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, 1996.
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
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 1996.
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: /s/ Harold E. Pendexter. Jr.
--------------------------------
H. E. Pendexter, Jr.
Member of Pension and Investment
Committee
Date: March 18, 1997
<PAGE>
USG CORPORATION
INVESTMENT PLAN
REPORT ON AUDITED
FINANCIAL STATEMENTS AND
SUPPLEMENTAL SCHEDULES
YEARS ENDED DECEMBER 31, 1996 AND 1995
<TABLE>
TABLE OF CONTENTS
PAGE
<CAPTION>
<S> <C>
INDEPENDENT AUDITORS' REPORT 1
FINANCIAL STATEMENTS:
Statement of Net Assets Available
for Plan Benefits 2
Statement of Changes in Net Assets
Available for Plan Benefits 4
Notes to Financial Statements 6
SUPPLEMENTAL SCHEDULES:
I. Schedule of Investments Held
at Year End 12
II. Schedule of Reportable Transactions 13
</TABLE>
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 statement of net assets available for plan
benefits of the USG Corporation Investment Plan as of December 31, 1996 and
1995, and the related statement of changes in net assets available for plan
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 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 plan benefits of the Plan as
of December 31, 1996 and 1995, and the changes in net assets available for plan
benefits for the years then ended in conformity with generally accepted
accounting principles.
Our audits were made 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, 1996, and reportable transactions for the
year ended December 31, 1996, are presented for purposes of complying with the
Department of Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974 and are not a required part
of the basic financial statements. 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.
/s/ Hill, Taylor LLC
- --------------------
March 11, 1997
<PAGE>
<TABLE>
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
DECEMBER 31, 1996 AND 1995
<CAPTION>
1996
------------------------------------------------------------------------------------
USG COMMON FIXED GOVERNMENT EQUITY
STOCK INCOME INVESTMENT INDEX BALANCED
FUND FUND FUND FUND FUND
------------- ------------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments at
Market $ 19,185,797 $122,884,255 $ 4,666,089 $ 32,485,092 $ 12,295,698
Receivables:
Employer contributions
receivable -- 7,960,213 -- -- --
Employee loans
receivable -- -- -- -- --
Interest and
dividend receivable 70 195,452 20,227 5 25
Pending transactions
from participants'
elections for transfers
between funds or
forfeitures -- -- 111,679 431,678 194,274
------------- ------------- ------------- ------------- ------------
Total Receivables 70 8,155,665 131,906 431,683 194,299
------------- ------------- ------------- ------------- ------------
Total Assets 19,185,867 131,039,920 4,797,995 32,916,775 12,489,997
------------- ------------- ------------- ------------- ------------
LIABILITIES:
Pending transactions
from participants'
elections for transfers
between funds or
forfeitures 554,236 1,422,440 -- -- --
------------- ------------ ------------ ------------ ------------
Total Liabilities 554,236 1,422,440 -- -- --
------------- ------------ ------------ ------------ ------------
NET ASSETS AVAILABLE
FOR PLAN BENEFITS $ 18,631,631 $129,617,480 $ 4,797,995 $ 32,916,775 $ 12,489,997
============ ============ ============ ============ ============
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
<PAGE>
<TABLE>
USG CORPORATION INVESTMENT PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
DECEMBER 31, 1996 AND 1995
<CAPTION>
1996
-------------------------------------------------------------------------
FORFEITURE INVESTMENT
GROWTH CASH PLAN
FUND ACCOUNT LOANS TOTAL
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
ASSETS:
Investments at
Market $ 20,394,899 $ 154,061 $ -- $212,065,891
Receivables:
Employer contributions
receivable -- (114,318) -- 7,845,895
Employee loans
receivable -- -- 7,840,092 7,840,092
Interest and
dividend receivable 3 704 -- 216,486
Pending transactions
from participants'
