10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2011

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission File Number 1-8864

USG CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	36-3329400
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)
550 West Adams Street, Chicago, Illinois	60661-3676
(Address of principal executive offices)	(Zip code)

Registrant’s telephone number, including area code (312) 436-4000

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company (as defined in Rule 12b-2 of the Exchange Act).

Large accelerated filer þ	Accelerated filer o	Non-accelerated filer o	Smaller reporting company o
		(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No þ

The number of shares of the registrant’s common stock outstanding as of June 30, 2011 was 105,290,743.

Table of Contents

	Page
PART I FINANCIAL INFORMATION
Item 1. Financial Statements:
Condensed Consolidated Statements of Operations: Three Months and Six Months Ended June 30, 2011 and 2010		3
Condensed Consolidated Balance Sheets: As of June 30, 2011 and December 31, 2010		4
Condensed Consolidated Statements of Cash Flows: Six Months Ended June 30, 2011 and 2010		5
Notes to Condensed Consolidated Financial Statements		6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		24
Item 3. Quantitative and Qualitative Disclosures about Market Risks		40
Item 4. Controls and Procedures		41
PART II OTHER INFORMATION
Item 1. Legal Proceedings		41
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		41
Item 5. Other Information		41
Item 6. Exhibits		43
Signatures		44
EX-4.1
EX-31.1
EX-31.2
EX-32.1
EX-32.2
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT

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PART I FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

USG CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

	Three Months						Six Months
(millions, except per-share and share data)	ended June 30,						ended June 30,
	2011			2010			2011			2010
Net sales	$	761		$	769		$	1,482		$	1,485
Cost of products sold		708			714			1,393			1,416
Gross profit		53			55			89			69
Selling and administrative expenses		72			73			157			157
Restructuring and long-lived asset impairment charges		2			7			11			19
Operating loss		(21	)		(25	)		(79	)		(107	)
Interest expense		52			44			104			89
Interest income		(2	)		(1	)		(4	)		(2	)
Other income, net		(2	)		(1	)		(2	)		—
Loss before income taxes		(69	)		(67	)		(177	)		(194	)
Income tax expense (benefit)		1			7			(2	)		(10	)
Net loss	$	(70	)	$	(74	)	$	(175	)	$	(184	)
Basic loss per common share	$	(0.69	)	$	(0.74	)	$	(1.70	)	$	(1.85	)
Diluted loss per common share	$	(0.69	)	$	(0.74	)	$	(1.70	)	$	(1.85	)
Average common shares		103,550,643			99,519,512			103,286,025			99,452,477
Average diluted common shares		103,550,643			99,519,512			103,286,025			99,452,477

See accompanying Notes to Condensed Consolidated Financial Statements.

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USG CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

	As of			As of
	June 30,			December 31,
(millions)	2011			2010
Assets
Current Assets:
Cash and cash equivalents	$	402		$	629
Short-term marketable securities		158			128
Restricted cash		2			4
Receivables (net of reserves — $18 and $17)		380			327
Inventories		313			290
Income taxes receivable		2			3
Deferred income taxes		6			6
Other current assets		56			50
Total current assets		1,319			1,437
Long-term marketable securities		165			150
Property, plant and equipment (net of accumulated depreciation and depletion — $1,619 and $1,546)		2,221			2,266
Other assets		244			234
Total assets	$	3,949		$	4,087
Liabilities and Stockholders’ Equity
Current Liabilities:
Accounts payable	$	234		$	218
Accrued expenses		278			294
Current portion of long-term debt		7			7
Income taxes payable		5			10
Total current liabilities		524			529
Long-term debt		2,299			2,301
Deferred income taxes		8			7
Other liabilities		591			631
Commitments and contingencies
Stockholders’ Equity:
Preferred stock		—			—
Common stock		10			10
Treasury stock		—			(55	)
Capital received in excess of par value		2,556			2,565
Accumulated other comprehensive loss		(13	)		(50	)
Retained earnings (deficit)		(2,026	)		(1,851	)
Total stockholders’ equity		527			619
Total liabilities and stockholders’ equity	$	3,949		$	4,087

See accompanying Notes to Condensed Consolidated Financial Statements.

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USG CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(millions)	Six Months Ended June 30,
	2011			2010
Operating Activities
Net loss	$	(175	)	$	(184	)
Adjustments to reconcile net loss to net cash:
Long-lived asset impairments		1			—
Depreciation, depletion and amortization		85			90
Share-based compensation expense		16			17
Deferred income taxes		1			1
Noncash income tax benefit		(3	)		(19	)
Gain on asset dispositions		(1	)		(1	)
(Increase) decrease in working capital:
Receivables		(54	)		(57	)
Income taxes receivable		1			17
Inventories		(23	)		(8	)
Prepaid expenses		(6	)		—
Payables		19			27
Accrued expenses		(13	)		(15	)
(Increase)/decrease in other assets		(12	)		4
Increase in other liabilities		6			14
Other, net		4			(7	)
Net cash used for operating activities		(154	)		(121	)
Investing Activities
Purchases of marketable securities		(221	)		(159	)
Sales or maturities of marketable securities		176			14
Capital expenditures		(25	)		(11	)
Loan to joint venture		(4	)		—
Net proceeds from asset dispositions		1			3
Return of restricted cash		2			—
Net cash used for investing activities		(71	)		(153	)
Financing Activities
Repayment of debt		(3	)		(3	)
Repurchases of common stock to satisfy employee tax withholding obligations		(3	)		(1	)
Net cash used for financing activities		(6	)		(4	)
Effect of exchange rate changes on cash		4			(2	)
Net decrease in cash and cash equivalents		(227	)		(280	)
Cash and cash equivalents at beginning of period		629			690
Cash and cash equivalents at end of period	$	402		$	410
Supplemental Cash Flow Disclosures:
Interest paid	$	97		$	85
Income taxes paid (refunded), net	$	8		$	(14	)
Amount in accounts payable for capital expenditures	$	2		$	1

See accompanying Notes to Condensed Consolidated Financial Statements.

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USG CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

In the following Notes to Condensed Consolidated Financial Statements, “USG,” “we,” “our” and “us” refer to USG Corporation, a Delaware corporation, and its subsidiaries included in the condensed consolidated financial statements, except as otherwise indicated or as the context otherwise requires.

1. Preparation of Financial Statements

We prepared the accompanying unaudited condensed consolidated financial statements of USG Corporation in accordance with applicable United States Securities and Exchange Commission, or SEC, guidelines pertaining to interim financial information. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Actual results could differ from those estimates. In the opinion of our management, the financial statements reflect all adjustments, which are of a normal recurring nature except as noted, necessary for a fair presentation of our financial results for the interim periods. The results of operations for the three months and six months ended June 30, 2011 are not necessarily indicative of the results of operations to be expected for the entire year. These financial statements and notes are to be read in conjunction with the financial statements and notes included in USG’s Annual Report on Form 10-K for the fiscal year ended December 31, 2010 which we filed with the SEC on February 11, 2011.

2. Recent Accounting Pronouncements

In May 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. This ASU clarifies the application of certain existing fair value measurement guidance and expands the disclosures for fair value measurements that are estimated using significant unobservable (Level 3) inputs. This guidance is effective for interim and annual periods beginning on or after December 15, 2011, applied prospectively. Our effective date is January 1, 2012. The adoption of this guidance is not expected to have a material impact on our consolidated financial statements.

     In June 2011, the FASB issued ASU 2011-05, Presentation of Comprehensive Income, which requires comprehensive income to be reported in either a single statement of comprehensive income or in separate, consecutive statements reporting net income and other comprehensive income. The ASU requires retrospective application and is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. The adoption of this guidance will require us to change the presentation of comprehensive income and its components which we currently report within the statement of changes in stockholders’ equity in our Annual Report on Form 10-K and in a note to the financial statements in our quarterly reports on Form 10-Q.

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3. Restructuring and Long-Lived Asset Impairment Charges

As a result of continuing adverse market conditions, we recorded restructuring and long-lived asset impairment charges totaling $2 million during the second quarter of 2011 and $11 million during the first six months of 2011.

     Restructuring and long-lived asset impairment charges for the second quarter of 2011 included $1 million for lease obligations and $1 million for exit costs related to production facilities closed in 2010 and 2009. These charges totaling $2 million related to North American Gypsum.

     Restructuring and long-lived asset impairment charges for the first six months of 2011 included $4 million for severance related to our salaried workforce reduction program announced during the fourth quarter of 2010 and a 2011 cost reduction initiative for L&W Supply Corporation, $2 million for lease obligations, $1 million for long-lived asset impairment related to an asset that was written down to its net realizable value and $4 million for exit costs related to production facilities closed in 2010 and 2009. On a segment basis, $9 million of the charges related to North American Gypsum, $1 million to Building Products Distribution and $1 million to Corporate.

RESTRUCTURING RESERVES

Restructuring reserves totaling $35 million were included in accrued expenses and other liabilities on the condensed consolidated balance sheet as of June 30, 2011. Total cash payments charged against the restructuring reserve in the first six months of 2011 amounted to $24 million. We expect future payments to be approximately $11 million during the remainder of 2011, $9 million in 2012 and $15 million after 2012. All restructuring-related payments in the first six months of 2011 were funded with cash on hand. We expect that the future payments will be funded with cash from operations or cash on hand. The restructuring reserve is summarized as follows:

	Balance		2011 Activity								Balance
	as of				Cash			Asset			as of
(millions)	12/31/10		Charges		Payments			Impairment			6/30/11
Severance	$	11	$	4	$	(11	)	$	—		$	4
Lease obligations		29		2		(8	)		—			23
Asset impairments		—		1		—			(1	)		—
Other exit costs		9		4		(5	)		—			8
Total	$	49	$	11	$	(24	)	$	(1	)	$	35

2010

Second quarter 2010 restructuring and long-lived asset impairment charges totaled $7 million and related to the curtailment of operations at a mining facility in Canada, the closure of one distribution center, the closure of an office and warehouse in Europe and continuing charges and adjustments related to prior-period restructuring initiatives. The charges included $4 million for severance, $1 million for asset impairments and lease obligations and $2 million for other exit costs.

     For the first six months of 2010, restructuring and long-lived asset impairment charges were $19 million. This amount primarily included charges related to the closure of five distribution centers and a gypsum wallboard production facility in Southard, Okla., the temporary idling of a gypsum wallboard production facility in Stony Point, N.Y., and the curtailment of operations at the mining facility in Canada. The charges included $9 million for severance, $6 million for asset impairments and lease obligations and $4 million for other exit costs.

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4. Segments

Our operations are organized into three reportable segments: North American Gypsum, Building Products Distribution and Worldwide Ceilings. Segment results were as follows:

	Three Months						Six Months
	ended June 30,						ended June 30,
(millions)	2011			2010			2011			2010
Net Sales:
North American Gypsum	$	420		$	428		$	836		$	852
Building Products Distribution		270			282			513			530
Worldwide Ceilings		173			172			350			337
Eliminations		(102	)		(113	)		(217	)		(234	)
Total	$	761		$	769		$	1,482		$	1,485
Operating Profit (Loss):
North American Gypsum	$	(16	)	$	(11	)	$	(45	)	$	(46	)
Building Products Distribution		(14	)		(22	)		(36	)		(61	)
Worldwide Ceilings		22			23			48			41
Corporate		(15	)		(14	)		(44	)		(37	)
Eliminations		2			(1	)		(2	)		(4	)
Total	$	(21	)	$	(25	)	$	(79	)	$	(107	)

     Restructuring and long-lived asset impairment charges by segment were as follows:

	Three Months				Six Months
	ended June 30,				ended June 30,
(millions)	2011		2010		2011		2010
North American Gypsum	$	2	$	6	$	9	$	10
Building Products Distribution		—		1		1		9
Worldwide Ceilings		—		—		—		—
Corporate		—		—		1		—
Total	$	2	$	7	$	11	$	19

     See Note 3 for information related to restructuring and long-lived asset impairment charges and the restructuring reserve as of June 30, 2011.

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5. Earnings (Loss) Per Share

Basic earnings (loss) per share are based on the weighted average number of common shares outstanding. Diluted earnings per share are based on the weighted average number of common shares outstanding plus the dilutive effect, if any, of restricted stock units, or RSUs, and performance shares, the potential exercise of outstanding stock options and the potential conversion of our $400 million of 10% convertible senior notes. The reconciliation of basic loss per share to diluted loss per share is shown in the following table:

						Weighted
						Average
	Net			Shares		Per-Share
(millions, except per-share and share data)	Loss			(000)		Amount
Three Months Ended June 30, 2011:
Basic loss	$	(70	)		103,551	$	(0.69	)
Diluted loss	$	(70	)		103,551	$	(0.69	)
Three Months Ended June 30, 2010:
Basic loss	$	(74	)		99,520	$	(0.74	)
Diluted loss	$	(74	)		99,520	$	(0.74	)
Six Months Ended June 30, 2011:
Basic loss	$	(175	)		103,286	$	(1.70	)
Diluted loss	$	(175	)		103,286	$	(1.70	)
Six Months Ended June 30, 2010:
Basic loss	$	(184	)		99,452	$	(1.85	)
Diluted loss	$	(184	)		99,452	$	(1.85	)

     The diluted losses per share for the second quarter and the first six months of 2011 and 2010 were computed using the weighted average number of common shares outstanding during those periods. The approximately 35.1 million shares issuable upon conversion of the $400 million of 10% convertible senior notes we issued in 2008 at the initial conversion price of $11.40 per share were not included in the computation of diluted loss per share for those periods because their inclusion was anti-dilutive. Stock options, RSUs and performance shares with respect to 7.1 million common shares for the second quarter of 2011, 7.2 million common shares for the first six months of 2011, 6.5 million common shares for the second quarter of 2010 and 6.8 million common shares for the first six months of 2010 were not included in the computation of diluted loss per share for those periods because their inclusion was anti-dilutive.

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6. Marketable Securities

Marketable securities are classified as available-for-sale securities and reported at fair value, with unrealized gains and losses excluded from earnings and reported in accumulated other comprehensive income (loss), or AOCI, on our condensed consolidated balance sheets. The realized and unrealized gains and losses as of and for the quarter ended June 30, 2011 were immaterial. Proceeds received from sales and maturities of marketable securities were $176 million for the six months ended June 30, 2011. Our investments in marketable securities as of June 30, 2011 consisted of the following:

	Amortized		Fair
(millions)	Cost		Value
Corporate debt securities	$	167	$	167
U.S. government and agency debt securities		63		63
Asset-backed debt securities		18		18
Certificates of deposit		49		49
Municipal debt securities		26		26
Total marketable securities	$	323	$	323

     Contractual maturities of marketable securities as of June 30, 2011 were as follows:

	Amortized		Fair
(millions)	Cost		Value
Due in 1 year or less	$	158	$	158
Due in 1-5 years		165		165
Due in more than 5 years		—		—
Total marketable securities	$	323	$	323

     Actual maturities may differ from the contractual maturities because issuers of the securities may have the right to prepay them.

7. Intangible Assets

Intangible assets are included in other assets on the condensed consolidated balance sheets. Intangible assets with definite lives are amortized. These assets are summarized as follows:

	As of June 30, 2011							As of December 31, 2010
	Gross							Gross
	Carrying		Accumulated					Carrying		Accumulated
(millions)	Amount		Amortization			Net		Amount		Amortization			Net
Intangible Assets with Definite Lives:
Customer relationships	$	70	$	(30	)	$	40	$	70	$	(26	)	$	44
Other		9		(5	)		4		9		(5	)		4
Total	$	79	$	(35	)	$	44	$	79	$	(31	)	$	48

     Total amortization expense was $2 million and $4 million for second quarter and first six months of 2011, respectively, and $2 million and $4 million for second quarter and first six months of 2010, respectively. Estimated annual amortization expense is as follows:

(millions)	2011		2012		2013		2014		2015		2016
Estimated annual amortization expense	$	8	$	8	$	7	$	7	$	7	$	7

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     Intangible assets with indefinite lives are not amortized. These assets are summarized as follows:

	As of June 30, 2011						As of December 31, 2010
	Gross						Gross
	Carrying		Impairment				Carrying		Impairment
(millions)	Amount		Charges		Net		Amount		Charges			Net
Intangible Assets with Indefinite Lives:
Trade names	$	22	$	—	$	22	$	22	$	—		$	22
Other		8		—		8		9		(1	)		8
Total	$	30	$	—	$	30	$	31	$	(1	)	$	30

8. Debt

Total debt, including the current portion of long-term debt, consisted of the following:

	As of		As of
	June 30,		December 31,
(millions)	2011		2010
6.3% senior notes due 2016	$	500	$	500
7.75% senior notes due 2018, net of discount		499		499
8.375% senior notes due 2018		350		350
9.75% senior notes due 2014, net of discount		296		296
10% convertible senior notes due 2018, net of discount		382		382
Ship mortgage facility (includes $7 million of current portion of long-term debt)		40		42
Industrial revenue bonds (due 2028 through 2034)		239		239
Total	$	2,306	$	2,308

CREDIT FACILITY

Our credit facility allows for revolving loans and letters of credit (up to $250 million) in an aggregate principal amount not to exceed the lesser of (a) $400 million or (b) a borrowing base determined by reference to the trade receivables and inventory of USG and its significant domestic subsidiaries. The maximum allowable borrowings may be increased at our request with the agreement of the lenders providing increased or new lending commitments, provided that the maximum allowable borrowings after giving effect to the increase may not exceed $600 million. The credit facility is guaranteed by our significant domestic subsidiaries and secured by their and USG’s trade receivables and inventory. It is available to fund working capital needs and for other general corporate purposes.

     Borrowings under the credit facility bear interest at a floating rate based on an alternate base rate or, at our option, at adjusted LIBOR plus 3.00%. We are also required to pay annual facility fees of 0.75% on the entire facility, whether drawn or undrawn, and fees on outstanding letters of credit. We have the ability to repay amounts outstanding under the credit agreement at any time without prepayment premium or penalty. The credit facility matures on December 21, 2015 unless terminated earlier in accordance with its terms, including if by May 2, 2014 our 9.75% senior notes due in 2014 are not repaid, their payment is not provided for or their maturity has not been extended until at least 2016 unless we then have liquidity of at least $500 million.

     The credit agreement contains a single financial covenant that would require us to maintain a minimum fixed charge coverage ratio of 1.1-to-1.0 if and for so long as the excess of the borrowing base over the outstanding borrowings under the credit agreement is less than the greater of (a) $40 million and (b) 15% of the lesser of (i) the aggregate revolving commitments at such time and (ii) the borrowing base at such time. As of June 30, 2011, our fixed charge coverage ratio was (0.19)-to-1. Because we do not currently satisfy the required fixed charge coverage ratio, we must maintain borrowing availability of at least $44 million under the credit facility. The credit agreement contains other covenants and events of default that are customary for similar agreements and may limit our ability to take various actions.

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     Taking into account the most recent borrowing base calculation delivered under the credit facility, which reflects trade receivables and inventory as of June 30, 2011, outstanding letters of credit and the current borrowing availability requirement of $44 million, borrowings available under the credit facility were approximately $167 million. As of June 30, 2011 and during the quarter then-ended, there were no borrowings under the facility. Had there been any borrowings as of that date, the applicable interest rate would have been 3.2%. Outstanding letters of credit totaled $80 million as of June 30, 2011.

SENIOR NOTES

We have $300 million in aggregate principal amount of 9.75% senior notes due 2014 that are recorded on the condensed consolidated balance sheets at $296 million as of June 30, 2011 and December 31, 2010, net of debt discount of $4 million. Our obligations under the notes are guaranteed on a senior unsecured basis by certain of our domestic subsidiaries.

     We have $350 million in aggregate principal amount of 8.375% senior notes due 2018. Our obligations under these notes are guaranteed on a senior unsecured basis by the same domestic subsidiaries that have guaranteed the 9.75% senior notes.

     We have $500 million of 7.75% senior notes due 2018 that are recorded on the condensed consolidated balance sheets at $499 million, net of debt discount of $1 million. The interest rate payable on these notes is subject to adjustment from time to time by up to 2% in the aggregate if the debt ratings assigned to the notes are upgraded or thereafter downgraded. At our current credit ratings, the interest rate on these notes is at the maximum level of 9.75%.

     We also have $500 million of 6.3% senior notes due 2016. The 9.75% senior notes, 8.375% senior notes, 7.75% senior notes and 6.3% senior notes are senior unsecured obligations and rank equally with all of our other existing and future unsecured senior indebtedness. The indentures governing the notes contain events of default, covenants and restrictions that are customary for similar transactions, including a limitation on our ability and the ability of certain of our subsidiaries to create or incur secured indebtedness.

     The 9.75% and 8.375% senior notes contain a provision requiring us to offer to purchase those notes at a premium of 101% of their principal amount (plus accrued and unpaid interest) in the event of a change in control. The 7.75% and 6.3% senior notes contain a provision requiring us to offer to purchase those notes at a premium of 101% of their principal amount (plus accrued and unpaid interest) in the event of a change in control and a related downgrade of the rating on the notes to below investment grade by both Moody’s Investors Service and Standard & Poor’s Financial Services LLC.

     The 9.75%, 7.75% and 6.3% senior notes contain a provision that allows us to redeem the notes in whole at any time, or in part from time to time, at our option, at a redemption price equal to the greater of (1) 100% of the principal amount of the notes being redeemed and (2) the sum of the present value of the remaining scheduled payments of principal and interest on the notes being redeemed discounted to the redemption date on a semi-annual basis at the applicable U.S. Treasury rate plus a spread (as outlined in the respective indentures), plus, in each case, any accrued and unpaid interest on the principal amount being redeemed to the redemption date. The 8.375% senior notes contain a similar provision that allows us to redeem those notes, in whole or in part from time to time, at our option, beginning on October 15, 2014 at stated redemption prices, plus any accrued and unpaid interest. In addition, we may redeem the 8.375% senior notes in whole or in part from time to time, at our option, prior to October 15, 2014 at a redemption price equal to 100% of the principal amount of the notes redeemed plus a premium (as specified in the supplemental indenture with respect to those notes), plus any accrued and unpaid interest.

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CONVERTIBLE SENIOR NOTES

We have $400 million aggregate principal amount of 10% convertible senior notes due 2018 that are recorded on the condensed consolidated balance sheets at $382 million as of June 30, 2011 and December 31, 2010, net of debt discount of $18 million as a result of an embedded derivative. The notes bear cash interest at the rate of 10% per year until maturity, redemption or conversion. The notes are initially convertible into 87.7193 shares of our common stock per $1,000 principal amount of notes which is equivalent to an initial conversion price of $11.40 per share, or a total of 35.1 million shares. The notes contain anti-dilution provisions that are customary for convertible notes issued in transactions similar to that in which the notes were issued. The notes mature on December 1, 2018 and are not callable until December 1, 2013, after which we may elect to redeem all or part of the notes at stated redemption prices, plus accrued and unpaid interest.

     The notes are senior unsecured obligations and rank equally with all of our other existing and future unsecured senior indebtedness. The indenture governing the notes contains events of default, covenants and restrictions that are customary for similar transactions, including a limitation on our ability and the ability of certain of our subsidiaries to create or incur secured indebtedness. The notes also contain a provision requiring us to offer to purchase the notes at a premium of 105% of their principal amount (plus accrued and unpaid interest) in the event of a change in control or the termination of trading of our common stock on a national securities exchange.

SHIP MORTGAGE FACILITY

Our subsidiary, Gypsum Transportation Limited, or GTL, has a secured loan facility agreement with DVB Bank SE, as lender, agent and security trustee. Both advances provided for under the secured loan facility have been drawn, and the total outstanding loan balances under the facility were $40 million as of June 30, 2011 and $42 million as of December 31, 2010. Of the total amounts outstanding as of June 30, 2011 and December 31, 2010, $7 million was classified as current portion of long-term debt on our condensed consolidated balance sheets.

     The loan balance under the secured loan facility bears interest at a floating rate based on LIBOR plus a margin of 1.65%. The interest rate was 2.09% as of June 30, 2011. Each advance is repayable in quarterly installments in amounts determined in accordance with the secured loan facility agreement, with the balance of each advance repayable eight years after the date it was advanced, or October 31, 2016 and May 22, 2017. The secured loan facility agreement contains affirmative and negative covenants affecting GTL and certain customary events of default. GTL has granted DVB Bank SE a security interest in the Gypsum Centennial and Gypsum Integrity ships and related insurance, contract, account and other rights as security for borrowings under the secured loan facility. USG Corporation has guaranteed the obligations of GTL under the secured loan facility and has agreed to maintain liquidity of at least $175 million.

CGC CREDIT FACILITY

Our Canadian subsidiary, CGC Inc., or CGC, has a Can. $30 million credit agreement with The Toronto-Dominion Bank. The credit agreement allows for revolving loans and letters of credit (up to Can. $3 million in aggregate) in an aggregate principal amount not to exceed Can. $30 million. The credit agreement is available for the general corporate purposes of CGC, excluding hostile acquisitions. The credit agreement is secured by a general security interest in substantially all of CGC’s assets other than intellectual property.

     Revolving loans under the agreement may be made in Canadian dollars or U.S. dollars. Revolving loans made in Canadian dollars bear interest at a floating rate based on the prime rate plus 1.50% or the Bankers’ Acceptance Discount Rate plus 3.00%, at the option of CGC. Revolving loans made in U.S. dollars bear interest at a floating rate based upon a base rate plus 1.50% or the LIBOR rate plus 3.00%, at the option of CGC. CGC may prepay the revolving loans at its discretion without premium or penalty and may be required to repay revolving loans under certain circumstances. The credit agreement matures on June 1, 2012, unless terminated earlier in accordance with its terms. The credit agreement contains customary representations and warranties, affirmative and negative covenants that may limit CGC’s ability to take certain actions and events of default. Borrowings under the credit agreement are subject to acceleration upon the occurrence of an event of default.

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     As of June 30, 2011 and during the quarter then ended, there were no borrowings outstanding under this credit agreement. Had there been any borrowings as of that date, the applicable interest rate would have been 4.3%. As of June 30, 2011, outstanding letters of credit totaled Can. $0.4 million. The U.S. dollar equivalent of borrowings available under this agreement as of June 30, 2011 was $31 million.

INDUSTRIAL REVENUE BONDS

Our $239 million of industrial revenue bonds have fixed interest rates ranging from 5.5% to 6.4%. The weighted average rate of interest on our industrial revenue bonds is 5.875%. These bonds mature during the years 2028 through 2034.

OTHER INFORMATION

The fair value of our debt was $2.504 billion as of June 30, 2011 and $2.564 billion as of December 31, 2010. The fair value was based on quoted market prices of our debt or, where quoted market prices were not available, on quoted market prices of instruments with similar terms and maturities or internal valuation models. Interest accrued on our debt as of June 30, 2011 and December 31, 2010 was $52 million and $49 million, respectively.

     As of June 30, 2011, we were in compliance with the covenants contained in our credit facilities.

9. Derivative Instruments

We use derivative instruments to manage selected commodity price and foreign currency exposures as described below. We do not use derivative instruments for speculative trading purposes, and we typically do not hedge beyond five years. Cash flows from derivative instruments are included in net cash used for operating activities in the condensed consolidated statements of cash flows.

COMMODITY DERIVATIVE INSTRUMENTS

As of June 30, 2011, we had swap and option contracts to hedge $55 million notional amounts of natural gas. All of these contracts mature by December 31, 2012. For contracts designated as cash flow hedges, the unrealized loss that remained in AOCI as of June 30, 2011 was $13 million. AOCI also included $1 million of losses related to closed derivative contracts hedging underlying transactions that have not yet affected earnings. No ineffectiveness was recorded on contracts designated as cash flow hedges in the first six months of 2011. Gains and losses on contracts designated as cash flow hedges are reclassified into earnings when the underlying forecasted transactions affect earnings. For contracts designated as cash flow hedges, we reassess the probability of the underlying forecasted transactions occurring on a regular basis. Changes in fair value on contracts not designated as cash flow hedges are recorded to earnings. The fair value of those contracts not designated as cash flow hedges was $2 million as of June 30, 2011.

FOREIGN EXCHANGE DERIVATIVE INSTRUMENTS

We have a foreign exchange forward contract in place to hedge changes in the value of an intercompany loan to a foreign subsidiary due to changes in foreign exchange rates. The notional amount of this contract was $8 million as of June 30, 2011, and it matures by August 26, 2011. We do not apply hedge accounting for this hedge contract and all changes in its fair value are recorded to earnings. As of June 30, 2011, the fair value of this contract was an unrealized loss of $1 million.

