SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
ANNUAL REPORT
PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark one)
/X/ Annual Report pursuant to 15(d) of the Securities Exchange Act of 1934 (Fee
required)
For the fiscal year ended December 31, 2003.
OR
/ / Transition report pursuant to Section 15(d) of the Securities Exchange Act
of 1934 (No fee required)
For the transition period from to
--------------- -------------
Commission file number 1-8864.
A. Full title of the Plan:
USG CORPORATION INVESTMENT PLAN (Formerly USG CORPORATION INVESTMENT
PLAN FOR SALARIED EMPLOYEES)
B. Name of the issuer of the securities held pursuant to the plan and the
address of its principal executive office:
USG CORPORATION, 125 SOUTH FRANKLIN STREET, CHICAGO, ILLINOIS 60606
REQUIRED INFORMATION
Financial Statements:
Plan financial statements and schedules prepared in accordance with the
financial reporting requirements of ERISA attached hereto, including a Consent
of Independent Public Auditors for 2003 with respect to Form S-8.
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
members of the Pension and Investment Committee administering the Plan have duly
caused this annual report to be signed by the undersigned thereunto duly
authorized.
USG CORPORATION INVESTMENT PLAN
By: /s/ Peter K. Maitland
-----------------------------
Peter K. Maitland
Vice President, Compensation,
Benefits and Administration
Date: March 29, 2004
USG CORPORATION
INVESTMENT PLAN
REPORT ON AUDITED
FINANCIAL STATEMENTS AND
SUPPLEMENTAL SCHEDULES
YEARS ENDED DECEMBER 31, 2003 AND 2002
TABLE OF CONTENTS
PAGE
INDEPENDENT AUDITORS' REPORT 1
FINANCIAL STATEMENTS:
Statements of Net Assets Available
for Benefits 2
Statements of Changes in Net Assets
Available for Benefits 3
Notes to Financial Statements 4
SUPPLEMENTAL SCHEDULES:
I. Schedule of Investments Held
at Year End 12
II. Schedule of Reportable Transactions 13
Member of the
American Institute
Of Certified Public Accountants
Member of the
Illinois CPA Society
[HillTaylor Logo]
Hill Taylor, LLC
Certified Public Accountants
116 South Michigan Avenue, 11th Floor
Chicago, Illinois 60603
V 312-332-4964 F 312-332-0181
INDEPENDENT AUDITORS' REPORT
PENSION AND INVESTMENT COMMITTEE
USG CORPORATION
We have audited the accompanying statements of net assets available for benefits
of the USG Corporation Investment Plan as of December 31, 2003 and 2002, and the
related statements of changes in net assets available for benefits for the years
then ended. These financial statements are the responsibility of the Plan's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan as of
December 31, 2003 and 2002, and the changes in net assets available for benefits
for the years then ended in conformity with accounting principles generally
accepted in the United States of America.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of investments
held at year end as of December 31, 2003, and reportable transactions for the
year ended December 31, 2003, are presented for the purpose of additional
analysis and are not a required part of the basic financial statements but are
supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. These supplemental schedules are the responsibility of the
Plan's management. The supplemental schedules have been subjected to the
auditing procedures applied in the audits of the basic financial statements and,
in our opinion, are fairly stated in all material respects in relation to the
basic financial statements taken as a whole.
March 12, 2004
USG CORPORATION INVESTMENT PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 2003 AND 2002
2003 2002
------------ ------------
ASSETS:
Investments, at market
$434,466,692 $336,413,983
------------ ------------
Receivables:
Employee loans
Receivable 28,451,799 25,110,551
Employer contributions
Receivable 9,000,208 20,755,665
Interest and
Dividends receivable 45,183 71,643
------------ ------------
Total Receivables 37,497,190 45,937,859
------------ ------------
Total Assets 471,963,882 382,351,842
------------ ------------
LIABILITIES:
Accrued administrative
Fees 161,276 177,595
------------ ------------
Total Liabilities 161,276 177,595
------------ ------------
NET ASSETS AVAILABLE
FOR BENEFITS $471,802,606 $382,174,247
============ ============
The accompanying notes to financial statements are an integral part of these
statements.
