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   &lt;div style="font-family: 'Times New Roman',Times,serif"&gt;
   &lt;div align="left" style="font-size: 10pt; margin-top: 12pt"&gt;&lt;b&gt;15. Litigation&lt;/b&gt;
   &lt;/div&gt;
   &lt;div align="left" style="font-size: 10pt; margin-top: 12pt"&gt;CHINESE-MANUFACTURED DRYWALL LAWSUITS&lt;br /&gt;&lt;br style="font-size: 6pt" /&gt;
   L&amp;#038;W Supply Corporation is one of many defendants in lawsuits relating to Chinese-made
   wallboard installed in homes primarily in the southeastern United States during 2006 and 2007. The
   wallboard was made in China by a number of manufacturers, including Knauf Plasterboard (Tianjin)
   Co., and was sold or used by hundreds of distributors, contractors, and homebuilders. Knauf Tianjin
   is an affiliate or indirect subsidiary of Knauf Gips KG, a multinational manufacturer of building
   materials headquartered in Germany. The plaintiffs in these lawsuits, most of whom are homeowners,
   claim that the Chinese-made wallboard is defective and emits elevated levels of sulfur gases
   causing a bad smell and corrosion of copper or other metal surfaces. Plaintiffs also allege that
   the Chinese-made wallboard causes health problems such as respiratory problems and allergic
   reactions. The plaintiffs seek damages for the costs of removing and replacing the Chinese-made
   wallboard and other allegedly damaged property as well as damages for bodily injury, including
   medical monitoring in some cases. Most of the lawsuits against L&amp;#038;W Supply are part of the
   consolidated multi-district litigation titled &lt;i&gt;In re Chinese-Manufactured Drywall Products Liability
   Litigation&lt;/i&gt;, MDL No.&amp;#160;2047, pending in New Orleans, Louisiana. The focus of the multi-district
   litigation to date has been on plaintiffs&amp;#8217; property damage claims and not their alleged bodily
   injury claims.
   &lt;/div&gt;
   &lt;div align="left" style="font-size: 10pt; margin-top: 6pt"&gt;&amp;#160;&amp;#160;&amp;#160;&amp;#160;&amp;#160;L&amp;#038;W Supply&amp;#8217;s sales of Knauf Tianjin wallboard, which were confined to the Florida region in
   2006, were relatively limited. The amount of Knauf Tianjin wallboard potentially sold by L&amp;#038;W Supply
   Corporation could completely furnish approximately 250-300 average-size houses; however, the actual
   number of homes involved is greater because many homes contain a mixture of different brands of
   wallboard. Our records contain the addresses of the homes and other construction sites to which L&amp;#038;W
   Supply delivered wallboard, but do not specifically identify the manufacturer of the wallboard
   delivered. Therefore, where Chinese-made wallboard is identified in a home, we can determine from
   our records whether L&amp;#038;W Supply delivered wallboard to that home.
   &lt;/div&gt;
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   &lt;div align="left" style="font-size: 10pt; margin-top: 6pt"&gt;&amp;#160;&amp;#160;&amp;#160;&amp;#160;&amp;#160;To date, of the claims asserted where our records indicate we delivered wallboard to the home,
   we have identified approximately 233 homes where we have confirmed the presence of Knauf Tianjin
   wallboard or, based on the date and location, the wallboard in the home could be Knauf Tianjin
   wallboard. We have resolved the claims relating to approximately 88 of those homes by funding
   remediations of the homes, which have either been completed or are in process.
   &lt;/div&gt;
   &lt;div align="left" style="font-size: 10pt; margin-top: 6pt"&gt;&amp;#160;&amp;#160;&amp;#160;&amp;#160;&amp;#160;Although the vast majority of Chinese drywall claims against us relate to Knauf Tianjin board,
   we have received a few claims relating to other Chinese-made wallboard sold by L&amp;#038;W Supply
   Corporation. Most, but not all, of the other Chinese-made wallboard we sold was manufactured by
   Knauf at two other plants in China. We are not aware of any instances in which the wallboard from
   the other Knauf Chinese plants has been determined to cause odor or corrosion problems.
