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| LP Reports Third Quarter 2006 Profits |
NASHVILLE, Tenn.--(BUSINESS WIRE)--Oct. 24, 2006--Louisiana-Pacific Corporation (LP) (NYSE: LPX) reported today third quarter net income of $9.5 million, or $0.09 per diluted share, on sales from continuing operations of $535 million. In the third quarter of 2005, LP's net income was $168 million, or $1.53 per diluted share, on sales from continuing operations of $621 million. For the first nine months of 2006, LP reported net income of $148 million, or $1.41 per diluted share, on sales from continuing operations of $1.87 billion compared to net income of $370 million, or $3.34 per diluted share, on sales from continuing operations of $1.97 billion for the first nine months of 2005. For the third quarter of 2006, income from continuing operations was $9.9 million, or $0.09 per diluted share. In the third quarter of 2005, LP's income from continuing operations was $175.5 million, or $1.59 per diluted share. For the first nine months 2006, income from continuing operations was $150 million, or $1.42 per diluted share. For the first nine months of 2005, income from continuing operations was $385 million, or $3.48 per diluted share. Results for 2005 include a one-time reversal of deferred tax liabilities of $102 million for the quarter (or $0.93 per diluted share) and $91 million for the first nine months of the year (or $0.83 per diluted share) associated with the planned repatriation of foreign earnings as provided by the American Job Creation Act of 2004. "OSB pricing levels continued to decline in the third quarter, cutting sharply into our earnings," said CEO Rick Frost. "Sales for most of our businesses, with the exception of siding, declined compared to third quarter 2005. The current low pricing environment reflects weakened demand for building products across North America consistent with a fall-off in housing starts. The industry has entered a difficult market environment, and we see little short-term relief. We continue to believe that the long-term demographics support a strong housing market." Frost continued, "We have been anticipating a downturn in the market cycle and we are prepared. Our strong balance sheet and committed workforce will allow us to continue to execute our strategic plan, focusing on customers, market share growth, cost reduction, capital investments, and the ongoing evaluation of strategic opportunities." At 11:00 a.m. ET (8:00 a.m. PT) today, LP will host a webcast on its third quarter 2006 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 Nine Months Ended
September 30, September 30,
------------------- -------------------
2006 2005 2006 2005
--------- --------- --------- ---------
Net sales $534.5 $621.3 $1,865.5 $1,974.7
Income before taxes and equity
in earnings of
unconsolidated affiliates $8.7 $110.3 $209.8 $434.9
Income from continuing
operations excluding (gain)
loss on sale or impairment of
long-lived assets, other
operating credits and
charges, net, and reversal of
tax liabilities due to
repatriation $8.7 $74.5 $148.7 $295.3
Income from continuing
operations $9.9 $175.5 $149.9 $385.4
Net income $9.5 $168.2 $148.3 $370.3
Net income per share - basic $0.09 $1.54 $1.41 $3.36
- diluted $0.09 $1.53 $1.41 $3.34
Average shares outstanding
(in millions)
Basic 104.9 109.0 105.0 110.1
Diluted 105.2 109.6 105.5 110.8
Calculation of income from continuing operations excluding (gain) loss on sale or impairment of long-lived assets, and other operating credits and charges, net and reversal of tax liabilities due to repatriation:
Income from continuing
operations $9.9 $175.5 $149.9 $385.4
(Gain) loss on sale or
impairment of long-lived
assets 0.9 0.9 0.9 -
Other operating credits and
charges, net (2.9) 0.3 (2.8) 1.4
--------- --------- --------- ---------
(2.0) 1.2 (1.9) 1.4
Provision for income taxes on
above items 0.8 (0.5) 0.7 (0.5)
Reversal of deferred tax
liabilities due to
repatriation of foreign
earnings - (101.7) - (91.0)
(1.2) (101.0) (1.2) (90.1)
--------- --------- --------- ---------
$8.7 $74.5 $148.7 $295.3
========= ========= ========= =========
Per share - basic $0.08 $0.68 $1.42 $2.68
diluted $0.08 $0.68 $1.41 $2.66
CONSOLIDATED STATEMENTS OF INCOME
LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES
(Dollar amounts in millions, except per share amounts) (Unaudited)
Quarter Ended Nine Months Ended
September 30, September 30,
------------------- -------------------
2006 2005 2006 2005
--------- --------- --------- ---------