elections for transfers
between funds or
forfeitures 1,271,645 29,143 -- 2,038,419
------------ ----------- ------------ ------------
Total Receivables 1,271,648 (84,471) 7,840,092 17,940,892
------------ ----------- ------------ ------------
Total Assets 21,666,547 69,590 7,840,092 230,006,783
------------ ----------- ------------ ------------
LIABILITIES:
Pending transactions
from participants'
elections for transfers
between funds or
forfeitures -- -- 697,912 2,674,588
------------ ------------ ------------ ------------
Total Liabilities -- -- 697,912 2,674,588
------------ ------------ ------------ ------------
NET ASSETS AVAILABLE
FOR PLAN BENEFITS $ 21,666,547 $ 69,590 $ 7,142,180 $227,332,195
============ ============ ============ ============
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
<PAGE>
<TABLE>
USG CORPORATION INVESTMENT PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
DECEMBER 31, 1996 AND 1995
<CAPTION>
1995
------------------------------------------------------------------------------------
USG COMMON FIXED GOVERNMENT EQUITY
STOCK INCOME INVESTMENT INDEX BALANCED
FUND FUND FUND FUND FUND
------------- ------------ ------------ ----------- ------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments at
Market $ 15,965,324 $121,017,261 $ 4,490,474 $ 21,878,533 $ 8,292,660
Receivables:
Employer contributions
receivable -- 5,506,150 -- -- --
Employee loans
receivable -- -- -- -- --
Employee contributions
receivable 6,807 15,719 1,449 6,411 4,737
Interest and
dividend receivable 98 215,820 20,761 2 27
Pending transactions
from participants'
elections for transfers
between funds or
forfeitures -- -- -- 956,988 852,825
------------ ------------ ----------- ----------- ------------
Total Receivables 6,905 5,737,689 22,210 963,401 857,589
------------ ------------ ----------- ----------- ------------
Total Assets 15,972,229 126,754,950 4,512,684 22,841,934 9,150,249
------------ ------------ ----------- ----------- ------------
LIABILITIES:
Pending transactions
from participants'
elections for transfers
between funds or
forfeitures 214,573 2,794,811 124,186 -- --
------------ ------------ ------------ ------------ ------------
Total Liabilities 214,573 2,794,811 124,186 -- --
------------ ------------ ------------ ------------ ------------
NET ASSETS AVAILABLE
FOR PLAN BENEFITS $ 15,757,656 $123,960,139 $ 4,388,498 $ 22,841,934 $ 9,150,249
============ ============ ============ ============ ============
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
<PAGE>
<TABLE>
USG CORPORATION INVESTMENT PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
DECEMBER 31, 1996 AND 1995
<CAPTION>
1995
---------------------------------------------------------------------------
FORFEITURE INVESTMENT
GROWTH CASH PLAN
FUND ACCOUNT LOANS TOTAL
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
ASSETS:
Investments at
Market $ 11,173,418 $ 56,911 $ -- $ 182,874,581
Receivables:
Employer contributions
receivable -- -- -- 5,506,150
Employee loans
receivable -- -- 5,447,027 5,447,027
Employee contributions
receivable 6,863 -- -- 41,986
Interest and
dividend receivable 1 281 -- 236,990
Pending transactions
from participants'
elections for transfers
between funds or
forfeitures 1,303,996 33,690 904,717 4,052,216
------------ ------------ ------------ ------------
Total Receivables 1,310,860 33,971 6,351,744 15,284,369
------------ ------------ ------------ ------------
Total Assets 12,484,278 90,882 6,351,744 198,158,950
------------ ------------ ------------ ------------
LIABILITIES:
Pending transactions
from participants'
elections for transfers
between funds or
forfeitures -- -- -- 3,133,570
------------ ------------ ------------ ------------
Total Liabilities -- -- -- 3,133,570
------------ ------------ ------------ ------------
NET ASSETS AVAILABLE
FOR PLAN BENEFITS $ 12,484,278 $ 90,882 $ 6,351,744 $195,025,380
============ ============ ============ ============
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
<PAGE>
<TABLE>
USG CORPORATION INVESTMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
YEARS ENDED DECEMBER 31, 1996 AND 1995