   &lt;/div&gt;
   &lt;div align="left" style="font-size: 10pt; margin-top: 6pt"&gt;&amp;#160;&amp;#160;&amp;#160;&amp;#160;&amp;#160;We asserted claims against Knauf, the manufacturer, for reimbursement and indemnification of
   our losses in connection with our sales of Knauf Tianjin wallboard. In the first quarter of 2011,
   we entered into an agreement with Knauf that caps our responsibility for homeowner property damage
   claims relating to Knauf Tianjin wallboard. The agreement with Knauf does not address claims for
   bodily injury or claims relating to wallboard made at other Knauf plants in China, neither of which
   has been a significant factor to date in the litigation relating to Chinese wallboard.
   &lt;/div&gt;
   &lt;div align="left" style="font-size: 10pt; margin-top: 6pt"&gt;&amp;#160;&amp;#160;&amp;#160;&amp;#160;&amp;#160;As of March&amp;#160;31, 2011, we have accrued $13&amp;#160;million for our estimated cost of resolving the
   Chinese wallboard property damage claims pending against L&amp;#038;W Supply and estimated to be asserted in
   the future, and, based on the terms of our settlement with Knauf, we have recorded a related
   receivable of $9&amp;#160;million. Our accrual does not take into account legal fees and costs, the costs of
   resolving claims for bodily injury, or any set-off for potential insurance recoveries. Our
   estimated liability is based on the information available to us to date regarding the number and
   type of pending claims, estimates of likely future claims, and the costs of resolving those claims.
   Our estimated liability could be higher if the other Knauf Chinese wallboard that we sold is
   determined to be problematic, the number of Chinese wallboard claims exceeds our estimates, or the
   cost of resolving bodily injury claims is more than nominal. Considering all factors known to date,
   we do not believe that these claims and other similar claims that might be asserted will have a
   material adverse effect on our results of operations, financial position or cash flows. However,
   there can be no assurance that the lawsuits will not have such an effect.
   &lt;/div&gt;
   &lt;div align="left" style="font-size: 10pt; margin-top: 12pt"&gt;ENVIRONMENTAL LITIGATION&lt;br /&gt;&lt;br style="font-size: 6pt" /&gt;
   We have been notified by state and federal environmental protection agencies of possible
   involvement as one of numerous &amp;#8220;potentially responsible parties&amp;#8221; in a number of Superfund sites in
   the United States. As a potentially responsible party, we may be responsible to pay for some part
   of the cleanup of hazardous waste at those sites. In most of these sites, our involvement is
   expected to be minimal. In addition, we are involved in environmental cleanups of other property
   that we own or owned. We believe that we have properly accrued for our potential liability in
   connection with these matters. Our accruals take into account all known or estimated undiscounted
   costs associated with these sites, including site investigations and feasibility costs, site
   cleanup and remediation, certain legal costs, and fines and penalties, if any. However, we continue
   to review these accruals as additional information becomes available and revise them as
   appropriate.
   &lt;/div&gt;
   &lt;div align="left" style="font-size: 10pt; margin-top: 12pt"&gt;OTHER LITIGATION&lt;br /&gt;&lt;br style="font-size: 6pt" /&gt;
   We are named as defendants in other claims and lawsuits arising from our operations, including
   claims and lawsuits arising from the operation of our vehicles, product warranties, personal injury
   and commercial disputes. We believe that we have properly accrued for our potential liability in
   connection with these claims and suits, taking into account the probability of liability, whether
   our exposure can be reasonably estimated and, if so, our estimate of our liability or the range of
   our liability. We do not expect these or any other litigation matters involving USG to have a
   material adverse effect upon our results of operations, financial position or cash flows.
   &lt;/div&gt;
   &lt;/div&gt;
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