Net sales $534.5 $621.3 $1,865.5 $1,974.7
--------- --------- --------- ---------
Operating costs and expenses:
Cost of sales 468.9 445.6 1,460.1 1,334.6
Depreciation, amortization
and cost of timber
harvested 32.8 33.5 99.7 98.8
Selling and administrative 39.6 36.8 122.4 110.5
(Gain) loss on sale or
impairment of long-lived
assets 0.9 0.9 0.9 -
Other operating credits and
charges, net (2.9) 0.3 (2.8) 1.4
--------- --------- --------- ---------
Total operating costs
and expenses 539.3 517.1 1,680.3 1,545.3
--------- --------- --------- ---------
Income from operations (4.8) 104.2 185.2 429.4
--------- --------- --------- ---------
Non-operating income
(expense):
Foreign currency exchange
(loss) gain (0.2) 0.4 (8.7) (1.6)
Interest expense, net of
capitalized interest (11.2) (13.1) (38.9) (44.1)
Investment income 24.9 18.8 72.2 51.2
--------- --------- --------- ---------
Total non-operating
income (expense) 13.5 6.1 24.6 5.5
--------- --------- --------- ---------
Income before taxes and equity
in earnings of unconsolidated
affiliates 8.7 110.3 209.8 434.9
Provision (benefit) for income
taxes (5.1) (66.5) 57.5 49.0
Equity in (earnings) loss of
unconsolidated affiliates 3.9 1.3 2.4 0.5
--------- --------- --------- ---------
Income from continuing
operations 9.9 175.5 149.9 385.4
--------- --------- --------- ---------
Discontinued operations:
Loss from discontinued
operations before taxes (0.6) (12.0) (2.6) (24.6)
Income tax benefit (0.2) (4.7) (1.0) (9.5)
--------- --------- --------- ---------
Loss from discontinued
operations (0.4) (7.3) (1.6) (15.1)
--------- --------- --------- ---------
Net income $9.5 $168.2 $148.3 $370.3
========= ========= ========= =========
Net income per share of common
stock (basic):
Income from continuing
operations $0.09 $1.61 $1.43 $3.50
Loss from discontinued
operations - (0.07) (0.02) (0.14)
--------- --------- --------- ---------
Net income per share - basic $0.09 $1.54 $1.41 $3.36
========= ========= ========= =========
Net income per share of common
stock (diluted):
Income from continuing
operations $0.09 $1.59 $1.42 $3.48
Loss from discontinued
operations - (0.06) (0.01) (0.14)
--------- --------- --------- ---------
Net income per share - diluted $0.09 $1.53 $1.41 $3.34
========= ========= ========= =========
Average shares of stock
outstanding - basic 104.9 109.0 105.0 110.1
========= ========= ========= =========
Average shares of stock
outstanding - diluted 105.2 109.6 105.5 110.8
========= ========= ========= =========
CONDENSED CONSOLIDATED BALANCE SHEETS
LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES
(Dollar amounts in millions) (Unaudited)
September 30, 2006 December 31, 2005
------------------- ------------------
ASSETS
Cash and cash equivalents $295.7 $607.6
Short-term investments 885.7 717.3
Receivables, net 127.4 146.8
Inventories 232.5 240.3
Prepaid expenses and other
current assets 15.5 14.4
Deferred income taxes 30.5 -
Current portion of notes
receivable from asset sales - 70.8
------------------- ------------------
Total current assets 1,587.3 1,797.2
Timber and timberlands 89.7 92.9
Property, plant and equipment 1,954.0 1,848.9
Accumulated depreciation (1,154.0) (1,065.6)
------------------- ------------------
Net property, plant and
equipment 800.0 783.3
Goodwill 273.5 273.5
Notes receivable from asset
sales 333.0 333.0
Long-term investments 46.1 13.5
Restricted cash 39.4 55.6
Investments in and advances to
affiliates 214.8 211.0
Other assets 36.8 38.0
------------------- ------------------
Total assets $3,420.6 $3,598.0
=================== ==================
LIABILITIES AND EQUITY
Current portion of long-term
debt $0.4 $18.9
Current portion of limited
recourse notes payable - 69.7
Accounts payable and accrued
liabilities 205.6 245.5
Current portion of contingency
reserves 12.0 12.0
------------------- ------------------
Total current liabilities 218.0 346.1
Long-term debt, excluding
current portion:
Limited recourse notes
payable 326.8 326.8
Other long-term debt 319.3 408.0
------------------- ------------------
Total long-term debt,
excluding current
portion 646.1 734.8
Contingency reserves, excluding
current portion 21.1 31.4
Other long-term liabilities 56.6 65.8
Deferred income taxes 366.3 377.0
Commitments and contingencies
Stockholders' equity:
Common stock 116.9 116.9
Additional paid-in capital 434.7 435.5
Retained earnings 1,910.5 1,809.7
Treasury stock (284.3) (257.0)
Accumulated comprehensive
loss (65.3) (62.2)
------------------- ------------------
Total stockholders'
equity 2,112.5 2,042.9
