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| LP Reports Second Quarter 2007 Results |
NASHVILLE, Tenn.--(BUSINESS WIRE)--July 25, 2007--Louisiana-Pacific Corporation (LP) (NYSE: LPX) reported today a second quarter net loss of $23 million, or $0.22 per diluted share, on sales from continuing operations of $461 million. In the second quarter of 2006, LP's net income was $55 million, or $0.52 per diluted share, on sales from continuing operations of $637 million. For the first six months of 2007, LP reported a net loss of $61 million, or $0.58 per diluted share, on sales from continuing operations of $856 million compared to net income of $139 million, or $1.31 per diluted share, on sales from continuing operations of $1.3 billion for the first six months of 2006. For the second quarter of 2007, loss from continuing operations was $16 million, or $0.15 per diluted share. In the second quarter of 2006, LP's income from continuing operations was $56 million, or $0.53 per diluted share. For the first six months 2007, loss from continuing operations was $52 million, or $0.50 per diluted share. For the first six months of 2006, income from continuing operations was $141 million, or $1.33 per diluted share. "Our second quarter results reflect the continuing weakness in the housing sector," said Chief Executive Officer Rick Frost. "With new housing starts down compared to the same quarter last year, we saw lower demand for most of our building products and significantly lower OSB prices. Additionally, the strengthening of the Canadian dollar during the quarter had a negative impact on operating results and caused a foreign exchange loss related to our debt." At 11:00 a.m. ET (8:00 a.m. PT) today, LP will host a webcast on its second quarter 2007 financial results. To access the live webcast and accompanying presentation, visit www.lpcorp.com and go to the "Investor Relations" section from the main menu. LP is a premier supplier of building materials, delivering innovative, high-quality commodity and specialty products to its retail, wholesale, homebuilding and industrial customers. Visit LP's web site at www.lpcorp.com for additional information on the company. FORWARD LOOKING STATEMENTS This news release contains statements concerning Louisiana-Pacific Corporation's (LP) future results and performance that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The matters addressed in these statements are subject to a number of risks, uncertainties and assumptions that may cause actual results to differ materially from those projected, including, but not limited to, the effect of general economic conditions, including the level of interest rates and housing starts, market demand for the company's products, and prices for structural products; the effect of forestry, land use, environmental and other governmental regulations; the ability to obtain regulatory approvals; and the risk of losses from fires, floods and other natural disasters. These and other factors that could cause or contribute to actual results differing materially from those contemplated by such forward-looking statements are discussed in greater detail in the company's Securities and Exchange Commission filings.
LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES
FINANCIAL AND QUARTERLY DATA
(Dollar amounts in millions, except per share amounts) (Unaudited)
Quarter Ended Six Months Ended
June 30, June 30,
--------------- -----------------
2007 2006 2007 2006
-------- ------ -------- --------
Net sales $461.2 $636.6 $855.8 $1,292.2
Income (loss) before income taxes
and equity in earnings of
unconsolidated affiliates $(21.6) $74.8 $(85.6) $202.9
Income (loss) from continuing
operations excluding (gain) loss on
sale or impairment of long-lived
assets and other operating credits
and charges, net $(27.6) $56.2 $(60.2) $141.2
Income (loss) from continuing
operations $(15.6) $56.1 $(51.6) $141.1
Net income (loss) $(23.3) $55.1 $(60.6) $138.8
Net income (loss) per share -
basic and diluted $(0.22) $0.52 $(0.58) $1.31
Average shares outstanding (in
millions)
Basic 104.2 105.3 104.1 105.6
Diluted 104.2 105.8 104.1 106.2
Calculation of income (loss) from continuing operations excluding
(gain) loss on sale or impairment of long-lived assets and other
operating credits and charges, net:
Income (loss) from continuing
operations $ (15.6) $ 56.1 $ (51.6) $ 141.1
(Gain) loss on sale or impairment
of long-lived assets (0.3) 0.1 5.2 -
Other operating credits and
charges, net (19.2) - (19.2) -
-------- ------ -------- --------
(19.5) 0.1 (14.0) 0.1
Provision (benefit) for income
taxes on above items 7.5 - 5.4 -