<CAPTION>
1996
------------------------------------------------------------------------------
COMMON FIXED GOVERNMENT EQUITY
STOCK INCOME INVESTMENT INDEX BALANCED
FUND FUND FUND FUND FUND
------------- -------------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C>
NET ASSETS AVAILABLE
FOR PLAN BENEFITS,
beginning of year $15,757,656 $123,960,139 $4,388,498 $22,841,934 $9,150,249
------------- -------------- ----------- ------------- -------------
ADD (DEDUCT):
Corporation contributions --- 11,859,525 --- --- ---
Employee contributions 2,142,189 8,635,407 507,642 3,073,532 1,462,446
------------- -------------- ----------- ------------- -------------
2,142,189 20,494,932 507,642 3,073,532 1,462,446
------------- -------------- ----------- ------------- -------------
Income from investments:
Dividend income --- --- --- 600,693 384,991
Interest income 1,698 7,325,085 234,013 665 1,296
Realized gain (loss) on
sale of investments (2,078,354) --- --- 808,159 1,015,612
Unrealized appreciation
for the year 4,338,774 --- --- 4,260,634 114,503
------------- -------------- ----------- ------------- -------------
2,262,118 7,325,085 234,013 5,670,151 1,516,402
------------- -------------- ----------- ------------- -------------
Benefit payments and
participant withdrawals (996,138) (13,205,907) (315,855) (2,036,392) (994,371)
Participants' elections for
transfers between funds
or forfeitures (813,112) (7,691,826) (35,878) 3,198,440 1,357,547
Net fund transactions 278,918 (1,264,943) 19,575 169,110 (2,276)
due to loans
Administrative expenses --- --- --- --- ---
------------- -------------- ----------- ------------- -------------
Net increase in
assets during the year 2,873,975 5,657,341 409,497 10,074,841 3,339,748
------------- -------------- ----------- ------------- -------------
NET ASSETS AVAILABLE
FOR PLAN BENEFITS,
end of year $18,631,631 $129,617,480 $4,797,995 $32,916,775 $12,489,997
============= ============== =========== ============= =============
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
<PAGE>
<TABLE>
USG CORPORATION INVESTMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
YEARS ENDED DECEMBER 31, 1996 AND 1995
1996
---------------------------------------------------------
FORFEITURE INVESTMENT
GROWTH CASH PLAN
FUND ACCOUNT LOANS TOTAL
------------- --------- ------------ --------------
<S> <C> <C> <C> <C>
NET ASSETS AVAILABLE
FOR PLAN BENEFITS,
beginning of year $12,484,278 $90,882 $6,351,744 $195,025,380
------------- --------- ------------ --------------
ADD (DEDUCT):
Corporation contributions --- (206,658) --- 11,652,867
Employee contributions 2,652,956 --- --- 18,474,172
------------- --------- ------------ --------------
2,652,956 (206,658) --- 30,127,039
------------- --------- ------------ --------------
Income from investments:
Dividend income 148,113 --- --- 1,133,797
Interest income 679 4,083 490,824 8,058,343
Realized gain (loss) on
sale of investments 755,115 --- 1 500,533
Unrealized appreciation
for the year 2,651,167 (1) (1) 11,365,076
------------- --------- ------------ --------------
3,555,074 4,082 490,824 21,057,749
------------- --------- ------------ --------------
Benefit payments and
participant withdrawals (954,476) 250 (339,239) (18,842,128)
Participants' elections for
transfers between funds
or forfeitures 3,767,950 216,879 --- ---
Net fund transactions 160,765 --- 638,851 ---
due to loans
Administrative expenses --- (35,845) --- (35,845)
------------- --------- ------------ --------------
Net increase in
assets during the year 9,182,269 (21,292) 790,436 32,306,815
------------- --------- ------------ --------------
NET ASSETS AVAILABLE
FOR PLAN BENEFITS,
end of year $21,666,547 $69,590 $7,142,180 $227,332,195
============= ========= ============ ==============
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
<PAGE>
<TABLE>
USG CORPORATION INVESTMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
YEARS ENDED DECEMBER 31, 1996 AND 1995
<CAPTION>
1995
-------------------------------------------------------------------------------------------
USG COMMON FIXED GOVERNMENT EQUITY
STOCK INCOME INVESTMENT INDEX BALANCED