------------------- ------------------
Total liabilities and
equity $3,420.6 $3,598.0
=================== ==================
CONSOLIDATED STATEMENTS OF CASH FLOWS
LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES
(Dollar amounts in millions) (Unaudited)
Nine Months Ended September 30,
-------------------------------
2006 2005
-------------- ---------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $148.3 $370.3
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation, amortization and cost of
timber harvested 99.7 100.8
Loss (earnings) of unconsolidated
affiliates 2.4 0.5
Other operating charges and credits,
net (2.6) 0.5
(Gain) loss on sale or impairment of
long-lived assets 0.4 18.6
Tax effect of exercise of stock options - 4.8
Stock-based compensation related to
stock plans 4.8 -
Excess tax benefits from stock-based
compensation (3.3) -
Exchange loss on remeasurement 17.0 4.1
Cash settlement of contingencies (10.8) (7.8)
Other adjustments, net (11.2) (9.3)
Decrease in receivables 24.0 4.5
Decrease in inventories 8.0 -
(Increase) decrease in prepaid expenses (1.6) 0.5
Decrease in accounts payable and
accrued liabilities (35.0) (15.7)
Decrease in deferred income taxes (46.8) (96.1)
-------------- ---------------
Net cash provided by operating
activities 193.3 375.7
-------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Property, plant and equipment additions (122.5) (110.5)
Proceeds from asset sales 2.6 33.4
Receipt of proceeds from notes
receivable 70.8 -
Investments and advances to joint
ventures (6.6) (63.8)
Proceeds from sales of investments 4,436.8 3,419.0
Cash paid for purchase of investments (4,627.1) (3,196.4)
Decrease in restricted cash under
letters of credit 16.2 3.0
-------------- ---------------
Net cash provided by (used in)
investing activities (229.8) 84.7
-------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of debt (190.7) (171.1)
Sale of common stock under equity plans 5.5 11.7
Excess tax benefits from stock-based
compensation 3.3 -
Purchase of treasury stock (41.1) (150.6)
Payment of cash dividends (47.5) (38.7)
-------------- ---------------
Net cash used in financing
activities (270.5) (348.7)
-------------- ---------------
EFFECT OF EXCHANGE RATE ON CASH AND
CASH EQUIVALENTS: (4.9) (2.0)
-------------- ---------------
Net increase (decrease) in cash and
cash equivalents (311.9) 109.7
Cash and cash equivalents at beginning
of period 607.6 544.7
-------------- ---------------
Cash and cash equivalents at end of
period $295.7 $654.4
============== ===============
LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES
SELECTED SEGMENT INFORMATION
(Dollar amounts in millions) (Unaudited)
Quarter Ended Nine Months Ended
September 30, September 30,
-------------------- -------------------
2006 2005 2006 2005
--------- --------- --------- ---------
Net sales:
OSB $275.7 $353.0 $1,028.0 $1,173.0
Siding 137.1 129.1 406.6 349.8
Engineered Wood Products 92.7 100.9 315.0 330.7
Other 29.0 40.1 115.9 128.5
Less: Intersegment sales - (1.8) - (7.3)
--------- --------- --------- ---------
$534.5 $621.3 $1,865.5 $1,974.7
========= ========= ========= =========
Operating profit (loss):
OSB $(9.3) $98.6 $164.0 $416.4
Siding 19.0 17.1 60.7 40.5
Engineered Wood Products 8.3 7.9 28.6 25.5
Other (5.0) 1.4 2.8 12.4
Other operating credits and
charges, net 2.9 (0.3) 2.8 (1.4)
Gain (loss) on sales of and
impairment of on long-lived
assets (0.9) (0.9) (0.9) -
General corporate and other
expenses, net (23.7) (20.9) (75.2) (64.5)
Foreign currency gains
(losses) (0.2) 0.4 (8.7) (1.6)
Investment income 24.9 18.8 72.2 51.2
Interest expense (11.2) (13.1) (38.9) (44.1)
--------- --------- --------- ---------
Income from operations before
taxes 4.8 109.0 207.4 434.4
Provision (benefit) for income
taxes (5.1) (66.5) 57.5 49.0
--------- --------- --------- ---------
Income from continuing
operations $9.9 $175.5 $149.9 $385.4
========= ========= ========= =========
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. The major components of "Other operating credits and charges,
net" in the Consolidated Statements Of Income for the quarter
ended September 30 are described below:
In the first quarter of 2005, LP recorded a gain of $0.9 million
($0.6 million after taxes, or $0.01 per diluted share) associated
with the recovery of a previous loss associated with the sale of
the Samoa, California pulp mill and a charge of $0.6 million
($0.4 million after taxes, or $0.00 per diluted share) associated
with the relocation and consolidation of LP's corporate offices to
Nashville, Tennessee.