     We have foreign exchange forward contracts to hedge purchases of products and services denominated in non-functional currencies. The notional amount of these contracts was $59 million as of June 30, 2011, and they mature by March 28, 2012. These forward contracts are designated as cash flow hedges and no ineffectiveness was recorded in the first six months of 2011. Gains and losses on the contracts are reclassified into earnings when the underlying transactions affect earnings. The fair value of these contracts that remained in AOCI was a $5 million unrealized loss as of June 30, 2011.

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COUNTERPARTY RISK

We are exposed to credit losses in the event of nonperformance by the counterparties to our derivative instruments. All of our counterparties have investment grade credit ratings; accordingly, we anticipate that they will be able to fully satisfy their obligations under the contracts. Additionally, the derivatives are governed by master netting agreements negotiated between us and the counterparties that reduce our counterparty credit exposure. The agreements outline the conditions (such as credit ratings and net derivative fair values) upon which we, or the counterparties, are required to post collateral. As of June 30, 2011, our derivatives were in a net liability position of $17 million, and we provided $14 million of collateral to our counterparties related to our derivatives. If full collateralization of these agreements were to be required, an additional $4 million of collateral would be provided. We have not adopted an accounting policy to offset fair value amounts related to derivative contracts under our master netting arrangements. Amounts paid as cash collateral are included in receivables on our condensed consolidated balance sheets.

FINANCIAL STATEMENT INFORMATION

The following are the pretax effects of derivative instruments on the condensed consolidated statements of operations for the three months ended June 30, 2011 and 2010 (dollars in millions):

	Amount of Gain or (Loss)
	Recognized in					Location of Gain or (Loss)	Amount of Gain or (Loss)
Derivatives in	Other Comprehensive					Reclassified from	Reclassified from
Cash Flow Hedging	Income on Derivatives					AOCI into Income	AOCI into Income
Relationships	(Effective Portion)					(Effective Portion)	(Effective Portion)
	2011			2010			2011			2010
Commodity contracts	$	(1	)	$	—	Cost of products sold	$	(4	)	$	(5	)
Foreign exchange contracts		(1	)		2	Cost of products sold		(2	)		—
Total	$	(2	)	$	2		$	(6	)	$	(5	)

Derivatives Not	Location of Gain or (Loss)	Amount of Gain or (Loss)
Designated as Hedging	Recognized in Income	Recognized in Income
Instruments	on Derivatives	on Derivatives
		2011			2010
Commodity contracts	Cost of products sold	$	(1	)	$	—
Foreign exchange contracts	Other expense (income), net		—			(1	)
Total		$	(1	)	$	(1	)

     The following are the pretax effects of derivative instruments on the condensed consolidated statement of operations for the six months ended June 30, 2011 and 2010 (dollars in millions):

	Amount of Gain or (Loss)
	Recognized in						Location of Gain or (Loss)	Amount of Gain or (Loss)
Derivatives in	Other Comprehensive						Reclassified from	Reclassified from
Cash Flow Hedging	Income on Derivatives						AOCI into Income	AOCI into Income
Relationships	(Effective Portion)						(Effective Portion)	(Effective Portion)
	2011			2010				2011			2010
Commodity contracts	$	(1	)	$	(12	)	Cost of products sold	$	(9	)	$	(10	)
Foreign exchange contracts		(4	)		1		Cost of products sold		(2	)		—
Total	$	(5	)	$	(11	)		$	(11	)	$	(10	)

Derivatives Not	Location of Gain or (Loss)	Amount of Gain or (Loss)
Designated as Hedging	Recognized in Income	Recognized in Income
Instruments	on Derivatives	on Derivatives
		2011			2010
Commodity contracts	Cost of products sold	$	(1	)	$	(1	)
Foreign exchange contracts	Other expense (income), net		(1	)		(2	)
Total		$	(2	)	$	(3	)

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     As of June 30, 2011, we had no derivatives designated as net investment or fair value hedges.

     The following are the fair values of derivative instruments on the condensed consolidated balance sheets as of June 30, 2011 and December 31, 2010 (dollars in millions):

Derivatives	Assets				Liabilities
Designated as Hedging	Balance Sheet				Balance Sheet
Instruments	Location	Fair Value			Location	Fair Value
		6/30/11		12/31/10		6/30/11		12/31/10
Commodity contracts	Other current assets	$	1	$—	Accrued expenses	$	11	$	16
Commodity contracts	Other assets		—	—	Other liabilities		3		5
Foreign exchange contracts	Other current assets		—	—	Accrued expenses		5		3
Foreign exchange contracts	Other assets		—	—	Other liabilities		—		1
Total		$	1	$—		$	19	$	25

Derivatives Not	Assets					Liabilities
Designated as Hedging	Balance Sheet					Balance Sheet
Instruments	Location	Fair Value				Location	Fair Value
		6/30/11		12/31/10			6/30/11		12/31/10
Commodity contracts	Other current assets	$	1	$	1	Accrued expenses	$	—	$	—
Commodity contracts	Other assets		1		—	Other liabilities		—		—
Foreign exchange contracts	Other current assets		—		—	Accrued expenses		1		—
Total		$	2	$	1		$	1	$	—
Total derivatives		$	3	$	1		$	20	$	25

10. Fair Value Measurements

Certain assets and liabilities are required to be recorded at fair value. There are three levels of inputs that may be used to measure fair value. Level 1 is defined as quoted prices for identical assets and liabilities in active markets. Level 2 is defined as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. Level 3 is defined as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. Certain assets and liabilities are measured at fair value on a nonrecurring basis rather than on an ongoing basis, such as when there is evidence of impairment or when a new liability is being established that requires fair value measurement.

     The cash equivalents shown in the table below primarily consist of money market funds that are valued based on quoted prices in active markets and as a result are classified as Level 1. We use quoted prices, other readily observable market data and internally developed valuation models when valuing our derivatives and marketable securities and have classified them as Level 2. Derivatives are valued using the income approach including discounted-cash-flow models or a Black-Scholes option pricing model and readily observable market data. The inputs for the valuation models are obtained from data providers and include end-of-period spot and forward natural gas prices and foreign currency exchange rates, natural gas price volatility and LIBOR and swap rates for discounting the cash flows implied from the derivative contracts. Marketable securities are valued using income and market value approaches and values are based on quoted prices or other observable market inputs received from data providers. The valuation process may include pricing matrices, or prices based upon yields, credit spreads or prices of securities of comparable quality, coupon, maturity and type. Our assets and liabilities measured at fair value on a recurring basis were as follows:

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	Quoted Prices
	in Active		Significant
	Markets for		Other			Significant
	Identical		Observable			Unobservable
	Assets		Inputs			Inputs
(millions)	(Level 1)		(Level 2)			(Level 3)		Total
As of June 30, 2011:
Cash equivalents	$	172	$	25		$	—	$	197
Marketable securities:
Corporate debt securities		—		167			—		167
U.S. government and agency debt securities		—		63			—		63
Asset-backed debt securities		—		18			—		18
Certificates of deposit		—		49			—		49
Municipal debt securities		—		26			—		26
Derivative assets		—		3			—		3
Derivative liabilities		—		(20	)		—		(20	)
As of December 31, 2010:
Cash equivalents	$	357	$	59		$	—	$	416
Marketable securities:
Corporate debt securities		—		123			—		123
U.S. government and agency debt securities		—		58			—		58
Asset-backed debt securities		—		19			—		19
Non-U.S. government debt securities		—		10			—		10
Certificates of deposit		—		41			—		41
Municipal debt securities		—		27			—		27
Derivative assets		—		1			—		1
Derivative liabilities		—		(25	)		—		(25	)

11. Employee Retirement Plans

The components of net pension and postretirement benefits costs are summarized in the following table:

	Three Months						Six Months
	ended June 30,						ended June 30,
(millions)	2011			2010			2011			2010
Pension:
Service cost of benefits earned	$	7		$	6		$	14		$	13
Interest cost on projected benefit obligation		16			16			32			32
Expected return on plan assets		(17	)		(16	)		(33	)		(33	)
Net amortization		7			4			13			8
Net pension cost	$	13		$	9		$	26		$	20
Postretirement:
Service cost of benefits earned	$	1		$	2		$	3		$	4
Interest cost on projected benefit obligation		3			5			7			9
Net amortization		(5	)		(5	)		(11	)		(9	)
Net postretirement cost	$	(1	)	$	2		$	(1	)	$	4

     During the second quarter of 2011, we made a contribution to the USG Corporation Retirement Plan Trust, or Trust, that was recorded on the condensed consolidated balance sheet at $30.9 million. This contribution consisted of 2,084,781 shares of our common stock, or the Contributed Shares, and was recorded on the condensed consolidated balance sheet at the June 20, 2011 closing price of $14.84 per share. The Contributed Shares are not reflected on the condensed consolidated statement of cash flows because they were treated as a noncash financing

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activity. The Contributed Shares were valued for purposes of crediting the contribution to the Trust at a discounted value of $14.39 per share ($14.84 less a 3% discount), or approximately $30.0 million in the aggregate, by an independent appraiser retained by Evercore Trust Company, N.A., or Evercore, an independent fiduciary that has been appointed as investment manager with respect to the Contributed Shares. The Contributed Shares are registered for resale, and Evercore has authority to sell some or all of them, as well as other of our shares in the Trust, in its discretion as fiduciary.

     During the first quarter of 2011, we contributed $10 million in cash to our pension plan in Canada. In July 2011, we contributed $10 million in cash to the Trust.

12. Share-Based Compensation

During the first six months of 2011, we granted share-based compensation to eligible participants under our Long-Term Incentive Plan. We recognize expense on all share-based grants over the service period, which is the shorter of the period until the employees’ retirement eligibility dates or the service period of the award for awards expected to vest. Expense is generally reduced for estimated forfeitures. During the three months ended June 30, 2011, we recognized forfeitures of approximately $718,000.

STOCK OPTIONS

We granted stock options to purchase 662,032 shares of common stock during the first six months of 2011 with an exercise price equal to the closing price of our common stock on the date of grant. The stock options generally become exercisable in four equal annual installments beginning one year from the date of grant, although they may become exercisable earlier in the event of death, disability, retirement or a change in control. The stock options generally expire 10 years from the date of grant, or earlier in the event of death, disability or retirement.

     We estimated the fair value of each stock option granted to be $10.60 on the date of grant using a Black-Scholes option valuation model that uses the assumptions noted below. We based expected volatility on a 50% weighting of our historical volatilities and 50% weighting of our implied volatilities. The risk-free rate was based on zero coupon U.S. government issues at the time of grant. The expected term was developed using the simplified method, as permitted by the SEC because there is not sufficient historical stock option exercise experience available.

     The assumptions used in the valuation were as follows: expected volatility 55.88%, risk-free rate 2.85%, expected term (in years) 6.25 and expected dividends 0.

RESTRICTED STOCK UNITS

We granted RSUs with respect to 444,901 shares of common stock during the first six months of 2011 that generally vest in four equal annual installments beginning one year from the date of grant. During the first six months of 2011, we also granted RSUs with respect to 35,000 shares of common stock that will vest in four equal annual installments beginning one year from the date of grant as a special retention award and with respect to an additional 35,000 shares of common stock that will vest upon the satisfaction of a specified performance goal. Generally, RSUs may vest earlier in the case of death, disability, retirement or a change in control. Each RSU is settled in a share of our common stock after the vesting period. The fair value of each RSU granted is equal to the closing price of our common stock on the date of grant. Substantially all RSU’s granted during the first six months of 2011 had a fair value of $18.99.

PERFORMANCE SHARES

We granted 227,539 performance shares during the first six months of 2011. The performance shares generally vest after a three-year period based on our total stockholder return relative to the performance of the Dow Jones U.S. Construction and Materials Index, with adjustments to that index in certain circumstances, for the three-year period. The number of performance shares earned will vary from 0 to 200% of the number of performance shares awarded depending on that relative performance. Vesting will be pro-rated based on the number of full months employed during the performance period in the case of death, disability, retirement or a change-in-control, and pro-rated

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awards earned will be paid at the end of the three-year period. Each performance share earned will be settled in a share of our common stock.

     We estimated the fair value of each performance share granted to be $28.40 on the date of grant using a Monte Carlo simulation that uses the assumptions noted below. Expected volatility is based on implied volatility of our traded options and the daily historical volatilities of our peer group. The risk-free rate was based on zero coupon U.S. government issues at the time of grant. The expected term represents the period from the valuation date to the end of the performance period.

     The assumptions used in the valuation were as follows: expected volatility 77.84%, risk-free rate 1.20%, expected term (in years) 2.89 and expected dividends 0.

13. Supplemental Balance Sheet Information

INVENTORIES

Total inventories consisted of the following:

	As of		As of
	June 30,		December 31,
(millions)	2011		2010
Finished goods and work in progress	$	250	$	227
Raw materials		63		63
Total	$	313	$	290

ASSET RETIREMENT OBLIGATIONS

Changes in the liability for asset retirement obligations consisted of the following:

	Six Months
	ended June 30,
(millions)	2011		2010
Balance as of January 1	$	103	$	101
Accretion expense		2		2
Foreign currency translation		1		—
Balance as of June 30	$	106	$	103

PROPERTY, PLANT AND EQUIPMENT

As of June 30, 2011, we had $8 million of net property, plant and equipment included in other current assets on the condensed consolidated balance sheet classified as “assets held for sale.” These assets are primarily owned by United States Gypsum Company. Assets held for sale as of December 31, 2010 amounted to $7 million.

14. Income Taxes

We had an income tax expense of $1 million and an effective tax rate of 1.6% in the second quarter of 2011.

     Accounting rules require a reduction of the carrying amounts of deferred tax assets by a valuation allowance if, based on the available evidence, it is more likely than not that such assets will not be realized. The need to establish valuation allowances for deferred tax assets is assessed periodically. In assessing the requirement for, and amount of, a valuation allowance in accordance with the more-likely-than-not standard, we give appropriate consideration to all positive and negative evidence related to the realization of the deferred tax assets. Under the accounting rules, this assessment considers, among other matters, the nature, frequency and severity of current and cumulative losses, forecasts of future profitability, the duration of statutory carryforward periods, our experience with operating loss and tax credit carryforwards not expiring unused and tax planning alternatives. A history of cumulative losses for a

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certain threshold period is a significant form of negative evidence used in the assessment, and the accounting rules require that we have a policy regarding the duration of the threshold period. If a cumulative loss threshold is met, forecasts of future profitability may not be used as positive evidence related to the realization of the deferred tax assets in the assessment. Consistent with practices in the home building and related industries, we have a policy of four years as our threshold period for cumulative losses.

     As of June 30, 2011, we had federal net operating loss, or NOL, carryforwards of approximately $1.7 billion that are available to offset future federal taxable income and will expire in the years 2026 through 2031. In addition, as of that date, we had federal alternative minimum tax credit carryforwards of approximately $52 million that are available to reduce future regular federal income taxes over an indefinite period. In order to fully realize these U.S. federal net deferred tax assets, taxable income of approximately $1.8 billion would need to be generated during the period before their expiration. In addition, we have federal foreign tax credit carryforwards of $5 million that will expire in 2015.

     As of June 30, 2011, we had a gross deferred tax asset related to our state NOLs and tax credit carryforwards of $282 million, of which $11 million will expire in 2011. The remainder will expire if unused in years 2012 through 2031. To the extent that we do not generate sufficient state taxable income within the statutory carryforward periods to utilize the NOL and tax credit carryforwards in these states, they will expire unused.

     We also had NOL and tax credit carryforwards in various foreign jurisdictions in the amount of $5 million as of June 30, 2011 against a portion of which we have historically maintained a valuation allowance.

     During periods prior to 2011, we established a valuation allowance against our deferred tax assets totaling $884 million. Based upon an evaluation of all available evidence and our losses for the first and second quarters of 2011, we recorded increases in the valuation allowance against our deferred tax assets of $54 million in the first quarter and $26 million in the second quarter. Our cumulative loss position over the last four years was significant evidence supporting the recording of the additional valuation allowance. In addition to being impacted by the $80 million increase due to the first and second quarter losses, the valuation allowance was also impacted by other discrete adjustments that increased the valuation allowance by $16 million. As a result, the net increase in the valuation allowance was $96 million, increasing our deferred tax assets valuation allowance to $980 million as of June 30, 2011. In future periods, the valuation allowance can be reversed based on sufficient evidence indicating that it is more likely than not that a portion of our deferred tax assets will be realized.

     The Internal Revenue Code imposes limitations on a corporation’s ability to utilize NOLs if it experiences an “ownership change.” In general terms, an ownership change may result from transactions increasing the ownership of certain stockholders in the stock of a corporation by more than 50 percentage points over a three-year period. If we were to experience an ownership change, utilization of our NOLs would be subject to an annual limitation determined by multiplying the market value of our outstanding shares of stock at the time of the ownership change by the applicable long-term tax-exempt rate, which was 4.17% for June 2011. Any unused annual limitation may be carried over to later years within the allowed NOL carryforward period. The amount of the limitation may, under certain circumstances, be increased or decreased by built-in gains or losses held by us at the time of the change that are recognized in the five-year period after the change. Many states have similar limitations. If an ownership change had occurred as of June 30, 2011, our annual U.S. federal NOL utilization would have been limited to approximately $62 million per year.

     We classify interest expense and penalties related to unrecognized tax benefits and interest income on tax overpayments as components of income taxes (benefit). As of June 30, 2011, the total amount of interest expense and penalties recognized on our condensed consolidated balance sheet was $4 million. The total amount of interest and penalties recognized in our condensed consolidated statements of operations was zero for the second quarter of 2011 and an expense of $1 million for the second quarter of 2010. We recognized a $6 million tax benefit in the first quarter of 2011 due to the reversal of reserves for uncertain tax positions that were resolved during the period.

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     Our federal income tax returns for 2008 and prior years have been examined by the Internal Revenue Service, or IRS. The U.S. federal statute of limitations remains open for the year 2004 and later years. We are under examination in various U.S. state and foreign jurisdictions. It is possible that these examinations may be resolved within the next 12 months. Due to the potential for resolution of the examinations and the expiration of various statutes of limitation, it is reasonably possible that our gross unrecognized tax benefit may change within the next 12 months by a range of $5 million to $10 million. Foreign and U.S. state jurisdictions have statutes of limitations generally ranging from three to five years.

     Under current accounting rules, we are required to consider all items (including items recorded in other comprehensive income) in determining the amount of tax benefit that results from a loss from continuing operations and that should be allocated to continuing operations. As a result, during the second quarter of 2011, we recorded a $3 million noncash income tax benefit on the loss from continuing operations. This benefit was offset by income tax expense on comprehensive income. However, while the income tax benefit from continuing operations is reported on the condensed consolidated statement of operations, the income tax expense on comprehensive income is recorded directly to AOCI, which is a component of stockholders’ equity. Because the income tax expense on comprehensive income is equal to the income tax benefit from continuing operations, our deferred tax position was not impacted by this tax allocation. A similar noncash income tax benefit of $19 million was recorded during the first quarter of 2010 relating to the fourth quarter of 2009.

15. Comprehensive Income (Loss)

The components of comprehensive income (loss) are summarized in the following table:

	Three Months						Six Months
	ended June 30,						ended June 30,
(millions)	2011			2010			2011			2010
Net loss	$	(70	)	$	(74	)	$	(175	)	$	(184	)
Derivatives, net of tax		5			7			8			(1	)
Pension and postretirement benefit plans, net of tax		9			9			6			(8	)
Foreign currency translation, net of tax		6			(26	)		23			(13	)
Total comprehensive loss	$	(50	)	$	(84	)	$	(138	)	$	(206	)

     AOCI consisted of the following:

	As of			As of
	June 30,			December 31,
(millions)	2011			2010
Unrecognized loss on pension and postretirement benefit plans, net of tax	$	(100	)	$	(106	)
Derivatives, net of tax		16			8
Foreign currency translation, net of tax		71			48
Total	$	(13	)	$	(50	)

     After-tax loss on derivatives reclassified from AOCI to earnings was $5 million during the second quarter of 2011. We estimate that we will reclassify a net $14 million after-tax loss on derivatives from AOCI to earnings within the next 12 months.

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16. Litigation

CHINESE-MANUFACTURED DRYWALL LAWSUITS

L&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., or Knauf Tianjin, 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&W Supply are part of the consolidated multi-district litigation titled In re Chinese-Manufactured Drywall Products Liability Litigation, MDL No. 2047, pending in New Orleans, Louisiana. The focus of the multi-district litigation to date has been on plaintiffs’ property damage claims and not their alleged bodily injury claims.

     L&W Supply’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&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&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&W Supply delivered wallboard to that home.

     We made claims against Knauf Tianjin, Knauf Gips KG, and other Knauf companies, collectively referred to as Knauf, 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 in the litigation relating to Chinese wallboard.

     Of the property damage claims asserted to date where our records indicate we delivered wallboard to the home, we have identified approximately 262 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 138 of those homes by funding or agreeing to fund remediations of the homes.

     Although the vast majority of Chinese drywall claims against us relate to Knauf Tianjin board, we have received some claims relating to other Chinese-made wallboard sold by L&W Supply Corporation. Most, but not all, of the other Chinese-made wallboard we sold was manufactured by Knauf at 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. A small percentage of claims made against L&W Supply Corporation relate to Chinese-made wallboard that was not manufactured by Knauf, but which is alleged to have odor and corrosion problems.

     As of June 30, 2011, we have an accrual of $15 million for our estimated cost of resolving all the Chinese wallboard property damage claims pending against L&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 $10 million. Our accrual does not take into account litigation 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 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

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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.

ENVIRONMENTAL LITIGATION

We have been notified by state and federal environmental protection agencies of possible involvement as one of numerous “potentially responsible parties” 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.

OTHER LITIGATION

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.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

In the following Management’s Discussion and Analysis of Financial Condition and Results of Operations, “USG,” “we,” “our” and “us” refer to USG Corporation, a Delaware corporation, and its subsidiaries included in the condensed consolidated financial statements, except as otherwise indicated or as the context otherwise requires.

Overview

SEGMENTS

Through our subsidiaries, we are a leading manufacturer and distributor of building materials. We produce a wide range of products for use in new residential, new nonresidential, and residential and nonresidential repair and remodel construction as well as products used in certain industrial processes. We estimate that during the first six months of 2011

• residential and nonresidential repair and remodel activity accounted for approximately 55% of our net sales,

• new residential construction accounted for approximately 21% of our net sales,

• new nonresidential construction accounted for approximately 21% of our net sales, and

• other activities accounted for approximately 3% of our net sales.

Our operations are organized into three reportable segments: North American Gypsum, Building Products Distribution and Worldwide Ceilings.

North American Gypsum: North American Gypsum manufactures and markets gypsum and related products in the United States, Canada and Mexico. It includes United States Gypsum Company, or U.S. Gypsum, in the United States, the gypsum business of CGC Inc., or CGC, in Canada, and USG Mexico, S.A. de C.V., or USG Mexico, in Mexico. North American Gypsum’s products are used in a variety of building applications to finish the walls, ceilings and floors in residential, commercial and institutional construction and in certain industrial applications. Its major product lines include SHEETROCK^® brand gypsum wallboard, a line of joint compounds used for finishing wallboard joints also sold under the SHEETROCK^® brand name, DUROCK^® brand cement board, FIBEROCK^® brand gypsum fiber panels and SECUROCK^® brand glass mat sheathing used for building exteriors and gypsum fiber panels used as roof cover board.

Building Products Distribution: Building Products Distribution consists of L&W Supply Corporation and its subsidiaries, or L&W Supply, the leading distributor of gypsum wallboard and other building materials in the United States. It is a service oriented business that stocks a wide range of construction materials. It delivers less-than-truckload quantities of construction materials to job sites and places them in areas where work is being done, thereby reducing the need for handling by contractors.

Worldwide Ceilings: Worldwide Ceilings manufactures and markets interior systems products worldwide. It includes USG Interiors, Inc., or USG Interiors, the international interior systems business managed as USG International, and the ceilings business of CGC. Worldwide Ceilings is a leading supplier of interior ceilings products used primarily in commercial applications. Worldwide Ceilings manufactures ceiling tile in the United States and ceiling grid in the United States, Canada, Europe and the Asia-Pacific region. It markets ceiling tile and ceiling grid in the United States, Canada, Mexico, Europe, Latin America and the Asia-Pacific region. It also manufactures and markets joint compound in Europe, Latin America and the Asia-Pacific region.

Geographic Information: For the first six months of 2011, approximately 76% of our net sales were attributable to the United States, Canada accounted for approximately 12% of our net sales and other foreign countries accounted for the remaining 12%.

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NEW PRODUCT INTRODUCTION

In 2010, U.S. Gypsum introduced SHEETROCK^® Brand UltraLight Panels, a new, lightweight 1/2-inch gypsum wallboard product that is up to 30% lighter than competing brands. Due to positive customer response, U.S. Gypsum accelerated the distribution of this product and it is now available at more than 2,000 retail and specialty dealer locations in the United States and Canada. In April 2011, U.S. Gypsum broadened its portfolio of lightweight wallboard products with the introduction of SHEETROCK^® Brand UltraLight Panels FIRECODE^® 30. This new, lightweight 5/8-inch gypsum wallboard product meets standards for use in non-rated and 30-minute fire-rated partitions and is up to 30% lighter than competing brands. SHEETROCK^® UltraLight Panels FIRECODE^®30 have received a favorable response from our customers and are now available through more than 200 specialty dealers in the eastern half of the United States.

FINANCIAL INFORMATION

Consolidated net sales in the second quarter of 2011 were $761 million, down 1% from the second quarter of 2010. An operating loss of $21 million and a net loss of $70 million, or $0.69 per share, were incurred in the second quarter of 2011. These results compared with an operating loss of $25 million and a net loss of $74 million, or $0.74 per share, in second quarter of 2010.

     As of June 30, 2011, we had $725 million of cash and cash equivalents and marketable securities compared with $769 million as of March 31, 2011 and $907 million as of December 31, 2010. Uses of cash during the first six months of 2011 primarily included $97 million for interest payments, $24 million paid for severance and other obligations associated with restructuring activities, $25 million for capital expenditures plus an additional $7 million for capital expenditures accrued in 2010 and $8.5 million for state and foreign tax payments.

MARKET CONDITIONS AND OUTLOOK

Our businesses are cyclical in nature and sensitive to changes in general economic conditions, including, in particular, conditions in the North American construction-based markets, which are our most significant markets. The market segments we serve can be broadly categorized as new residential construction, new nonresidential construction and repair and remodel activity, which includes both residential and nonresidential construction.

     Housing starts are a very good indicator of demand for our gypsum products. Installation of our gypsum products typically follows the start of construction by one to two months. New residential construction in the United States continues to be at a very low level by historical standards. In June 2011, the seasonally-adjusted annualized rate of housing starts was reported by the U.S. Census Bureau to have increased to 629,000 units, the highest level since January 2011 but still less than one-third of the level at the peak of the housing boom. Many industry analysts believe that the decline in new home construction has stabilized, that there will be a muted recovery over the next few years, and that over the longer term housing starts will begin to approach historical averages. However, the rate of recovery remains uncertain and will depend on broader economic issues such as employment, foreclosures and house price trends. Industry analysts’ forecasts for new single and multi-family construction in the United States in 2011 are for a range of from 570,000 to 630,000 units. We currently estimate that 2011 housing starts in the U.S. will be near the middle of that range.

     New nonresidential construction has also experienced significant declines over the past several years. Demand for our products from new nonresidential construction is determined by floor space for which contracts are signed. Installation of gypsum and ceilings products typically follows signing of construction contracts by about one year. According to McGraw-Hill Construction, total floor space for which new nonresidential construction contracts in the United States were signed declined 14% in 2010 compared to 2009 following a 44% decrease in 2009 compared to 2008. However, industry analysts have noted that there may be signs of stabilization in this segment. Vacancy rates, although still high by historical standards, are no longer increasing, delinquency rates on construction and development loans have fallen, and a majority of large banks are no longer tightening lending standards. McGraw-Hill Construction now forecasts that total floor space for which new nonresidential construction contracts in the U.S. are signed will be virtually unchanged in 2011 from the 2010 level.