FUND FUND FUND FUND FUND
------------- -------------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C>
NET ASSETS AVAILABLE
FOR PLAN BENEFITS,
beginning of year $ 8,956,154 $ 114,852,726 $ 4,042,546 $ 13,911,850 $ 5,771,470
------------- ------------- ------------- ------------- -------------
ADD (DEDUCT):
Corporation contributions -- 8,031,143 -- -- --
Employee contributions 1,926,937 8,776,541 553,605 2,152,522 1,277,618
------------- ------------- ------------- ------------- -------------
1,926,937 16,807,684 553,605 2,152,522 1,277,618
------------- ------------- ------------- ------------- -------------
Income from investments:
Dividend income -- -- -- 451,179 220,314
Interest income 2,411 7,209,145 248,810 315 486
Realized gain (loss) on
sale of investments (245,236) -- -- 175,248 206,491
Unrealized depreciation
for the year 5,496,461 -- -- 4,933,282 961,587
------------- ------------- ------------- ------------- -------------
5,253,636 7,209,145 248,810 5,560,024 1,388,878
------------- ------------- ------------- ------------- -------------
Benefit payments and
participant withdrawals (342,218) (8,469,035) (259,936) (760,126) (201,243)
Participants' elections for
transfers between funds
or forfeitures (71,044) (4,924,839) (208,328) 1,937,298 804,570
Withdrawals from funds 34,191 (1,515,542) 11,801 40,366 108,956
due to loans
------------- ------------- ------------- ------------- -------------
Net increase (decrease) in
assets during the year 6,801,502 9,107,413 345,952 8,930,084 3,378,779
------------- ------------- ------------- ------------- -------------
NET ASSETS AVAILABLE
FOR PLAN BENEFITS,
end of year $ 15,757,656 $ 123,960,139 $ 4,388,498 $ 22,841,934 $ 9,150,249
============= ============= ============= ============= =============
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
<PAGE>
<TABLE>
USG CORPORATION INVESTMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
YEARS ENDED DECEMBER 31, 1996 AND 1995
<CAPTION>
1995
---------------------------------------------------------
FORFEITURE INVESTMENT
GROWTH CASH PLAN
FUND ACCOUNT LOANS TOTAL
------------- --------- ------------ -------------
<S> <C> <C> <C> <C>
NET ASSETS AVAILABLE
FOR PLAN BENEFITS,
beginning of year $5,948,930 $17,735 $4,876,708 $158,378,119
------------- --------- ------------ --------------
ADD (DEDUCT):
Corporation contributions --- --- --- 8,031,143
Employee contributions 1,757,974 --- --- 16,445,197
------------- --------- ------------ --------------
1,757,974 --- --- 24,476,340
------------- --------- ------------ --------------
Income from investments:
Dividend income 103,477 --- --- 774,970
Interest income 250 2,120 439,088 7,902,625
Realized gain (loss) on
sale of investments 379,254 --- --- 515,757
Unrealized depreciation
for the year 2,038,294 --- --- 13,429,624
------------- --------- ------------ --------------
2,521,275 2,120 439,088 22,622,976
------------- --------- ------------ --------------
Benefit payments and
participant withdrawals (222,736) --- (196,761) (10,452,055)
Participants' elections for
transfers between funds
or forfeitures 2,391,316 71,027 --- ---
Withdrawals from funds 87,519 --- 1,232,709 ---
due to loans
------------- --------- ------------ --------------
Net increase (decrease) in
assets during the year 6,535,348 73,147 1,475,036 36,647,261
------------- --------- ------------ --------------
NET ASSETS AVAILABLE
FOR PLAN BENEFITS,
end of year $12,484,278 $90,882 $6,351,744 $195,025,380
============= ========= ============ ==============
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
<PAGE>
USG CORPORATION
INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
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. On January 2, 1989, the
Plan was amended and completely restated effective as of January 1,
1989 ("restated Plan"). The amendment and restatement incorporates all
prior amendments to the Plan and makes changes to reflect the merger of
the USG Corporation Savings Plan for Hourly Employees effective January
1, 1989, and to change the name of the Plan to the USG Corporation
Investment Plan.
