8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported)           December 21, 2006          

USG CORPORATION

(Exact Name of Registrant as Specified in Charter)

Delaware	1-8864	36-3329400
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)
125 South Franklin Street, Chicago, Illinois		60606-4678
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s telephone number, including area code           (312) 606-4000          

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2.):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 3.03. Material Modification to Rights of Security Holders.

     On December 21, 2006, the Board of Directors of USG Corporation (the “Company”) declared a dividend distribution of one right (a “Right”) for each share of common stock, par value $0.10 per share (the “Common Shares”), of the Company outstanding at the close of business on January 2, 2007 (the “Record Date”), pursuant to the terms of the Rights Agreement, dated as of December 21, 2006 (the “Rights Agreement”), by and between the Company and Computershare Investor Services, LLC, as Rights Agent. The Rights Agreement also provides, subject to specified exceptions and limitations, that Common Shares issued or delivered from the Company’s treasury after the Record Date will be entitled to and accompanied by Rights. The Rights are in all respects subject to and governed by the provisions of the Rights Agreement, a copy of which is incorporated herein by this reference.

Item 7.01. Regulation FD Disclosure.

     On December 21, 2006, the Company issued a press release announcing the adoption of the Rights Agreement and the final payment to the United States Gypsum Asbestos Personal Injury Settlement Trust. A copy of the press release is furnished as Exhibit 99.1 hereto and incorporated herein by this reference.

Item 9.01. Financial Statements and Exhibits.

     (d) Exhibits.

Number	Exhibit
4.1	Rights Agreement, dated as of December 21, 2006, incorporated by reference to Exhibit 4.1 to the Form 8-A filed by the Company on December 21, 2006
99.1	USG Corporation press release dated December 21, 2006

SIGNATURE

     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, hereunto duly authorized.

USG CORPORATION
By:	/s/ Stanley L. Ferguson
	Name:	Stanley L. Ferguson
	Title:	Executive Vice President and General Counsel

     Date: December 21, 2006

EXHIBIT INDEX

Number	Exhibit
4.1	Rights Agreement, dated as of December 21, 2006, incorporated by reference to Exhibit 4.1 to the Form 8-A filed by the Company on December 21, 2006
99.1	USG Corporation press release dated December 21, 2006

EX-99.1

Exhibit 99.1

Media Inquires: (312) 606-4356

Investor Relations: (312) 606-4125

USG CORPORATION MAKES FINAL $3.05 BILLION PAYMENT TO TRUST

Company adopts 15 percent-triggered shareholder rights plan

     Chicago, December 21, 2006 — USG Corporation (NYSE: USG), a leading building products company, announced today that it made the final payment to the United States Gypsum Asbestos Personal Injury Settlement Trust. The $3.05 billion payment represents the final amounts due under the previously announced settlement agreement and plan of reorganization that enabled the company to emerge from its reorganization proceedings on June 20, 2006.

     Under terms of the company’s bankruptcy plan of reorganization, USG agreed to make three payments totaling $3.95 billion to a trust that will compensate asbestos personal injury claimants. The first payment of $900 million was made on June 20, 2006. The company elected to combine into a single $3.05 billion payment the second required installment, due 10 days following the adjournment of the 109th Congress, and the third installment, due 180 days following the second payment. Accelerating the third payment permits the company to maximize 2006 deductions necessary for a $1.1 billion federal tax refund expected to be received in 2007.

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USG CORPORATION MAKES FINAL $3.05 BILLION PAYMENT TO TRUST/2

     “We achieved the goals we established when we filed for chapter 11 protection in 2001,” said William C. Foote, USG chairman and CEO. “Our shareholders’ interests were preserved, our creditors are being paid in full with interest, asbestos personal injury claims have been permanently resolved and USG’s operations are stronger than ever before.”

     Foote continued, “We are optimistic about USG’s future and look forward to continued success implementing our strategic plans, unencumbered by asbestos liabilities.”

     The payment was funded using cash on hand, proceeds from the $500 million senior note offering completed in November and borrowings under the bank term loan and tax bridge term loan facilities established in August. A federal tax refund of $1.1 billion will be used to repay borrowing under the tax bridge term loan facility.

OTHER CORPORATE NEWS—NEW SHAREHOLDER RIGHTS PLAN

     USG also announced that it has adopted a new shareholder rights plan with a 15 percent share ownership trigger. USG determined not to extend the term of the existing reorganization rights plan with a 5 percent share ownership trigger that it adopted in connection with the company’s emergence from reorganization proceedings. As a result, the reorganization rights plan will expire on December 31, 2006.

     The new plan will take effect upon expiration of the reorganization rights plan. Under the new plan, if any person acquires beneficial ownership of 15 percent or more of USG’s voting stock, shareholders other than the 15 percent triggering shareholder will have the right to purchase additional shares of USG common stock at half their market price, thereby diluting the triggering shareholder. The new plan is similar to the rights plan that USG had in effect from the 1980s through its emergence from reorganization proceedings earlier this year. Pursuant to USG’s

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USG CORPORATION MAKES FINAL $3.05 BILLION PAYMENT TO TRUST/3

prior agreement with Berkshire Hathaway Inc. as part of Berkshire Hathaway’s commitment to backstop the $1.8 billion rights offering that USG completed in August, Berkshire Hathaway may acquire up to 40 percent of USG’s shares through August 1, 2013 without triggering the rights.

     The USG Board also adopted a Three-Year Independent Director Evaluation (“TIDE”) policy with respect to the rights plan. Under the TIDE policy, a Board committee composed solely of independent directors will review the rights plan at least once every three years to determine whether to modify the plan in light of all relevant factors.

     USG Corporation is a Fortune 500 manufacturer and distributor of high-performance building systems through its United States Gypsum Company, USG Interiors, Inc. and L&W Supply Corporation subsidiaries. Headquartered in Chicago, the company serves the residential

     and non-residential construction markets, repair and remodel construction markets, and industrial
processes. USG’s wall, ceiling, flooring and roofing products provide leading-edge building solutions for customers, while L&W Supply center locations efficiently stock and deliver building materials nationwide. For additional information, visit the USG Web site at www.usg.com.

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This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 related to management’s expectations about future conditions, including statements relating to the amount and timing of the expected tax refund and the strength of and outlook for USG’s operations. Actual results could differ due to, various other factors, including timing of certain actions related to the tax refund, economic conditions such as the levels of new home and other construction activity; competitive conditions, such as price and product competition; increases in raw material, energy and employee costs; the loss of one or more major customers; capacity constraints; capital market conditions and availability of borrowings under the corporation’s credit agreement; the unpredictable effects of acts of terrorism or war upon domestic and international economies and financial markets; acts of God; and the other risk factors listed from time to time by the corporation in documents and reports it files with the Securities and Exchange Commission. The corporation assumes no obligation to update any forward-looking information contained in this press release.