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     The repair and remodel segment includes renovation of both residential and nonresidential buildings. As a result of the low levels of new home construction in recent years, this segment currently accounts for the largest portion of our sales. Many buyers begin to remodel an existing home within two years of purchase. According to the National Association of Realtors, sales of existing homes in the United States decreased to approximately 4.9 million units in 2010, the lowest level since 1997 and down from a high of 6.5 million units in 2006. For June 2011, the National Association of Realtors reported that sales of existing homes were at a seasonally adjusted annual rate of 4.77 million. The low levels of existing home sales in recent years, continued concerns regarding the job market and home resale values and tight lending standards have all contributed to a decrease in demand for our products from the residential repair and remodel segment. Recent housing price trends, as indicated by indices such as the S&P Case-Shiller Home Price Index, suggest that meaningful increases in home resale values in most markets are unlikely in the near term. Nonresidential repair and remodel activity is driven by factors including lease turnover rates, discretionary business investment, job growth and governmental building-related expenditures. We currently estimate that overall repair and remodel spending in 2011 will be approximately 1% above the 2010 level.

     The outlook for our international businesses is more positive. We have seen most of the markets in which we do business stabilize after the effects of the global financial crisis, and emerging markets are showing positive growth. However, there is uncertainty regarding the strength of our European markets due to continuing concerns about the European debt crisis.

     The housing and construction-based market segments we serve are affected by economic conditions, the availability of credit, lending practices, interest rates, the unemployment rate and consumer confidence. An increase in interest rates, continued high levels of unemployment, continued restrictive lending practices, a decrease in consumer confidence or other adverse economic conditions could have a material adverse effect on our business, financial condition, results of operations and cash flows. Our businesses are also affected by a variety of other factors beyond our control, including the inventory of unsold homes, which remains at a historically high level, the level of foreclosures, home resale rates, housing affordability, office and retail vacancy rates and foreign currency exchange rates. Since we operate in a variety of geographic markets, our businesses are subject to the economic conditions in each of these geographic markets. General economic downturns or localized downturns or financial concerns in the regions where we have operations may have a material adverse effect on our business, results of operations, financial condition and cash flows.

     Our results of operations have been adversely affected by the economic downturn and continued uncertainty in the financial markets. During the first six months of 2011, our North American Gypsum segment continued to be adversely affected by the low level of residential and other construction activity. Our Building Products Distribution segment, which serves the residential and commercial market segments, and our Worldwide Ceilings segment, which primarily serves the commercial markets, continued to be adversely affected by the significant reduction in new commercial construction activity.

     Industry shipments of gypsum wallboard in the United States (including imports) were an estimated 8.52 billion square feet in first six months of 2011, down approximately 6% compared with 9.09 billion square feet in the first six months of 2010. We estimate that industry shipments in the United States for all of 2011 will be approximately 17.3 billion square feet, unchanged from 17.3 billion square feet in 2010.

     U.S. Gypsum shipped 1.98 billion square feet of SHEETROCK^® brand gypsum wallboard in the first six months of 2011, an 11% decrease from 2.22 billion square feet in the first six months of 2010. The percentage decline of U.S. Gypsum’s wallboard shipments in the first six months of 2011 compared with the first six months of 2010 exceeded the decline for the industry primarily due to our continuing efforts to improve profitability. U.S. Gypsum’s share of the gypsum wallboard market in the United States was approximately 24% in the second quarter and first six months of 2011, down from approximately 25% in the second quarter and first six months of 2010. Its share of the gypsum wallboard market in the United States was approximately 24% in the first quarter of 2011.

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     Currently, there is significant excess wallboard production capacity industry-wide in the United States. Industry capacity in the United States was approximately 34.4 billion square feet as of January 1, 2011. We estimate that the industry capacity utilization rate was approximately 51% during the first six months of 2011 compared to 52% during the first six months of 2010. We project that the industry capacity utilization rate will remain at approximately that level for the balance of 2011. Despite our realization of some price improvement since the first quarter, we expect there to be continued pressure on gypsum wallboard selling prices and gross margins at such a low level of capacity utilization.

RESTRUCTURING AND OTHER INITIATIVES

We have been adjusting our operations in response to market conditions since the downturn began in 2006. Since mid-2006, we have temporarily idled or permanently closed approximately 3.8 billion square feet of our highest-cost wallboard manufacturing capacity. In the first quarter of 2011, we temporarily idled our gypsum quarry and ship loading facility in Windsor, Nova Scotia, Canada.

     Since January 1, 2007, we have eliminated approximately 4,575 salaried and hourly positions, including approximately 75 positions during the first six months of 2011 primarily reflecting L&W Supply’s 2011 cost reduction initiative. As part of L&W Supply’s efforts to reduce its cost structure, it has closed a total of 103 distribution branches since January 1, 2007. It continued to serve its customers from 163 branches in the United States as of June 30, 2011.

     Restructuring activities in 2010 included (1) a salaried workforce reduction program, (2) the permanent closure of three gypsum wallboard production facilities, including two that had been temporarily idled since 2008, and two paper production facilities that were temporarily idled in 2009 and 2008, (3) the temporary idling of two gypsum wallboard production facilities, a plaster production facility and a gypsum quarry, and (4) the closure of five distribution branches.

     We will continue to adjust our operations to the economic conditions in our markets.

     Historically, the housing and other construction markets that we serve have been deeply cyclical. Downturns in demand are typically steep and last several years, but they have typically been followed by periods of strong recovery. If the recovery from this cycle results in increases in demand similar to those realized in recoveries from past cycles, we believe we will generate significant cash flows when our markets recover. We regularly monitor forecasts prepared by external economic forecasters and review our facilities and other assets to determine which of them, if any, are impaired under applicable accounting rules. During the first six months of 2011, we recorded a $1 million long-lived asset impairment related to an asset that was written down to its net realizable value. Because we believe that a significant recovery in the housing and other construction markets we serve is likely to begin in the next two to three years, we determined that there were no other impairments of our long-lived assets during the first six months of 2011.

     However, if the downturn in our markets does not significantly reverse or the downturn is significantly further extended, material write-downs or impairment charges may be required in the future. If these conditions were to materialize or worsen, or if there is a fundamental change in the housing and other construction markets we serve, which individually or collectively lead to a significantly extended downturn or decrease in demand, we may permanently close additional production and distribution facilities and material restructuring and impairment charges may be necessary. The magnitude and timing of those possible charges would be dependent on the severity and duration of the extended downturn, should it materialize, and cannot be determined at this time. Any material restructuring or impairment charges, including write-downs of property, plant and equipment, would have a material adverse effect on our results of operations and financial condition. We will continue to monitor economic forecasts and their effect on our facilities to determine whether any of our assets are impaired.

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     Our focus on costs and efficiencies, including capacity closures and overhead reductions, has helped to mitigate the effects of the downturn in all of our markets. As economic and market conditions warrant, we will evaluate alternatives to further reduce costs, improve operational efficiency and maintain adequate liquidity. Actions to reduce costs and improve efficiencies could require us to record additional restructuring charges. See Liquidity and Capital Resources below for information regarding our cash position and credit facilities. See Part I, Item 1A, Risk Factors, in our 2010 Annual Report on Form 10-K for additional information regarding conditions affecting our businesses, the possibility that additional capital investment would be required to address future environmental laws and regulations and the effects of climate change and other risks and uncertainties that affect us.

KEY OBJECTIVES AND STRATEGIES

While adjusting our operations during this challenging business cycle, we are continuing to focus on the following key objectives and strategic priorities:

Objectives:

• extend our customer satisfaction leadership;

• improve operating efficiencies and reduce costs;

• maintain financial flexibility;

Strategic Priorities:

• strengthen our core businesses;

• diversify our earnings by expanding internationally and expanding our current product lines; and

• differentiate USG from our competitors through innovation.

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Consolidated Results of Operations

							% Increase
(dollars in millions, except per-share data)	2011			2010			(Decrease)
Three Months ended June 30:
Net sales	$	761		$	769			(1	)%
Cost of products sold		708			714			(1	)%
Gross profit		53			55			(4	)%
Selling and administrative expenses		72			73			(1	)%
Restructuring and long-lived asset impairment charges		2			7			(71	)%
Operating loss		(21	)		(25	)		(16	)%
Interest expense		52			44			18	%
Interest income		(2	)		(1	)		100	%
Other income, net		(2	)		(1	)		100	%
Income tax expense		1			7			(86	)%
Net loss		(70	)		(74	)		(5	)%
Diluted loss per share		(0.69	)		(0.74	)		(7	)%
Six Months ended June 30:
Net sales	$	1,482		$	1,485			—
Cost of products sold		1,393			1,416			(2	)%
Gross profit		89			69			29	%
Selling and administrative expenses		157			157			—
Restructuring and long-lived asset impairment charges		11			19			(42	)%
Operating loss		(79	)		(107	)		(26	)%
Interest expense		104			89			17	%
Interest income		(4	)		(2	)		100	%
Other income, net		(2	)		—			—
Income tax benefit		(2	)		(10	)		(80	)%
Net loss		(175	)		(184	)		(5	)%
Diluted loss per share		(1.70	)		(1.85	)		(8	)%

NET SALES

Consolidated net sales in the second quarter of 2011 decreased $8 million, or 1%, compared with the second quarter of 2010. Net sales increased 1% for our Worldwide Ceilings segment, but decreased 2% for our North American Gypsum segment and 4% for our Building Products Distribution segment. The higher level of net sales in the second quarter of 2011 for Worldwide Ceilings was primarily due to higher ceiling grid selling prices in the United States (up 7%) compared with the second quarter of 2010. The lower level of net sales for North American Gypsum was largely attributable to an 8% decline in U.S. Gypsum’s SHEETROCK^® brand gypsum wallboard volume and a 2% decrease in average gypsum wallboard selling prices. Net sales for Building Products Distribution were down primarily due to a 24% decrease in gypsum wallboard volume, partially offset by an 8% increase in average gypsum wallboard selling prices.

     Consolidated net sales in the first six months of 2011 decreased $3 million compared with the first six months of 2010. Net sales increased 4% for our Worldwide Ceilings segment, but decreased 2% for our North American Gypsum segment and 3% for our Building Products Distribution segment. The higher level of net sales in the first six months of 2011 for Worldwide Ceilings was primarily due to higher ceiling grid volume (up 2%) and selling prices (up 8%) in the United States compared with the first six months of 2010. The lower level of net sales for North American Gypsum was largely attributable to an 11% decline in U.S. Gypsum’s SHEETROCK^® brand gypsum wallboard volume. Net sales for Building Products Distribution were down primarily due to a 22% decrease in gypsum wallboard volume, partially offset by a 9% increase in average gypsum wallboard selling prices.

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COST OF PRODUCTS SOLD

Cost of products sold for the second quarter of 2011 decreased $6 million, or 1%, compared with the second quarter of 2010 primarily reflecting lower product volumes. Manufacturing costs per unit for U.S. Gypsum’s SHEETROCK^® brand gypsum wallboard were down 2% in the second quarter of 2011 compared with the second quarter of 2010, primarily due to per unit cost decreases of 7% for energy and 7% for fixed costs, partially offset by a 2% increase in per unit costs for raw materials. For USG Interiors, manufacturing costs per unit increased for ceiling grid in the second quarter of 2011 compared with the second quarter of 2010 due to higher steel costs and for ceiling tile due to higher per unit costs for raw materials, offset in part by lower per unit energy costs.

     Cost of products sold for the first six months of 2011 decreased $23 million, or 2%, compared with the first six months of 2010 primarily reflecting lower product volumes. Manufacturing costs per unit for U.S. Gypsum’s SHEETROCK^® brand gypsum wallboard were down 2% in the first six months of 2011 compared with the first six months of 2010, primarily due to per unit cost decreases of 6% for energy and 6% for fixed costs. For USG Interiors, manufacturing costs per unit increased for ceiling grid in the first six months of 2011 compared with the first six months of 2010 due to higher steel costs and for ceiling tile due to higher per unit costs for raw materials, offset in part by lower per unit energy costs.

GROSS PROFIT

Gross profit for the second quarter of 2011 decreased $2 million, or 4%, compared with the second quarter of 2010. Gross profit as a percentage of net sales was 7.0% for the second quarter of 2011, down slightly from 7.2% for the second quarter of 2010.

     Gross profit for the first six months of 2011 increased $20 million, or 29%, compared with the first six months of 2010. Gross profit as a percentage of net sales was 6.0% for the first six months of 2011 compared with 4.6% for the first six months of 2010. The higher percentage for the first six months of 2011 was primarily due to improved gross margins for L&W Supply and USG Interiors.

SELLING AND ADMINISTRATIVE EXPENSES

Selling and administrative expenses totaled $72 million and $157 million in the second quarter and first six months of 2011, respectively, compared with $73 million and $157 million in the second quarter and first six months of 2010, respectively. As a percentage of net sales, selling and administrative expenses were 9.5% for the second quarters of 2011 and 2010 and 10.6% for the first six months of 2011 and 2010.

RESTRUCTURING AND LONG-LIVED ASSET IMPAIRMENT CHARGES

As a result of continuing adverse market conditions, we recorded restructuring and long-lived asset impairment charges totaling $2 million during the second quarter of 2011 and $11 million during the first six months of 2011.

     Restructuring and long-lived asset impairment charges for the second quarter of 2011 included $1 million for lease obligations and $1 million for exit costs related to production facilities closed in 2010 and 2009. These charges related to North American Gypsum.

     Restructuring and long-lived asset impairment charges for the first six months of 2011 included $4 million for severance related to our salaried workforce reduction program announced during the fourth quarter of 2010 and a 2011 cost reduction initiative for L&W Supply Corporation, $2 million for lease obligations, $1 million for long-lived asset impairment related to an asset that was written down to its net realizable value and $4 million for exit costs related to production facilities closed in 2010 and 2009. On a segment basis, $9 million of the charges related to North American Gypsum, $1 million to Building Products Distribution and $1 million to Corporate.

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     Second quarter 2010 restructuring and long-lived asset impairment charges totaled $7 million and related to the curtailment of operations at a mining facility in Canada, the closure of one distribution center, the closure of an office and warehouse in Europe and continuing charges and adjustments related to prior-period restructuring initiatives. The charges included $4 million for severance, $1 million for asset impairments and lease obligations and $2 million for other exit costs.

     For the first six months of 2010, restructuring and long-lived asset impairment charges were $19 million. This amount primarily included charges related to the closure of five distribution centers and a gypsum wallboard production facility in Southard, Okla., the temporary idling of a gypsum wallboard production facility in Stony Point, N.Y., and the curtailment of operations at the mining facility in Canada. The charges included $9 million for severance, $6 million for asset impairments and lease obligations and $4 million for other exit costs.

     Total cash payments charged against the restructuring reserve in the first six months of 2011 amounted to $24 million. We expect future payments to be approximately $11 million during the remainder of 2011, $9 million in 2012 and $15 million after 2012. All restructuring-related payments made in the first six months of 2011 were funded with cash on hand. We expect that the future payments will be funded with cash from operations or cash on hand. See Note 3 to the condensed consolidated financial statements for additional information related to our restructuring reserve.

INTEREST EXPENSE

Interest expense was $52 million in the second quarter of 2011 compared with $44 million in the second quarter of 2010. For the first six months of 2011, interest expense was $104 million compared with $89 million for the first six months of 2010. Interest expense was higher in the 2011 periods primarily due to higher average levels of debt outstanding.

INCOME TAX EXPENSE (BENEFIT)

Income tax expense was $1 million in the second quarter of 2011 compared to $7 million in the second quarter of 2010. We had effective tax rates of 1.6% and 9.9% for the second quarter of 2011 and 2010, respectively. Income tax benefit was $2 million for the first six months of 2011 and $10 million for the first six months of 2010. Our effective tax rates were 1.1% and 5.4% for the first six months of 2011 and 2010, respectively. Since recording a full valuation allowance against the federal and most state deferred tax assets, the effective tax rate in 2011 is lower as we do not benefit losses in those jurisdictions and have a provision in foreign jurisdictions. In addition, during the second quarter of 2011, we recorded a noncash income tax benefit of $3 million resulting from the requirement to consider all items (including items recorded in other comprehensive income) in determining the amount of income tax benefit that results from a loss from continuing operations. This income tax benefit was offset by income tax expense on other comprehensive income. A similar noncash income tax benefit of $19 million was recorded during the first quarter of 2010 relating to the fourth quarter of 2009.

NET LOSS

A net loss of $70 million, or $0.69 per diluted share, was recorded in the second quarter of 2011 compared with a net loss of $74 million, or $0.74 per diluted share, in the second quarter of 2010. A net loss of $175 million, or $1.70 per diluted share, was recorded for the first six months of 2011 compared with a net loss of $184 million, or $1.85 per diluted share, for the first six months of 2010.

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Segment Results of Operations

NORTH AMERICAN GYPSUM

Net sales and operating profit (loss) for the businesses comprising our North American Gypsum segment were as follows:

	Three Months ended June 30,									Six Months ended June 30,
							% Increase									% Increase
(millions)	2011(a)			2010(b)			(Decrease)			2011(a)			2010(b)			(Decrease)
Net Sales:
U. S. Gypsum	$	322		$	336			(4	)%	$	640		$	668			(4	)%
CGC (gypsum)		76			75			1	%		152			151			1	%
USG Mexico		40			37			8	%		81			73			11	%
Other (c)		7			9			(22	)%		14			15			(7	)%
Eliminations		(25	)		(29	)		(14	)%		(51	)		(55	)		(7	)%
Total	$	420		$	428			(2	)%	$	836		$	852			(2	)%
Operating Profit (Loss):
U. S. Gypsum	$	(21	)	$	(16	)		31	%	$	(50	)	$	(53	)		(6	)%
CGC (gypsum)		2			6			(67	)%		5			13			(62	)%
USG Mexico		5			4			25	%		10			7			43	%
Other (c)		(2	)		(5	)		(60	)%		(10	)		(13	)		(23	)%
Total	$	(16	)	$	(11	)		45	%	$	(45	)	$	(46	)		(2	)%

(a)	Operating losses for 2011 included restructuring and long-lived asset impairment charges of $2 million and $9 million for the second quarter and first six months, respectively. These charges related to U.S. Gypsum.
(b)	Operating losses for 2010 included restructuring and long-lived asset impairment charges of $6 million and $10 million for the second quarter and first six months, respectively. These charges included $5 million and $9 million related to U.S. Gypsum for the second quarter and first six months, respectively, and $1 million in each period relating to a mining operation in Nova Scotia, Canada.
(c)	Includes a shipping company in Bermuda and a mining operation in Nova Scotia, Canada.

U.S. Gypsum: Net sales in the second quarter of 2011 were $322 million, down $14 million, or 4%, compared with the second quarter of 2010. Net sales of SHEETROCK^® brand gypsum wallboard declined $12 million, or 10%, reflecting an 8% decrease in gypsum wallboard shipments which adversely affected sales by $10 million and a 2% decrease in average gypsum wallboard selling prices which lowered sales by $2 million. Net sales for FIBEROCK^® brand gypsum fiber panels declined $3 million primarily due to a 36% decrease in volume as a result of the decision by that product’s principal customer to reduce the number of tile backer products it carries. Net sales of SHEETROCK^® brand joint compound declined $2 million due to a 6% decrease in volume, partially offset by a 3% increase in selling prices. Net sales of DUROCK^® brand cement board increased $1 million due to a 7% increase in volume, partially offset by a 1% decrease in selling prices. Net sales of other products increased an aggregate of $2 million compared with the second quarter of 2010.

     An operating loss of $21 million was recorded in the second quarter of 2011 compared with an operating loss of $16 million in the second quarter of 2010. The $5 million unfavorable change in operating loss reflected gross profit declines of (1) $2 million for SHEETROCK^® brand gypsum wallboard, of which $1 million was due to the lower shipments and $1 million was due to a lower gross margin, (2) $2 million for SHEETROCK^® brand joint compound primarily due to the lower volume and 6% higher per unit costs, (3) $1 million for FIBEROCK^® brand gypsum fiber panels primarily due to the lower volume and (4) a $4 million aggregate decrease in gross profit for other product lines. These declines were partially was offset by a $3 million decrease in restructuring and long-lived asset impairment charges and a $1 million decrease in selling and administrative expenses compared to the second quarter of 2010. Gross profit for DUROCK^® brand cement board was unchanged compared to the second quarter of 2010 as the increase in volume was offset by a lower gross margin due to the lower selling prices and 3% higher per unit costs.

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     Demand for gypsum wallboard declined in the second quarter of 2011 compared to the second quarter of 2010. U.S. Gypsum shipped 986 million square feet of SHEETROCK^® brand gypsum wallboard in the second quarter of 2011, an 8% decrease from 1.07 billion square feet in the second quarter of 2010 which benefited from the impact of the housing tax credit during the first half of that quarter. We estimate that capacity utilization rates were approximately 51% for the industry and 42% for U.S. Gypsum during the second quarter of 2011.

     In the second quarter of 2011, our nationwide average realized selling price for SHEETROCK^® brand gypsum wallboard was $111.55 per thousand square feet, down 2% from $114.17 in the second quarter of 2010, but up 2% from $109.15 in the first quarter of 2011 due to the price increase implemented by U.S. Gypsum effective in March 2011.

     Manufacturing costs per unit for U.S. Gypsum’s SHEETROCK^® brand gypsum wallboard were down 2% in the second quarter of 2011 compared with the second quarter of 2010, primarily due to per unit cost decreases of 7% for energy and 7% for fixed costs, partially offset by a 2% increase in per unit costs for raw materials. Compared to the first quarter of 2011, SHEETROCK^® brand gypsum wallboard manufacturing costs per unit decreased 1%, primarily due to lower energy costs.

     CGC (gypsum): Net sales in the second quarter of 2011 were $76 million, an increase of $1 million compared to the second quarter of 2010. The increase in net sales reflects a $4 million favorable currency translation impact, partially offset by a $3 million decrease in sales of SHEETROCK^® brand gypsum wallboard due to 3% lower volume and 4% lower selling prices. Sales of products other than gypsum wallboard were unchanged. Operating profit was $2 million in the second quarter of 2011 compared with $6 million in the second quarter of 2010. This decline was attributable to a $4 million decrease in gypsum wallboard gross profit due to the lower volume and selling prices and 5% higher per unit manufacturing costs primarily due to higher raw materials costs.

USG Mexico: Net sales for our Mexico-based subsidiary were $40 million in the second quarter of 2011 compared with $37 million in the second quarter of 2010. Net sales increased $3 million for ceiling products, glass mat sheathing and miscellaneous product lines, but were unchanged for SHEETROCK^® brand gypsum wallboard, drywall steel, cement board, and joint treatment. Operating profit was $5 million in the second quarter of 2011 compared with $4 million in the second quarter of 2010 reflecting gross profit increases of $1 million each for drywall steel and joint treatment, partially offset by a $1 million decrease in gross profit related to other nonwallboard products and miscellaneous costs. Gross profit was unchanged for SHEETROCK^® brand gypsum wallboard.

BUILDING PRODUCTS DISTRIBUTION

Net sales and operating loss for our Building Products Distribution segment, which consists of L&W Supply, were as follows:

	Three Months ended June 30,									Six Months ended June 30,
(millions)	2011			2010(a)			% Decrease			2011(b)			2010(a)			% Decrease
Net sales	$	270		$	282			(4	)%	$	513		$	530			(3	)%
Operating loss		(14	)		(22	)		(36	)%		(36	)		(61	)		(41	)%

(a)	Operating losses for 2010 included restructuring and long-lived asset impairment charges of $1 million and $9 million for the second quarter and first six months, respectively.
(b)	The operating loss for first six months of 2011 included restructuring and long-lived asset impairment charges of $1 million.

L&W Supply’s net sales in the second quarter of 2011 were $270 million, down $12 million, or 4%, compared with the second quarter of 2010. Net sales of gypsum wallboard declined $16 million, or 18%, reflecting a 24% decrease in gypsum wallboard shipments, which adversely affected sales by $21 million, partially offset by an 8% increase in average gypsum wallboard selling prices, which favorably affected sales by $5 million. Net sales increased $7 million, or 8%, for construction metal products and $5 million, or 7%, for ceilings products as higher selling prices more than offset lower volumes for these products. Net sales of all other products decreased $8 million, or 10%. As

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a result of lower gypsum wallboard volume, same-location net sales for the second quarter of 2011 were down 4% compared with the second quarter of 2010.

     An operating loss of $14 million was incurred in the second quarter of 2011 compared with an operating loss of $22 million in the second quarter of 2010. The $8 million reduction in operating loss was attributable to a $12 million decrease in operating expenses primarily attributable to L&W Supply’s cost reduction programs, partially offset by lower gross profit for gypsum wallboard (down $1 million) and other product lines (down $4 million). The decline in gross profit for gypsum wallboard reflected a $4 million decrease due to the lower shipments, partially offset by a 31% increase in gypsum wallboard gross margin. That gross margin increase and the impact of rebates favorably affected operating profit by $3 million. There were no restructuring charges in the second quarter of 2011 compared with $1 million in the second quarter of 2010.

     L&W Supply continued to serve its customers from 163 branches in the United States as of June 30, 2011. L&W Supply operated 163 branches as of December 31, 2010 and 160 branches as of June 30, 2010.

WORLDWIDE CEILINGS

Net sales and operating profit for the businesses comprising our Worldwide Ceilings segment were as follows:

	Three Months ended June 30,									Six Months ended June 30,
							% Increase									% Increase
(millions)	2011			2010			(Decrease)			2011			2010			(Decrease)
Net Sales:
USG Interiors	$	112		$	111			1	%	$	222		$	214			4	%
USG International		55			57			(4	)%		116			114			2	%
CGC (ceilings)		18			16			13	%		37			33			12	%
Eliminations		(12	)		(12	)		—			(25	)		(24	)		4	%
Total	$	173		$	172			1	%	$	350		$	337			4	%
Operating Profit:
USG Interiors	$	15		$	18			(17	)%	$	33		$	30			10	%
USG International		3			2			50	%		7			5			40	%
CGC (ceilings)		4			3			33	%		8			6			33	%
Total	$	22		$	23			(4	)%	$	48		$	41			17	%

USG Interiors: Net sales for our domestic ceilings business increased to $112 million in the second quarter of 2011 from $111 million in the second quarter of 2010. The increase was primarily due to higher selling prices for ceiling grid. Operating profit of $15 million was down $3 million, or 17%, compared with the second quarter of 2010 primarily due to a lower gross margin for ceiling tile.

     Net sales in the second quarter of 2011 increased $1 million for ceiling grid and were unchanged for ceiling tile compared with the second quarter of 2010. A 7% increase in ceiling grid selling prices favorably affected sales by $2 million, while a 4% decrease in grid volume adversely affected sales by $1 million. A 3% increase in ceiling tile selling prices, which favorably affected sales by $2 million, was offset by a 3% decrease in tile volume.

     The decrease in operating profit was attributable to a $2 million decline in gross profit for ceiling tile and a $1 million increase in selling and administrative expenses. Gross profit for ceiling tile was adversely affected by a $1 million decrease in gross margin reflecting higher per unit manufacturing costs, which more than offset higher selling prices, and a $1 million decrease due to lower volume. Gross profit for ceiling grid was unchanged as a $1 million decrease due to lower volume was offset by a $1 million increase in gross margin due to higher selling prices.

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USG International: Net sales of $55 million in the second quarter of 2011 were down $2 million, or 4%, compared with the second quarter of 2010 primarily due to decreased demand for grid in Europe and lower sales of FIBEROCK^® brand gypsum fiber panels in the Pacific region due to the delay of a construction project. These decreases were partially offset by increased demand for joint treatment in Europe. Operating profit was $3 million in the second quarter of 2011 compared with $2 million in the second quarter of 2010 primarily due to increased gross profit for gypsum products in Latin America and lower restructuring expenses in the second quarter 2011.

CGC (ceilings): Net sales in the second quarter of 2011 of $18 million were up $2 million, or 13%, compared with the second quarter of 2010. Operating profit increased to $4 million from $3 million. These results were primarily attributable to higher selling prices for ceiling tile and grid and, in the case of net sales, the favorable effects of currency translation.

CORPORATE

The operating loss for Corporate was $15 million in the second quarter of 2011 compared with $14 million for the second quarter of 2010. The operating loss for Corporate increased $7 million to $44 million in the first six months of 2011 compared to the first six months of 2010. The increase was primarily attributable to expenses associated with upgrades to our technology infrastructure and an enterprise-wide initiative to improve back office efficiency.

Liquidity and Capital Resources

LIQUIDITY

As of June 30, 2011, we had $725 million of cash and cash equivalents and marketable securities compared with $769 million as of March 31, 2011 and $907 million as of December 31, 2010. Uses of cash during the first six months of 2011 primarily included $97 million for interest payments, $24 million paid for severance and other obligations associated with restructuring activities, $25 million for capital expenditures plus an additional $7 million for capital expenditures accrued in 2010 and $8.5 million for state and foreign tax payments. Our total liquidity as of June 30, 2011 was $923 million, including $198 million of borrowing availability under our revolving credit facilities.