- 2 -
USG CORPORATION INVESTMENT PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEARS ENDED DECEMBER 31, 2003 AND 2002
2003 2002
------------- -------------
NET ASSETS AVAILABLE
FOR BENEFITS,
beginning of year $ 382,174,247 $ 359,963,777
------------- -------------
ADD (DEDUCT):
Corporation contributions 21,446,194 32,239,836
Employee contributions 34,726,469 31,793,149
------------- -------------
56,172,663 64,032,985
------------- -------------
Income from investments:
Dividend income 2,239,930 1,723,247
Interest income 11,176,035 11,553,884
Realized gain (loss) on
sale of investments (3,731,443) (9,911,879)
Unrealized appreciation
(depreciation) for the year 48,234,914 (21,497,946)
------------- -------------
57,919,436 (18,132,694)
------------- -------------
Benefit payments and
participant withdrawals (23,635,328) (22,503,535)
Net transactions due to loans 6,651 (11,911)
Administrative expenses (835,063) (1,174,375)
------------- -------------
Net increase in assets
during the year 89,628,359 22,210,470
------------- -------------
NET ASSETS AVAILABLE
FOR BENEFITS,
end of year $ 471,802,606 $ 382,174,247
============= =============
The accompanying notes to financial statements are an integral part of these
statements.
- 3 -
USG CORPORATION
INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND 2002
1. DESCRIPTION OF THE PLAN
The USG Corporation Investment Plan, also known as the USG Corporation
Investment Plan for Salaried Employees prior to January 1, 1989 ("The
Plan"), was approved by the stockholders of the Corporation on May 11,
1977, and became effective on July 1, 1977. The Plan was subsequently
amended and completely restated effective as of January 1, 1989 and
most recently as of July 1, 1997 ("restated Plan"). The amendments and
restatements incorporate all prior amendments to the Plan and make
changes to reflect the merger of the USG Corporation Savings Plan for
Hourly Employees and change the name of the Plan to the USG Corporation
Investment Plan, effective January 1, 1989; and to implement the daily
valuation of investments in the participants' accounts at fair market
value on each business day effective July 1, 1997.
The Plan was established to provide a means for eligible hourly and
salaried employees to participate in the earnings of the Corporation,
to build a supplemental retirement fund and to provide additional
disability and death benefits.
The Plan provides, among other things, that participants may contribute
up to 20% (9% for highly compensated employees) of their eligible pay
to the Plan through payroll deductions on a before-tax basis during the
year effective January 1, 2002, 15% from January 1, 1998 to December
31, 2001, 12% from July 1, 1997 to December 31, 1997, 9% from January
1, 1989 to June 30, 1997, 15% from October 1, 1985 to December 31, 1988
and 12% prior to October 15, 1985. The amount of distributions to be
made upon withdrawal from the Plan is dependent upon the participant's
and the Corporation's contributions. The Plan requires completion of
three years of credited service, effective January 1, 2002 (five years
previously), in order to be 100% vested in the Corporation
contribution. Employee contributions are always 100% vested. In
addition, the Plan contains provisions under which the entire amount
credited to a participant's account is distributable upon a
participant's retirement, disability, or death.
Employee contributions are invested by the Trustee in any one or a
combination of nine funds: (a) common stock of USG Corporation (USG
Common Stock Fund), (b) an equity index fund which provides investment
results that are designed to correspond to the performance of publicly
traded common stocks, as represented by the Standard & Poor's 500
Composite Stock Price Index (Equity Index Fund), (c) a balanced fund
which invests in several broadly diversified asset classes, including
domestic and foreign common stock and bonds, preferred stocks and cash
(Balanced Fund), (d) a growth fund which invests primarily in equity
securities of large market capitalization companies with earnings that
are expected to grow at an above-average rate, but may be further
diversified by investment of a small portion of the assets in domestic
bonds, foreign common stocks and bonds, and cash (Growth Fund), (e) a
small-mid cap equity fund which seeks maximum long-term growth of
capital by investing in common stock of rapidly growing U.S. small and
mid cap companies with market capitalizations of less than $1.5 billion
and $8.5 billion, respectively, at the time of initial investment
(Small-Mid Cap Equity Fund), (f) a large cap value fund which seeks to
provide long-term growth of principal and income by investing in common
stocks of companies that appear to be temporarily
- 4 -
undervalued by the stock market but have a favorable outlook for
long-term growth (Large Cap Value Fund), (g) an international equity
fund which seeks long-term capital appreciation through investments in
common stock of established non-U.S. companies (International Equity
Fund), (h) a bond fund which seeks to provide current income and
preservation of capital by investing in investment grade corporate debt
securities, government bonds and mortgages in both U.S. and foreign
markets, (Bond Fund) or (i) a managed separate account which seeks to
preserve principal and income while maximizing current income by
investing in a diversified pool of Guaranteed Investment Contracts
(GICs), separate account GICs, synthetic GICs or Structured Investment
Contracts (SICs) and Bank Investment Contracts (BICs) of varying
maturity, size and yield (Stable Value Fund).
