMBER 31, 1999 AND 1998
1999 1998 ------------ ------------ ASSETS: Investments, at market $388,432,770 $319,106,678 Receivables: Employer contributions receivable 17,680,587 10,940,048 Employee loans receivable 20,213,688 16,465,003 Interest and dividends receivable 83,928 60,276 Pending transactions due to loans --- 68,400 ------------ ------------ Total Receivables 37,978,203 27,533,727 ------------ ------------ Total Assets 426,410,973 346,640,405 ------------ ------------ LIABILITIES: Pending transactions due to loans 14,347 --- Accrued Administrative Fees 74,600 22,199 ------------ ------------ Total Liabilities 88,947 22,199 ------------ ------------ NET ASSETS AVAILABLE FOR PLAN BENEFITS $426,322,026 $346,618,206 ============ ============
The accompanying notes to financial statements are an integral part of these statements. -2- 7 USG CORPORATION INVESTMENT PLAN STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS YEARS ENDED DECEMBER 31, 1999 AND 1998
1999 1998 ------------- ------------- NET ASSETS AVAILABLE FOR PLAN BENEFITS, beginning of year $ 346,618,206 $ 287,586,645 ------------- ------------- ADD (DEDUCT): Corporation contributions 22,731,532 15,419,180 Employee contributions 30,337,373 26,378,806 ------------- ------------- 53,068,905 41,797,986 ------------- ------------- Income from investments: Dividend income 3,907,453 5,871,392 Interest income 9,931,703 9,067,730 Realized gain (loss) on sale of investments 11,556,860 3,065,433 Unrealized appreciation for the year 22,582,166 20,267,520 ------------- ------------- 47,978,182 38,272,075 ------------- ------------- Benefit payments and participant withdrawals (20,808,916) (20,628,734) Administrative expenses (534,351) (409,766) ------------- ------------- Net increase in assets during the year 79,703,820 59,031,561 ------------- ------------- NET ASSETS AVAILABLE FOR PLAN BENEFITS, end of year $ 426,322,026 $ 346,618,206 ============= =============
The accompanying notes to financial statements are an integral part of these statements. -3- 8 USG CORPORATION INVESTMENT PLAN NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 1999 AND 1998 1. DESCRIPTION OF THE PLAN The USG Corporation Investment Plan, also known as the USG Corporation Investment Plan for Salaried Employees prior to January 1, 1989 ("The Plan"), was approved by the stockholders of the Corporation on May 11, 1977, and became effective on July 1, 1977. The Plan was subsequently amended and completely restated effective as of January 1, 1989 and most recently as of July 1, 1997 ("restated Plan"). The amendments and restatements incorporate all prior amendments to the Plan and make changes to reflect the merger of the USG Corporation Savings Plan for Hourly Employees and change the name of the Plan to the USG Corporation Investment Plan, effective January 1, 1989; and to implement the daily valuation of investments in the participants? accounts at fair market value on each business day effective July 1, 1997. The Plan was established to provide a means for eligible hourly and salaried employees to participate in the earnings of the Corporation, to build a supplemental retirement fund and to provide additional disability and death benefits. The Plan provides, among other things, that participants may contribute up to 15% (9% for highly compensated employees) of their eligible pay to the Plan through payroll deductions on a before-tax basis during the year effective January 1, 1998, 12% from July 1, 1997 to December 31, 1997, 9% from January 1, 1989 to June 30, 1997, 15% from October 1, 1985 to December 31, 1988 and 12% prior to October 15, 1985. The amount of distributions to be made upon withdrawal from the Plan is dependent upon the participant's and the Corporation's contributions. The Plan requires completion of five years of credited service in order to be 100% vested in the Corporation contribution. Employee contributions are always 100% vested. In addition, the Plan contains provisions under which the entire amount credited to a participant's account is distributable upon a participant's retirement, disability, or death. Employee contributions are invested by the Trustee in any one or a combination of eight funds: (a) common stock of USG Corporation (USG Common Stock Fund), (b) an equity index fund which provides investment results that are designed to correspond to the performance of publicly traded common stocks, as represented by the Standard & Poor's 500 Composite Stock Price Index (Equity Index Fund), (c) a balanced fund which invests in several broadly diversified asset classes, including domestic and foreign common stock and bonds, preferred stocks and cash (Balanced Fund), (d) a growth fund which invests primarily in equity securities of large market capitalization companies with earnings that are