     Our cash is invested in cash equivalents and marketable securities pursuant to an investment policy that has preservation of principal as its primary objective. The policy includes provisions regarding diversification, credit quality and maturity profile that are designed to minimize the overall risk profile of our investment portfolio. The securities in the portfolio are subject to normal market fluctuations. See Note 6 to the condensed consolidated financial statements for additional information regarding our investments in marketable securities.

     Our credit facility is guaranteed by our significant domestic subsidiaries and secured by their and USG’s trade receivables and inventory. It matures in December 2015 and allows for revolving loans and letters of credit (up to $250 million) in an aggregate principal amount not to exceed the lesser of (a) $400 million or (b) a borrowing base determined by reference to the trade receivables and inventory of USG and its significant domestic subsidiaries. The maximum allowable borrowings may be increased at our request with the agreement of the lenders providing increased or new lending commitments, provided that the maximum allowable borrowings after giving effect to the increase may not exceed $600 million. Availability under the credit facility will increase or decrease depending on changes to the borrowing base over time. The facility contains a single financial covenant that would require us to maintain a minimum fixed charge coverage ratio of 1.1-to-1.0 if and for so long as the excess of the borrowing base over the outstanding borrowings under the credit agreement is less than the greater of (a) $40 million and (b) 15% of the lesser of (i) the aggregate revolving commitments at such time and (ii) the borrowing base at such time. As of June 30, 2011, our fixed charge coverage ratio was (0.19)-to-1. Because we do not currently satisfy the required fixed charge coverage ratio, we must maintain borrowing availability of at least $44 million under the credit facility. Taking into account the most recent borrowing base calculation, borrowings available under the credit facility were approximately $167 million. We also have Can. $30 million available for borrowing under CGC’s credit facility. The U.S. dollar equivalent of borrowings available under CGC’s credit facility as of June 30, 2011 was $31 million.

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     We expect our total capital expenditures for 2011 will be approximately $50 million. In the first six months of 2011, they totaled $25 million. Interest payments are expected to increase to approximately $195 million in 2011 compared with $171 million in 2010 due to a higher average level of debt outstanding. We have no term debt maturities until 2014, other than approximately $7 million of annual debt amortization under our ship mortgage facility.

     We believe that cash on hand, including cash equivalents and marketable securities, cash available from future operations and our credit facilities will provide sufficient liquidity to fund our operations for at least the next 12 months. Because of our significant interest expense, cash flows are expected to be negative and reduce our liquidity in 2011, but to a lesser extent during the third and fourth quarters than during the first six months of 2011. In addition to interest, cash requirements include, among other things, capital expenditures, working capital needs, debt amortization and other contractual obligations. Additionally, we may consider selective strategic transactions and alliances that we believe create value, including mergers and acquisitions, joint ventures, partnerships or other business combinations, restructurings and dispositions. Transactions of these types, if any, may result in material cash expenditures or proceeds.

     Despite our present liquidity position, some uncertainty exists as to whether we will have sufficient cash flows to weather a significantly extended downturn or further significant decrease in demand for our products. As discussed above, during the last several years, we took actions to reduce costs and increase our liquidity. We will continue our efforts to maintain our financial flexibility, but there can be no assurance that our efforts will be sufficient to withstand the impact of extended negative economic conditions. Under those conditions, our funds from operations and the other sources referenced above may not be sufficient to fund our operations or pursue strategic transactions, and we may be required to seek alternative sources of financing. There is no assurance, however, that we will be able to obtain financing on acceptable terms, or at all.

CASH FLOWS

The following table presents a summary of our cash flows:

	Six Months
	ended June 30,
(millions)	2011			2010
Net cash provided by (used for):
Operating activities	$	(154	)	$	(121	)
Investing activities		(71	)		(153	)
Financing activities		(6	)		(4	)
Effect of exchange rate changes on cash		4			(2	)
Net decrease in cash and cash equivalents	$	(227	)	$	(280	)

Operating Activities: The variation between the first six months of 2011 and the first six months of 2010 primarily reflected a $40 million increase in cash outflow for working capital in the 2011 period compared to the 2010 period.

Investing Activities: The variation between the first six months of 2011 and the first six months of 2010 primarily reflected net purchases of marketable securities of $45 million in the 2011 period compared with net purchases of $145 million in the first six months of 2010. This decrease was partially offset by a $14 million increase in capital expenditures compared to the 2010 period.

Financing Activities: The variation between the first six months of 2011 and the first six months of 2010 reflected a $2 million increase in the amount recorded as repurchases of common stock. Shares are withheld from employees in connection with the vesting of restricted stock units in an amount equal to their withholding tax obligations, which we satisfy in cash.

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CAPITAL EXPENDITURES

Capital spending amounted to $25 million in the first six months of 2011 compared with $11 million in the first six months of 2010. Because of the high level of investment that we made in our operations in 2006 through 2008 and the current market environment, we plan to limit our capital spending in 2011 to approximately $50 million. Approved capital expenditures for the replacement, modernization and expansion of operations totaled $240 million as of June 30, 2011 compared with $237 million as of December 31, 2010. Approved expenditures as of June 30, 2011 included $209 million for construction of a new, low-cost gypsum wallboard plant in Stockton, Calif. Commencement of construction of this facility has been delayed until after 2012, with the actual timing dependent on market conditions. Its cost will be reassessed when construction is considered ready for commencement. We expect to fund our capital expenditures program with cash from operations or cash on hand and, if determined to be appropriate and they are available, borrowings under our revolving credit facility or other alternative financings.

WORKING CAPITAL

As of June 30, 2011, working capital (current assets less current liabilities) amounted to $795 million, and the ratio of current assets to current liabilities was 2.52-to-1. As of December 31, 2010, working capital amounted to $908 million, and the ratio of current assets to current liabilities was 2.72-to-1.

Cash and Cash Equivalents and Marketable Securities: As of June 30, 2011, we had $725 million of cash and cash equivalents and marketable securities compared with $769 million as of March 31, 2011 and $907 million as of December 31, 2010. Uses of cash during the first six months of 2011 primarily included $97 million for interest payments, $24 million paid for severance and other obligations associated with restructuring activities, $25 million for capital expenditures plus an additional $7 million for capital expenditures accrued in 2010 and $8.5 million for state and foreign tax payments.

Receivables: As of June 30, 2011, receivables were $380 million, up $53 million, or 16%, from $327 million as of December 31, 2010. This increase primarily reflected a 20% increase in consolidated net sales in June 2011 compared with December 2010.

Inventories: As of June 30, 2011, inventories were $313 million, up $23 million, or 8%, from $290 million as of December 31, 2010 reflecting an increase in finished goods and work-in-progress due to the seasonal increase in business in the second quarter compared to the fourth quarter.

Accounts Payable: As of June 30, 2011, accounts payable were $234 million, up $16 million, or 7%, from $218 million as of December 31, 2010 primarily due to a 23% increase in cost of goods sold in June 2011 compared with December 2010.

Accrued Expenses: As of June 30, 2011, accrued expenses were $278 million, down $16 million, or 5%, from $294 million as of December 31, 2010. The lower level of accrued expenses primarily reflected a $14 million decrease in accruals for obligations associated with restructuring activities.

MARKETABLE SECURITIES

Marketable securities that we invest in are classified as available-for-sale securities and reported at fair value with unrealized gains and losses excluded from earnings and reported in accumulated other comprehensive income (loss) on our condensed consolidated balance sheets. The realized and unrealized gains and losses for the six months ended June 30, 2011 were immaterial. See Note 6 to the condensed consolidated financial statements for additional information regarding our investments in marketable securities.

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DEBT

Total debt, consisting of senior notes, convertible senior notes, industrial revenue bonds and outstanding borrowings under our ship mortgage facility, amounted to $2.329 billion ($2.306 billion, net of debt discount of $23 million) as of June 30, 2011 and $2.331 billion ($2.308 billion, net of debt discount of $23 million) as of December 31, 2010. As of June 30, 2011 and during the quarter then ended, there were no borrowings under our revolving credit facility or CGC’s credit facility. See Note 8 to the condensed consolidated financial statements for additional information about our debt.

Realization of Deferred Tax Asset

     As of June 30, 2011, we had federal net operating loss, or NOL, carryforwards of approximately $1.7 billion that are available to offset future federal taxable income and will expire in the years 2026 through 2031. In addition, as of that date, we had federal alternative minimum tax credit carryforwards of approximately $52 million that are available to reduce future regular federal income taxes over an indefinite period.

     As of June 30, 2011, we had a gross deferred tax asset related to our state NOLs and tax credit carryforwards of $282 and will expire in the years 2011-2031. We also had NOL and tax credit carryforwards in various foreign jurisdictions in the amount of $5 million as of June 30, 2011 against a portion of which we have historically maintained a valuation allowance.

     For the six months ended June 30, 2011, we established an additional valuation allowance of $96 million against our deferred tax assets primarily due to the first and second quarter losses. As a result we increased our deferred tax assets valuation allowance to $980 million as of June 30, 2011. Recording this allowance will have no impact on our ability to utilize our U.S. federal and state NOL and tax credit carryforwards to offset future U.S. profits. We continue to believe that we ultimately will have sufficient U.S. profitability during the remaining NOL and tax credit carryforward periods to realize substantially all of the economic value of the federal NOLs and some of the state NOLs before they expire. In future periods, the valuation allowance can be reversed based on sufficient evidence indicating that it is more likely than not that a portion of our deferred tax assets will be realized.

     See Note 14 to the condensed consolidated financial statements for additional information regarding income tax matters.

Legal Contingencies

We are named as defendants in litigation arising from our operations, including claims and lawsuits arising from the operation of our vehicles and claims arising from product warranties, workplace or job site injuries, and general commercial disputes. This litigation includes multiple lawsuits, including class actions, relating to Chinese-manufactured drywall distributed by L&W Supply Corporation in the southeastern United States in 2006 and 2007.

     We have also been notified by state and federal environmental protection agencies of possible involvement as one of numerous “potentially responsible parties” in a number of Superfund sites in the United States.

     We believe that appropriate accruals have been established for our potential liability in connection with these matters, 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. However, we continue to review these accruals as additional information becomes available and revise them as appropriate. We do not expect the environmental matters or any other litigation matters involving USG to have a material adverse effect upon our results of operations, financial position or cash flows.

     See Note 16 to the condensed consolidated financial statements for additional information regarding litigation matters.

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Critical Accounting Policies

The preparation of our financial statements requires us to make estimates, judgments and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses during the periods presented. Our Annual Report on Form 10-K for the fiscal year ended December 31, 2010, which we filed with the Securities and Exchange Commission on February 11, 2011, includes a summary of the critical accounting policies we believe are the most important to aid in understanding our financial results. There have been no changes to those critical accounting policies that have had a material impact on our reported amounts of assets, liabilities, revenues or expenses during the first six months of 2011.

Recent Accounting Pronouncements

In May 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. This ASU clarifies the application of certain existing fair value measurement guidance and expands the disclosures for fair value measurements that are estimated using significant unobservable (Level 3) inputs. This guidance is effective for interim and annual periods beginning on or after December 15, 2011, applied prospectively. Our effective date is January 1, 2012. The adoption of this guidance is not expected to have a material impact on our consolidated financial statements.

     In June 2011, the FASB issued ASU 2011-05, Presentation of Comprehensive Income, which requires comprehensive income to be reported in either a single statement of comprehensive income or in separate consecutive statements reporting net income and other comprehensive income. The ASU requires retrospective application and is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. The adoption of this guidance will require us to change the presentation of comprehensive income and its components which we currently report within the statement of changes in stockholders’ equity in our Annual Report on Form 10-K and in a note to the financial statements in our quarterly reports on Form 10-Q.

Forward-Looking Statements

This report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 related to management’s expectations about future conditions. Actual business, market or other conditions may differ from management’s expectations and, accordingly, may affect our sales and profitability or other results and liquidity. Actual results may differ due to various other factors, including:

• economic conditions, such as the levels of new home and other construction activity, employment levels, the availability of mortgage, construction and other financing, mortgage and other interest rates, housing affordability and supply, the levels of foreclosures and home resales, currency exchange rates and consumer confidence;

• capital markets conditions and the availability of borrowings under our credit agreement or other financings;

• competitive conditions, such as price, service and product competition;

• shortages in raw materials;

• changes in raw material, energy, transportation and employee benefit costs;

• the loss of one or more major customers and our customers’ ability to meet their financial obligations to us;

• capacity utilization rates for us and the industry;

• changes in laws or regulations, including environmental and safety regulations;

• the outcome in contested litigation matters;

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• the effects of acts of terrorism or war upon domestic and international economies and financial markets; and

• acts of God.

We assume no obligation to update any forward-looking information contained in this report.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We use derivative instruments to manage selected commodity price and foreign currency exposures. We do not use derivative instruments for speculative trading purposes, and we typically do not hedge beyond five years.

COMMODITY PRICE RISK

We use swap and option contracts to manage our exposure to fluctuations in commodity prices associated with anticipated purchases of natural gas. Currently, a portion of our anticipated purchases of natural gas are hedged for 2011 and 2012. The notional amount of these hedge contracts was $55 million as of June 30, 2011. We review our positions regularly and make adjustments as market and business conditions warrant. A sensitivity analysis was prepared to estimate the potential change in the fair value of our natural gas hedge contracts assuming a hypothetical 10% change in market prices. Based on the results of this analysis, which may differ from actual results, the potential change in the fair value of our natural gas hedge contracts as of June 30, 2011 was $2 million. This analysis does not consider the underlying exposure.

FOREIGN CURRENCY EXCHANGE RISK

We have a foreign exchange forward contract in place to hedge changes in the value of an intercompany loan to a foreign subsidiary due to changes in foreign exchange rates. The notional amount of this contract was $8 million as of June 30, 2011, and it matures August 26, 2011. As of June 30, 2011, the fair value of this contract was an unrealized loss of $1 million.

     We also have foreign exchange forward contracts to hedge purchases of products and services denominated in non-functional currencies. The notional amount of these contracts was $59 million as of June 30, 2011, and they mature by March 28, 2012. The fair value of these contracts was a $5 million unrealized loss as of June 30, 2011. A sensitivity analysis was prepared to estimate the potential change in the fair value of our foreign exchange forward contracts assuming a hypothetical 10% change in foreign exchange rates. Based on the results of this analysis, which may differ from actual results, the potential change in the fair value of our foreign exchange forward contracts as of June 30, 2011 was $6 million. This analysis does not consider the underlying exposure.

INTEREST RATE RISK

As of June 30, 2011, most of our outstanding debt was fixed-rate debt. A sensitivity analysis was prepared to estimate the potential change in interest expense assuming a hypothetical 100-basis-point increase in interest rates. Based on the results of this analysis, which may differ from actual results, the potential change in interest expense would be immaterial.

See Note 9 to the condensed consolidated financial statements for additional information regarding our financial exposures.

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ITEM 4. CONTROLS AND PROCEDURES

(a) Evaluation of disclosure controls and procedures.

Our Chief Executive Officer and Chief Financial Officer, after evaluating the effectiveness of our “disclosure controls and procedures” (as defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, or the Act), have concluded that, as of the end of the quarter covered by this report, our disclosure controls and procedures were effective to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Act is accumulated and communicated to the issuer’s management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

(b) Changes in internal control over financial reporting.

There were no changes in our “internal control over financial reporting” (as defined in Rule 13a-15(f) promulgated under the Act) identified in connection with the evaluation required by Rule 13a-15(d) promulgated under the Act that occurred during the fiscal quarter ended June 30, 2011 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

See Part I, Item 1, Note 16 to the condensed consolidated financial statements for additional information regarding legal proceedings.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(a) Pursuant to our Deferred Compensation Program for Non-Employee Directors, two of our non-employee directors deferred their quarterly retainers for service as directors that were payable on June 30, 2011 into a total of approximately 2,979 deferred stock units. These units will increase or decrease in value in direct proportion to the market value of our common stock and will be paid in cash or shares of common stock, at the director’s option, following termination of service as a director. The issuance of these deferred stock units was effected through a private placement under Section 4(2) of the Securities Act of 1933, as amended, and was exempt from registration under Section 5 of that Act.

ITEM 5. OTHER INFORMATION

FREQUENCY OF VOTE ON COMPENSATION OF NAMED EXECUTIVE OFFICERS

At our annual meeting of stockholders held in May of this year, the recommendation of our Board of Directors to hold an advisory vote regarding the compensation of our named executive officers every three years received the support of an almost two-thirds majority of the votes cast by our stockholders. Taking into consideration that support, the Board of Directors has determined that future stockholder advisory votes regarding the compensation of our named executive officers will be held every three years until the next stockholder advisory vote regarding the frequency of that advisory vote on compensation. The next stockholder advisory vote regarding that frequency is not required to be held until our 2017 annual meeting of stockholders. Accordingly, the next stockholder advisory vote regarding the compensation of our named executive officers is expected to be held at our 2014 annual meeting

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of stockholders.

MINE SAFETY

The operation of our nine mines and quarries in the United States is subject to regulation and inspection under the Federal Mine Safety and Health Act of 1977, or Safety Act. From time to time, inspection of our mines and quarries and their operation results in our receipt of citations or orders alleging violations of health or safety standards or other violations under the Safety Act. We are usually able to resolve the matters identified in the citations or orders with little or no assessments or penalties.

     Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act requires that we disclose specified information about mine health and safety in our periodic reports filed with the Securities and Exchange Commission. The disclosure requirements set forth in Section 1503 refer to, and are based on, the safety and health requirements applicable to mines under the Safety Act which is administered by the U.S. Labor Department’s Mine Safety and Health Administration, or MSHA. Under the Safety Act, MSHA is required to inspect surface mines at least twice a year and underground mines at least four times a year to determine whether there is compliance with health and safety standards or with any citation, order or decision issued under the Safety Act and whether an imminent danger exists. MSHA also conducts spot inspections and inspections pursuant to miners’ complaints.

     If violations of safety or health standards are found, MSHA inspectors will issue citations to the mine operators. Among other activities under the Safety Act, MSHA also assesses and collects civil monetary penalties for violations of mine safety and health standards.

     In addition, an independent adjudicative agency, the Federal Mine Safety and Health Review Commission, or FMSHRC, provides administrative trial and appellate review of legal disputes arising under the Safety Act. Most cases deal with civil penalties proposed by MSHA to be assessed against mine operators and address whether the alleged safety and health violations occurred, as well as the appropriateness of proposed penalties.

     During the quarter ended June 30, 2011, we received 15 citations alleging health and safety violations that could significantly and substantially contribute to the cause and effect of a mine safety or health hazard under the Safety Act. We have received proposed assessments from MHSA with respect to 11 of those citations. The total dollar value of proposed assessments from MSHA with respect to those citations was $6,604. We have resolved two of the proposed assessments through payments of penalties aggregating $200. The other thirteen proposed assessments aggregating $6,404 are being contested or otherwise remain outstanding. No assessment has yet been made with respect to 1 of the citations. Set forth below is information with respect to the gypsum mines with respect to which citations were received during the quarter ended June 30, 2011:

			Proposed		Outstanding
	Number of Citations		Assessments		Assessments as
Location of Mine/Quarry	4/1/11 - 6/30/11		4/1/11 to Date		of 6/30/11
Alabaster, Mich.		—	$	—	$	—
Fort Dodge, Iowa		—		—		—
Plaster City, Calif.		—		—		—
Shoals, Ind.		—		—		—
Sigurd, Utah		—		—		—
Southard, Okla.		7		1,479		1,479
Sperry, Iowa		6		4,925		4,925
Spruce Pine, N.C.		2		200		—
Sweetwater, Texas		—		—		—
Totals		15	$	6,604	$	6,404

     We did not receive any citations for unwarrantable failure to comply with health and safety standards under the Safety Act, any orders under the Safety Act regarding withdrawal from a mine as a result of failure to abate in a timely manner a health and safety violation for which a citation was issued or any imminent danger orders under the

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Safety Act during the quarter ended June 30, 2011. Also, there were no flagrant violations and no mining-related fatalities during the second quarter of 2011.

ITEM 6. EXHIBITS

4.1	Certificate of Correction of the Restated Certificate of Incorporation of USG Corporation*
4.2	Registration Rights Agreement, dated as of June 21, 2011, between USG Corporation and Evercore Trust Company, N.A. (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K dated June 24, 2011)
31.1	Rule 13a-14(a) Certifications of USG Corporation’s Chief Executive Officer *
31.2	Rule 13a-14(a) Certifications of USG Corporation’s Chief Financial Officer *
32.1	Section 1350 Certifications of USG Corporation’s Chief Executive Officer *
32.2	Section 1350 Certifications of USG Corporation’s Chief Financial Officer *
101	The following financial information from USG Corporation’s Quarterly Report on Form 10-Q for the three months and six months ended June 30, 2011, formatted in XBRL (Extensible Business Reporting Language): (1) the condensed consolidated statements of operations for the three months and six months ended June 30, 2011 and 2010, (2) the condensed consolidated balance sheets as of June 30, 2011 and December 31, 2010, (3) the condensed consolidated statements of cash flows for the six months ended June 30, 2011 and 2010 and (4) notes to the condensed consolidated financial statements. *

* Filed or furnished herewith

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SIGNATURES

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 thereunto duly authorized.

	USG CORPORATION
	By	/s/ James S. Metcalf  James S. Metcalf,
		President and Chief Executive Officer
	By	/s/ Richard H. Fleming  Richard H. Fleming,
		Executive Vice President and
		Chief Financial Officer
	By	/s/ William J. Kelley Jr.  William J. Kelley Jr.,
		Vice President and Controller
August 3, 2011

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EXHIBIT INDEX

Exhibit
Number	Exhibit
4.1	Certificate of Correction of the Restated Certificate of Incorporation of USG Corporation*
4.2	Registration Rights Agreement, dated as of June 21, 2011, between USG Corporation and Evercore Trust Company, N.A. (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K dated June 24, 2011)
31.1	Rule 13a-14(a) Certifications of USG Corporation’s Chief Executive Officer *
31.2	Rule 13a-14(a) Certifications of USG Corporation’s Chief Financial Officer *
32.1	Section 1350 Certifications of USG Corporation’s Chief Executive Officer *
32.2	Section 1350 Certifications of USG Corporation’s Chief Financial Officer *
101	The following financial information from USG Corporation’s Quarterly Report on Form 10-Q for the three months and six months ended June 30, 2011, formatted in XBRL (Extensible Business Reporting Language): (1) the condensed consolidated statements of operations for the three months and six months ended June 30, 2011 and 2010, (2) the condensed consolidated balance sheets as of June 30, 2011 and December 31, 2010, (3) the condensed consolidated statements of cash flows for the six months ended June 30, 2011 and 2010 and (4) notes to the condensed consolidated financial statements. *

* Filed or furnished herewith

EX-4.1

EXHIBIT 4.1

CERTIFICATE OF CORRECTION OF THE

RESTATED CERTIFICATE OF INCORPORATION OF

USG CORPORATION

     USG Corporation (the “Corporation”), a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, does hereby certify:

     1. The name of the Corporation is USG Corporation.

     2. That a Restated Certificate of Incorporation of the Corporation was filed with the Secretary of State of the State of Delaware (the “Secretary of State”) on June 19, 2006 (the “Restated Certificate of Incorporation”) and said Restated Certificate of Incorporation requires correction as permitted by subsection (f) of Section 103 of the General Corporation Law of the State of Delaware.

     3. The inaccuracy or defect of said Restated Certificate of Incorporation to be corrected is that it inadvertently omitted the Certificate of Designations of Junior Participating Stock, Series D, which was filed with the Secretary of State on March 30, 1998 and amended on January 31, 2006.

     4. The Restated Certificate of Incorporation is corrected by inserting the following as a new Section 2.1 immediately preceding Section 3 in Article FOURTH of the Restated Certificate of Incorporation:

“Section 2.1 Junior Participating Preferred Stock, Series D

     Pursuant to the authority granted to and vested in the board of directors in accordance with the provisions of the Certificate of Incorporation, the board of directors created a series of preferred stock designated as Junior Participating Preferred Stock, Series D (the “Series D Preferred Stock”) by filing a Certificate of Designations with the Secretary of State of the State of Delaware (the “Secretary of State”) on March 30, 1998. Further, the board of directors amended such Certificate of Designations by filing an Amendment No. 1 to the Certificate of Designations with the Secretary of State on January 31, 2006. The voting powers, preferences and relative, participating, optional and other special rights, and the qualifications, limitations or restrictions of the Series D Preferred Stock are set forth in Appendix A hereto and are incorporated herein by reference.”

     5. The Restated Certificate of Incorporation is further corrected by attaching Appendix A hereto as Appendix A to the Restated Certificate of Incorporation.

     6. All other provisions of the Restated Certificate of Incorporation remain unchanged.

     IN WITNESS WHEREOF, the Corporation has caused this Certificate of Correction to be executed as of the 20th day of June, 2011.

USG CORPORATION
By:	/s/ Richard H. Fleming
	Name:	Richard H. Fleming
	Title:	Executive Vice President and Chief Financial Officer

Appendix A

CERTIFICATE OF DESIGNATIONS

of

JUNIOR PARTICIPATING PREFERRED STOCK, SERIES D

of

USG CORPORATION

     Section 1. Designation and Amount.

The shares of such series shall be designated as “Junior Participating Preferred Stock, Series D” (the “Series D Preferred Stock”) and the number of shares constituting the Series D Preferred Stock shall be four million (4,000,000). Such number of shares may be increased or decreased by resolution of the Board of Directors; provided, that no decrease shall reduce the number of shares of Series D Preferred Stock to a number less than the number of shares then outstanding plus the number of shares reserved for issuance upon the exercise of outstanding options, rights or warrants or upon the conversion of any outstanding securities issued by the Corporation convertible into Series D Preferred Stock.

     Section 2. Dividends and Distributions.

(A) Subject to the rights of the holders of any shares of any series of Preferred Stock (or any similar stock) ranking prior and superior to the Series D Preferred Stock with respect to dividends, the holders of shares of Series D Preferred Stock, in preference to the holders of Common Stock, par value $0.10 per share (the “Common Stock”), of the Corporation, and of any other junior stock, shall be entitled to receive, when, as and if declared by the Board of Directors out of funds legally available for the purpose, quarterly dividends payable in cash on the first day of March, June, September and December in each year (each such date being referred to herein as a “Quarterly Dividend Payment Date”), commencing on the first Quarterly Dividend Payment Date after the first issuance of a share or fraction of a share of Series D Preferred Stock, in an amount per share (rounded to the nearest cent) equal to the greater of (a) $25 or (b) subject to the provision for adjustment hereinafter set forth, 100 times the aggregate per share amount of all cash dividends, and 100 times the aggregate per share amount (payable in kind) of all non-cash dividends or other distributions, other than a dividend payable in shares of Common Stock or a subdivision of the outstanding shares of Common

	Stock (by reclassification or otherwise), declared on the Common Stock since the immediately preceding Quarterly Dividend Payment Date or, with respect to the first Quarterly Dividend Payment Date, since the first issuance of any share or fraction of a share of Series D Preferred Stock. In the event the Corporation shall at any time declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock on or after April 15, 1998, then in each such case the amount to which holders of shares of Series D Preferred Stock were entitled immediately prior to such event under clause (b) of the preceding sentence shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.
(B)	The Corporation shall declare a dividend or distribution on the Series D Preferred Stock as provided in paragraph (A) of this Section immediately after it declares a dividend or distribution on the Common Stock (other than a dividend payable in shares of Common Stock); provided that, in the event no dividend or distribution shall have been declared on the Common Stock during the period between any Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date, a dividend of $25 per share on the Series D Preferred Stock shall nevertheless be payable on such subsequent Quarterly Dividend Payment Date.
(C)	Dividends shall begin to accrue and be cumulative on outstanding shares of Series D Preferred Stock from the Quarterly Dividend Payment Date next preceding the date of issue of such shares, unless the date of issue of such shares is prior to the record date for the first Quarterly Dividend Payment Date, in which case dividends on such shares shall begin to accrue from the date of issue of such shares, or unless the date of issue is a Quarterly Dividend Payment Date or is a date after the record date for the determination of holders of shares of Series D Preferred Stock entitled to receive a quarterly dividend and before such Quarterly Dividend Payment Date, in either of which events such dividends shall begin to accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends paid on the shares of Series D Preferred Stock in an amount less than the total amount of such dividends at the time accrued and payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding. The Board of Directors may fix a record date for the determination of holders of shares of Series D Preferred Stock entitled to receive payment of a dividend or distribution declared thereon, which record date shall be not more than 60 days prior to the date fixed for the payment thereof.