-------- ------ -------- --------
(12.0) 0.1 (8.6) 0.1
$ (27.6) $ 56.2 $ (60.2) $ 141.2
======== ====== ======== ========
Per share - basic $ (0.26) $ 0.53 $ (0.58) $ 1.34
Per share - diluted $ (0.26) $ 0.53 $ (0.58) $ 1.33
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES
(Dollar amounts in millions, except per share amounts) (Unaudited)
Quarter Ended Six Months Ended
June 30, June 30,
--------------- ----------------
2007 2006 2007 2006
-------- ------ ------- --------
Net sales $461.2 $636.6 $855.8 $1,292.2
-------- ------ ------- --------
Operating costs and expenses:
Cost of sales 437.6 491.3 829.3 956.6
Depreciation, amortization and cost
of timber harvested 27.4 31.0 55.9 64.0
Selling and administrative 38.3 38.8 78.5 79.7
(Gain) loss on sale or impairment of
long-lived assets (0.3) 0.1 5.2 -
Other operating credits and charges,
net (19.2) - (19.2) 0.1
-------- ------ ------- --------
Total operating costs and
expenses 483.8 561.2 949.7 1,100.4
-------- ------ ------- --------
Income (loss) from operations (22.6) 75.4 (93.9) 191.8
-------- ------ ------- --------
Non-operating income (expense):
Foreign currency exchange loss (12.7) (10.6) (15.5) (8.5)
Interest expense, net of capitalized
interest (9.7) (14.3) (20.0) (27.7)
Investment income 23.4 24.3 43.8 47.3
-------- ------ ------- --------
Total non-operating income
(expense) 1.0 (0.6) 8.3 11.1
-------- ------ ------- --------
Income (loss) before taxes and equity
in earnings of unconsolidated
affiliates (21.6) 74.8 (85.6) 202.9
Provision (benefit) for income taxes (10.9) 19.0 (42.2) 63.3
Equity in loss (earnings) of
unconsolidated affiliates 4.9 (0.3) 8.2 (1.5)
-------- ------ ------- --------
Income (loss) from continuing
operations (15.6) 56.1 (51.6) 141.1
-------- ------ ------- --------
Discontinued operations:
Loss from discontinued operations
before income taxes (12.6) (1.7) (14.8) (3.8)
Income tax benefit (4.9) (0.7) (5.8) (1.5)
-------- ------ ------- --------
Loss from discontinued operations (7.7) (1.0) (9.0) (2.3)
-------- ------ ------- --------
Net income (loss) $(23.3) $55.1 $(60.6) $138.8
======== ====== ======= ========
Net income (loss) per share of common
stock (basic):
Income (loss) from continuing
operations $(0.15) $0.53 $(0.50) $1.34
Loss from discontinued operations (0.07) (0.01) (0.08) (0.03)
-------- ------ ------- --------
Net income (loss) per share - basic $(0.22) $0.52 $(0.58) $1.31
======== ====== ======= ========
Net income (loss) per share of common
stock (diluted):
Income (loss) from continuing
operations $(0.15) $0.53 $(0.50) $1.33
Loss from discontinued operations (0.07) (0.01) (0.08) (0.02)
-------- ------ ------- --------
Net income (loss) per share - diluted $(0.22) $0.52 $(0.58) $1.31
======== ====== ======= ========
Average shares of stock outstanding -
basic 104.2 105.3 104.1 105.6
======== ====== ======= ========
Average shares of stock outstanding -
diluted 104.2 105.8 104.1 106.2
======== ====== ======= ========
CONDENSED CONSOLIDATED BALANCE SHEETS
LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES
(Dollar amounts in millions) (Unaudited)
June 30, December 31,
2007 2006
---------- ------------
ASSETS
Cash and cash equivalents $265.6 $265.7
Short-term investments 645.9 797.0
Receivables, net 180.8 157.4
Inventories 232.3 221.6
Prepaid expenses and other current assets 10.1 9.3
Deferred income taxes 8.8 28.5
Current portion of notes receivable from asset
sales 37.1 -
Current assets of discontinued operations 18.5 24.5
---------- ------------
Total current assets 1,399.1 1,504.0
Timber and timberlands 92.8 98.7
Property, plant and equipment 2,093.2 1,986.1
Accumulated depreciation (1,167.0) (1,135.7)
---------- ------------
Net property, plant and equipment 926.2 850.4
Goodwill 273.5 273.5
Notes receivable from asset sales 295.9 333.0
Long-term investments 66.4 40.4
Restricted cash 52.7 51.8
Investments in and advances to affiliates 209.8 212.9
Other assets 31.9 27.1
Long-term assets of discontinued operations 33.9 44.6
---------- ------------
Total assets $3,382.2 $3,436.4
========== ============
LIABILITIES AND EQUITY
Current portion of long-term debt $0.2 $0.4
Current portion of limited recourse notes
payable 36.5 -
Short-term notes payable 32.6 3.0
Accounts payable and accrued liabilities 229.8 237.9
Current portion of deferred tax liabilities 14.6 14.6
Current portion of contingency reserves 9.0 9.0
---------- ------------
Total current liabilities 322.7 264.9
Long-term debt, excluding current portion:
Limited recourse notes payable 290.3 326.8
Other long-term debt 340.3 317.8
---------- ------------
Total long-term debt, excluding current
portion 630.6 644.6