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 9% of their annual compensation to the Plan during the year
effective January 1, 1989, 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 six funds: (a) common stock of USG Corporation (USG
Common Stock Fund), (b) United States Government obligations
(Government Investment Fund), (c) other obligations providing a fixed
rate of interest (Fixed Income Fund), (d) 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),
(e) 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), or (f) 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).
Participants may elect to have their contributions invested in 5%
increments in any fund and can change their investment election each
quarter. In order to change their investment options, transfer their
prior accumulated account to another investment option, increase or
decrease the percent of contributions, and to make requests for
withdrawals, participants are required to provide notice by the 15th
day of the last month of any quarter.
At December 31, 1996 and 1995, the Fixed Income Fund was primarily
composed of an investment in group annuity contracts maintained by
Metropolitan Life Insurance Co., Provident Life Insurance Co., John
Hancock Mutual Life Insurance Co. and SunAmerica Life Insurance Co.
The Equity Index Fund was invested in the Vanguard Institutional
Index Fund.
As of December 31, 1996 and 1995, the Balanced Fund was invested in the
Fidelity Puritan Fund and the Growth Fund was invested in the IDS New
Dimensions Fund.
Corporation contributions, whether made in cash or stock, are initially
invested in the Fixed Income Fund. If the Trustee is unable to invest
any contributions immediately, the funds are temporarily invested in
collective investment funds and any earnings in the fund are credited
to the participants' accounts.
The sixth amendment to the Plan was adopted in 1993 which provides that
the Corporation makes formula matching contributions for each plan year
commencing after December 31, 1992, if at least 80% of the consolidated
earnings goal of the Corporation has been met for that plan year. For
each calendar quarter commencing after December 31, 1993, the
Corporation will also make quarterly matching contributions in an
amount equal to 25% of each eligible participant's basic contributions
made during that calendar quarter not in excess of 4% of his or her
earnings for that calendar quarter. This amendment also established a
balanced fund and a growth fund which increased the investment options
under the Plan to six. In addition, provisions for loans to
participants were established by this amendment.
The ninth amendment effective January 1, 1996, changed the quarterly
matching contribution to 25% on basic contributions not in excess of
6%. The tenth amendment adopted by the Plan provides that effective
January 1, 1997, participants may elect to make pre-tax basic
contributions to the Plan from 1% to 15% of earnings during the plan
year. The Plan may limit the basic contributions of highly compensated
participants' contributions to less than 15% of their earnings in any
plan year in order to comply with IRC Sections 401(k) and 415
limitations. Under the tenth amendment, effective July 1, 1997,
Corporation formula matching contributions will be allocated to the
participants based on their investment election for new contributions
not in excess of 9% of their earnings during that year.
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 three or more members appointed by the Board of Directors
of USG Corporation. Administrative expenses of the Plan, except for
charges such as brokerage fees and expenses related to group annuity
contracts, are paid by the Corporation.
At December 31, 1996 and 1995, there were approximately 9,991 and
10,723 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 statements are prepared on the
accrual basis of accounting. Contributions to the Plan are made
throughout the year and adjustments are made to the statements to
accrue for the portion of annual contributions unpaid at year-end.
All investments of the Plan are valued at market. Unrealized
appreciation (depreciation) of investments of the Plan represents the
change between years in the difference between the market value and
cost of the investments.
Realized gains or losses on the sale of investments are calculated
based upon the historical average cost of the investments. Market value
and cost are equal for the group annuity contract and short-term
investments.
The preparation of financial statements in conformity with generally
accepted accounting principles requires the plan administrator to make
estimates and assumptions that effect certain reported amounts and
disclosures. Accordingly, actual results may differ from those
estimates.
