USG Corporation Reports Net Earnings
USG recently announced that it would take year-end charges totaling $904 million, or $557 million net of tax benefits. Of the $904 million in charges, $850 million is a charge related to the estimated cost of settling asbestos claims and $54 million reflects a restructuring charge for plant shutdowns, severance costs and inventory write-offs.
The company benefited from its strong customer relationships and market- leading brands to ship record volumes of USG SHEETROCK brand gypsum wallboard and joint compound, DUROCK brand cement board and DONN brand ceiling grid during the quarter. USG's building products distribution business, L&W Supply, also sold record amounts of wallboard. Offsetting the volume gains were significantly lower market prices for gypsum wallboard and higher production costs associated with increased energy prices.
``USG's strong competitive position was evident during the quarter, as all of our businesses achieved real growth in shipments and United States Gypsum Company had solid market share gains. These accomplishments were achieved despite increasingly difficult market conditions,'' said William C. Foote, USG Corporation Chairman, CEO and President. ``Both industry demand and selling prices for gypsum wallboard continued to soften during the quarter and the price of natural gas, a major cost element in several of our businesses, climbed dramatically.''
The company believes that these challenging market conditions are likely to persist in 2001. To strengthen the company's competitive position, it recently announced several initiatives designed to improve business efficiencies. To better serve customers, USG's gypsum and ceiling sales and marketing organizations have been integrated. To reduce costs, a restructuring was announced January 11, 2001, which included a workforce reduction and the closing of additional old high-cost wallboard capacity. Foote remarked, ``We are streamlining the organization and focusing on our core strengths. We should see benefits from these initiatives this year.''
Full year 2000 net sales were $3.78 billion. Net earnings for the year totaled $298 million when the special charges are excluded, and a loss of $259 million, including them. Diluted earnings per share for the full year of 2000 were $6.49, excluding the charges, and a loss of $5.62 when the charges are included. The asbestos charge taken at year-end is based upon a recently completed independent review of United States Gypsum Company's asbestos liability. The company had worked for some time to develop a reasonable estimate of its future asbestos liability.
``Estimating the potential future asbestos liability serves to accomplish one of our goals with respect to asbestos, which is to reduce the uncertainty of this issue. Nevertheless, quantifying the liability, through 2003, does not solve the fundamental problem related to how asbestos cases are resolved today in the tort system,'' stated Foote. ``Our energies are now focused on supporting the development of legislation to resolve the asbestos situation in a manner that is fair and equitable to all the parties involved.''