Contingency reserves, excluding current
portion 20.1 25.6
Other long-term liabilities 83.9 70.0
Deferred income taxes 341.9 363.9
Commitments and contingencies
Stockholders' equity:
Common stock 116.9 116.9
Additional paid-in capital 435.9 435.8
Retained earnings 1,780.3 1,870.2
Treasury stock (278.7) (284.0)
Accumulated comprehensive loss (71.4) (71.5)
---------- ------------
Total stockholders' equity 1,983.0 2,067.4
---------- ------------
Total liabilities and equity $3,382.2 $3,436.4
========== ============
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES
(Dollar amounts in millions) (Unaudited)
Six Months Ended June 30,
-------------------------
2007 2006
------------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $(60.6) $138.8
Adjustments to reconcile net income (loss)
to net cash provided by (used in) operating
activities:
Depreciation, amortization and cost of
timber harvested 57.7 66.9
(Earnings) losses of unconsolidated
affiliates 8.2 (1.5)
(Gain) loss on sale or impairment of
long-lived assets 14.2 (0.4)
Stock based compensation expense related
to stock plans 3.3 3.2
Excess tax benefits from stock based
compensation - (3.3)
Exchange loss on remeasurement 19.1 15.8
Cash settlement of contingencies (6.9) (7.7)
Pension (payments) expense, net (2.1) (2.2)
Other adjustments (6.1) 2.6
(Increase) decrease in receivables (20.2) 20.5
Increase in inventories (0.7) (16.6)
Increase in prepaid expenses (1.9) (2.0)
Decrease in accounts payable and accrued
liabilities (4.5) (10.0)
Increase (decrease) in deferred income
taxes 0.5 (48.0)
------------- -----------
Net cash provided by (used in) operating
activities - 156.1
------------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Property, plant, and equipment additions (132.3) (64.7)
Proceeds from asset sales 2.0 1.5
Investments in and advances to joint
ventures (4.9) (8.8)
Receipt of proceeds from notes receivable - 70.8
Cash paid for purchase of investments (1,538.1) (3,602.3)
Proceeds from sales of investments 1,669.4 3,439.3
(Increase) decrease in restricted cash
under letter of credit requirements (10.8) 16.0
------------- -----------
Net cash used in investing activities (14.7) (148.2)
------------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings of long-term debt 13.0 -
Repayment of debt (0.2) (189.1)
Net borrowings under revolving credit
agreements 29.6 -
Sale of common stock under equity plans 2.6 5.5
Purchase of treasury stock - (22.3)
Payment of cash dividends (31.3) (31.8)
Excess tax benefits from stock-based
compensation - 3.3
------------- -----------
Net cash provided by (used in) financing
activities 13.7 (234.4)
------------- -----------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND
CASH EQUIVALENTS 0.9 (5.0)
------------- -----------
Net decrease in cash and cash equivalents (0.1) (231.5)
Cash and cash equivalents at beginning of
period 265.7 607.6
------------- -----------
Cash and cash equivalents at end of period $265.6 $376.1
============= ===========
LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES
SELECTED SEGMENT INFORMATION
(Dollar amounts in millions) (Unaudited)
Dollar amounts in millions Quarter Ended Six Months Ended
June 30, June 30,
-------------- -----------------
2007 2006 2007 2006
------- ------ -------- --------
Net sales:
OSB $223.3 $354.6 $412.2 $752.3
Siding 131.0 148.6 235.1 269.4
Engineered Wood Products 85.7 110.0 166.0 222.4
Other 23.9 23.4 47.5 48.1
Less: Intersegment sales (2.7) - (5.0) -
------- ------ -------- --------
$461.2 $636.6 $855.8 $1,292.2
======= ====== ======== ========
Operating profit (loss):
OSB $(44.6) $62.4 $(109.1) $173.3
Siding 17.2 22.9 26.6 41.5
Engineered Wood Products 3.9 9.1 10.3 20.3
Other (2.7) 4.4 (0.6) 9.9
Other operating credits and charges,
net 19.2 - 19.2 (0.1)
Gain (loss) on sales of and
impairment of long-lived assets 0.3 (0.1) (5.2) -
General corporate and other expenses,
net (20.8) (23.0) (43.3) (51.6)
Foreign currency losses (12.7) (10.6) (15.5) (8.5)
Investment income 23.4 24.3 43.8 47.3
Interest expense, net of capitalized
interest (9.7) (14.3) (20.0) (27.7)
------- ------ -------- --------
Income from operations before taxes (26.5) 75.1 (93.8) 204.4
Provision (benefit) for income taxes (10.9) 19.0 (42.2) 63.3
------- ------ -------- --------
Income (loss) from continuing
operations $(15.6) $56.1 $(51.6)# $141.1
============== ======== ========
LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES
NOTES TO FINANCIAL DATA
(Dollar amounts in millions, except per share amounts) (Unaudited)
1. Results of operations for interim periods are not necessarily
indicative of results to be expected for an entire year.