     Section 3. Voting Rights. The holders of shares of Series D Preferred Stock shall have the following voting rights:

(A)	Subject to the provision for adjustment hereinafter set forth, each share of Series D Preferred Stock shall entitle the holder thereof to 100 votes on all matters submitted to a vote of the stockholders of the Corporation. In the event the Corporation shall at any time declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock on or after April 15, 1998, then in each such case the number of votes per share to which holders of shares of Series D Preferred Stock were entitled immediately prior to such event shall be adjusted by multiplying such number by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.
(B)	Except as otherwise provided herein, in any other Certificate of Designations creating a series of Preferred Stock or any similar stock, or by law, the holders of shares of Series D Preferred Stock and the holders of shares of Common Stock and any other capital stock of the Corporation having general voting rights shall vote together as one class on all matters submitted to a vote of stockholders of the Corporation.
(C)	Except as set forth herein, or as otherwise provided by law, holders of Series D Preferred Stock shall have no special voting rights and their consent shall not be required (except to the extent they are entitled to vote with holders of Common Stock as set forth herein) for taking any corporate action.

     Section 4. Certain Restrictions.

(A) Whenever quarterly dividends or other dividends or distributions payable on the Series D Preferred Stock as provided in Section 2 are in arrears, thereafter and until all accrued and unpaid dividends and distributions, whether or not declared, on shares of Series D Preferred Stock outstanding shall have been paid in full, the Corporation shall not:

(i)

declare or pay dividends, or make any other distributions, on any shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series D Preferred Stock;

(ii)

declare or pay dividends, or make any other distributions, on any shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series D Preferred Stock, except dividends paid ratably on the Series D Preferred Stock and all such parity stock on which dividends are payable or in arrears in proportion to the total amounts to which the holders of all such shares are then entitled;

(iii)

redeem or purchase or otherwise acquire for consideration shares of any stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series D Preferred Stock, provided that the Corporation may at any time redeem, purchase or otherwise acquire shares of any such junior stock in exchange for shares of any stock of the Corporation ranking junior (either as to dividends or upon dissolution, liquidation or winding up) to the Series D Preferred Stock; or

(iv)

redeem or purchase or otherwise acquire for consideration any shares of Series D Preferred Stock, or any shares of stock ranking on a parity with the Series D Preferred Stock, except in accordance with a purchase offer made in writing or by publication (as determined by the Board of Directors) to all holders of such shares upon such terms as the Board of Directors, after consideration of the respective annual dividend rates and other relative rights and preferences of the respective Series and classes, shall determine in good faith will result in fair and equitable treatment among the respective series or classes.

(B) The Corporation shall not permit any subsidiary of the Corporation to purchase or otherwise acquire for consideration any shares of stock of the Corporation unless the Corporation could, under paragraph (A) of this Section 4, purchase or otherwise acquire such shares at such time and in such manner.

     Section 5. Reacquired Shares. Any shares of Series D Preferred Stock purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and canceled promptly after the acquisition thereof. All such shares shall upon their cancellation become authorized but unissued shares of Preferred Stock and may be reissued as part of a new series of Preferred Stock subject to the conditions and restrictions on issuance set forth herein, in the Certificate of Incorporation, or in any other Certificate of Designations creating a series of Preferred Stock or any similar stock or as otherwise required by law.

     Section 6. Liquidation, Dissolution or Winding Up. Upon any liquidation, dissolution or winding up of the Corporation, no distribution shall be made (1) to the holders of shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series D Preferred Stock unless, prior thereto, the holders of shares of Series D Preferred Stock shall have received $100 per share, plus an amount equal to accrued and unpaid dividends and distributions thereon, whether or not declared, to the date of such payment, provided that the holders of shares of Series D Preferred Stock shall be entitled to receive an aggregate amount per share, subject to the provision for adjustment hereinafter set forth, equal to 100 times the aggregate amount to be distributed per share to holders of shares of Common Stock, or (2) to the holders of shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series D Preferred Stock, except distributions made ratably on the Series D Preferred Stock and all such parity stock in proportion to the total amounts to which the holders of all such shares are entitled upon such liquidation, dissolution or winding up. In the event the Corporation shall at any time declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a

dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock on or after April 15, 1998, then in each such case the aggregate amount to which holders of shares of Series D Preferred Stock were entitled immediately prior to such event under the proviso in clause (1) of the preceding sentence shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

     Section 7. Consolidation, Merger, etc. In case the Corporation shall enter into any consolidation, merger, combination or other transaction in which the shares of Common Stock are exchanged for or changed into other stock or securities, cash and/or any other property, then in any such case each share of Series D Preferred Stock shall at the same time be similarly exchanged or changed into an amount per share, subject to the provision for adjustment hereinafter set forth, equal to 100 times the aggregate amount of stock, securities, cash and/or any other property (payable in kind), as the case may be, into which or for which each share of Common Stock is changed or exchanged. In the event the Corporation shall at any time declare or pay any dividend on the Common Stock payable in shares of Common Stock, or effect a subdivision or combination or consolidation of the outstanding shares of Common Stock (by reclassification or otherwise than by payment of a dividend in shares of Common Stock) into a greater or lesser number of shares of Common Stock, then in each such case the amount set forth in the preceding sentence with respect to the exchange or change of shares of Series D Preferred Stock shall be adjusted by multiplying such amount by a fraction, the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event.

     Section 8. No Redemption. The shares of Series D Preferred Stock shall not be redeemable.

     Section 9. Rank. The Series D Preferred Stock shall rank, with respect to the payment of dividends and the distribution of assets, junior to all series of any other class of the Corporation’s Preferred Stock.

     Section 10. Amendment. The Restated Certificate of Incorporation, as amended, of the Corporation shall not be amended in any manner which would materially alter or change the powers, preferences or special rights of the Series D Preferred Stock so as to affect them adversely without the affirmative vote of the holders of at least two-thirds of the outstanding shares of Series D Preferred Stock, voting together as a single class.

EX-31.1

EXHIBIT 31.1
CERTIFICATIONS

I, James S. Metcalf, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of USG Corporation (the “Corporation”);
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Corporation as of, and for, the periods presented in this report;
4.	The Corporation’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act rules 13a-15(f) and 15(d)-15(f)) for the Corporation and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Corporation, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the Corporation’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the Corporation’s internal control over financial reporting that occurred during the Corporation’s most recent fiscal quarter (the Corporation’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Corporation’s internal control over financial reporting; and

5. The Corporation’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Corporation’s auditors and the audit committee of the Corporation’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Corporation’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the Corporation’s internal control over financial reporting.

August 3, 2011	/s/ James S. Metcalf  James S. Metcalf
	President and Chief Executive Officer

EX-31.2

EXHIBIT 31.2
CERTIFICATIONS

I, Richard H. Fleming, certify that:

1. I have reviewed this quarterly report on Form 10-Q of USG Corporation (the “Corporation”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Corporation as of, and for, the periods presented in this report;

4. The Corporation’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act rules 13a-15(f) and 15(d)-15(f)) for the Corporation and have:

(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Corporation, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)	Evaluated the effectiveness of the Corporation’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)	Disclosed in this report any change in the Corporation’s internal control over financial reporting that occurred during the Corporation’s most recent fiscal quarter (the Corporation’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Corporation’s internal control over financial reporting; and

5. The Corporation’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Corporation’s auditors and the audit committee of the Corporation’s board of directors (or persons performing the equivalent functions):

(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Corporation’s ability to record, process, summarize and report financial information; and
(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the Corporation’s internal control over financial reporting.

August 3, 2011	/s/ Richard H. Fleming Richard H. Fleming
	Executive Vice President and Chief Financial Officer

EX-32.1

EXHIBIT 32.1
SECTION 1350 CERTIFICATIONS

In connection with the Quarterly Report of USG Corporation (the “Corporation”) on Form 10-Q, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, James S. Metcalf, President and Chief Executive Officer of the Corporation, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.

August 3, 2011	/s/ James S. Metcalf James S. Metcalf
	President and Chief Executive Officer

EX-32.2

EXHIBIT 32.2
SECTION 1350 CERTIFICATIONS

In connection with the Quarterly Report of USG Corporation (the “Corporation”) on Form 10-Q, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Richard H. Fleming, Executive Vice President and Chief Financial Officer of the Corporation, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Corporation.

August 3, 2011	/s/ Richard H. Fleming Richard H. Fleming
	Executive Vice President and Chief Financial Officer

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Comprehensive Income (Loss) (Details) (USD $) In Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010	Dec. 31, 2010
Components of comprehensive income (loss)
Net loss	$ (70)	$ (74)	$ (175)	$ (184)
Derivatives, net of tax	5	7	8	(1)
Pension and postretirement benefit plans, net of tax	9	9	6	(8)
Foreign currency translation, net of tax	6	(26)	23	(13)
Total comprehensive (loss)	(50)	(84)	(138)	(206)
AOCI
Unrecognized loss on pension and postretirement benefit plans, net of tax	(100)		(100)		(106)
Gain (loss) on derivatives, net of tax	16		16		8
Foreign currency translation, net of tax	71		71		48
Total	(13)		(13)		(50)
Comprehensive Income (Loss) (Textuals)
After-tax loss on derivatives reclassified from AOCI to earnings	5
Estimated amount of after-tax loss on derivatives from AOCI to be reclassified to earnings within the next 12 months			$ 14

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Condensed Consolidated Balance Sheets (USD $) In Millions	Jun. 30, 2011	Dec. 31, 2010
Current Assets:
Cash and cash equivalents	$ 402	$ 629
Short-term marketable securities	158	128
Restricted cash	2	4
Receivables (net of reserves - $18 and $17)	380	327
Inventories	313	290
Income taxes receivable	2	3
Deferred income taxes	6	6
Other current assets	56	50
Total current assets	1,319	1,437
Long-term marketable securities	165	150
Property, plant and equipment (net of accumulated depreciation and depletion - $1,619 and $1,546	2,221	2,266
Other assets	244	234
Total assets	3,949	4,087
Current Liabilities:
Accounts payable	234	218
Accrued expenses	278	294
Current portion of long term debt	7	7
Income taxes payable	5	10
Total current liabilities	524	529
Long-term debt	2,299	2,301
Deferred income taxes	8	7
Other liabilities	591	631
Commitments and contingencies
Stockholders' Equity:
Preferred stock	0	0
Common stock	10	10
Treasury stock	0	(55)
Capital received in excess of par value	2,556	2,565
Accumulated other comprehensive loss	(13)	(50)
Retained earnings (deficit)	(2,026)	(1,851)
Total stockholders' equity	527	619
Total liabilities and stockholders' equity	$ 3,949	$ 4,087

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Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) (USD $) In Millions	Jun. 30, 2011	Dec. 31, 2010
Current Assets:
Reserves on receivables	$ 18	$ 17
Accumulated depreciation and depletion on property, plant and equipment	$ 1,619	$ 1,546

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Restructuring and Long-Lived Asset Impairment Charges (Tables)

6 Months Ended

Jun. 30, 2011

Restructuring and Long-Lived Asset Impairment Charges [Abstract]

Restructuring Reserves

	Balance		2011 Activity								Balance
	as of				Cash			Asset			as of
(millions)	12/31/10		Charges		Payments			Impairment			6/30/11
Severance	$	11	$	4	$	(11	)	$	—		$	4
Lease obligations		29		2		(8	)		—			23
Asset impairments		—		1		—			(1	)		—
Other exit costs		9		4		(5	)		—			8
Total	$	49	$	11	$	(24	)	$	(1	)	$	35

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Document and Entity Information (USD $)	6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010
Document and Entity Information [Abstract]
Entity Registrant Name	USG CORP
Entity Central Index Key	0000757011
Document Type	10-Q
Document Period End Date	Jun. 30, 2011
Amendment Flag	false
Document Fiscal Year Focus	2011
Document Fiscal Period Focus	Q2
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Public Float		$ 1,236,646,720
Entity Common Stock, Shares Outstanding	105,290,743

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Supplemental Balance Sheet Information (Details) (USD $) In Millions	6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Dec. 31, 2010
Total inventories
Finished goods and work in progress	$ 250		$ 227
Raw materials	63		63
Total	313		290
Changes in the liability for asset retirement obligations
Balance as of January 1	103	101
Accretion expense	2	2
Foreign Currency Translation	1	0
Balance as of June 30	106	103
Supplemental Balance Sheet Information (Textuals)
Net property, plant and equipment included in other current assets classified as assets held for sale	$ 8		$ 7

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Marketable Securities (Tables)

6 Months Ended

Jun. 30, 2011

Marketable Securities [Abstract]

Investments in marketable securities

	Amortized		Fair
(millions)	Cost		Value
Corporate debt securities	$	167	$	167
U.S. government and agency debt securities		63		63
Asset-backed debt securities		18		18
Certificates of deposit		49		49
Municipal debt securities		26		26
Total marketable securities	$	323	$	323

Contractual maturities of marketable securities

	Amortized		Fair
(millions)	Cost		Value
Due in 1 year or less	$	158	$	158
Due in 1-5 years		165		165
Due in more than 5 years		—		—
Total marketable securities	$	323	$	323

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Share-Based Compensation (Details) (USD $)	6 Months Ended					3 Months Ended
	Jun. 30, 2011 Stock Options [Member]	Jun. 30, 2011 Restricted Stock Units [Member]	Jun. 30, 2011 Performance Based Restricted Stock Units [Member]	Jun. 30, 2011 Additional Restricted Stock Units [Member]	Jun. 30, 2011 Performance Shares [Member]	Jun. 30, 2011 Long Term Incentive Plan [Member]
Share-Based Compensation (Textuals)
Forfeitures						$ 718,000
Stock options granted	662,032
Vesting period	four equal annual installments beginning one year from the date of grant, although they may become exercisable earlier in the event of death, disability, retirement or a change in control	four equal annual installments beginning one year from the date of grant			after a three-year period based on our total stockholder return relative to the performance of the Dow Jones U.S. Construction and Materials Index, with adjustments to that index in certain circumstances, for the three-year period
Expiration period for stock options	10 years
Range for number of performance shares earned					0 to 200%
Fair value of stock option granted	$ 10.60
Share Based Compensation Arrangement By Share Based Payment Award Fair Value Assumptions Expected Volatility Calculation	50% weighting of our historical volatilities and 50% weighting of our implied volatilities
Expected volatility	55.88%				77.84%
Risk-free rate	2.85%				1.20%
Expected term (in years)	6.25				2.89
Expected dividends	$ 0				$ 0
Shares granted		444,901	35,000	35,000	227,539
Average fair value of shares granted		$ 18.99			$ 28.40

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Intangible Assets

6 Months Ended

Jun. 30, 2011

Intangible Assets [Abstract]

Intangible assets

7. Intangible Assets

Intangible assets are included in other assets on the condensed consolidated balance sheets. Intangible assets with definite lives are amortized. These assets are summarized as follows:

	As of June 30, 2011							As of December 31, 2010
	Gross							Gross
	Carrying		Accumulated					Carrying		Accumulated
(millions)	Amount		Amortization			Net		Amount		Amortization			Net
Intangible Assets with Definite Lives:
Customer relationships	$	70	$	(30	)	$	40	$	70	$	(26	)	$	44
Other		9		(5	)		4		9		(5	)		4
Total	$	79	$	(35	)	$	44	$	79	$	(31	)	$	48

     Total amortization expense was $2 million and $4 million for second quarter and first six months of 2011, respectively, and $2 million and $4 million for second quarter and first six months of 2010, respectively. Estimated annual amortization expense is as follows:

(millions)	2011		2012		2013		2014		2015		2016
Estimated annual amortization expense	$	8	$	8	$	7	$	7	$	7	$	7

     Intangible assets with indefinite lives are not amortized. These assets are summarized as follows:

	As of June 30, 2011						As of December 31, 2010
	Gross						Gross
	Carrying		Impairment				Carrying		Impairment
(millions)	Amount		Charges		Net		Amount		Charges			Net
Intangible Assets with Indefinite Lives:
Trade names	$	22	$	—	$	22	$	22	$	—		$	22
Other		8		—		8		9		(1	)		8
Total	$	30	$	—	$	30	$	31	$	(1	)	$	30

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Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2011

Intangible Assets [Abstract]

Intangible Assets with definite lives

	As of June 30, 2011							As of December 31, 2010
	Gross							Gross
	Carrying		Accumulated					Carrying		Accumulated
(millions)	Amount		Amortization			Net		Amount		Amortization			Net
Intangible Assets with Definite Lives:
Customer relationships	$	70	$	(30	)	$	40	$	70	$	(26	)	$	44
Other		9		(5	)		4		9		(5	)		4
Total	$	79	$	(35	)	$	44	$	79	$	(31	)	$	48

Estimated annual amortization expense intangible assets

(millions)	2011		2012		2013		2014		2015		2016
Estimated annual amortization expense	$	8	$	8	$	7	$	7	$	7	$	7

Intangible Assets with Indefinite Lives

	As of June 30, 2011						As of December 31, 2010
	Gross						Gross
	Carrying		Impairment				Carrying		Impairment
(millions)	Amount		Charges		Net		Amount		Charges			Net
Intangible Assets with Indefinite Lives:
Trade names	$	22	$	—	$	22	$	22	$	—		$	22
Other		8		—		8		9		(1	)		8
Total	$	30	$	—	$	30	$	31	$	(1	)	$	30

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Derivative Instruments (Details 1) (USD $) In Millions	Jun. 30, 2011	Dec. 31, 2010
Fair values of derivative instruments on the condensed consolidated balance sheets
Derivative Assets	$ 3	$ 1
Derivative liabilities	20	25
Commodity contracts [Member] | Other assets [Member] | Designated as Hedging Instrument [Member]
Fair values of derivative instruments on the condensed consolidated balance sheets
Derivative Assets	0	0
Commodity contracts [Member] | Other assets [Member] | Not Designated as Hedging Instrument [Member]
Fair values of derivative instruments on the condensed consolidated balance sheets
Derivative Assets	1	0
Commodity contracts [Member] | Other liabilities [Member] | Designated as Hedging Instrument [Member]
Fair values of derivative instruments on the condensed consolidated balance sheets
Derivative liabilities	3	5
Commodity contracts [Member] | Other liabilities [Member] | Not Designated as Hedging Instrument [Member]
Fair values of derivative instruments on the condensed consolidated balance sheets
Derivative liabilities	0	0
Commodity contracts [Member] | Other current assets [Member] | Designated as Hedging Instrument [Member]
Fair values of derivative instruments on the condensed consolidated balance sheets
Derivative Assets	1	0
Commodity contracts [Member] | Other current assets [Member] | Not Designated as Hedging Instrument [Member]
Fair values of derivative instruments on the condensed consolidated balance sheets
Derivative Assets	1	1
Commodity contracts [Member] | Accrued expenses [Member] | Designated as Hedging Instrument [Member]
Fair values of derivative instruments on the condensed consolidated balance sheets
Derivative liabilities	11	16
Commodity contracts [Member] | Accrued expenses [Member] | Not Designated as Hedging Instrument [Member]
Fair values of derivative instruments on the condensed consolidated balance sheets
Derivative liabilities	0	0
Foreign exchange contracts [Member] | Other assets [Member] | Designated as Hedging Instrument [Member]
Fair values of derivative instruments on the condensed consolidated balance sheets
Derivative Assets	0	0
Foreign exchange contracts [Member] | Other liabilities [Member] | Designated as Hedging Instrument [Member]
Fair values of derivative instruments on the condensed consolidated balance sheets
Derivative liabilities	0	1
Foreign exchange contracts [Member] | Other current assets [Member] | Designated as Hedging Instrument [Member]
Fair values of derivative instruments on the condensed consolidated balance sheets
Derivative Assets	0	0
Foreign exchange contracts [Member] | Other current assets [Member] | Not Designated as Hedging Instrument [Member]
Fair values of derivative instruments on the condensed consolidated balance sheets
Derivative Assets	0	0
Foreign exchange contracts [Member] | Accrued expenses [Member] | Designated as Hedging Instrument [Member]
Fair values of derivative instruments on the condensed consolidated balance sheets
Derivative liabilities	5	3
Foreign exchange contracts [Member] | Accrued expenses [Member] | Not Designated as Hedging Instrument [Member]
Fair values of derivative instruments on the condensed consolidated balance sheets
Derivative liabilities	1	0
Designated as Hedging Instrument [Member]
Fair values of derivative instruments on the condensed consolidated balance sheets
Derivative Assets	1	0
Derivative liabilities	19	25
Not Designated as Hedging Instrument [Member]
Fair values of derivative instruments on the condensed consolidated balance sheets
Derivative Assets	2	1
Derivative liabilities	$ 1	$ 0

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Marketable Securities (Details 1) (USD $) In Millions	6 Months Ended
	Jun. 30, 2011
Marketable Securities (Textuals)
Proceeds received from sales and maturities of marketable securities	$ 176
Contractual maturities of marketable securities
Due in 1 year or less, amortized cost	158
Due in 1 year or less, fair value	158
Due in 1-5 years, amortized cost	165
Due in 1-5 years, fair value	165
Due in more than 5 years, amortized cost	0
Due in more than 5 years fair Value	0
Marketable securities, amortized cost	323
Available For Sale Debt Securities Fair Value	$ 323

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Earnings (Loss) Per Share (Tables)

6 Months Ended

Jun. 30, 2011

Earnings (Loss) Per Share [Abstract]

Reconciliation of basic earnings (loss) per share to diluted earnings (loss) per share

						Weighted
						Average
	Net			Shares		Per-Share
(millions, except per-share and share data)	Loss			(000)		Amount
Three Months Ended June 30, 2011:
Basic loss	$	(70	)		103,551	$	(0.69	)
Diluted loss	$	(70	)		103,551	$	(0.69	)
Three Months Ended June 30, 2010:
Basic loss	$	(74	)		99,520	$	(0.74	)
Diluted loss	$	(74	)		99,520	$	(0.74	)
Six Months Ended June 30, 2011:
Basic loss	$	(175	)		103,286	$	(1.70	)
Diluted loss	$	(175	)		103,286	$	(1.70	)
Six Months Ended June 30, 2010:
Basic loss	$	(184	)		99,452	$	(1.85	)
Diluted loss	$	(184	)		99,452	$	(1.85	)

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Share-Based Compensation

6 Months Ended

Jun. 30, 2011

Share-Based Compensation [Abstract]

Share-Based Compensation

12. Share-Based Compensation

During the first six months of 2011, we granted share-based compensation to eligible participants under our Long-Term Incentive Plan. We recognize expense on all share-based grants over the service period, which is the shorter of the period until the employees’ retirement eligibility dates or the service period of the award for awards expected to vest. Expense is generally reduced for estimated forfeitures. During the three months ended June 30, 2011, we recognized forfeitures of approximately $718,000.

STOCK OPTIONS

We granted stock options to purchase 662,032 shares of common stock during the first six months of 2011 with an exercise price equal to the closing price of our common stock on the date of grant. The stock options generally become exercisable in four equal annual installments beginning one year from the date of grant, although they may become exercisable earlier in the event of death, disability, retirement or a change in control. The stock options generally expire 10 years from the date of grant, or earlier in the event of death, disability or retirement.

     We estimated the fair value of each stock option granted to be $10.60 on the date of grant using a Black-Scholes option valuation model that uses the assumptions noted below. We based expected volatility on a 50% weighting of our historical volatilities and 50% weighting of our implied volatilities. The risk-free rate was based on zero coupon U.S. government issues at the time of grant. The expected term was developed using the simplified method, as permitted by the SEC because there is not sufficient historical stock option exercise experience available.

     The assumptions used in the valuation were as follows: expected volatility 55.88%, risk-free rate 2.85%, expected term (in years) 6.25 and expected dividends 0.

RESTRICTED STOCK UNITS

We granted RSUs with respect to 444,901 shares of common stock during the first six months of 2011 that generally vest in four equal annual installments beginning one year from the date of grant. During the first six months of 2011, we also granted RSUs with respect to 35,000 shares of common stock that will vest in four equal annual installments beginning one year from the date of grant as a special retention award and with respect to an additional 35,000 shares of common stock that will vest upon the satisfaction of a specified performance goal. Generally, RSUs may vest earlier in the case of death, disability, retirement or a change in control. Each RSU is settled in a share of our common stock after the vesting period. The fair value of each RSU granted is equal to the closing price of our common stock on the date of grant. Substantially all RSU’s granted during the first six months of 2011 had a fair value of $18.99.

PERFORMANCE SHARES

We granted 227,539 performance shares during the first six months of 2011. The performance shares generally vest after a three-year period based on our total stockholder return relative to the performance of the Dow Jones U.S. Construction and Materials Index, with adjustments to that index in certain circumstances, for the three-year period. The number of performance shares earned will vary from 0 to 200% of the number of performance shares awarded depending on that relative performance. Vesting will be pro-rated based on the number of full months employed during the performance period in the case of death, disability, retirement or a change-in-control, and pro-rated awards earned will be paid at the end of the three-year period. Each performance share earned will be settled in a share of our common stock.

     We estimated the fair value of each performance share granted to be $28.40 on the date of grant using a Monte Carlo simulation that uses the assumptions noted below. Expected volatility is based on implied volatility of our traded options and the daily historical volatilities of our peer group. The risk-free rate was based on zero coupon U.S. government issues at the time of grant. The expected term represents the period from the valuation date to the end of the performance period.

     The assumptions used in the valuation were as follows: expected volatility 77.84%, risk-free rate 1.20%, expected term (in years) 2.89 and expected dividends 0.

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Restructuring and Long-Lived Asset Impairment Charges

6 Months Ended

Jun. 30, 2011

Restructuring and Long-Lived Asset Impairment Charges [Abstract]

Restructuring and Long-Lived Asset Impairment Charges

3. Restructuring and Long-Lived Asset Impairment Charges

As a result of continuing adverse market conditions, we recorded restructuring and long-lived asset impairment charges totaling $2 million during the second quarter of 2011 and $11 million during the first six months of 2011.

     Restructuring and long-lived asset impairment charges for the second quarter of 2011 included $1 million for lease obligations and $1 million for exit costs related to production facilities closed in 2010 and 2009. These charges totaling $2 million related to North American Gypsum.

     Restructuring and long-lived asset impairment charges for the first six months of 2011 included $4 million for severance related to our salaried workforce reduction program announced during the fourth quarter of 2010 and a 2011 cost reduction initiative for L&W Supply Corporation, $2 million for lease obligations, $1 million for long-lived asset impairment related to an asset that was written down to its net realizable value and $4 million for exit costs related to production facilities closed in 2010 and 2009. On a segment basis, $9 million of the charges related to North American Gypsum, $1 million to Building Products Distribution and $1 million to Corporate.

RESTRUCTURING RESERVES

Restructuring reserves totaling $35 million were included in accrued expenses and other liabilities on the condensed consolidated balance sheet as of June 30, 2011. Total cash payments charged against the restructuring reserve in the first six months of 2011 amounted to $24 million. We expect future payments to be approximately $11 million during the remainder of 2011, $9 million in 2012 and $15 million after 2012. All restructuring-related payments in the first six months of 2011 were funded with cash on hand. We expect that the future payments will be funded with cash from operations or cash on hand. The restructuring reserve is summarized as follows:

	Balance		2011 Activity								Balance
	as of				Cash			Asset			as of
(millions)	12/31/10		Charges		Payments			Impairment			6/30/11
Severance	$	11	$	4	$	(11	)	$	—		$	4
Lease obligations		29		2		(8	)		—			23
Asset impairments		—		1		—			(1	)		—
Other exit costs		9		4		(5	)		—			8
Total	$	49	$	11	$	(24	)	$	(1	)	$	35

2010

Second quarter 2010 restructuring and long-lived asset impairment charges totaled $7 million and related to the curtailment of operations at a mining facility in Canada, the closure of one distribution center, the closure of an office and warehouse in Europe and continuing charges and adjustments related to prior-period restructuring initiatives. The charges included $4 million for severance, $1 million for asset impairments and lease obligations and $2 million for other exit costs.

     For the first six months of 2010, restructuring and long-lived asset impairment charges were $19 million. This amount primarily included charges related to the closure of five distribution centers and a gypsum wallboard production facility in Southard, Okla., the temporary idling of a gypsum wallboard production facility in Stony Point, N.Y., and the curtailment of operations at the mining facility in Canada. The charges included $9 million for severance, $6 million for asset impairments and lease obligations and $4 million for other exit costs.