In the second quarter of 2005, LP recorded a charge of $1.5
million ($0.9 million after taxes, or $0.01 per diluted share)
associated with the relocation and consolidation of LP's corporate
offices to Nashville, Tennessee.
In the third quarter of 2005, LP recorded a charge of $0.3 million
($0.2 million after taxes, or $0.00 per diluted share) associated
with the relocation and consolidation of LP's corporate offices to
Nashville, Tennessee.
In the first quarter of 2006, LP recorded a charge of $0.1 million
associated with the relocation and consolidation of LP's corporate
offices to Nashville, Tennessee.
In the third quarter of 2006, LP recorded a gain of $2.8 million
($1.7 million after taxes, or $0.02 per diluted share) associated
with insurance recoveries related to the hurricanes which occurred
in the third and fourth quarter of 2005.
3. Income Taxes
Quarter Ended Nine Months Ended
September 30, September 30,
------------------ -----------------
2006 2005 2006 2005
Income from continuing operations $4.8 $109.0 $207.4 $434.4
Income (loss) from discontinued
operations (0.6) (12.0) (2.6) (24.6)
--------- -------- -------- --------
4.2 97.0 204.8 409.8
Total tax provision (benefit) on
operations (5.3) 30.5 56.5 130.5
--------- -------- -------- --------
After-tax income before
repatriation 9.5 66.5 148.3 279.3
Effect of repatriation - 101.7 - 91.0
--------- -------- -------- --------
Net income $9.5 $168.2 $148.3 $370.3
========= ======== ======== ========
Accounting standards require that income tax expense be determined using 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 nine months ended September 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, corrections of prior year estimates and a reduction in LP's Canadian deferred tax liabilities due to an enacted decrease in the statutory income tax rate. For the nine months ended September 30, 2005, the differences between the U.S. statutory rate of 35% and the effective rate on continuing operations relate to the company's foreign debt structure and state income taxes. During the third quarter of 2005, LP finalized its plans to repatriate accumulated earnings from its Canadian subsidiaries to the US under the provisions of the American Jobs Creation Act of 2004. LP planned to repatriate approximately $522 million of Canadian earnings in the fourth quarter and planned to pay approximately $31 million in US federal and state income taxes with respect to the distribution and an additional $22 million, net of tax benefit, in Canadian withholding taxes. LP had previously anticipated repatriating a portion of these earnings as a dividend to the US, and accordingly accrued a tax liability of $155.0 million through June 30,2005 ($144.3 million at December 31, 2004). The American Jobs Creation Act of 2004 provides for a dividends received deduction for 85% of the qualified portion of this dividend and therefore, in the third quarter, LP reversed $91 million of tax liabilities accrued in prior years as well as $10.7 million accrued in the first six months of 2005. The components and associated effective income tax rates applied to each period are as follows:
Quarter Ended September 30,
----------------------------------------------
2006 2005
---------------------- ----------------------
Tax Provision Tax Rate Tax Provision Tax Rate
------------- -------- ------------- --------
Continuing operations $(5.1) (106%) $35.2 32%
Discontinued operations (0.2) 38% (4.7) 38%
Effect of Repatriation - (101.7)
------------- -------------
$(5.3) (126%) $(71.2) (73%)
============= =============
Nine Months Ended September 30,
----------------------------------------------
2006 2005
---------------------- ----------------------
Tax Provision Tax Rate Tax Provision Tax Rate
------------- -------- ------------- --------
Continuing operations $57.5 28% $140.0 32%
Discontinued operations (1.0) 38% (9.5) 38%
Effect of Repatriation - (91.0)
------------- -------------
$56.5 28% $39.5 10%
============= =============
LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES
SUMMARY OF PRODUCTION VOLUMES
Quarter Ended Nine Months Ended
September 30 September 30
----------------- -----------------
2006 2005 2006 2005
-------- -------- -------- --------
Oriented strand board, million
square feet 3/8" basis (1) 1,487 1,399 4,538 4,172
Oriented strand board, million
square feet 3/8" basis (produced
by wood-based siding mills) 67 24 200 47
Wood-based siding, million square
feet 3/8" basis 245 229 758 744
Engineered I-Joist, million lineal
feet (1) 33 40 119 131
Laminated veneer lumber (LVL),
thousand cubic feet 1,973 2,277 7,962 8,652
Composite Decking, million lineal
feet 7 11 38 37
(1) Includes volumes produced by joint venture operations and sold to
LP.
CONTACT: Louisiana-Pacific Corporation
Media Relations
Mary Cohn, 615-986-5886
Fax: 615-986-5666
or
Investor Relations
Mike Kinney / Becky Barckley, 615-986-5600
SOURCE: Louisiana-Pacific Corporation
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