The Equity Index Fund is invested in the Vanguard Institutional Index
Fund.
The Balanced Fund is invested in the Fidelity Puritan Fund.
The Growth Fund is invested in the AXP New Dimensions Fund - Class Y.
The Small-Mid Cap Equity Fund is invested in the Franklin Small-Mid Cap
Growth Fund - Class A.
The Large Cap Value Fund is invested in the Dodge & Cox Stock Fund.
The International Equity Fund is invested in the Templeton Foreign Fund
- Class A.
The Bond Fund is invested in the PIMCO Total Return Fund -
Institutional Class.
The Stable Value Fund is managed by PRIMCO Capital Management. At
December 31, 2003, the Stable Value Fund was primarily composed of
group annuity contracts maintained by banks and insurance companies.
Participants may elect to have their contributions invested in 1%
increments in any fund or combination of funds and to change their
contribution rate, suspend or resume their contributions, change their
investment allocations, transfer their investments from one fund to
another and apply for a loan by calling the USG Investment Plan
Connection, an automated telephone service, or accessing Retirement
Passport, a secured interactive website, via the Internet, on any day.
Certain Executive officers of the Corporation must pre-clear any
transfer out of the USG Common Stock Fund with the USG Corporate
Secretary.
The Corporation made a regular 50% matching contribution up to the
first 6% of the participants' eligible pay contributed to the Plan,
credited to the participants' accounts each pay period starting June 1,
2001. From January 1, 2001 to May 31, 2001 the Corporation made a
regular 25% matching contribution up to the first 6% of each
participant's eligible pay contributed to the Plan.
The Plan was amended effective January 1, 1999 to provide for immediate
eligibility and enrollment to join the Plan for newly hired employees
and current employees who are in their one year waiting period as of
January 1, 1999, unless the employee elects not to join the Plan.
- 5 -
The fifth amendment to the Plan, effective November 8, 2000, does not
allow additional participant or employer contributions to the USG
Common Stock Fund. The amendment also does not allow the transfer of
any portion of a participant's interest from any other fund into the
USG Common Stock Fund.
The sixth amendment to the Plan, effective June 1, 2001, increased the
regular matching contribution on the first 6% of participant's eligible
pay contributed to the Plan to 50% from 25%, credited to the
participant's account each pay period.
The seventh amendment, effective January 1, 2002, made several
technical changes in conjunction with the underlying Internal Revenue
Code as to contribution limits and distribution periods and limits,
increasing the employee contribution rate to 20%, increasing the annual
basic contribution limit to $11,000, increasing the plan year earnings
limit to $200,000, and increasing the maximum annual addition to
$40,000. This amendment also changed participant vesting in Corporation
contributions to three years from five and changed the Corporation
matching formula to attainment of certain EBITDAR goals from the
previous consolidated earnings goals.
The eighth amendment to the Plan, effective January 1, 2003 allows for
catch-up contributions for participants who will have attained age 50
by the end of the plan year. The catch-up contribution limits are in
accordance with, and subject to the limitations of, Section 414(v) of
the Internal Revenue Code. The catch-up contributions are not taken
into account for purposes of determining compliance with other
contribution limits of the Plan.
The ninth amendment to the Plan changes the Corporation profit sharing
matching contribution to a formula based on the USG Companies'
"adjusted net earnings" for that plan year, effective for plan years
ending on or after January 1, 2003. Effective January 1, 2003, the
amendment allowed for technical changes in the rules for distributions,
primarily to spouses or beneficiaries, to comply with changes in the
Internal Revenue Code. Effective January 1, 2004, no company profit
sharing match contribution will be made for any plan year ending after
December 31, 2003.
If the Trustee is unable to invest any contributions immediately, the
funds are temporarily invested in short-term investment funds and any
earnings in the fund are credited to the participants' accounts.