2. As of January 1, 2007, LP adopted Financial Accounting
Standards Board (FASB) Staff Position AUG AIR-1, "Accounting
for Planned Major Maintenance Activities" and FASB
Interpretation No. 48, "Accounting for Uncertainty in Income
Taxes - an Interpretation of FASB Statement No. 109" and
accordingly adjusted the beginning balance of retained
earnings for these standards.
3. LP has announced its intent to divest its decking operations.
In accordance with Statement of Financial Accounting Standards
(SFAS) No. 144, "Accounting for the Impairment or Disposal of
Long-Lived Assets," LP is required to account for the
businesses anticipated to be sold within one year as
discontinued operations. Accordingly, commencing with the
quarter ended June 30, 2007, LP is classifying its decking
operations as discontinued operations and has reclassified all
periods presented in the same manner.
4. The major components of "Other operating credits and charges,
net" and "(Gain) loss on sale or impairment of long lived
assets" in the Consolidated Statements Of Income for the
quarter and six month period ended June 30 are described below:
In the first quarter of 2007, LP recorded a charge of $5.0
million to reduce the carrying value of a sawmill located
in Quebec to the estimated sales price less selling costs.
In the second quarter of 2007, LP recorded a gain of $17.7
million associated with proceeds received associated with a
favorable verdict on a legal suit associated with our
insurance on hardboard siding and a gain of $1.5 million
associated with a settlement with the Canadian government
on the reduction of certain of LP's timber licenses in
British Columbia.
5. Income Taxes
Quarter Ended Six Months Ended
June 30, June 30,
---------------- ------------------
2007 2006 2007 2006
---------------- ------------------
Pre-tax income (loss) from
continuing operations $(26.5) $75.1 $(93.8) $204.4
Pre-tax loss from discontinued
operations (12.6) (1.7) (14.8) (3.8)
-------- ------- --------- --------
(39.1) 73.4 (108.6) 200.6
Total tax (provision) benefit 15.8 (18.3) 48.0 (61.8)
-------- ------- --------- --------
Net income (loss) $(23.3) $55.1 $(60.6) $138.8
======== ======= ========= ========
Accounting standards require that income tax expense be determined by applying the estimated annual effective tax rate (based upon estimated annual amounts of taxable income and expense) by income component for the year applied to year-to-date income or loss at the end of each quarter, further adjusted by any changes in reserve requirements or the impact of statutory tax rate changes, if any. Each quarter the income tax accrual is adjusted to the latest estimate and the difference from the previously accrued year-to-date balance is adjusted to the current quarter. For the six months ended June 30, 2007, the primary differences between the U.S. statutory rate of 35% and the effective rate on continuing operations relates to the company's foreign debt structure, state income taxes and the favorable resolution of an outstanding state tax contingency. For the six months ended June 30, 2006, the primary differences between the U.S. statutory rate of 35% and the effective rate on continuing operations relate to the company's foreign debt structure, state income taxes, and a second quarter reduction in LP's Canadian deferred tax liabilities due to an enacted decrease in the statutory income tax rate. The components and associated effective income tax rates applied to each period are as follows:
Quarter Ended June 30,
------------------------------------------
2007 2006
--------------------- --------------------
Tax Benefit Tax Rate Tax Tax
Provision Rate
(Benefit)
----------- --------- --------------------
Continuing operations $(10.9) 41% $19.0 25%
Discontinued operations (4.9) 39% (0.7) 39%
----------- ------------
$(15.8) 40% $18.3 25%
=========== ============
Six Months Ended June 30,
------------------------------------------
2007 2006
--------------------- --------------------
Tax Benefit Tax Rate Tax Tax
Provision Rate
(Benefit)
----------- --------- --------------------
Continuing operations $(42.2) 45% $63.3 31%
Discontinued operations (5.8) 39% (1.5) 39%
----------- ------------
$(48.0) 44% $61.8 31%
=========== ============
LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES
SUMMARY OF PRODUCTION VOLUMES
Quarter Ended Six Months Ended
June 30, June 30,
------------- ----------------
2007 2006 2007 2006
------- ----- -------- -------
Oriented strand board, million square
feet 3/8" basis (1) 1,458 1,542 2,808 3,035
Oriented strand board, million square
feet 3/8" basis 72 65 114 133
(produced by wood-based siding mills)
Wood-based siding, million square feet
3/8" basis 247 263 489 514
Engineered I-Joist, million lineal feet
(1) 36 42 71 85
Laminated veneer lumber (LVL), thousand
cubic feet 2,165 3,026 4,331 5,989
Composite Decking, million lineal feet 5 16 10 31
(1) Includes volumes produced by joint venture operations and sold to
LP.
CONTACT: Louisiana-Pacific Corporation |