Metropolitan Life Insurance Co., Provident Life Insurance Co., John
Hancock Mutual Life Insurance Co. and SunAmerica Life Insurance Co.
group annuity contracts earned guaranteed interest at rates varying
from 5.75% to 7.20% at December 31, 1996. The rates for 1995 ranged
from 5.75% to 7.76%. The Insurance contract earnings are calculated
net of administrative fees.
For the USG Common Stock Fund, cost was $53,327,934 and $54,917,273 as
of December 31, 1996 and 1995, respectively. For the Equity Index Fund,
the amount by which market value exceeded cost was $9,201,443 at
December 31, 1996, and $4,940,810 at December 31, 1995. For the
Balanced Fund, market value exceeded cost by $686,560 at December 31,
1996, and $572,057 at December 31, 1995. For the Growth Fund, market
value was $4,204,977 above cost at December 31, 1996 and $1,553,811 at
December 31, 1995.
Pending transactions from participants' elections for transfers between
funds represent the fourth quarter transfers between funds that were
elected by participants but have not been executed by the Trustee
before year-end as well as withdrawals from participants' accounts to
make loans to them. In order to present the proper balance of net
assets in each fund at year-end, a receivable and payable were used to
record such pending transactions and the net amount of transfers in or
out for each fund during the year was presented in participants'
elections for transfers between funds on the accompanying statement of
changes in net assets available for plan benefits.
3. TAX STATUS
The Plan, as amended and restated, effective January 1, 1989, 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 fees of the plan and are held in the Forfeiture Cash Account.
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.
<PAGE>
<TABLE>
6. INVESTMENTS
The following is a summary of the Plan's investments as well as the net
realized and unrealized appreciation (depreciation) for 1996 and 1995:
<CAPTION>
December 31, 1996 DECEMBER 31, 1995
------------------------- ----------------------
INVESTMENTS AT
FAIR VALUE NET NET
DETERMINED BY APPRECIATION APPRECIATION
QUOTED MARKET FAIR (DEPRECIATION) FAIR (DEPRECIATION)
PRICE: VALUE IN FAIR VALUE VALUE IN FAIR VALUE
<S> <C> <C> <C> <C>
USG Common
Stock $19,120,158 $ 2,260,420 $15,913,830 $ 5,251,225
Vanguard Index
Trust 32,478,696 5,068,792 21,879,768 5,108,530
Fidelity Puritan
Fund 12,256,681 1,130,115 8,263,417 1,168,078
IDS New Dimension
Fund 20,388,050 3,406,282 11,173,930 2,417,548
----------- ------------ ----------- ------------
SUB-TOTAL 84,243,585 11,865,609 57,230,945 13,945,381
INVESTMENTS AT
FAIR VALUE
DETERMINED BY
OTHER THAN
QUOTED MARKET
PRICE:
Mortgages,
Notes,
Contracts 79,511,775 --- 79,041,920 ---
Collective
Short-Term
Investment
Fund 48,310,531 --- 46,601,716 ---
------------ ------------ ------------ ------------
SUB-TOTAL 127,822,306 --- 125,643,636 ---
------------ ------------ ------------ ------------
TOTAL
INVESTMENTS $212,065,891 $ 11,865,609 $182,874,581 $ 13,945,381
============ ============= ============ ============
</TABLE>
<PAGE>
<TABLE>
At December 31, 1996 and 1995, the following investments exceeded 5% of the net
assets available for the Plan benefits:
<CAPTION>
1996 1995
------------ --------
<S> <C> <C>
USG Corporation Common Stock $19,120,158 $15,913,830
Metropolitan Life Insurance
Company, GAC 13908 16,141,476 15,057,347
Provident Life Insurance
Company, GAC 627-05701 23,754,071 22,233,313
John Hancock Mutual Life
Insurance Company, GAC 8396 - 10,031,727
John Hancock Mutual Life
Insurance Company, GAC 6317 - 31,719,533
SunAmerica Life
Insurance Company, GAC 6317 20,630,854 -
Vanguard Index Trust 32,478,696 21,879,768
IDS New Dimension Fund 20,388,050 11,173,930
Fidelity Puritan Fund 12,256,681 -
Collective Short Term
Investment Fund 48,310,531 46,601,716
</TABLE>
7. PARTICIPANT LOANS
Effective October 1, 1993, a participant can obtain a loan 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 $100 increments. The Plan restricts the
participant to one outstanding loan at a time. The loan can be repaid
by the participant over a five year period, or sooner, in full, with
interest at the prime rate. Default on a loan by a participant will be
treated as a hardship withdrawal and will be subject to IRS penalties.