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Segments (Details) (USD $) In Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Net Sales:
Net Sales	$ 761	$ 769	$ 1,482	$ 1,485
Operating Profit (Loss):
Operating loss	(21)	(25)	(79)	(107)
Restructuring and long-lived asset impairment charges by segment
Restructuring and long-lived asset impairment charges	2	7	11	19
North American Gypsum Member
Net Sales:
Net Sales	420	428	836	852
Operating Profit (Loss):
Operating loss	(16)	(11)	(45)	(46)
Restructuring and long-lived asset impairment charges by segment
Restructuring and long-lived asset impairment charges	2	6	9	10
Building Products Distribution Member
Net Sales:
Net Sales	270	282	513	530
Operating Profit (Loss):
Operating loss	(14)	(22)	(36)	(61)
Restructuring and long-lived asset impairment charges by segment
Restructuring and long-lived asset impairment charges		1	1	9
Worldwide Ceilings [Member]
Net Sales:
Net Sales	173	172	350	337
Operating Profit (Loss):
Operating loss	22	23	48	41
Corporate [Member]
Operating Profit (Loss):
Operating loss	(15)	(14)	(44)	(37)
Restructuring and long-lived asset impairment charges by segment
Restructuring and long-lived asset impairment charges			1
Eliminations [Member]
Net Sales:
Net Sales	(102)	(113)	(217)	(234)
Segment Reporting Information Intersegment Profit Loss	$ 2	$ (1)	$ (2)	$ (4)

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Derivative Instruments

6 Months Ended

Jun. 30, 2011

Derivative Instruments [Abstract]

Derivative Instruments

9. Derivative Instruments

We use derivative instruments to manage selected commodity price and foreign currency exposures as described below. We do not use derivative instruments for speculative trading purposes, and we typically do not hedge beyond five years. Cash flows from derivative instruments are included in net cash used for operating activities in the condensed consolidated statements of cash flows.

COMMODITY DERIVATIVE INSTRUMENTS

As of June 30, 2011, we had swap and option contracts to hedge $55 million notional amounts of natural gas. All of these contracts mature by December 31, 2012. For contracts designated as cash flow hedges, the unrealized loss that remained in AOCI as of June 30, 2011 was $13 million. AOCI also included $1 million of losses related to closed derivative contracts hedging underlying transactions that have not yet affected earnings. No ineffectiveness was recorded on contracts designated as cash flow hedges in the first six months of 2011. Gains and losses on contracts designated as cash flow hedges are reclassified into earnings when the underlying forecasted transactions affect earnings. For contracts designated as cash flow hedges, we reassess the probability of the underlying forecasted transactions occurring on a regular basis. Changes in fair value on contracts not designated as cash flow hedges are recorded to earnings. The fair value of those contracts not designated as cash flow hedges was $2 million as of June 30, 2011.

FOREIGN EXCHANGE DERIVATIVE INSTRUMENTS

We have a foreign exchange forward contract in place to hedge changes in the value of an intercompany loan to a foreign subsidiary due to changes in foreign exchange rates. The notional amount of this contract was $8 million as of June 30, 2011, and it matures by August 26, 2011. We do not apply hedge accounting for this hedge contract and all changes in its fair value are recorded to earnings. As of June 30, 2011, the fair value of this contract was an unrealized loss of $1 million.

     We have foreign exchange forward contracts to hedge purchases of products and services denominated in non-functional currencies. The notional amount of these contracts was $59 million as of June 30, 2011, and they mature by March 28, 2012. These forward contracts are designated as cash flow hedges and no ineffectiveness was recorded in the first six months of 2011. Gains and losses on the contracts are reclassified into earnings when the underlying transactions affect earnings. The fair value of these contracts that remained in AOCI was a $5 million unrealized loss as of June 30, 2011.

COUNTERPARTY RISK

We are exposed to credit losses in the event of nonperformance by the counterparties to our derivative instruments. All of our counterparties have investment grade credit ratings; accordingly, we anticipate that they will be able to fully satisfy their obligations under the contracts. Additionally, the derivatives are governed by master netting agreements negotiated between us and the counterparties that reduce our counterparty credit exposure. The agreements outline the conditions (such as credit ratings and net derivative fair values) upon which we, or the counterparties, are required to post collateral. As of June 30, 2011, our derivatives were in a net liability position of $17 million, and we provided $14 million of collateral to our counterparties related to our derivatives. If full collateralization of these agreements were to be required, an additional $4 million of collateral would be provided. We have not adopted an accounting policy to offset fair value amounts related to derivative contracts under our master netting arrangements. Amounts paid as cash collateral are included in receivables on our condensed consolidated balance sheets.

FINANCIAL STATEMENT INFORMATION

The following are the pretax effects of derivative instruments on the condensed consolidated statements of operations for the three months ended June 30, 2011 and 2010 (dollars in millions):

	Amount of Gain or (Loss)
	Recognized in					Location of Gain or (Loss)	Amount of Gain or (Loss)
Derivatives in	Other Comprehensive					Reclassified from	Reclassified from
Cash Flow Hedging	Income on Derivatives					AOCI into Income	AOCI into Income
Relationships	(Effective Portion)					(Effective Portion)	(Effective Portion)
	2011			2010			2011			2010
Commodity contracts	$	(1	)	$	—	Cost of products sold	$	(4	)	$	(5	)
Foreign exchange contracts		(1	)		2	Cost of products sold		(2	)		—
Total	$	(2	)	$	2		$	(6	)	$	(5	)

Derivatives Not	Location of Gain or (Loss)	Amount of Gain or (Loss)
Designated as Hedging	Recognized in Income	Recognized in Income
Instruments	on Derivatives	on Derivatives
		2011			2010
Commodity contracts	Cost of products sold	$	(1	)	$	—
Foreign exchange contracts	Other expense (income), net		—			(1	)
Total		$	(1	)	$	(1	)

     The following are the pretax effects of derivative instruments on the condensed consolidated statement of operations for the six months ended June 30, 2011 and 2010 (dollars in millions):

	Amount of Gain or (Loss)
	Recognized in						Location of Gain or (Loss)	Amount of Gain or (Loss)
Derivatives in	Other Comprehensive						Reclassified from	Reclassified from
Cash Flow Hedging	Income on Derivatives						AOCI into Income	AOCI into Income
Relationships	(Effective Portion)						(Effective Portion)	(Effective Portion)
	2011			2010				2011			2010
Commodity contracts	$	(1	)	$	(12	)	Cost of products sold	$	(9	)	$	(10	)
Foreign exchange contracts		(4	)		1		Cost of products sold		(2	)		—
Total	$	(5	)	$	(11	)		$	(11	)	$	(10	)

Derivatives Not	Location of Gain or (Loss)	Amount of Gain or (Loss)
Designated as Hedging	Recognized in Income	Recognized in Income
Instruments	on Derivatives	on Derivatives
		2011			2010
Commodity contracts	Cost of products sold	$	(1	)	$	(1	)
Foreign exchange contracts	Other expense (income), net		(1	)		(2	)
Total		$	(2	)	$	(3	)

     As of June 30, 2011, we had no derivatives designated as net investment or fair value hedges.

     The following are the fair values of derivative instruments on the condensed consolidated balance sheets as of June 30, 2011 and December 31, 2010 (dollars in millions):

Derivatives	Assets				Liabilities
Designated as Hedging	Balance Sheet				Balance Sheet
Instruments	Location	Fair Value			Location	Fair Value
		6/30/11		12/31/10		6/30/11		12/31/10
Commodity contracts	Other current assets	$	1	$—	Accrued expenses	$	11	$	16
Commodity contracts	Other assets		—	—	Other liabilities		3		5
Foreign exchange contracts	Other current assets		—	—	Accrued expenses		5		3
Foreign exchange contracts	Other assets		—	—	Other liabilities		—		1
Total		$	1	$—		$	19	$	25

Derivatives Not	Assets					Liabilities
Designated as Hedging	Balance Sheet					Balance Sheet
Instruments	Location	Fair Value				Location	Fair Value
		6/30/11		12/31/10			6/30/11		12/31/10
Commodity contracts	Other current assets	$	1	$	1	Accrued expenses	$	—	$	—
Commodity contracts	Other assets		1		—	Other liabilities		—		—
Foreign exchange contracts	Other current assets		—		—	Accrued expenses		1		—
Total		$	2	$	1		$	1	$	—
Total derivatives		$	3	$	1		$	20	$	25

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Income Taxes

6 Months Ended

Jun. 30, 2011

Income Taxes [Abstract]

Income Taxes

14. Income Taxes

We had an income tax expense of $1 million and an effective tax rate of 1.6% in the second quarter of 2011.

     Accounting rules require a reduction of the carrying amounts of deferred tax assets by a valuation allowance if, based on the available evidence, it is more likely than not that such assets will not be realized. The need to establish valuation allowances for deferred tax assets is assessed periodically. In assessing the requirement for, and amount of, a valuation allowance in accordance with the more-likely-than-not standard, we give appropriate consideration to all positive and negative evidence related to the realization of the deferred tax assets. Under the accounting rules, this assessment considers, among other matters, the nature, frequency and severity of current and cumulative losses, forecasts of future profitability, the duration of statutory carryforward periods, our experience with operating loss and tax credit carryforwards not expiring unused and tax planning alternatives. A history of cumulative losses for a certain threshold period is a significant form of negative evidence used in the assessment, and the accounting rules require that we have a policy regarding the duration of the threshold period. If a cumulative loss threshold is met, forecasts of future profitability may not be used as positive evidence related to the realization of the deferred tax assets in the assessment. Consistent with practices in the home building and related industries, we have a policy of four years as our threshold period for cumulative losses.

     As of June 30, 2011, we had federal net operating loss, or NOL, carryforwards of approximately $1.7 billion that are available to offset future federal taxable income and will expire in the years 2026 through 2031. In addition, as of that date, we had federal alternative minimum tax credit carryforwards of approximately $52 million that are available to reduce future regular federal income taxes over an indefinite period. In order to fully realize these U.S. federal net deferred tax assets, taxable income of approximately $1.8 billion would need to be generated during the period before their expiration. In addition, we have federal foreign tax credit carryforwards of $5 million that will expire in 2015.

     As of June 30, 2011, we had a gross deferred tax asset related to our state NOLs and tax credit carryforwards of $282 million, of which $11 million will expire in 2011. The remainder will expire if unused in years 2012 through 2031. To the extent that we do not generate sufficient state taxable income within the statutory carryforward periods to utilize the NOL and tax credit carryforwards in these states, they will expire unused.

     We also had NOL and tax credit carryforwards in various foreign jurisdictions in the amount of $5 million as of June 30, 2011 against a portion of which we have historically maintained a valuation allowance.

     During periods prior to 2011, we established a valuation allowance against our deferred tax assets totaling $884 million. Based upon an evaluation of all available evidence and our losses for the first and second quarters of 2011, we recorded increases in the valuation allowance against our deferred tax assets of $54 million in the first quarter and $26 million in the second quarter. Our cumulative loss position over the last four years was significant evidence supporting the recording of the additional valuation allowance. In addition to being impacted by the $80 million increase due to the first and second quarter losses, the valuation allowance was also impacted by other discrete adjustments that increased the valuation allowance by $16 million. As a result, the net increase in the valuation allowance was $96 million, increasing our deferred tax assets valuation allowance to $980 million as of June 30, 2011. In future periods, the valuation allowance can be reversed based on sufficient evidence indicating that it is more likely than not that a portion of our deferred tax assets will be realized.

     The Internal Revenue Code imposes limitations on a corporation’s ability to utilize NOLs if it experiences an “ownership change.” In general terms, an ownership change may result from transactions increasing the ownership of certain stockholders in the stock of a corporation by more than 50 percentage points over a three-year period. If we were to experience an ownership change, utilization of our NOLs would be subject to an annual limitation determined by multiplying the market value of our outstanding shares of stock at the time of the ownership change by the applicable long-term tax-exempt rate, which was 4.17% for June 2011. Any unused annual limitation may be carried over to later years within the allowed NOL carryforward period. The amount of the limitation may, under certain circumstances, be increased or decreased by built-in gains or losses held by us at the time of the change that are recognized in the five-year period after the change. Many states have similar limitations. If an ownership change had occurred as of June 30, 2011, our annual U.S. federal NOL utilization would have been limited to approximately $62 million per year.

     We classify interest expense and penalties related to unrecognized tax benefits and interest income on tax overpayments as components of income taxes (benefit). As of June 30, 2011, the total amount of interest expense and penalties recognized on our condensed consolidated balance sheet was $4 million. The total amount of interest and penalties recognized in our condensed consolidated statements of operations was zero for the second quarter of 2011 and an expense of $1 million for the second quarter of 2010. We recognized a $6 million tax benefit in the first quarter of 2011 due to the reversal of reserves for uncertain tax positions that were resolved during the period.

     Our federal income tax returns for 2008 and prior years have been examined by the Internal Revenue Service, or IRS. The U.S. federal statute of limitations remains open for the year 2004 and later years. We are under examination in various U.S. state and foreign jurisdictions. It is possible that these examinations may be resolved within the next 12 months. Due to the potential for resolution of the examinations and the expiration of various statutes of limitation, it is reasonably possible that our gross unrecognized tax benefit may change within the next 12 months by a range of $5 million to $10 million. Foreign and U.S. state jurisdictions have statutes of limitations generally ranging from three to five years.

     Under current accounting rules, we are required to consider all items (including items recorded in other comprehensive income) in determining the amount of tax benefit that results from a loss from continuing operations and that should be allocated to continuing operations. As a result, during the second quarter of 2011, we recorded a $3 million noncash income tax benefit on the loss from continuing operations. This benefit was offset by income tax expense on comprehensive income. However, while the income tax benefit from continuing operations is reported on the condensed consolidated statement of operations, the income tax expense on comprehensive income is recorded directly to AOCI, which is a component of stockholders’ equity. Because the income tax expense on comprehensive income is equal to the income tax benefit from continuing operations, our deferred tax position was not impacted by this tax allocation. A similar noncash income tax benefit of $19 million was recorded during the first quarter of 2010 relating to the fourth quarter of 2009.

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Fair Value Measurements

6 Months Ended

Jun. 30, 2011

Fair Value Measurements [Abstract]

Fair Value Measurements

10. Fair Value Measurements

Certain assets and liabilities are required to be recorded at fair value. There are three levels of inputs that may be used to measure fair value. Level 1 is defined as quoted prices for identical assets and liabilities in active markets. Level 2 is defined as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. Level 3 is defined as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. Certain assets and liabilities are measured at fair value on a nonrecurring basis rather than on an ongoing basis, such as when there is evidence of impairment or when a new liability is being established that requires fair value measurement.

     The cash equivalents shown in the table below primarily consist of money market funds that are valued based on quoted prices in active markets and as a result are classified as Level 1. We use quoted prices, other readily observable market data and internally developed valuation models when valuing our derivatives and marketable securities and have classified them as Level 2. Derivatives are valued using the income approach including discounted-cash-flow models or a Black-Scholes option pricing model and readily observable market data. The inputs for the valuation models are obtained from data providers and include end-of-period spot and forward natural gas prices and foreign currency exchange rates, natural gas price volatility and LIBOR and swap rates for discounting the cash flows implied from the derivative contracts. Marketable securities are valued using income and market value approaches and values are based on quoted prices or other observable market inputs received from data providers. The valuation process may include pricing matrices, or prices based upon yields, credit spreads or prices of securities of comparable quality, coupon, maturity and type. Our assets and liabilities measured at fair value on a recurring basis were as follows:

	Quoted Prices
	in Active		Significant
	Markets for		Other			Significant
	Identical		Observable			Unobservable
	Assets		Inputs			Inputs
(millions)	(Level 1)		(Level 2)			(Level 3)		Total
As of June 30, 2011:
Cash equivalents	$	172	$	25		$	—	$	197
Marketable securities:
Corporate debt securities		—		167			—		167
U.S. government and agency debt securities		—		63			—		63
Asset-backed debt securities		—		18			—		18
Certificates of deposit		—		49			—		49
Municipal debt securities		—		26			—		26
Derivative assets		—		3			—		3
Derivative liabilities		—		(20	)		—		(20	)
As of December 31, 2010:
Cash equivalents	$	357	$	59		$	—	$	416
Marketable securities:
Corporate debt securities		—		123			—		123
U.S. government and agency debt securities		—		58			—		58
Asset-backed debt securities		—		19			—		19
Non-U.S. government debt securities		—		10			—		10
Certificates of deposit		—		41			—		41
Municipal debt securities		—		27			—		27
Derivative assets		—		1			—		1
Derivative liabilities		—		(25	)		—		(25	)

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Supplemental Balance Sheet Information (Tables)

6 Months Ended

Jun. 30, 2011

Supplemental Balance Sheet Information [Abstract]

Total inventories

	As of		As of
	June 30,		December 31,
(millions)	2011		2010
Finished goods and work in progress	$	250	$	227
Raw materials		63		63
Total	$	313	$	290

Changes in the liability for asset retirement obligations

	Six Months
	ended June 30,
(millions)	2011		2010
Balance as of January 1	$	103	$	101
Accretion expense		2		2
Foreign currency translation		1		—
Balance as of June 30	$	106	$	103

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Debt

6 Months Ended

Jun. 30, 2011

Debt [Abstract]

Debt

8. Debt

Total debt, including the current portion of long-term debt, consisted of the following:

	As of		As of
	June 30,		December 31,
(millions)	2011		2010
6.3% senior notes due 2016	$	500	$	500
7.75% senior notes due 2018, net of discount		499		499
8.375% senior notes due 2018		350		350
9.75% senior notes due 2014, net of discount		296		296
10% convertible senior notes due 2018, net of discount		382		382
Ship mortgage facility (includes $7 million of current portion of long-term debt)		40		42
Industrial revenue bonds (due 2028 through 2034)		239		239
Total	$	2,306	$	2,308

CREDIT FACILITY

Our credit facility allows for revolving loans and letters of credit (up to $250 million) in an aggregate principal amount not to exceed the lesser of (a) $400 million or (b) a borrowing base determined by reference to the trade receivables and inventory of USG and its significant domestic subsidiaries. The maximum allowable borrowings may be increased at our request with the agreement of the lenders providing increased or new lending commitments, provided that the maximum allowable borrowings after giving effect to the increase may not exceed $600 million. The credit facility is guaranteed by our significant domestic subsidiaries and secured by their and USG’s trade receivables and inventory. It is available to fund working capital needs and for other general corporate purposes.

     Borrowings under the credit facility bear interest at a floating rate based on an alternate base rate or, at our option, at adjusted LIBOR plus 3.00%. We are also required to pay annual facility fees of 0.75% on the entire facility, whether drawn or undrawn, and fees on outstanding letters of credit. We have the ability to repay amounts outstanding under the credit agreement at any time without prepayment premium or penalty. The credit facility matures on December 21, 2015 unless terminated earlier in accordance with its terms, including if by May 2, 2014 our 9.75% senior notes due in 2014 are not repaid, their payment is not provided for or their maturity has not been extended until at least 2016 unless we then have liquidity of at least $500 million.

     The credit agreement contains a single financial covenant that would require us to maintain a minimum fixed charge coverage ratio of 1.1-to-1.0 if and for so long as the excess of the borrowing base over the outstanding borrowings under the credit agreement is less than the greater of (a) $40 million and (b) 15% of the lesser of (i) the aggregate revolving commitments at such time and (ii) the borrowing base at such time. As of June 30, 2011, our fixed charge coverage ratio was (0.19)-to-1. Because we do not currently satisfy the required fixed charge coverage ratio, we must maintain borrowing availability of at least $44 million under the credit facility. The credit agreement contains other covenants and events of default that are customary for similar agreements and may limit our ability to take various actions.

     Taking into account the most recent borrowing base calculation delivered under the credit facility, which reflects trade receivables and inventory as of June 30, 2011, outstanding letters of credit and the current borrowing availability requirement of $44 million, borrowings available under the credit facility were approximately $167 million. As of June 30, 2011 and during the quarter then-ended, there were no borrowings under the facility. Had there been any borrowings as of that date, the applicable interest rate would have been 3.2%. Outstanding letters of credit totaled $80 million as of June 30, 2011.

SENIOR NOTES

We have $300 million in aggregate principal amount of 9.75% senior notes due 2014 that are recorded on the condensed consolidated balance sheets at $296 million as of June 30, 2011 and December 31, 2010, net of debt discount of $4 million. Our obligations under the notes are guaranteed on a senior unsecured basis by certain of our domestic subsidiaries.

     We have $350 million in aggregate principal amount of 8.375% senior notes due 2018. Our obligations under these notes are guaranteed on a senior unsecured basis by the same domestic subsidiaries that have guaranteed the 9.75% senior notes.

     We have $500 million of 7.75% senior notes due 2018 that are recorded on the condensed consolidated balance sheets at $499 million, net of debt discount of $1 million. The interest rate payable on these notes is subject to adjustment from time to time by up to 2% in the aggregate if the debt ratings assigned to the notes are upgraded or thereafter downgraded. At our current credit ratings, the interest rate on these notes is at the maximum level of 9.75%.

     We also have $500 million of 6.3% senior notes due 2016. The 9.75% senior notes, 8.375% senior notes, 7.75% senior notes and 6.3% senior notes are senior unsecured obligations and rank equally with all of our other existing and future unsecured senior indebtedness. The indentures governing the notes contain events of default, covenants and restrictions that are customary for similar transactions, including a limitation on our ability and the ability of certain of our subsidiaries to create or incur secured indebtedness.

     The 9.75% and 8.375% senior notes contain a provision requiring us to offer to purchase those notes at a premium of 101% of their principal amount (plus accrued and unpaid interest) in the event of a change in control. The 7.75% and 6.3% senior notes contain a provision requiring us to offer to purchase those notes at a premium of 101% of their principal amount (plus accrued and unpaid interest) in the event of a change in control and a related downgrade of the rating on the notes to below investment grade by both Moody’s Investors Service and Standard & Poor’s Financial Services LLC.

     The 9.75%, 7.75% and 6.3% senior notes contain a provision that allows us to redeem the notes in whole at any time, or in part from time to time, at our option, at a redemption price equal to the greater of (1) 100% of the principal amount of the notes being redeemed and (2) the sum of the present value of the remaining scheduled payments of principal and interest on the notes being redeemed discounted to the redemption date on a semi-annual basis at the applicable U.S. Treasury rate plus a spread (as outlined in the respective indentures), plus, in each case, any accrued and unpaid interest on the principal amount being redeemed to the redemption date. The 8.375% senior notes contain a similar provision that allows us to redeem those notes, in whole or in part from time to time, at our option, beginning on October 15, 2014 at stated redemption prices, plus any accrued and unpaid interest. In addition, we may redeem the 8.375% senior notes in whole or in part from time to time, at our option, prior to October 15, 2014 at a redemption price equal to 100% of the principal amount of the notes redeemed plus a premium (as specified in the supplemental indenture with respect to those notes), plus any accrued and unpaid interest.

CONVERTIBLE SENIOR NOTES

We have $400 million aggregate principal amount of 10% convertible senior notes due 2018 that are recorded on the condensed consolidated balance sheets at $382 million as of June 30, 2011 and December 31, 2010, net of debt discount of $18 million as a result of an embedded derivative. The notes bear cash interest at the rate of 10% per year until maturity, redemption or conversion. The notes are initially convertible into 87.7193 shares of our common stock per $1,000 principal amount of notes which is equivalent to an initial conversion price of $11.40 per share, or a total of 35.1 million shares. The notes contain anti-dilution provisions that are customary for convertible notes issued in transactions similar to that in which the notes were issued. The notes mature on December 1, 2018 and are not callable until December 1, 2013, after which we may elect to redeem all or part of the notes at stated redemption prices, plus accrued and unpaid interest.

     The notes are senior unsecured obligations and rank equally with all of our other existing and future unsecured senior indebtedness. The indenture governing the notes contains events of default, covenants and restrictions that are customary for similar transactions, including a limitation on our ability and the ability of certain of our subsidiaries to create or incur secured indebtedness. The notes also contain a provision requiring us to offer to purchase the notes at a premium of 105% of their principal amount (plus accrued and unpaid interest) in the event of a change in control or the termination of trading of our common stock on a national securities exchange.

SHIP MORTGAGE FACILITY

Our subsidiary, Gypsum Transportation Limited, or GTL, has a secured loan facility agreement with DVB Bank SE, as lender, agent and security trustee. Both advances provided for under the secured loan facility have been drawn, and the total outstanding loan balances under the facility were $40 million as of June 30, 2011 and $42 million as of December 31, 2010. Of the total amounts outstanding as of June 30, 2011 and December 31, 2010, $7 million was classified as current portion of long-term debt on our condensed consolidated balance sheets.

     The loan balance under the secured loan facility bears interest at a floating rate based on LIBOR plus a margin of 1.65%. The interest rate was 2.09% as of June 30, 2011. Each advance is repayable in quarterly installments in amounts determined in accordance with the secured loan facility agreement, with the balance of each advance repayable eight years after the date it was advanced, or October 31, 2016 and May 22, 2017. The secured loan facility agreement contains affirmative and negative covenants affecting GTL and certain customary events of default. GTL has granted DVB Bank SE a security interest in the Gypsum Centennial and Gypsum Integrity ships and related insurance, contract, account and other rights as security for borrowings under the secured loan facility. USG Corporation has guaranteed the obligations of GTL under the secured loan facility and has agreed to maintain liquidity of at least $175 million.

CGC CREDIT FACILITY

Our Canadian subsidiary, CGC Inc., or CGC, has a Can. $30 million credit agreement with The Toronto-Dominion Bank. The credit agreement allows for revolving loans and letters of credit (up to Can. $3 million in aggregate) in an aggregate principal amount not to exceed Can. $30 million. The credit agreement is available for the general corporate purposes of CGC, excluding hostile acquisitions. The credit agreement is secured by a general security interest in substantially all of CGC’s assets other than intellectual property.

     Revolving loans under the agreement may be made in Canadian dollars or U.S. dollars. Revolving loans made in Canadian dollars bear interest at a floating rate based on the prime rate plus 1.50% or the Bankers’ Acceptance Discount Rate plus 3.00%, at the option of CGC. Revolving loans made in U.S. dollars bear interest at a floating rate based upon a base rate plus 1.50% or the LIBOR rate plus 3.00%, at the option of CGC. CGC may prepay the revolving loans at its discretion without premium or penalty and may be required to repay revolving loans under certain circumstances. The credit agreement matures on June 1, 2012, unless terminated earlier in accordance with its terms. The credit agreement contains customary representations and warranties, affirmative and negative covenants that may limit CGC’s ability to take certain actions and events of default. Borrowings under the credit agreement are subject to acceleration upon the occurrence of an event of default.

     As of June 30, 2011 and during the quarter then ended, there were no borrowings outstanding under this credit agreement. Had there been any borrowings as of that date, the applicable interest rate would have been 4.3%. As of June 30, 2011, outstanding letters of credit totaled Can. $0.4 million. The U.S. dollar equivalent of borrowings available under this agreement as of June 30, 2011 was $31 million.

INDUSTRIAL REVENUE BONDS

Our $239 million of industrial revenue bonds have fixed interest rates ranging from 5.5% to 6.4%. The weighted average rate of interest on our industrial revenue bonds is 5.875%. These bonds mature during the years 2028 through 2034.

OTHER INFORMATION

The fair value of our debt was $2.504 billion as of June 30, 2011 and $2.564 billion as of December 31, 2010. The fair value was based on quoted market prices of our debt or, where quoted market prices were not available, on quoted market prices of instruments with similar terms and maturities or internal valuation models. Interest accrued on our debt as of June 30, 2011 and December 31, 2010 was $52 million and $49 million, respectively.

     As of June 30, 2011, we were in compliance with the covenants contained in our credit facilities.

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Preparation of Financial Statements

6 Months Ended

Jun. 30, 2011

Preparation Financial Statements [Abstract]

Preparation of Financial Statements

1. Preparation of Financial Statements

We prepared the accompanying unaudited condensed consolidated financial statements of USG Corporation in accordance with applicable United States Securities and Exchange Commission, or SEC, guidelines pertaining to interim financial information. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Actual results could differ from those estimates. In the opinion of our management, the financial statements reflect all adjustments, which are of a normal recurring nature except as noted, necessary for a fair presentation of our financial results for the interim periods. The results of operations for the three months and six months ended June 30, 2011 are not necessarily indicative of the results of operations to be expected for the entire year. These financial statements and notes are to be read in conjunction with the financial statements and notes included in USG’s Annual Report on Form 10-K for the fiscal year ended December 31, 2010 which we filed with the SEC on February 11, 2011.