expected to grow at an above-average rate, but may be further diversified by investment of a small portion of the assets in domestic bonds, foreign common stocks and bonds, and cash (Growth Fund), (e) a small cap equity fund which seeks maximum long-term growth of capital by investing in common stock of rapidly growing U.S. companies with market capitalization of less than $1 billion at the time of initial investment (Small Cap Equity Fund), (f) an international equity fund which seeks long-term capital appreciation through investments in common stock of established non-U.S. -4- 9 companies (International Equity Fund), (g) a bond fund which seeks to provide current income and preservation of capital by investing in investment grade corporate debt securities, government bonds and mortgages in both U.S. and foreign markets, (Bond Fund) or (h) a managed separate account which seeks to preserve principal and income while maximizing current income by investing in a diversified pool of Guaranteed Investment Contracts (GICs), separate account GICs, synthetic GICs or Structured Investment Contracts (SICs) and Bank Investment Contracts (BICs) of varying maturity, size and yield (Stable Value Fund). The Equity Index Fund is invested in the Vanguard Institutional Index Fund. The Balanced Fund is invested in the Fidelity Puritan Fund. The Growth Fund is invested in the American Express/IDS New Dimensions Fund - Class Y. The Small Cap Equity Fund is invested in the Franklin Small Cap Growth Fund - Class A. The International Equity Fund is invested in the Templeton Foreign Fund - Class A. The Bond Fund is invested in the PIMCO Total Return Fund - Institutional Class. The Stable Value Fund is managed by PRIMCO Capital Management. At December 31, 1999, the Stable Value Fund was primarily composed of group annuity contracts maintained by banks and insurance companies. Participants may elect to have their contributions invested in 1% increments in any fund or combination of funds and to change their contribution rate, suspend or resume their contributions, change their investment allocations, transfer their investments from one fund to another and apply for a loan by calling the USG Investment Plan Connection, an automated telephone service, on any day. Certain Executive officers of the Corporation must pre-clear any transfer in or out of the USG Common Stock Fund with the USG Corporate Secretary. The Corporation made a regular 25% matching contribution up to the first 6% of the participants? eligible pay contributed to the Plan, credited to the participants? accounts each pay period. In addition, the Corporation also made an annual profit sharing matching contribution of up to 9% of the participants? eligible pay contributed to the Plan based on achievement of at least 80% of the corporate consolidated earnings goal for the plan year. The Plan was amended effective January 1, 1999 to provide for immediate eligibility and enrollment to join the Plan for newly hired employees and current employees who are in their one year waiting period as of January 1, 1999, unless the employee elects not to join the Plan. If the Trustee is unable to invest any contributions immediately, the funds are temporarily invested in short-term investment funds and any earnings in the fund are credited to the participants' accounts. -5- 10 The Plan funds are administered under the terms of a Trust agreement with The Northern Trust Company. The Trust agreement provides, among other things, that the Trustee shall keep account of all investments, receipts and disbursements and other transactions and shall provide annually a report setting forth such transactions and the status of the funds at the end of the period. The Plan is administered by the Pension and Investment Committee, which consists of five members appointed by the Corporation. Administrative expenses and other fees of the Plan are shared by the Corporation and the participants. At December 31, 1999 and 1998, there were approximately 12,342 and 8,932 participants in the Plan, respectively. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The amounts in the accompanying statements were accumulated from the reports of the Trustee (Note 1). The financial statements of the Plan are prepared under the accrual method of accounting. Contributions to the Plan are made throughout the year and adjustments are made to the financial statements to accrue for the portion of annual contributions unpaid at year-end. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and changes therein, and disclosure of contingent assets and liabilities. Actual results could differ from those estimates. The Plan's investments are stated at market value except for its group annuity contracts with insurance companies, which are valued at contract value because they are fully benefit responsive. For example, participants may ordinarily direct the withdrawal or transfer of all or a portion of their investment at contract value. There are no reserves against contract value for credit risk of the contract issuers. Market value and cost are equal for the group annuity contracts and short-term investments. Shares of registered investment companies are valued at quoted market prices which represent the net asset value of shares held by the Plan at year-end. The Company stock is valued at its quoted market price. Participant loans receivable are valued at cost which approximates fair value. Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date. Realized gains or losses on the sale of investments are calculated based upon the historical average cost of the investments. Unrealized appreciation or depreciation of investments of the Plan represents the change between years in the difference between the market value and cost of the investments. The guaranteed investment contracts in the Stable Value Fund earned guaranteed interest at rates varying from 4.92% to 6.90% at December 31, 1999. The rates for 1998 ranged from 4.33% to 6.80%. The guaranteed investment contracts earnings are calculated net of administrative fees. -6- 11 For the USG Common Stock Fund, cost was $53,574,063 and $50,887,831 as of December 31, 1999 and 1998, respectively. For the Equity Index Fund, market value exceeded cost by $33,320,876 and $26,834,737 at December 31, 1999, and 1998, respectively. For the Balanced Fund, market value exceeded cost by $479,518 and $2,124,574 at December 31, 1999, and 1998, respectively. For the Growth Fund, market value exceeded cost by $19,983,844 and $11,579,622 at December 31, 1999, and 1998, respectively. For the Small Cap Equity Fund, market value exceeded cost at December 31, 1999, and 1998, by $7,088,610 and by $23,416, respectively. Market value exceeded cost for the International Equity Fund at December 31, 1999 by $585,687, and cost exceeded market value by $602,200 at December 31, 1998. For the Bond Fund, cost exceeded market value by $203,910 and $118,327 at December 31, 1999, and 1998, respectively. Pending transactions due to loans represent reconciliations of the loan amounts between the Trustee and recordkeeper at year-end, which will be posted to the Trustee's records in the subsequent year. Benefits are recorded when paid. Certain amounts in the Plan's 1998 financial statements have been reclassified to conform with the 1999 financial statement presentation as a result of adopting SOP 99-3, Accounting for and Reporting of Certain Defined Contribution Plan Investments and Other Disclosure Matters, in 1999. 3. TAX STATUS The Plan, as amended and restated, effective July 1, 1997, meets the requirements of Section 401(a) of the Internal Revenue Code and, accordingly, its income is exempt from Federal income tax under Section 501(a). Employer contributions and the income of the Plan are not taxable to the participants until distributions are made. 4. EMPLOYER CONTRIBUTIONS The Corporation will make a formula matching contribution with respect to each eligible participant only if at least 80% of the Corporation's consolidated earnings goal is met. The Corporation formula matching contribution schedule was changed for the 1995 Plan year. Beginning January 1, 1995, each 1% increase in goal attainment from 80% to 100% of goal results in a corresponding 1.5% increase in the profit sharing match, starting at a 10% match with the attainment of 80% of earnings goal. Each 1% increase in goal attainment from 100% to 140% of goal will result in a 1% increase in the profit sharing match, starting from a 40% match with attainment of 100% of goal earnings. And each 1% increase in goal attainment above 140% results in a 2% increase in the profit sharing match, starting from 80% matching with attainment of 140% of goal earnings. Employer contribution amounts forfeited by terminated employees are applied as a credit against future Corporate contributions or used to pay administrative expenses and other fees of the plan and are held in the Forfeiture Cash Account. -7- 12 5. DISTRIBUTION ON TERMINATION OF THE PLAN In the event of any termination of the Plan, the account balances of all affected participants shall become non-forfeitable. -8- 13 6. INVESTMENTS The following is a summary of the Plan's investments as well as the net realized and unrealized appreciation (depreciation) for 1999 and 1998:
DECEMBER 31, 1999 DECEMBER 31, 1998 ------------------------------- ------------------------------- NET NET APPRECIATION APPRECIATION FAIR (DEPRECIATION) FAIR (DEPRECIATION) VALUE IN FAIR VALUE VALUE IN FAIR VALUE ---------- ----------------- -------- ----------------- Common Stock: USG Common Stock $ 41,824,663 ($ 2,375,345) $ 37,948,896 $ 1,319,485 Mutual Funds: Vanguard Index Trust 83,214,189 13,484,628 68,948,314 14,147,223 Fidelity Puritan Fund 20,897,409 ( 300,641) 21,338,448 765,501 IDS New Dimension Fund 64,363,112 14,290,871 44,834,896 7,024,648 Franklin Small Cap Growth Fund 19,154,114 8,128,960 6,094,338 185,567 Templeton Foreign Fund 6,094,843 1,219,397 2,462,450 ( 233,854) PIMCO Total Return Fund 4,445,160 ( 308,844) 5,656,053 124,383 ------------- ------------- ------------- ------------- 198,168,827 36,514,371 149,334,499 22,013,468 ============= ============= ============= ============= Mortgages, Notes, Contracts 128,345,349 --- 125,741,562 --- Collective Short-Term Investment Fund 20,093,931 --- 6,081,721 --- ------------- ------------- ------------- ------------- TOTAL INVESTMENTS $ 388,432,770 $ 34,139,026 $ 319,106,678 $ 23,332,953 ============= ============= ============= =============
All investments in the Plan are participant-directed investments. -9- 14 At December 31, 1999 and 1998, the following investments (participant-directed) exceeded 5% of the net assets available for the Plan benefits:
1999 1998 ---------- --------- USG Corporation Common Stock $41,824,663 $37,948,896 Allstate Insurance Company Contract 77032 24,052,589 22,018,078 Jackson National Life Insurance Contract S-1129-1 --- 22,965,801 SunAmerica Life Insurance Company, GAC 4653 --- 23,611,436 UBS, 5021 19,648,352 --- Vanguard Index Trust 83,214,189 68,948,314 IDS New Dimension Fund 64,363,112 44,834,896 Fidelity Puritan Fund 20,897,409 21,338,448
7. PARTICIPANT LOANS Effective October 1, 1993, and as revised on July 1, 1997, a participant can obtain loans from the Plan. Under the Plan's loan provisions, the maximum loan allowable is one half of a participant's vested account balance or $50,000, whichever is less. The minimum loan amount is $1,000. Additional amounts can be taken in $1 increments. A participant must have a vested account balance of at least $2,000 before he or she can apply for a loan. The Plan restricts the participant to no more than two loans outstanding at a time. Most loans can be repaid by the participant over a five-year period, or sooner, in full, with interest at the prime rate in effect at the time of requesting the loan. A residential loan can be repaid over a period of up to 30 years. Default on a loan by a participant is treated as a hardship withdrawal and subject to IRS penalties. -10- 15 SCHEDULE I USG CORPORATION INVESTMENT PLAN SCHEDULE OF INVESTMENTS HELD AT YEAR END DECEMBER 31, 1999
PRINCIPAL AMOUNT/NUMBER OF FAIR SHARES COST VALUE ------------ ------------ ------------ COMMON STOCK USG Corporation 887,526 $ 53,574,063 $ 41,824,663 Vanguard Index Trust 620,955 49,893,313 83,214,189 Fidelity Puritan Fund 1,098,130 20,417,891 20,897,409 IDS New Dimension Fund 1,797,350 44,379,268 64,363,112 Franklin Small Cap Growth Fund 434,038 12,065,504 19,154,114 Templeton Foreign Fund 543,212 5,509,156 6,094,843 ------------ ------------ ------------ TOTAL COMMON STOCK 185,839,195 235,548,330 ------------ ------------ CORPORATE BONDS PIMCO Total Return Fund 449,006 4,649,070 4,445,160 ------------ ------------ ------------ CONTRACTS Aetna Life & Casualty Company, GAC 14621 $ 3,418,862 3,418,862 3,418,862 Allstate, 77032 $ 24,052,589 24,052,589 24,052,589 Bank Of America, 99-061 $ 7,542,931 7,542,931 7,542,931 Bankers Trust, GAC 97-157 $ 12,414,394 12,414,394 12,414,394 Chase, 401748 $ 1,033,864 1,033,864 1,033,864 John Hancock Mutual Life Insurance Co., GAC 8396-1 $ 6,061,386 6,061,386 6,061,386 John Hancock Mutual Life Insurance Co., GAC 9532 $ 11,966,310 11,966,310 11,966,310 Metropolitan Life, 25287 $ 4,016,854 4,016,854 4,016,854 Monumental Life Insurance Company, GAC ADA00259TR $ 15,382,950 15,382,950 15,382,950 State Street Bank & Trust, Contract 98203 $ 2,126,670 2,126,670 2,126,670 State Street Bank & Trust, Contract 99010 $ 10,567,031 10,567,031 10,567,031 Transamerica Life & Annuity, GAC 76879 $ 1,056,291 1,056,291 1,056,291 Transamerica Life & Annuity, 76912 $ 9,056,865 9,056,865 9,056,865 UBS, 5021 $ 19,648,352 19,648,352 19,648,352 ------------ ------------ ------------ TOTAL CONTRACTS $128,345,349 128,345,349 128,345,349 ------------ ------------ ------------ SHORT-TERM INVESTMENTS Collective Short-Term Investment Fund $ 20,093,931 20,093,931 20,093,931 ------------ ------------ ------------ TOTAL INVESTMENTS $338,927,545 $388,432,770 ============ ============
-11- 16 SCHEDULE II USG CORPORATION INVESTMENT PLAN SCHEDULE OF REPORTABLE TRANSACTIONS FOR THE YEAR ENDED DECEMBER 31, 1999 SERIES OF TRANSACTIONS IN THE SAME SECURITY:
TOTAL COST TOTAL CURRENT DESCRIPTION OF NUMBER OF OF NUMBER OF VALUE OF SECURITY PURCHASES ASSET SALES SALES --------------- --------- -------- --------- -------- None
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