<PAGE>
<TABLE>
SCHEDULE I
USG CORPORATION
INVESTMENT PLAN
<CAPTION>
PRINCIPAL
AMOUNT/NUMBER OF FAIR
SHARES COST VALUE
------- ---------- -----------
COMMON STOCK
<S> <C> <C> <C>
USG Corporation 564,449 $ 53,327,934 $ 19,120,158
Vanguard Index Trust 471,663 23,277,253 32,478,696
IDS New Dimension Fund 984,454 16,183,073 20,388,050
Fidelity Puritan Fund 710,944 11,570,121 12,256,681
-------- ----------- ------------
TOTAL COMMON STOCKS 104,358,381 84,243,585
----------- ------------
CONTRACTS
Metropolitan Life Insurance
Company, GAC 13908 $16,141,476 16,141,476 16,141,476
Provident Life Insurance
Company, GAC 627-05701 $23,754,071 23,754,071 23,754,071
John Hancock Mutual Life
Insurance Company,
GAC 8396 $10,599,522 10,599,522 10,599,522
John Hancock Mutual Life
Insurance Company,
GAC 6317 $ 8,385,852 8,385,852 8,385,852
SunAmerica Life Insurance
Company, GAC 4653 $20,630,854 20,630,854 20,630,854
----------- ----------- -----------
TOTAL CONTRACTS $79,511,775 79,511,775 79,511,775
----------- ----------- -----------
SHORT-TERM INVESTMENTS
Collective Government
Short-Term Investment
Fund $ 4,666,089 4,666,089 4,666,089
Collective Short-Term
Investment Fund $43,644,442 43,644,442 43,644,442
----------- ------------ ------------
TOTAL SHORT-TERM
INVESTMENTS $48,310,531 48,310,531 48,310,531
----------- ------------ ------------
TOTAL INVESTMENTS $232,180,687 $212,065,891
============ ============
</TABLE>
<PAGE>
<TABLE>
USG CORPORATION
INVESTMENT PLAN
SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
SERIES OF TRANSACTIONS IN THE SAME SECURITY:
<CAPTION>
TOTAL COST TOTAL CURRENT
DESCRIPTION OF NUMBER OF OF NUMBER OF VALUE OF
SECURITY PURCHASES ASSET SALES SALES
-------- --------- ----- ----- -----
<S> <C> <C> <C> <C>
Collective
Short-term
Investment
Fund 354 $54,377,720 205 $52,845,058
SunAmerica Life
Insurance
GAC 4653 7 20,633,772 0 -
John Hancock Mutual
Life Insurance,
GAC 6317 12 1,147,655 2 24,481,337
</TABLE>
CONSENT OF INDEPENDENT PUBLIC AUDITORS
WITH RESPECT TO FORM S-8
As independent public auditors, we hereby consent to the incorporation by
reference of our report, dated March 11, 1997, appearing in the USG Corporation
Investment Plan Annual Report on Form 11-K for the year ended December 31, 1996,
into USG Corporation's previously filed Registration Statements No.2-94787,
33-63554 and 33-9948 on Form S-8. It should be noted that we have not examined
any financial statements of the Investment Plan subsequent to December 31, 1996,
or performed any audit procedures subsequent to the date of our report.
/s/ Hill, Taylor LLC
- --------------------
Chicago, Illinois
March 11, 1997