The Plan funds are administered under the terms of a Trust agreement
with The Northern Trust Company. The Trust agreement provides, among
other things, that the Trustee shall keep account of all investments,
receipts and disbursements and other transactions and shall provide
annually a report setting forth such transactions and the status of the
funds at the end of the period.
The Plan is administered by the Pension and Investment Committee, which
consists of six members appointed by the Corporation. Administrative
expenses and other fees of the Plan are shared by the Corporation and
the participants.
At December 31, 2003 and 2002, there were approximately 12,623 and
12,238 participants in the Plan, respectively.
- 6 -
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The amounts in the accompanying statements were accumulated from the
reports of the Trustee (Note 1). The financial statements of the Plan
are prepared under the accrual method of accounting. Contributions to
the Plan are made throughout the year and adjustments are made to the
financial statements to accrue for the portion of annual contributions
unpaid at year-end.
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, and changes therein, and disclosure of
contingent assets and liabilities. Actual results could differ from
those estimates.
The Plan's investments are stated at market value except for its group
annuity contracts with insurance companies, which are valued at
contract value because they are fully benefit responsive. For example,
participants may ordinarily direct the withdrawal or transfer of all or
a portion of their investment at contract value. There are no reserves
against contract value for credit risk of the contract issuers. Market
value and cost are equal for the group annuity contracts and short-term
investments. Shares of registered investment companies are valued at
quoted market prices which represent the net asset value of shares held
by the Plan at year-end. The Company stock is valued at its quoted
market price. Participant loans receivable are valued at cost which
approximates fair value.
Purchases and sales of securities are recorded on a trade-date basis.
Interest income is recorded on the accrual basis. Dividends are
recorded on the ex-dividend date. Realized gains or losses on the sale
of investments are calculated based upon the historical average cost of
the investments. Unrealized appreciation or depreciation of investments
of the Plan represents the change between years in the difference
between the market value and cost of the investments.
The guaranteed investment contracts in the Stable Value Fund earned
guaranteed interest at rates varying from 1.24% to 7.87% at December
31, 2003. The rates for 2002 ranged from 1.44% to 7.47%. The guaranteed
investment contracts earnings are calculated net of administrative
fees.
For the USG Common Stock Fund, cost was $19,016,328 and $23,326,234 as
of December 31, 2003 and 2002, respectively. For the Equity Index Fund,
market value exceeded cost by $6,414,226 at December 31, 2003 and cost
value exceeded market value by $7,123,086 at December 31, 2002. For the
Balanced Fund, market value exceeded cost by $1,171,123 at December 31,
2003 and cost exceeded market value by $2,921,244 at December 31, 2002.
For the Growth Fund, cost exceeded market value by $1,957,069 and
$13,006,764 at December 31, 2003, and 2002, respectively. For the
Small-Mid Cap Equity Fund, market value exceeded cost by $1,655,346 at
December 31, 2003 and cost exceeded market value by $5,738,888 at
December 31, 2002. For the Large Cap Value Fund, market value exceeded
cost by $2,970,995 at December 31, 2003 and cost exceeded market value
by $654,672 at December 31, 2002. For the International Equity Fund,
market value exceeded cost by $1,058,685 at December 31, 2003 and cost
exceeded market value by $90,878 at December 31, 2002. For the Bond
Fund, cost exceeded market value by $50,241 and $24,756 at December 31,
2003, and 2002, respectively.
- 7 -
Pending transactions due to loans represent reconciliations of the loan
amounts between the Trustee and recordkeeper at year-end, which will be
posted to the Trustee's records in the subsequent year.
Benefits are recorded when paid.
3. TAX STATUS
The Plan, as amended and restated, effective July 1, 1997, meets the
requirements of Section 401(a) of the Internal Revenue Code and,
accordingly, its income is exempt from Federal income tax under Section
501(a). Employer contributions and the income of the Plan are not
taxable to the participants until distributions are made.
4. EMPLOYER CONTRIBUTIONS
The Corporation will make a formula matching contribution with respect
to each eligible participant only if the USG Companies' adjusted net
earnings for the plan year equal or exceed ten million dollars for each
plan year ending on or after January 1, 2003. The adjusted net earnings
of the USG Companies for any plan year is based upon the net income of
the USG Companies as reported for the fiscal year that coincides with
the plan year, plus after-tax Chapter 11 expenses, plus the cumulative
effect of accounting changes to determine the share of earnings. The
adjusted net earnings for any plan year is to be determined by the
chief financial officer of the company and filed in writing with the
committee by the end of the first calendar quarter of each plan year.
