LP Reports Second Quarter 2003 Results
PORTLAND, Ore.--(BUSINESS WIRE)--July 29, 2003--Louisiana-Pacific Corporation (LP) (NYSE:LPX) today reported a second quarter net loss of $17.2 million, or $0.16 per diluted share, on sales of $479 million. In the second quarter of 2002, LP's net loss was $13.2 million, or $0.13 per diluted share, on sales of $432 million. For the first six months of 2003, LP reported a net loss of $15.7 million, or $0.15 per diluted share, on sales of $892 million compared to a net loss of $22.7 million, or $0.22 per diluted share, on sales of $822 million for the first six months of 2002. All sales figures are from continuing operations only.
For the second quarter of 2003, income from continuing operations was $8.9 million, or $0.09 per share. In the second quarter of 2002, income from continuing operations was $7.5 million, or $0.07 per diluted share. For the first six months of 2003, income from continuing operations before cumulative effect of accounting principle was $10.9 million, or $0.10 per share. For the first six months of 2002, income from continuing operations before cumulative effect of accounting principle was $7.6 million, or $0.07 per share.
"Our continuing businesses showed significant strength exiting the quarter. However, during the first two months, poor weather conditions disrupted construction activity and seasonal demand for building products. In late May and June, demand surged for oriented strand board, siding and engineered wood products. That momentum has continued to build into the third quarter," said Mark A. Suwyn, LP's chairman & CEO.
Suwyn continued, "In addition to poor weather conditions, our operations were negatively impacted by elevated costs, compared to second quarter 2002, in energy, other petroleum-based expenses, and wood costs, and the continued strengthening of the Canadian dollar.
"We are making excellent progress toward achieving the objectives of our divestiture program. During the second quarter, we sold approximately $110 million of timberland. Also, earlier this month we announced a definitive agreement to sell 465,000 acres of timberland, which represents the last significant portion of our timberland that was not under contract or sold," Suwyn stated. "We are on track to divest the remaining assets and generate more than $700 million in total value (including cash, liquidation of working capital and reduction of liabilities) from this program for our shareholders."
LP also announced today that it is moving its remaining lumber and interior decorative panel facilities to discontinued operations, reflecting its intent to divest or discontinue operating these facilities within the next year. LP has signed letters of intent with interested buyers for the majority of the facilities and expects to complete most of the transactions by the end of 2003. As a result of these actions, LP was required to evaluate these facilities for impairment based on expected net sales proceeds. Based on that evaluation, LP recorded impairment charges associated with certain of these planned divestitures and shutdowns during the second quarter.
At 11:00 a.m. EDT (8:00 a.m. PDT) today, LP will host a webcast on its second quarter 2003 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 contemplated by these, 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 Six Months
Ended Ended
--------------- ---------------
June 30, June 30,
--------------- ---------------
2003 2002 2003 2002
------- ------- ------- -------
Net sales $478.5 $432.3 $891.6 $821.5
Income (loss) before taxes,
minority interest, and equity in
earnings of unconsolidated
affiliate $19.3 $11.1 $22.4 $13.9
Income (loss) before taxes,
minority interest, and equity in
earnings of unconsolidated
affiliate excluding (gain) loss
on sale or impairment of long-
lived assets, other operating
credits and charges, net $15.5 $6.8 $6.1 $9.3
Income (loss) from continuing
operations before cumulative
effect of change in accounting
principle $8.9 $7.5 $10.9 $7.6
Net income (loss) $(17.2) $(13.2) $(15.7) $(22.7)
Net income (loss) per share -
basic and diluted $(0.16) $(0.13) $(0.15) $(0.22)
Average shares outstanding
Basic 104.6 104.6 104.6 104.6
Diluted 105.1 104.7 104.9 104.6
Calculation of income from continuing operations before taxes,
minority interest and equity in earnings of unconsolidated affiliate,
excluding gain or loss on sale or impairment of long-lived assets and
other operating credits and charges, net:
Income before taxes, minority
interest, and equity in earnings of
unconsolidated affiliate $19.3 $11.1 $22.4 $13.9
(Gain) loss on sale or impairment of
long-lived assets (29.2) (5.8) (41.7) (4.2)
Other operating credits and charges,
net 25.4 1.5 25.4 (0.4)
------- ------- ------- -------
Income (loss) before taxes, minority
interest, and equity in earnings of
unconsolidated affiliate excluding
(gain) loss on sale or impairment of
long-lived assets, other operating
credits and charges, net $15.5 $6.8 $6.1 $9.3
======= ======= ======= =======
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,
----------------- -----------------
2003 2002 2003 2002
-------- -------- -------- --------
Net Sales $478.5 $432.3 $891.6 $821.5
OPERATING COSTS AND EXPENSES
Cost of sales 376.9 339.0 712.9 639.4
Depreciation, amortization and
cost of timber harvested 32.1 32.4 65.0 68.7
Selling and administrative 39.9 36.7 76.5 70.5
(Gain) loss on sale or
impairment of long lived assets (29.2) (5.8) (41.7) (4.2)
Other operating credits and
charges, net 25.4 1.5 25.4 (0.4)
-------- -------- -------- --------
Total operating costs and
expenses 445.1 403.8 838.1 774.0
-------- -------- -------- --------