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Segments

6 Months Ended

Jun. 30, 2011

Segments [Abstract]

Segments

4. Segments

Our operations are organized into three reportable segments: North American Gypsum, Building Products Distribution and Worldwide Ceilings. Segment results were as follows:

	Three Months						Six Months
	ended June 30,						ended June 30,
(millions)	2011			2010			2011			2010
Net Sales:
North American Gypsum	$	420		$	428		$	836		$	852
Building Products Distribution		270			282			513			530
Worldwide Ceilings		173			172			350			337
Eliminations		(102	)		(113	)		(217	)		(234	)
Total	$	761		$	769		$	1,482		$	1,485
Operating Profit (Loss):
North American Gypsum	$	(16	)	$	(11	)	$	(45	)	$	(46	)
Building Products Distribution		(14	)		(22	)		(36	)		(61	)
Worldwide Ceilings		22			23			48			41
Corporate		(15	)		(14	)		(44	)		(37	)
Eliminations		2			(1	)		(2	)		(4	)
Total	$	(21	)	$	(25	)	$	(79	)	$	(107	)

     Restructuring and long-lived asset impairment charges by segment were as follows:

	Three Months				Six Months
	ended June 30,				ended June 30,
(millions)	2011		2010		2011		2010
North American Gypsum	$	2	$	6	$	9	$	10
Building Products Distribution		—		1		1		9
Worldwide Ceilings		—		—		—		—
Corporate		—		—		1		—
Total	$	2	$	7	$	11	$	19

     See Note 3 for information related to restructuring and long-lived asset impairment charges and the restructuring reserve as of June 30, 2011.

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Debt (Details) In Millions, except Share data, unless otherwise specified	6 Months Ended		6 Months Ended		6 Months Ended		6 Months Ended		6 Months Ended		6 Months Ended		6 Months Ended		6 Months Ended
	Jun. 30, 2011 USD ($)	Dec. 31, 2010 USD ($)	Jun. 30, 2011 6.3% senior notes due 2016 [Member] USD ($)	Dec. 31, 2010 6.3% senior notes due 2016 [Member] USD ($)	Jun. 30, 2011 7.75% senior notes due 2018, net of discount [Member] USD ($)	Dec. 31, 2010 7.75% senior notes due 2018, net of discount [Member] USD ($)	Jun. 30, 2011 8.375% senior notes due 2018 [Member] USD ($)	Dec. 31, 2010 8.375% senior notes due 2018 [Member] USD ($)	Jun. 30, 2011 9.75% senior notes due 2014, net of discount [Member] USD ($)	Dec. 31, 2010 9.75% senior notes due 2014, net of discount [Member] USD ($)	Jun. 30, 2011 10% convertible senior notes due 2018, net of discount [Member] USD ($)	Dec. 31, 2010 10% convertible senior notes due 2018, net of discount [Member] USD ($)	Jun. 30, 2011 Ship mortgage facility (includes $7 million of current portion of long-term debt) [Member] USD ($)	Dec. 31, 2010 Ship mortgage facility (includes $7 million of current portion of long-term debt) [Member] USD ($)	Jun. 30, 2011 Industrial revenue bonds (due 2028 through 2034) [Member] USD ($)	Dec. 31, 2010 Industrial revenue bonds (due 2028 through 2034) [Member] USD ($)	Jun. 30, 2011 CGC Credit Facility CAD [Member] CAD
Total debt, including the current portion of long-term debt
Total debt	$ 2,306	$ 2,308	$ 500	$ 500	$ 499	$ 499	$ 350	$ 350	$ 296	$ 296	$ 382	$ 382	$ 40	$ 42	$ 239	$ 239
Debt (Textuals) [Abstract]
Interest rate of senior notes	10.00%		6.30%	6.30%	7.75%	7.75%	8.375%	8.375%	9.75%	9.75%	10.00%	10.00%
Variable interest rate, LIBOR plus													1.65%
Aggregate principal amount	400		500		500		350		300		400						30
Debt discount					1				4		18
Maximum interest rate on notes subject to change in debt ratings assigned					2.00%
Current Interest rate					9.75%
Premium on repurchase of notes			101% of their principal amount (plus accrued and unpaid interest) in the event of a change in control and a related downgrade of the rating on the notes to below investment grade by both Moody’s Investors Service and Standard & Poor’s Financial Services LLC		101% of their principal amount (plus accrued and unpaid interest) in the event of a change in control and a related downgrade of the rating on the notes to below investment grade by both Moody’s Investors Service and Standard & Poor’s Financial Services LLC		101% of their principal amount (plus accrued and unpaid interest) in the event of a change in control		101% of their principal amount (plus accrued and unpaid interest) in the event of a change in control		105% of their principal amount (plus accrued and unpaid interest) in the event of a change in control or the termination of trading of our common stock on a national securities exchange
Long-term Debt, Maturities, Repayment Terms							we may redeem the 8.375% senior notes in whole or in part from time to time, at our option, prior to October 15, 2014 at a redemption price equal to 100% of the principal amount of the notes redeemed plus a premium (as specified in the supplemental indenture with respect to those notes), plus any accrued and unpaid interest.
Maturity date			2016		2018		2018		2014		2018
Cash Interest rate until maturity, redemption or conversion											10.00%
Convertible ratio, shares per $1,000 principal amount of notes											87.7193
Base principal amount of convertible notes											1,000
Initial conversion price per share											$ 11.40
Total shares to be issued on conversion of notes											35,100,000
Current portion of long term debt	7	7											7
Interest rate													2.09%
Liquidity condition under guaranteed obligation of GTL													at least $175 million
Advance payment terms	The 9.75%, 7.75% and 6.3% senior notes contain a provision that allows USG to redeem the notes in whole at any time, or in part from time to time, at our option, at a redemption price equal to the greater of (1) 100% of the principal amount of the notes being redeemed and (2) the sum of the present value of the remaining scheduled payments of principal and interest on the notes being redeemed discounted to the redemption date on a semi-annual basis at the applicable U.S. Treasury rate plus a spread (as outlined in the respective indentures), plus, in each case, any accrued and unpaid interest on the principal amount being redeemed to the redemption date. The 8.375% senior notes contain a similar provision that allows us to redeem those notes, in whole or in part from time to time, at our option, beginning on October 15, 2014 at stated redemption prices, plus any accrued and unpaid interest. In addition, we may redeem the 8.375% senior notes in whole or in part from time to time, at our option, prior to October 15, 2014 at a redemption price equal to 100% of the principal amount of the notes redeemed plus a premium (as specified in the supplemental indenture with respect to those notes), plus any accrued and unpaid interest. The 9.75%, 7.75% and 6.3% senior notes contain a provision that allows USG to redeem the notes in whole at any time, or in part from time to time, at our option, at a redemption price equal to the greater of (1) 100% of the principal amount of the notes being redeemed and (2) the sum of the present value of the remaining scheduled payments of principal and interest on the notes being redeemed discounted to the redemption date on a semi-annual basis at the applicable U.S. Treasury rate plus a spread (as outlined in the respective indentures), plus, in each case, any accrued and unpaid interest on the principal amount being redeemed to the redemption date. The 8.375% senior notes contain a similar provision that allows us to redeem those notes, in whole or in part from time to time, at our option, beginning on October 15, 2014 at stated redemption prices, plus any accrued and unpaid interest. In addition, we may redeem the 8.375% senior notes in whole or in part from time to time, at our option, prior to October 15, 2014 at a redemption price equal to 100% of the principal amount of the notes redeemed plus a premium (as specified in the supplemental indenture with respect to those notes), plus any accrued and unpaid interest. The 9.75%, 7.75% and 6.3% senior notes contain a provision that allows USG to redeem the notes in whole at any time, or in part from time to time, at our option, at a redemption price equal to the greater of (1) 100% of the principal amount of the notes being redeemed and (2) the sum of the present value of the remaining scheduled payments of principal and interest on the notes being redeemed discounted to the redemption date on a semi-annual basis at the applicable U.S. Treasury rate plus a spread (as outlined in the respective indentures), plus, in each case, any accrued and unpaid interest on the principal amount being redeemed to the redemption date. The 8.375% senior notes contain a similar provision that allows us to redeem those notes, in whole or in part from time to time, at our option, beginning on October 15, 2014 at stated redemption prices, plus any accrued and unpaid interest. In addition, we may redeem the 8.375% senior notes in whole or in part from time to time, at our option, prior to October 15, 2014 at a redemption price equal to 100% of the principal amount of the notes redeemed plus a premium (as specified in the supplemental indenture with respect to those notes), plus any accrued and unpaid interest. The 9.75%, 7.75% and 6.3% senior notes contain a provision that allows USG to redeem the notes in whole at any time, or in part from time to time, at our option, at a redemption price equal to the greater of (1) 100% of the principal amount of the notes being redeemed and (2) the sum of the present value of the remaining scheduled payments of principal and interest on the notes being redeemed discounted to the redemption date on a semi-annual basis at the applicable U.S. Treasury rate plus a spread (as outlined in the respective indentures), plus, in each case, any accrued and unpaid interest on the principal amount being redeemed to the redemption date. The 8.375% senior notes contain a similar provision that allows us to redeem those notes, in whole or in part from time to time, at our option, beginning on October 15, 2014 at stated redemption prices, plus any accrued and unpaid interest. In addition, we may redeem the 8.375% senior notes in whole or in part from time to time, at our option, prior to October 15, 2014 at a redemption price equal to 100% of the principal amount of the notes redeemed plus a premium (as specified in the supplemental indenture with respect to those notes), plus any accrued and unpaid interest. The 9.75%, 7.75% and 6.3% senior notes contain a provision that allows USG to redeem the notes in whole at any time, or in part from time to time, at our option, at a redemption price equal to the greater of (1) 100% of the principal amount of the notes being redeemed and (2) the sum of the present value of the remaining scheduled payments of principal and interest on the notes being redeemed discounted to the redemption date on a semi-annual basis at the applicable U.S. Treasury rate plus a spread (as outlined in the respective indentures), plus, in each case, any accrued and unpaid interest on the principal amount being redeemed to the redemption date. The 8.375% senior notes contain a similar provision that allows us to redeem those notes, in whole or in part from time to time, at our option, beginning on October 15, 2014 at stated redemption prices, plus any accrued and unpaid interest. In addition, we may redeem the 8.375% senior notes in whole or in part from time to time, at our option, prior to October 15, 2014 at a redemption price equal to 100% of the principal amount of the notes redeemed plus a premium (as specified in the supplemental indenture with respect to those notes), plus any accrued and unpaid interest. The 9.75%, 7.75% and 6.3% senior notes contain a provision that allows USG to redeem the notes in whole at any time, or in part from time to time, at our option, at a redemption price equal to the greater of (1) 100% of the principal amount of the notes being redeemed and (2) the sum of the present value of the remaining scheduled payments of principal and interest on the notes being redeemed discounted to the redemption date on a semi-annual basis at the applicable U.S. Treasury rate plus a spread (as outlined in the respective indentures), plus, in each case, any accrued and unpaid interest on the principal amount being redeemed to the redemption date. The 8.375% senior notes contain a similar provision that allows us to redeem those notes, in whole or in part from time to time, at our option, beginning on October 15, 2014 at stated redemption prices, plus any accrued and unpaid interest. In addition, we may redeem the 8.375% senior notes in whole or in part from time to time, at our option, prior to October 15, 2014 at a redemption price equal to 100% of the principal amount of the notes redeemed plus a premium (as specified in the supplemental indenture with respect to those notes), plus any accrued and unpaid interest.												eight years after the date it was advanced, or October 31, 2016 and May 22, 2017 in quarterly installments
Fixed interest rate, Minimum															5.50%
Fixed interest rate, Maximum															6.40%
Weighted average rate of interest															5.87%
Average maturity of industrial revenue bonds															2028 through 2034
Fair value of debt	$ 2,504	$ 2,564

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Employee Retirement Plans (Tables)

6 Months Ended

Jun. 30, 2011

Employee Retirement Plans [Abstract]

Components of net pension and postretirement benefits costs

	Three Months						Six Months
	ended June 30,						ended June 30,
(millions)	2011			2010			2011			2010
Pension:
Service cost of benefits earned	$	7		$	6		$	14		$	13
Interest cost on projected benefit obligation		16			16			32			32
Expected return on plan assets		(17	)		(16	)		(33	)		(33	)
Net amortization		7			4			13			8
Net pension cost	$	13		$	9		$	26		$	20
Postretirement:
Service cost of benefits earned	$	1		$	2		$	3		$	4
Interest cost on projected benefit obligation		3			5			7			9
Net amortization		(5	)		(5	)		(11	)		(9	)
Net postretirement cost	$	(1	)	$	2		$	(1	)	$	4

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Litigation (Details) (USD $) In Millions, unless otherwise specified	6 Months Ended
	Jun. 30, 2011
Litigation (Textuals)
Approximate number of homes where the presence of Knauf Tianjin wallboard has been confirmed	262
Approximate number of property damage claims resolved	138
Accrual for estimated costs of resolving the Chinese wallboard property damage claims	$ 15
Receivables Related to Settlement	$ 10
Maximum [Member]
Litigation (Textuals)
Range of average-size houses that the amount of Knauf Tianjin wallboard potentially sold by L&W Supply Corporation could completely furnish	300
Minimum [Member]
Litigation (Textuals)
Range of average-size houses that the amount of Knauf Tianjin wallboard potentially sold by L&W Supply Corporation could completely furnish	250

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Earnings (Loss) Per Share

6 Months Ended

Jun. 30, 2011

Earnings (Loss) Per Share [Abstract]

Earnings (Loss) Per Share

5. Earnings (Loss) Per Share

Basic earnings (loss) per share are based on the weighted average number of common shares outstanding. Diluted earnings per share are based on the weighted average number of common shares outstanding plus the dilutive effect, if any, of restricted stock units, or RSUs, and performance shares, the potential exercise of outstanding stock options and the potential conversion of our $400 million of 10% convertible senior notes. The reconciliation of basic loss per share to diluted loss per share is shown in the following table:

						Weighted
						Average
	Net			Shares		Per-Share
(millions, except per-share and share data)	Loss			(000)		Amount
Three Months Ended June 30, 2011:
Basic loss	$	(70	)		103,551	$	(0.69	)
Diluted loss	$	(70	)		103,551	$	(0.69	)
Three Months Ended June 30, 2010:
Basic loss	$	(74	)		99,520	$	(0.74	)
Diluted loss	$	(74	)		99,520	$	(0.74	)
Six Months Ended June 30, 2011:
Basic loss	$	(175	)		103,286	$	(1.70	)
Diluted loss	$	(175	)		103,286	$	(1.70	)
Six Months Ended June 30, 2010:
Basic loss	$	(184	)		99,452	$	(1.85	)
Diluted loss	$	(184	)		99,452	$	(1.85	)

     The diluted losses per share for the second quarter and the first six months of 2011 and 2010 were computed using the weighted average number of common shares outstanding during those periods. The approximately 35.1 million shares issuable upon conversion of the $400 million of 10% convertible senior notes we issued in 2008 at the initial conversion price of $11.40 per share were not included in the computation of diluted loss per share for those periods because their inclusion was anti-dilutive. Stock options, RSUs and performance shares with respect to 7.1 million common shares for the second quarter of 2011, 7.2 million common shares for the first six months of 2011, 6.5 million common shares for the second quarter of 2010 and 6.8 million common shares for the first six months of 2010 were not included in the computation of diluted loss per share for those periods because their inclusion was anti-dilutive.

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Derivative Instruments (Details) (USD $) In Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Pretax effects of derivative instruments on condensed consolidated statements of operations
Amount of Gain or (Loss) Recognized in Income On Derivatives	$ (1)	$ (1)	$ (2)	$ (3)
Commodity contracts [Member] | Cost of products sold [Member]
Pretax effects of derivative instruments on condensed consolidated statements of operations
Amount of Gain or (Loss) Recognized in Income On Derivatives	(1)	0	(1)	(1)
Commodity contracts [Member] | Cost of products sold [Member] | Cash Flow Hedging [Member]
Pretax effects of derivative instruments on condensed consolidated statements of operations
Amount of Gain or (Loss) Reclassified from AOCI into Income (Effective Portion)	(4)	(5)	(9)	(10)
Commodity contracts [Member] | Cash Flow Hedging [Member]
Pretax effects of derivative instruments on condensed consolidated statements of operations
Amount of Gain or (Loss) Recognized in Other Comprehensive Income on Derivatives (Effective Portion)	(1)	0	(1)	(12)
Foreign exchange contracts [Member] | Cost of products sold [Member] | Cash Flow Hedging [Member]
Pretax effects of derivative instruments on condensed consolidated statements of operations
Amount of Gain or (Loss) Reclassified from AOCI into Income (Effective Portion)	(2)	0	(2)	0
Foreign exchange contracts [Member] | Other expense (income), net [Member]
Pretax effects of derivative instruments on condensed consolidated statements of operations
Amount of Gain or (Loss) Recognized in Income On Derivatives	0	(1)	(1)	(2)
Foreign exchange contracts [Member] | Cash Flow Hedging [Member]
Pretax effects of derivative instruments on condensed consolidated statements of operations
Amount of Gain or (Loss) Recognized in Other Comprehensive Income on Derivatives (Effective Portion)	(1)	2	(4)	1
Cash Flow Hedging [Member]
Pretax effects of derivative instruments on condensed consolidated statements of operations
Amount of Gain or (Loss) Recognized in Other Comprehensive Income on Derivatives (Effective Portion)	(2)	2	(5)	(11)
Amount of Gain or (Loss) Reclassified from AOCI into Income (Effective Portion)	$ (6)	$ (5)	$ (11)	$ (10)

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Debt (Tables)

6 Months Ended

Jun. 30, 2011

Debt [Abstract]

Total debt, including the current portion of long-term debt

	As of		As of
	June 30,		December 31,
(millions)	2011		2010
6.3% senior notes due 2016	$	500	$	500
7.75% senior notes due 2018, net of discount		499		499
8.375% senior notes due 2018		350		350
9.75% senior notes due 2014, net of discount		296		296
10% convertible senior notes due 2018, net of discount		382		382
Ship mortgage facility (includes $7 million of current portion of long-term debt)		40		42
Industrial revenue bonds (due 2028 through 2034)		239		239
Total	$	2,306	$	2,308

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Comprehensive Income (Loss) (Tables)

6 Months Ended

Jun. 30, 2011

Comprehensive Income (Loss) [Abstract]

Components of comprehensive income (loss)

	Three Months						Six Months
	ended June 30,						ended June 30,
(millions)	2011			2010			2011			2010
Net loss	$	(70	)	$	(74	)	$	(175	)	$	(184	)
Derivatives, net of tax		5			7			8			(1	)
Pension and postretirement benefit plans, net of tax		9			9			6			(8	)
Foreign currency translation, net of tax		6			(26	)		23			(13	)
Total comprehensive loss	$	(50	)	$	(84	)	$	(138	)	$	(206	)

AOCI

	As of			As of
	June 30,			December 31,
(millions)	2011			2010
Unrecognized loss on pension and postretirement benefit plans, net of tax	$	(100	)	$	(106	)
Derivatives, net of tax		16			8
Foreign currency translation, net of tax		71			48
Total	$	(13	)	$	(50	)

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Debt (Details Textual) In Millions, unless otherwise specified			6 Months Ended
	Jun. 30, 2011 USD ($)	Dec. 31, 2010 USD ($)	Jun. 30, 2011 Credit Facility [Member] USD ($)	Jun. 30, 2011 CGC Credit Facility [Member] CAD	Jun. 30, 2011 CGC Credit Facility USD [Member] USD ($)	Jun. 30, 2011 CGC Credit Facility CAD [Member] CAD
Debt (Textuals) [Abstract]
Maximum Borrowing Capacity for letters of credit			$ 250	3
Borrowing capacity description under credit facility			Aggregate principal amount not to exceed the lesser of (a) $400 million or (b) a borrowing base determined by reference to the trade receivables and inventory of USG and its significant domestic subsidiaries
Maximum allowable borrowings after giving effect to the increase			600
Annual facility fees			0.75%
Maturity date of credit facility				June 1, 2012
Line of Credit Facility, Expiration Date and Description of Conditions for Accelerated Expiration Date			The credit facility matures on December 21, 2015 unless terminated earlier in accordance with its terms, including if by May 2, 2014 our 9.75% senior notes due in 2014 are not repaid, their payment is not provided for or their maturity has not been extended until at least 2016 unless we then have liquidity of at least $500 million
Minimum liquidity required to extend maturity of 9.75% senior notes	500
Credit agreement covenant terms			Minimum fixed charge coverage ratio of 1.1-to-1.0 if and for so long as the excess of the borrowing base over the outstanding borrowings under the credit agreement is less than the greater of (a) $40 million and (b) 15% of the lesser of (i) the aggregate revolving commitments at such time and (ii) the borrowing base at such time
Credit agreement current covenant compliance			fixed charge coverage ratio was (0.19)-to-1
Borrowing availability that must be maintained under the credit facility			44
Outstanding letter of credit			80.0			0.4
Borrowing available under credit facility			167		31
Applicable interest rate for credit facility			3.20%		4.30%
Interest rate at a floating rate based on an alternate base rate			Adjusted LIBOR plus 3.00%		Base rate plus 1.50% or the LIBOR rate plus 3.00%, at the option of CGC	Prime rate plus 1.5% or the Bankers’ Acceptance Discount Rate plus 3.00%, at the option of CGC
Interest accured	$ 52	$ 49

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Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2011

Fair Value Measurements [Abstract]

Assets and liabilities measured at fair value on a recurring basis

	Quoted Prices
	in Active		Significant
	Markets for		Other			Significant
	Identical		Observable			Unobservable
	Assets		Inputs			Inputs
(millions)	(Level 1)		(Level 2)			(Level 3)		Total
As of June 30, 2011:
Cash equivalents	$	172	$	25		$	—	$	197
Marketable securities:
Corporate debt securities		—		167			—		167
U.S. government and agency debt securities		—		63			—		63
Asset-backed debt securities		—		18			—		18
Certificates of deposit		—		49			—		49
Municipal debt securities		—		26			—		26
Derivative assets		—		3			—		3
Derivative liabilities		—		(20	)		—		(20	)
As of December 31, 2010:
Cash equivalents	$	357	$	59		$	—	$	416
Marketable securities:
Corporate debt securities		—		123			—		123
U.S. government and agency debt securities		—		58			—		58
Asset-backed debt securities		—		19			—		19
Non-U.S. government debt securities		—		10			—		10
Certificates of deposit		—		41			—		41
Municipal debt securities		—		27			—		27
Derivative assets		—		1			—		1
Derivative liabilities		—		(25	)		—		(25	)

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Supplemental Balance Sheet Information

6 Months Ended

Jun. 30, 2011

Supplemental Balance Sheet Information [Abstract]

Supplemental Balance Sheet Information

13. Supplemental Balance Sheet Information

INVENTORIES

Total inventories consisted of the following:

	As of		As of
	June 30,		December 31,
(millions)	2011		2010
Finished goods and work in progress	$	250	$	227
Raw materials		63		63
Total	$	313	$	290

ASSET RETIREMENT OBLIGATIONS

Changes in the liability for asset retirement obligations consisted of the following:

	Six Months
	ended June 30,
(millions)	2011		2010
Balance as of January 1	$	103	$	101
Accretion expense		2		2
Foreign currency translation		1		—
Balance as of June 30	$	106	$	103

PROPERTY, PLANT AND EQUIPMENT

As of June 30, 2011, we had $8 million of net property, plant and equipment included in other current assets on the condensed consolidated balance sheet classified as “assets held for sale.” These assets are primarily owned by United States Gypsum Company. Assets held for sale as of December 31, 2010 amounted to $7 million.

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Marketable Securities

6 Months Ended

Jun. 30, 2011

Marketable Securities [Abstract]

Marketable Securities

6. Marketable Securities

Marketable securities are classified as available-for-sale securities and reported at fair value, with unrealized gains and losses excluded from earnings and reported in accumulated other comprehensive income (loss), or AOCI, on our condensed consolidated balance sheets. The realized and unrealized gains and losses as of and for the quarter ended June 30, 2011 were immaterial. Proceeds received from sales and maturities of marketable securities were $176 million for the six months ended June 30, 2011. Our investments in marketable securities as of June 30, 2011 consisted of the following:

	Amortized		Fair
(millions)	Cost		Value
Corporate debt securities	$	167	$	167
U.S. government and agency debt securities		63		63
Asset-backed debt securities		18		18
Certificates of deposit		49		49
Municipal debt securities		26		26
Total marketable securities	$	323	$	323

     Contractual maturities of marketable securities as of June 30, 2011 were as follows:

	Amortized		Fair
(millions)	Cost		Value
Due in 1 year or less	$	158	$	158
Due in 1-5 years		165		165
Due in more than 5 years		—		—
Total marketable securities	$	323	$	323

     Actual maturities may differ from the contractual maturities because issuers of the securities may have the right to prepay them.

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Litigation

6 Months Ended

Jun. 30, 2011

Litigation [Abstract]

Litigation

16. Litigation

CHINESE-MANUFACTURED DRYWALL LAWSUITS

L&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., or Knauf Tianjin, 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&W Supply are part of the consolidated multi-district litigation titled In re Chinese-Manufactured Drywall Products Liability Litigation, MDL No. 2047, pending in New Orleans, Louisiana. The focus of the multi-district litigation to date has been on plaintiffs’ property damage claims and not their alleged bodily injury claims.

     L&W Supply’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&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&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&W Supply delivered wallboard to that home.

     We made claims against Knauf Tianjin, Knauf Gips KG, and other Knauf companies, collectively referred to as Knauf, 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 in the litigation relating to Chinese wallboard.

     Of the property damage claims asserted to date where our records indicate we delivered wallboard to the home, we have identified approximately 262 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 138 of those homes by funding or agreeing to fund remediations of the homes.

     Although the vast majority of Chinese drywall claims against us relate to Knauf Tianjin board, we have received some claims relating to other Chinese-made wallboard sold by L&W Supply Corporation. Most, but not all, of the other Chinese-made wallboard we sold was manufactured by Knauf at 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. A small percentage of claims made against L&W Supply Corporation relate to Chinese-made wallboard that was not manufactured by Knauf, but which is alleged to have odor and corrosion problems.

     As of June 30, 2011, we have an accrual of $15 million for our estimated cost of resolving all the Chinese wallboard property damage claims pending against L&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 $10 million. Our accrual does not take into account litigation 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 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.

ENVIRONMENTAL LITIGATION

We have been notified by state and federal environmental protection agencies of possible involvement as one of numerous “potentially responsible parties” 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.

OTHER LITIGATION

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.