Beginning January 1, 2003, the Corporation formula matching
contribution schedule was set as starting with a 3% match for ten
million dollars in adjusted net earnings, with a 3% increase for each
additional ten million dollars in adjusted net earnings up to fifty
million dollars in adjusted net earnings. Each additional ten million
dollars in adjusted net earnings from fifty million dollars to two
hundred fifty million dollars results in a 2% increase in match. From
two hundred fifty million to five hundred million in adjusted net
earnings, each additional ten million dollars will result in a 1%
increase in match. There is no additional increase in match beyond five
hundred million dollars. The percentage match will be adjusted pro
rata, to the nearest hundredth, for any net earnings between the set
points.
Beginning January 1, 2002, the Plan used EBITDAR (Consolidated Net
Earnings of the USG Companies before Interest, Taxes, Depreciation,
Amortization, Reorganization expenses and other income and expense
items) as the target to measure performance attainment to be consistent
with other USG incentive plans. In order for a match to be made at
least 80% of the USG Companies EBITDAR goal had to be met for that plan
year. In 2001 and years prior to that, the formula used in the matching
contribution calculation was the consolidated earnings goal, which was
based on the net sales of the USG Companies less cost of sales and
selling and administrative expenses.
- 8 -
Beginning January 1, 2002, the Corporation formula matching
contribution schedule was set as follows: each 1% increase in goal
attainment from 80% to 100% of goal results in a corresponding 1.5%
increase in the profit sharing match, starting at a 10% match with the
attainment of 80% of earnings goal. Each 1% increase in goal attainment
from 100% to 140% of goal will result in a 1% increase in the profit
sharing match, starting from a 40% match with attainment of 100% of
goal earnings. There is no additional increase in matching percentage
for achieving an EBITDAR goal beyond 140%.
Employer contribution amounts forfeited by terminated employees are
applied as a credit against future Corporate contributions or used to
pay administrative expenses and other fees of the Plan and are held in
the Forfeiture Cash Account.
5. DISTRIBUTION ON TERMINATION OF THE PLAN
In the event of termination of the Plan, the account balances of all
affected participants shall become non-forfeitable.
- 9 -
6. INVESTMENTS
The following is a summary of the Plan's investments as well as the net
realized and unrealized appreciation (depreciation) for 2003 and 2002:
2003 2002
------------------------------- --------------------------------
NET NET
APPRECIATION APPRECIATION
FAIR (DEPRECIATION) FAIR (DEPRECIATION)
VALUE IN FAIR VALUE VALUE IN FAIR VALUE
------------- ------------- ------------- -------------
Common Stock:
USG Common
Stock $ 8,019,913 $ 4,535,056 $ 4,839,349 $ 1,650,999
------------- ------------- ------------- -------------
Mutual Funds:
Vanguard Index
Trust 64,882,331 13,128,884 43,804,332 (13,696,593)
Fidelity Puritan
Fund 27,381,225 4,274,254 19,758,185 (2,548,063)
AXP New Dimensions
Fund 50,561,578 9,588,994 35,894,239 (10,326,773)
Franklin Small-Mid
Cap Growth Fund 26,535,598 6,237,411 13,038,488 (5,672,594)
Dodge & Cox
Stock Fund 21,014,479 3,756,898 7,141,212 (927,772)
Templeton Foreign
Fund 13,889,216 2,655,425 6,254,958 (607,795)
PIMCO Total Return
Fund 15,147,976 326,549 16,860,651 694,596
------------- ------------- ------------- -------------
219,412,403 39,968,415 142,752,065 (33,084,994)
============= ============= ============= =============
Mortgages, Notes,
Contracts 200,325,898 --- 178,789,884 24,170
Collective Short-Term
Investment Fund 6,708,478 --- 10,032,685 ---
------------- ------------- ------------- -------------
TOTAL
INVESTMENTS $ 434,466,692 $ 44,503,471 $ 336,413,983 ($ 31,409,825)
============= ============= ============= =============
All investments in the Plan are participant-directed investments.
