USG Corp. (USG) filed Quarterly Report for the period ended 2009-09-30.
USG Corp. through its subsidiaries is a leading manufacturer and distributor of building materials producing a wide range of products for use in new residential new nonresidential and repair and remodel construction as well as products used in certain industrial processes. USG's operations are organized into three operating segments: North American Gypsum Worldwide Ceilings and Building Products Distribution. Usg Corp. has a market cap of $1.35 billion; its shares were traded at around $13.62 with and P/S ratio of 0.3.
Highlight of Business Operations:
Consolidated net sales in the third quarter of 2009 were $822 million, down 32% from the third quarter of 2008. An operating loss of $92 million and a net loss of $94 million, or $0.96 per diluted share, were incurred in the third quarter of 2009. These results included charges $41 million pretax ($28 million after-tax) for goodwill and other intangible asset impairment and charges of $22 million pretax ($15 million after-tax) for restructuring and long-lived asset impairment. An operating loss of $32 million and net loss of $36 million, or $0.36 per diluted share, were recorded in the third quarter of 2008. These results included charges of $5 million pretax ($3 million after-tax) for restructuring and long-lived asset impairment. Financial information for the third quarter of 2008 was retrospectively adjusted for our change in the fourth quarter of 2008 from the last-in, first-out method to the average cost method of inventory accounting.
Third quarter restructuring and long-lived asset impairment charges totaled $22 million pretax ($15 million after-tax). A charge of $10 million for asset impairments primarily related to the write-downs of the values of machinery and equipment at the temporarily idled structural cement panel production facility in Delavan, Wis., and gypsum wallboard production facility in Detroit, Mich. A charge of $6 million for lease obligations primarily related to the closure of distribution centers. A charge of $4 million for severance primarily related to salaried workforce reductions. An additional $2 million was recorded for other exit costs.
Total restructuring and long-lived asset impairment charges for the first nine months of 2009 were $51 million pretax ($33 million after-tax). This amount included $16 million for asset impairments, $15 million for lease obligations, $12 million for severance and $8 million for other exit costs.
Other (income) expense, net was $(1) million in the third quarter of 2009 compared with $3 million in the third quarter of 2008. Other (income) expense, net was $(10) million in the first nine months of 2009 compared with $2 million in the first nine months of 2008, primarily reflecting the reversal of the remaining $10 million of embedded derivative liability related to our $400 million of 10% convertible senior notes as a result of the approval of the conversion feature of the notes by our stockholders in February 2009.
Income tax benefit was $37 million for the third quarter of 2009 and $18 million for the third quarter of 2008. Our effective tax rates were 28.3% for the third quarter of 2009 and 35.0% for the third quarter of 2008. Income tax benefit was $92 million for the first nine months of 2009 and $73 million for the first nine months of 2008. Our effective tax rates were 32.8% for the first nine months of 2009 and 39.2% for the first nine months of 2008. The 2009 tax benefits result from our anticipated carryforward of most of the 2009 net operating loss to offset U.S. federal income taxes in future years and reflects a reduction in tax benefit due to an increase in the valuation allowance, primarily on state net operating loss and tax credit carryforwards, in the amounts of $9 million for the third quarter and $13 million for the first nine months. The increase in the valuation allowance recognizes the difficulty in estimating when certain state net operating losses and tax credit carryforwards will be realized given the current challenging economic environment.
A net loss of $94 million, or $0.96 per diluted share, was recorded for the third quarter of 2009 compared with a net loss of $36 million, or $0.36 per diluted share, for the third quarter of 2008. A net loss of $189 million, or $1.91 per diluted share, was recorded for the first nine months of 2009 compared with a net loss of $114 million, or $1.15 per diluted share, for the first nine months of 2008.
USG is in the portfolios of Prem Watsa of Fairfax Financial Holdings, Inc., Donald Yacktman of Yacktman Asset Management Co., Donald Yacktman of Yacktman Asset Management Co., Wallace Weitz of Weitz Wallace R & Co, Warren Buffett of Berkshire Hathaway, Irving Kahn of Kahn Brothers & Company Inc., Brian Rogers of T Rowe Price Equity Income Fund, Brian Rogers of T Rowe Price Equity Income Fund, Charles Brandes of Brandes Investment.
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