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Intangible Assets (Details) (USD $) In Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010	Dec. 31, 2010
Intangible assets with definite lives, Total
Gross Carrying Amount	$ 79		$ 79		$ 79
Accumulated Amortization	(35)		(35)		(31)
Net	44		44		48
Intangible Assets with indefinite lives, Total
Gross Carrying Amount	30		30		31
Impairment Charges	0		0		(1)
Net	30		30		30
Estimated annual amortization expense
Estimated annual amortization expense, 2011			8
Estimated annual amortization expense, 2012			8
Estimated annual amortization expense, 2013			7
Estimated annual amortization expense, 2014			7
Estimated annual amortization expense, 2015			7
Estimated annual amortization expense, 2016			7
Intangible Assets (Textuals)
Amortization expense of intangible assets	2	2	4	4
Customer relationships [Member]
Intangible assets with definite lives, Total
Gross Carrying Amount	70		70		70
Accumulated Amortization	(30)		(30)		(26)
Net	40		40		44
Other [Member]
Intangible assets with definite lives, Total
Gross Carrying Amount	9		9		9
Accumulated Amortization	(5)		(5)		(5)
Net	4		4		4
Trade names [Member]
Intangible Assets with indefinite lives, Total
Gross Carrying Amount	22		22		22
Impairment Charges	0		0		0
Net	22		22		22
Other indefinite lived intangible assets [Member]
Intangible Assets with indefinite lives, Total
Gross Carrying Amount	8		8		9
Impairment Charges	0		0		(1)
Net	$ 8		$ 8		$ 8

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Derivative Instruments (Tables)

6 Months Ended

Jun. 30, 2011

Derivative Instruments [Abstract]

Pretax effects of derivative instruments on condensed consolidated statements of operations

	Amount of Gain or (Loss)
	Recognized in					Location of Gain or (Loss)	Amount of Gain or (Loss)
Derivatives in	Other Comprehensive					Reclassified from	Reclassified from
Cash Flow Hedging	Income on Derivatives					AOCI into Income	AOCI into Income
Relationships	(Effective Portion)					(Effective Portion)	(Effective Portion)
	2011			2010			2011			2010
Commodity contracts	$	(1	)	$	—	Cost of products sold	$	(4	)	$	(5	)
Foreign exchange contracts		(1	)		2	Cost of products sold		(2	)		—
Total	$	(2	)	$	2		$	(6	)	$	(5	)

Derivatives Not	Location of Gain or (Loss)	Amount of Gain or (Loss)
Designated as Hedging	Recognized in Income	Recognized in Income
Instruments	on Derivatives	on Derivatives
		2011			2010
Commodity contracts	Cost of products sold	$	(1	)	$	—
Foreign exchange contracts	Other expense (income), net		—			(1	)
Total		$	(1	)	$	(1	)

     The following are the pretax effects of derivative instruments on the condensed consolidated statement of operations for the six months ended June 30, 2011 and 2010 (dollars in millions):

	Amount of Gain or (Loss)
	Recognized in						Location of Gain or (Loss)	Amount of Gain or (Loss)
Derivatives in	Other Comprehensive						Reclassified from	Reclassified from
Cash Flow Hedging	Income on Derivatives						AOCI into Income	AOCI into Income
Relationships	(Effective Portion)						(Effective Portion)	(Effective Portion)
	2011			2010				2011			2010
Commodity contracts	$	(1	)	$	(12	)	Cost of products sold	$	(9	)	$	(10	)
Foreign exchange contracts		(4	)		1		Cost of products sold		(2	)		—
Total	$	(5	)	$	(11	)		$	(11	)	$	(10	)

Derivatives Not	Location of Gain or (Loss)	Amount of Gain or (Loss)
Designated as Hedging	Recognized in Income	Recognized in Income
Instruments	on Derivatives	on Derivatives
		2011			2010
Commodity contracts	Cost of products sold	$	(1	)	$	(1	)
Foreign exchange contracts	Other expense (income), net		(1	)		(2	)
Total		$	(2	)	$	(3	)

Fair values of derivative instruments on the condensed consolidated balance sheets

Derivatives	Assets				Liabilities
Designated as Hedging	Balance Sheet				Balance Sheet
Instruments	Location	Fair Value			Location	Fair Value
		6/30/11		12/31/10		6/30/11		12/31/10
Commodity contracts	Other current assets	$	1	$—	Accrued expenses	$	11	$	16
Commodity contracts	Other assets		—	—	Other liabilities		3		5
Foreign exchange contracts	Other current assets		—	—	Accrued expenses		5		3
Foreign exchange contracts	Other assets		—	—	Other liabilities		—		1
Total		$	1	$—		$	19	$	25

Derivatives Not	Assets					Liabilities
Designated as Hedging	Balance Sheet					Balance Sheet
Instruments	Location	Fair Value				Location	Fair Value
		6/30/11		12/31/10			6/30/11		12/31/10
Commodity contracts	Other current assets	$	1	$	1	Accrued expenses	$	—	$	—
Commodity contracts	Other assets		1		—	Other liabilities		—		—
Foreign exchange contracts	Other current assets		—		—	Accrued expenses		1		—
Total		$	2	$	1		$	1	$	—
Total derivatives		$	3	$	1		$	20	$	25

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Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $) In Millions	6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010
Operating Activities
Net loss	$ (175)	$ (184)
Adjustments to reconcile net loss to net cash:
Long-lived asset impairments	1
Depreciation, depletion and amortization	85	90
Share-based compensation expense	16	17
Deferred income taxes	1	1
Noncash income tax benefit	(3)	(19)
Gain on asset dispositions	(1)	(1)
(Increase) decrease in working capital:
Receivables	(54)	(57)
Income taxes receivable	1	17
Inventories	(23)	(8)
Prepaid expenses	(6)
Payables	19	27
Accrued expenses	(13)	(15)
(Increase)/decrease in other assets	(12)	4
Increase in other liabilities	6	14
Other, net	4	(7)
Net cash used for operating activities	(154)	(121)
Investing Activities
Purchases of marketable securities	(221)	(159)
Sales and maturities of marketable securities	176	14
Capital expenditures	(25)	(11)
Loan to joint venture	(4)
Net proceeds from asset dispositions	1	3
Return of restricted cash	2
Net cash used for investing activities	(71)	(153)
Financing Activities
Repayment of debt	(3)	(3)
Repurchases of common stock to satisfy employee tax withholding obligations	(3)	(1)
Net cash used for financing activities	(6)	(4)
Effect of exchange rate changes on cash	4	(2)
Net decrease in cash and cash equivalents	(227)	(280)
Cash and cash equivalents at beginning of period	629	690
Cash and cash equivalents at end of period	402	410
Supplemental Cash Flow Disclosures:
Interest paid	97	85
Income taxes paid (refunded), net	8	(14)
Amount in accounts payable for capital expenditures	$ 2	$ 1

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Recent Accounting Pronouncements (Policies)

6 Months Ended

Jun. 30, 2011

Recent Accounting Pronouncements [Abstract]

Fair Value Measurement, Policy

In May 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. This ASU clarifies the application of certain existing fair value measurement guidance and expands the disclosures for fair value measurements that are estimated using significant unobservable (Level 3) inputs. This guidance is effective for interim and annual periods beginning on or after December 15, 2011, applied prospectively. Our effective date is January 1, 2012. The adoption of this guidance is not expected to have a material impact on our consolidated financial statements.

Presentation of Comprehensive Income, Policy

     In June 2011, the FASB issued ASU 2011-05, Presentation of Comprehensive Income, which requires comprehensive income to be reported in either a single statement of comprehensive income or in separate, consecutive statements reporting net income and other comprehensive income. The ASU requires retrospective application and is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. The adoption of this guidance will require us to change the presentation of comprehensive income and its components which we currently report within the statement of changes in stockholders’ equity in our Annual Report on Form 10-K and in a note to the financial statements in our quarterly reports on Form 10-Q.

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Derivative Instruments (Details Textual) (USD $) In Millions	6 Months Ended
	Jun. 30, 2011
Derivative Instruments (Textuals)
Unrealized loss that remained in AOCI	$ 5
Derivative [Line Items]
Unrealized loss on fair value of foreign exchange contracts not designated as hedging instruments	1
Losses related to closed derivative contracts hedging underlying transactions that have not yet affected earnings	1
Fair value of contracts not designated as cash flow hedges	2
Net liability position of derivatives	17
Collateral provided to counterparties related to derivatives	14
Additional collateral	4
Cash Flow Hedging [Member]
Derivative Instruments (Textuals)
Unrealized loss that remained in AOCI	13
Commodity contracts [Member]
Derivative [Line Items]
Notional amount of commodity contracts	55
Derivative, Maturity Date	Dec. 31, 2012
Foreign exchange contracts #1 [Member]
Derivative [Line Items]
Derivative, Maturity Date	Aug. 26, 2011
Notional amounts of foreign exchange forward contracts	8
Foreign exchange contracts #2 [Member]
Derivative [Line Items]
Derivative, Maturity Date	Mar. 28, 2012
Notional amounts of foreign exchange forward contracts	$ 59

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Segments (Tables)

6 Months Ended

Jun. 30, 2011

Segments [Abstract]

Net sales and operating profit (loss) by segment

	Three Months						Six Months
	ended June 30,						ended June 30,
(millions)	2011			2010			2011			2010
Net Sales:
North American Gypsum	$	420		$	428		$	836		$	852
Building Products Distribution		270			282			513			530
Worldwide Ceilings		173			172			350			337
Eliminations		(102	)		(113	)		(217	)		(234	)
Total	$	761		$	769		$	1,482		$	1,485
Operating Profit (Loss):
North American Gypsum	$	(16	)	$	(11	)	$	(45	)	$	(46	)
Building Products Distribution		(14	)		(22	)		(36	)		(61	)
Worldwide Ceilings		22			23			48			41
Corporate		(15	)		(14	)		(44	)		(37	)
Eliminations		2			(1	)		(2	)		(4	)
Total	$	(21	)	$	(25	)	$	(79	)	$	(107	)

Restructuring and long-lived asset impairment charges by segment

	Three Months				Six Months
	ended June 30,				ended June 30,
(millions)	2011		2010		2011		2010
North American Gypsum	$	2	$	6	$	9	$	10
Building Products Distribution		—		1		1		9
Worldwide Ceilings		—		—		—		—
Corporate		—		—		1		—
Total	$	2	$	7	$	11	$	19

     See Note 3 for information related to restructuring and long-lived asset impairment charges and the restructuring reserve as of June 30, 2011.

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Recent Accounting Pronouncements

6 Months Ended

Jun. 30, 2011

Recent Accounting Pronouncements [Abstract]

Recent Accounting Pronouncements

2. Recent Accounting Pronouncements

In May 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. This ASU clarifies the application of certain existing fair value measurement guidance and expands the disclosures for fair value measurements that are estimated using significant unobservable (Level 3) inputs. This guidance is effective for interim and annual periods beginning on or after December 15, 2011, applied prospectively. Our effective date is January 1, 2012. The adoption of this guidance is not expected to have a material impact on our consolidated financial statements.

     In June 2011, the FASB issued ASU 2011-05, Presentation of Comprehensive Income, which requires comprehensive income to be reported in either a single statement of comprehensive income or in separate, consecutive statements reporting net income and other comprehensive income. The ASU requires retrospective application and is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. The adoption of this guidance will require us to change the presentation of comprehensive income and its components which we currently report within the statement of changes in stockholders’ equity in our Annual Report on Form 10-K and in a note to the financial statements in our quarterly reports on Form 10-Q.

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Employee Retirement Plans

6 Months Ended

Jun. 30, 2011

Employee Retirement Plans [Abstract]

Employee Retirement Plans

11. Employee Retirement Plans

The components of net pension and postretirement benefits costs are summarized in the following table:

	Three Months						Six Months
	ended June 30,						ended June 30,
(millions)	2011			2010			2011			2010
Pension:
Service cost of benefits earned	$	7		$	6		$	14		$	13
Interest cost on projected benefit obligation		16			16			32			32
Expected return on plan assets		(17	)		(16	)		(33	)		(33	)
Net amortization		7			4			13			8
Net pension cost	$	13		$	9		$	26		$	20
Postretirement:
Service cost of benefits earned	$	1		$	2		$	3		$	4
Interest cost on projected benefit obligation		3			5			7			9
Net amortization		(5	)		(5	)		(11	)		(9	)
Net postretirement cost	$	(1	)	$	2		$	(1	)	$	4

     During the second quarter of 2011, we made a contribution to the USG Corporation Retirement Plan Trust, or Trust, that was recorded on the condensed consolidated balance sheet at $30.9 million. This contribution consisted of 2,084,781 shares of our common stock, or the Contributed Shares, and was recorded on the condensed consolidated balance sheet at the June 20, 2011 closing price of $14.84 per share. The Contributed Shares are not reflected on the condensed consolidated statement of cash flows because they were treated as a noncash financing activity. The Contributed Shares were valued for purposes of crediting the contribution to the Trust at a discounted value of $14.39 per share ($14.84 less a 3% discount), or approximately $30.0 million in the aggregate, by an independent appraiser retained by Evercore Trust Company, N.A., or Evercore, an independent fiduciary that has been appointed as investment manager with respect to the Contributed Shares. The Contributed Shares are registered for resale, and Evercore has authority to sell some or all of them, as well as other of our shares in the Trust, in its discretion as fiduciary.

     During the first quarter of 2011, we contributed $10 million in cash to our pension plan in Canada. In July 2011, we contributed $10 million in cash to the Trust.

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Restructuring and Long-Lived Asset Impairment Charges (Details) (USD $) In Millions	3 Months Ended		6 Months Ended			12 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Dec. 31, 2011	Jun. 30, 2011	Jun. 30, 2010	Dec. 31, 2012
Balance, Total
Balance as of 12/31/2010			$ 35	$ 49
Charges, Total				11
Cash Payments, Total				(24)
Assets Impairment, Total				(1)
Balance as of 6/30/2011	35			35
Restructuring and long lived asset impairment charges (Textuals)
Restructuring and long-lived asset impairment charges	2	7		11	19
Total restructuring reserve	35			35
Cash Payments, Total				(24)
Severance		4		4	9
Lease obligations	1			2
Asset Impairments and Lease Obligations		1		1	6
Other Exit Costs	1	2		4	4
Expected future restructuring-related payments			11			9
Expected future restructuring-related payments after 2012						15
North American Gypsum [Member]
Restructuring and long lived asset impairment charges (Textuals)
Restructuring and long-lived asset impairment charges	2			9
Building Products Distribution [Member]
Restructuring and long lived asset impairment charges (Textuals)
Restructuring and long-lived asset impairment charges				1
Corporate [Member]
Restructuring and long lived asset impairment charges (Textuals)
Restructuring and long-lived asset impairment charges				1
Severance [Member]
Balance, Total
Balance as of 12/31/2010				11
Charges, Total				4
Cash Payments, Total				(11)
Balance as of 6/30/2011	4			4
Restructuring and long lived asset impairment charges (Textuals)
Total restructuring reserve	4			4
Cash Payments, Total				(11)
Lease obligations [Member]
Balance, Total
Balance as of 12/31/2010				29
Charges, Total				2
Cash Payments, Total				(8)
Balance as of 6/30/2011	23			23
Restructuring and long lived asset impairment charges (Textuals)
Total restructuring reserve	23			23
Cash Payments, Total				(8)
Asset impairments [Member]
Balance, Total
Balance as of 12/31/2010				0
Charges, Total				1
Assets Impairment, Total				(1)
Balance as of 6/30/2011	0			0
Restructuring and long lived asset impairment charges (Textuals)
Total restructuring reserve	0			0
Other exit costs [Member]
Balance, Total
Balance as of 12/31/2010				9
Charges, Total				4
Cash Payments, Total				(5)
Balance as of 6/30/2011	8			8
Restructuring and long lived asset impairment charges (Textuals)
Total restructuring reserve	8			8
Cash Payments, Total				$ (5)

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Comprehensive Income (Loss)

6 Months Ended

Jun. 30, 2011

Comprehensive Income (Loss) [Abstract]

Comprehensive Income (Loss)

15. Comprehensive Income (Loss)

The components of comprehensive income (loss) are summarized in the following table:

	Three Months						Six Months
	ended June 30,						ended June 30,
(millions)	2011			2010			2011			2010
Net loss	$	(70	)	$	(74	)	$	(175	)	$	(184	)
Derivatives, net of tax		5			7			8			(1	)
Pension and postretirement benefit plans, net of tax		9			9			6			(8	)
Foreign currency translation, net of tax		6			(26	)		23			(13	)
Total comprehensive loss	$	(50	)	$	(84	)	$	(138	)	$	(206	)

     AOCI consisted of the following:

	As of			As of
	June 30,			December 31,
(millions)	2011			2010
Unrecognized loss on pension and postretirement benefit plans, net of tax	$	(100	)	$	(106	)
Derivatives, net of tax		16			8
Foreign currency translation, net of tax		71			48
Total	$	(13	)	$	(50	)

     After-tax loss on derivatives reclassified from AOCI to earnings was $5 million during the second quarter of 2011. We estimate that we will reclassify a net $14 million after-tax loss on derivatives from AOCI to earnings within the next 12 months.

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Condensed Consolidated Statements of Operations (Unaudited) (USD $) In Millions, except Share data	3 Months Ended		6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Condensed Consolidated Statements of Operations (Unaudited)
Net Sales	$ 761	$ 769	$ 1,482	$ 1,485
Cost of products sold	708	714	1,393	1,416
Gross Profit	53	55	89	69
Selling and administrative expenses	72	73	157	157
Restructuring and long-lived asset impairment charges	2	7	11	19
Operating loss	(21)	(25)	(79)	(107)
Interest expense	52	44	104	89
Interest income	(2)	(1)	(4)	(2)
Other income, net	(2)	(1)	(2)
Loss before income taxes	(69)	(67)	(177)	(194)
Income tax expense (benefit)	1	7	(2)	(10)
Net loss	$ (70)	$ (74)	$ (175)	$ (184)
Basic loss per common share	$ (0.69)	$ (0.74)	$ (1.70)	$ (1.85)
Diluted loss per common share	$ (0.69)	$ (0.74)	$ (1.70)	$ (1.85)
Average common shares	103,550,643	99,519,512	103,286,025	99,452,477
Average diluted common shares	103,550,643	99,519,512	103,286,025	99,452,477

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Earnings (Loss) Per Share (Details) (USD $) In Millions, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Reconciliation of basic earnings (loss) per share to diluted earnings (loss) per share
Net Loss (Basic and Diluted)	$ (70)	$ (74)	$ (175)	$ (184)
Shares, Basic	103,550,643	99,519,512	103,286,025	99,452,477
Shares, Diluted	103,550,643	99,519,512	103,286,025	99,452,477
Weighted Average Per-Share Amount, Basic	$ (0.69)	$ (0.74)	$ (1.70)	$ (1.85)
Weighted Average Per-Share Amount, Diluted	$ (0.69)	$ (0.74)	$ (1.70)	$ (1.85)
Earnings (Loss) Per Share (Textuals)
Potential conversion of convertible senior notes	$ 400		$ 400
Interest rate of convertible senior notes	10.00%		10.00%
Shares issuable upon conversion of 10% convertible senior notes not included in the computation of diluted loss per share	35,100,000	35,100,000	35,100,000	35,100,000
Shares not included in the computation of diluted loss per share	7,100,000	6,500,000	7,200,000	6,800,000
Initial conversion price of 10% convertible senior notes not included in the computation of diluted loss per share	$ 11.40		$ 11.40

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Income Taxes (Details) (USD $)	3 Months Ended				6 Months Ended
	Jun. 30, 2011	Mar. 31, 2011	Jun. 30, 2010	Mar. 31, 2010	Jun. 30, 2011	Jun. 30, 2010	Dec. 31, 2010
Income Taxes (Textuals) [Abstract]
Income tax expense (benefit)	$ 1,000,000		$ 7,000,000		$ (2,000,000)	$ (10,000,000)
Effective tax rate	1.60%
Threshold period (in years) for cumulative losses	4 years
Approximate federal net operating loss carryforwards	1,700,000,000				1,700,000,000
Federal net operating loss carryforwards, expiration dates					2026-2031
Approximate federal alternative minimum tax credit carryforwards	52,000,000				52,000,000
Minimum taxable income needed to fully realize the U.S. federal net deferred tax assets	1,800,000,000				1,800,000,000
Foreign tax credit carryforwards	5,000,000				5,000,000
Foreign tax credit carryforwards, expiration date					2015
Approximate gross deferred tax assets related to state NOLs and tax credit carryforwards	282,000,000				282,000,000
Approximately gross deferred tax assets operating loss and tax credit carry forwards that will expire in current year	11,000,000				11,000,000
Gross deferred tax assets related to state NOLs and tax credit carryforwards, expiration dates					2012-2031
Approximate gross deferred tax assets related to foreign NOLs	5,000,000				5,000,000
Net increase in valuation allowance					96,000,000
Valuation allowance against deferred tax assets	980,000,000				980,000,000		884,000,000
Additional valuation allowance against deferred tax assets recorded	26,000,000	54,000,000
Increased in valuation allowance impacted by other discrete adjustments					80,000,000
Increased in deferred tax assets valuation allowance	16,000,000				16,000,000
Ownership changes that imposes limitations on a corporation's ability to utilize NOLs					50 percentage points over a three-year period
Long-term tax-exempt rate	4.17%				4.17%
Time period after the change in which amount of the limitation be increased or decreased by built-in gains or losses					5 years
Approximate annual NOL utilization had an ownership change occurred	62,000,000				62,000,000
Interest expense related to unrecognized tax benefits	4,000,000				4,000,000
Penalties related to unrecognized tax benefits	0		1,000,000		0	1,000,000
Recognized tax benefit due to reversal of reserves for uncertain resolved tax positions		6,000,000
Noncash income tax benefit	3,000,000			19,000,000	(3,000,000)	(19,000,000)
Number of months examinations maybe be resolved	12 months				12 months
Estimated lower range for change in gross unrecognized tax benefit	5,000,000				5,000,000
Estimated upper range for change in gross unrecognized tax benefit	$ 10,000,000				$ 10,000,000
Maximum [Member]
Additional Income Tax (Textuals) [Abstract]
Period of limitations in Foreign and U.S. jurisdictions					P5Y
Minimum [Member]
Additional Income Tax (Textuals) [Abstract]
Period of limitations in Foreign and U.S. jurisdictions					P3Y

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Fair Value Measurements (Details) (USD $) In Millions	Jun. 30, 2011	Dec. 31, 2010
Assets and liabilities measured at fair value on a recurring basis
Marketable securities	$ 323
Fair Value, Measurements, Recurring [Member]
Assets and liabilities measured at fair value on a recurring basis
Cash equivalents	197	416
Derivative Assets	3	1
Derivative liabilities	(20)	(25)
Fair Value, Measurements, Recurring [Member] | Quoted Prices In Active Markets for Identical Assets (Level 1) [Member]
Assets and liabilities measured at fair value on a recurring basis
Cash equivalents	172	357
Derivative Assets	0	0
Derivative liabilities	0	0
Fair Value, Measurements, Recurring [Member] | Quoted Prices In Active Markets for Identical Assets (Level 1) [Member] | Corporate debt securities [Member]
Assets and liabilities measured at fair value on a recurring basis
Marketable securities	0	0
Fair Value, Measurements, Recurring [Member] | Quoted Prices In Active Markets for Identical Assets (Level 1) [Member] | U.S. government and agency debt securities [Member]
Assets and liabilities measured at fair value on a recurring basis
Marketable securities	0	0
Fair Value, Measurements, Recurring [Member] | Quoted Prices In Active Markets for Identical Assets (Level 1) [Member] | Asset-backed debt securities [Member]
Assets and liabilities measured at fair value on a recurring basis
Marketable securities	0	0
Fair Value, Measurements, Recurring [Member] | Quoted Prices In Active Markets for Identical Assets (Level 1) [Member] | Non-U.S. government debt securities
Assets and liabilities measured at fair value on a recurring basis
Marketable securities		0
Fair Value, Measurements, Recurring [Member] | Quoted Prices In Active Markets for Identical Assets (Level 1) [Member] | Certificates of deposit [Member]
Assets and liabilities measured at fair value on a recurring basis
Marketable securities	0	0
Fair Value, Measurements, Recurring [Member] | Quoted Prices In Active Markets for Identical Assets (Level 1) [Member] | Municipal debt securities [Member]
Assets and liabilities measured at fair value on a recurring basis
Marketable securities	0	0
Fair Value, Measurements, Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member]
Assets and liabilities measured at fair value on a recurring basis
Cash equivalents	25	59
Derivative Assets	3	1
Derivative liabilities	(20)	(25)
Fair Value, Measurements, Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member] | Corporate debt securities [Member]
Assets and liabilities measured at fair value on a recurring basis
Marketable securities	167	123
Fair Value, Measurements, Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member] | U.S. government and agency debt securities [Member]
Assets and liabilities measured at fair value on a recurring basis
Marketable securities	63	58
Fair Value, Measurements, Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member] | Asset-backed debt securities [Member]
Assets and liabilities measured at fair value on a recurring basis
Marketable securities	18	19
Fair Value, Measurements, Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member] | Non-U.S. government debt securities
Assets and liabilities measured at fair value on a recurring basis
Marketable securities		10
Fair Value, Measurements, Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member] | Certificates of deposit [Member]
Assets and liabilities measured at fair value on a recurring basis
Marketable securities	49	41
Fair Value, Measurements, Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member] | Municipal debt securities [Member]
Assets and liabilities measured at fair value on a recurring basis
Marketable securities	26	27
Fair Value, Measurements, Recurring [Member] | Significant Unobservable Inputs (Level 3) [Member]
Assets and liabilities measured at fair value on a recurring basis
Cash equivalents	0	0
Derivative Assets	0	0
Derivative liabilities	0	0
Fair Value, Measurements, Recurring [Member] | Significant Unobservable Inputs (Level 3) [Member] | Corporate debt securities [Member]
Assets and liabilities measured at fair value on a recurring basis
Marketable securities	0	0
Fair Value, Measurements, Recurring [Member] | Significant Unobservable Inputs (Level 3) [Member] | U.S. government and agency debt securities [Member]
Assets and liabilities measured at fair value on a recurring basis
Marketable securities	0	0
Fair Value, Measurements, Recurring [Member] | Significant Unobservable Inputs (Level 3) [Member] | Asset-backed debt securities [Member]
Assets and liabilities measured at fair value on a recurring basis
Marketable securities	0	0
Fair Value, Measurements, Recurring [Member] | Significant Unobservable Inputs (Level 3) [Member] | Non-U.S. government debt securities
Assets and liabilities measured at fair value on a recurring basis
Marketable securities		0
Fair Value, Measurements, Recurring [Member] | Significant Unobservable Inputs (Level 3) [Member] | Certificates of deposit [Member]
Assets and liabilities measured at fair value on a recurring basis
Marketable securities	0	0
Fair Value, Measurements, Recurring [Member] | Significant Unobservable Inputs (Level 3) [Member] | Municipal debt securities [Member]
Assets and liabilities measured at fair value on a recurring basis
Marketable securities	0	0
Fair Value, Measurements, Recurring [Member] | Corporate debt securities [Member]
Assets and liabilities measured at fair value on a recurring basis
Marketable securities	167	123
Fair Value, Measurements, Recurring [Member] | U.S. government and agency debt securities [Member]
Assets and liabilities measured at fair value on a recurring basis
Marketable securities	63	58
Fair Value, Measurements, Recurring [Member] | Asset-backed debt securities [Member]
Assets and liabilities measured at fair value on a recurring basis
Marketable securities	18	19
Fair Value, Measurements, Recurring [Member] | Non-U.S. government debt securities
Assets and liabilities measured at fair value on a recurring basis
Marketable securities		10
Fair Value, Measurements, Recurring [Member] | Certificates of deposit [Member]
Assets and liabilities measured at fair value on a recurring basis
Marketable securities	49	41
Fair Value, Measurements, Recurring [Member] | Municipal debt securities [Member]
Assets and liabilities measured at fair value on a recurring basis
Marketable securities	$ 26	$ 27

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Employee Retirement Plans (Details) (USD $) In Millions, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Employee Retirement Plans (Textuals)
Closing price per share of contributed shares to the USG corporation Retirement plan Trust	$ 14.84		$ 14.84
Discounted value shares valued for purposes of crediting the contribution to trust	$ 14.39		$ 14.39
Discount rate used to valued shares for purposes of crediting the contribution to the Trust	3.00%		3.00%
Rate at which shares valued for purposes of crediting the contribution to trust	$ 14.84		$ 14.84
Pension [Member]
Components of net pension and postretirement benefits costs
Service cost of benefits earned	$ 7	$ 6	$ 14	$ 13
Interest cost on projected benefit obligation	16	16	32	32
Expected return on plan assets	(17)	(16)	(33)	(33)
Net amortization	7	4	13	8
Net cost	13	9	26	20
Employee Retirement Plans (Textuals)
Contribution by employer	30.9
Contribution by employer in common stock				2,084,781
Aggregate Contribution by employer			30.0
Postretirement [Member]
Components of net pension and postretirement benefits costs
Service cost of benefits earned	1	2	3	4
Interest cost on projected benefit obligation	3	5	7	9
Net amortization	(5)	(5)	(11)	(9)
Net cost	(1)	2	(1)	4
United States Postretirement Benefit Plans of US Entity, Defined Benefit [Member]
Employee Retirement Plans (Textuals)
Contribution by employer	10.0
Foreign Postretirement Benefit Plans, Defined Benefit [Member]
Employee Retirement Plans (Textuals)
Contribution by employer			$ 10.0

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Marketable Securities (Details) (USD $) In Millions	Jun. 30, 2011
Investments in marketable securities
Marketable securities, amortized cost	$ 323
Marketable securities	323
Corporate debt securities [Member]
Investments in marketable securities
Marketable securities, amortized cost	167
Marketable securities	167
U.S. government and agency debt securities [Member]
Investments in marketable securities
Marketable securities, amortized cost	63
Marketable securities	63
Asset-backed debt securities [Member]
Investments in marketable securities
Marketable securities, amortized cost	18
Marketable securities	18
Certificates of deposit [Member]
Investments in marketable securities
Marketable securities, amortized cost	49
Marketable securities	49
Municipal debt securities [Member]
Investments in marketable securities
Marketable securities, amortized cost	26
Marketable securities	$ 26