- 10 -
At December 31, 2003 and 2002, the following investments
(participant-directed) exceeded 5% of the net assets available for Plan
benefits:
2003 2002
----------- -----------
Vanguard Index Trust $64,882,331 $43,804,332
Fidelity Puritan Fund 27,381,225 19,758,185
AXP New Dimension Fund 50,561,578 35,894,239
Franklin Small-Mid Cap Growth Fund 26,535,598 13,038,488
Allstate Insurance Company
Contract 77032 --- 11,696,347
Bank of America
Contract 03-087 34,653,488 ---
ING Life Insurance
Contract 60035 34,787,719 ---
Monumental Life Insurance Company
Contract 00246TR 12,815,100 22,478,371
State Street Bank & Trust
Contract 103097 34,652,393 ---
State Street Bank & Trust
Contract 99010 --- 15,461,787
UBS, Contract 5171 31,165,070
UBS, Contract 5021 --- 33,775,598
7. PARTICIPANT LOANS
Effective October 1, 1993, and as revised on July 1, 1997, a participant can
obtain loans from the Plan. Under the Plan's loan provisions, the maximum
loan allowable is one half of a participant's vested account balance or
$50,000, whichever is less. The minimum loan amount is $1,000. Additional
amounts can be taken in $1 increments. A participant must have a vested
account balance of at least $2,000 before he or she can apply for a loan.
The Plan restricts the participant to no more than two loans outstanding at
a time. Most loans can be repaid by the participant over a five-year period,
or sooner, in full, with interest at the prime rate in effect at the time of
requesting the loan. A residential loan can be repaid over a period of up to
30 years. Default on a loan by a participant is treated as a hardship
withdrawal and subject to IRS penalties.
- 11 -
SCHEDULE I
USG CORPORATION
INVESTMENT PLAN
SCHEDULE OF INVESTMENTS HELD AT YEAR END
DECEMBER 31, 2003
PRINCIPAL
AMOUNT/NUMBER OF FAIR
SHARES COST VALUE
------------ ----------- -----------
COMMON STOCK
USG Corporation 484,002 $ 19,016,328 $ 8,019,913
Vanguard Index Trust 637,476 58,468,105 64,882,331
Fidelity Puritan Fund 1,482,470 26,210,102 27,381,225
AXP New Dimensions Fund 2,117,319 52,518,647 50,561,578
Franklin Small-Mid Cap
Growth Fund 878,081 24,880,252 26,535,598
Dodge & Cox Stock Fund 184,694 18,043,484 21,014,479
Templeton Foreign Fund 1,305,377 12,830,531 13,889,216
------------ ----------- -----------
TOTAL COMMON STOCK 211,967,449 212,284,340
----------- -----------
CORPORATE BONDS
PIMCO Total Return Fund 1,414,377 15,198,217 15,147,976
------------ ----------- -----------
CONTRACTS
AEGON, MDA00538TR $ 10,438,299 10,438,299 10,438,299
Bank of America, 03-087 $ 34,653,488 34,653,488 34,653,488
Caisse des Deposts, 1077-02 $ 8,754,646 8,754,646 8,754,646
ING Life & Annuity, 60035 $ 34,787,719 34,787,719 34,787,719
John Hancock Mutual Life
Insurance Co., GAC 9532 $ 7,393,488 7,393,488 7,393,488
JP Morgan Chase
Contract AUSG01 $ 21,974,554 21,974,554 21,974,554
Monumental Life Insurance
Company, 00246TR $ 12,815,100 12,815,100 12,815,100
Prudential, 10092-211 $ 3,691,141 3,691,141 3,691,141
State Street Bank & Trust
Contract 103097 $ 34,652,393 34,652,393 34,652,393
UBS, 5171 $ 31,165,070 31,165,070 31,165,070
------------ ------------ ------------
TOTAL CONTRACTS $200,325,898 200,325,898 200,325,898
------------ ------------ ------------
SHORT-TERM INVESTMENTS
Collective Short-Term
Investment Fund $ 6,708,478 6,708,478 6,708,478
------------ ------------
TOTAL INVESTMENTS $434,200,042 $434,466,692
============ ============
- 12 -
SCHEDULE II
USG CORPORATION
INVESTMENT PLAN
SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 2003
SERIES OF TRANSACTIONS IN THE SAME SECURITY:
TOTAL COST TOTAL CURRENT
DESCRIPTION OF NUMBER OF OF NUMBER OF VALUE OF
SECURITY PURCHASES ASSET SALES SALES
-------------- --------- ---------- ----------- ----------
None
- 13 -