Income (loss) from operations 33.4 28.5 53.5 47.5
-------- -------- -------- --------
NON-OPERATING INCOME (EXPENSE)
Foreign currency exchange gain
(loss) 0.2 (0.8) (1.7) (1.1)
Interest expense (22.3) (24.4) (45.2) (48.2)
Interest income 8.0 7.8 15.8 15.7
-------- -------- -------- --------
Total non-operating income
(expense) (14.1) (17.4) (31.1) (33.6)
-------- -------- -------- --------
Income (loss) before taxes,
minority interest, and equity in
earnings of unconsolidated
affliates 19.3 11.1 22.4 13.9
Provision (benefit) for income
taxes 10.0 4.3 11.1 8.4
Equity in (income) loss of
unconsolidated affliates - (0.5) - (1.4)
Minority interest in net income
(loss) of consolidated subsidiary 0.4 (0.2) 0.4 (0.7)
-------- -------- -------- --------
Income (loss) from continuing
operations before cumulative
effect of change in accounting
principle 8.9 7.5 10.9 7.6
-------- -------- -------- --------
DISCONTINUED OPERATIONS
Income (loss) from discontinued
operations (42.3) (33.4) (43.2) (42.8)
Provision (benefit) for income
taxes (16.2) (12.7) (16.5) (16.3)
-------- -------- -------- --------
Income (loss) from discontinued
operations (26.1) (20.7) (26.7) (26.5)
-------- -------- -------- --------
Income (loss) before cumulative
effect of change in accounting
principle (17.2) (13.2) (15.8) (18.9)
Cumulative effect of change in
accounting principle - - 0.1 (3.8)
-------- -------- -------- --------
Net income (loss) $(17.2) $(13.2) $(15.7) $(22.7)
======== ======== ======== ========
Net income (loss) per share of
common stock:
Income (loss) from continuing
operations $0.09 $0.07 $0.10 $0.07
Income (loss) from discontinued
operations (0.25) (0.20) (0.25) (0.26)
Cumulative effect of change in
accounting principle - - - (0.03)
-------- -------- -------- --------
Net Income (Loss) Per Share -
Basic and Diluted $(0.16) $(0.13) $(0.15) $(0.22)
======== ======== ======== ========
Average shares of common stock
outstanding - Basic 104.6 104.6 104.6 104.6
======== ======== ======== ========
- Diluted 105.1 104.7 104.9 104.6
======== ======== ======== ========
CONDENSED CONSOLIDATED BALANCE SHEETS
LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES
(Dollar amounts in millions) (Unaudited)
June 30, December 31,
2003 2002
------------- -------------
ASSETS
Cash and cash equivalents $158.0 $137.3
Receivables,
net 139.3 99.3
Inventories 166.2 163.5
Prepaid expenses 14.4 11.3
Deferred income taxes 46.2 38.6
Current assets of discontinued
operations 14.5 41.3
------------- -------------
Total current assets 538.6 491.3
Timber and timberlands
Forest
licenses 95.3 97.3
Deposits and other 15.4 15.1
Timber and timberlands held for sale 278.1 377.5
------------- -------------
Total timber and timberlands 388.8 489.9
Property, plant and equipment 1,786.7 1,770.1
Accumulated depreciation (981.0) (928.6)
------------- -------------
Net property, plant and equipment 805.7 841.5
Goodwill 276.7 276.7
Other intangible assets 26.9 29.9
Notes receivable from asset sales 403.9 403.9
Assets transferred under contractual
arrangement - 29.1
Restricted cash 92.8 46.8
Other assets 120.3 63.9
Long-term assets of discontinued
operations 54.8 100.2
------------- -------------
Total assets $2,708.5 $2,773.2
============= =============
LIABILITIES AND EQUITY
Current portion of long-term debt $1.1 $35.3
Accounts payable and accrued
liabilities 215.7 211.1
Current portion of contingency reserves 40.0 20.0
------------- -------------
Total current liabilities 256.8 266.4
Long-term debt, excluding current
portion:
Limited recourse notes payable 396.5 396.5
Other long-term debt 643.8 673.6
------------- -------------
Total long-term debt,
excluding current portion 1,040.3 1,070.1
Contingency reserves, excluding current
portion 85.3 106.1
Liabilities transferred under
contractual arrangement - 15.3
Deferred income taxes and other 342.6 309.1
Commitments and contingencies
Stockholders' equity:
Common stock 116.9 116.9
Additional paid-in capital 447.8 446.8
Retained earnings 730.1 745.8
Treasury stock (228.4) (230.2)
Accumulated comprehensive loss (82.9) (73.1)
------------- -------------
Total stockholders' equity 983.5 1,006.2
------------- -------------
Total liabilities and equity $2,708.5 $2,773.2
============= =============
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES
(Dollar amounts in millions) (Unaudited)
Six Months Ended June 30,
-------------------------
2003 2002
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $(15.7) $(22.7)
Adjustments to reconcile net income (loss)
to net cash provided by operating
activities:
Depreciation, amortization and cost of
timber harvested 69.9 83.9
(Gain) loss on sale or impairment on long-
lived assets (24.8) 23.2
Other operating charges and credits 35.4 3.1
Exchange loss on remeasurement 10.0 3.7
Increase in contingency reserves 8.4 2.2
Cash settlement of contingencies (8.0) (24.8)
Cumulative effect of change in accounting
principle (0.1) 6.3
Other adjustments (3.0) (10.6)
Increase in certain working capital
components and deferred taxes (24.8) (3.2)
------------ ------------
Net cash provided by operating
activities 47.3 61.1
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Property, plant and equipment additions (25.9) (15.5)
Proceeds from timber & timberland sales 54.1 1.1
Proceeds from asset sales 30.2 19.5
Increase in restricted cash from asset
sales (46.0) -
Return of capital from unconsolidated
subsidiary 27.1 -
Other investing activities, net (1.8) 5.9
------------ ------------
Net cash provided by investing
activities 37.7 11.0
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net payments under revolving credit
facilities (30.0) (32.0)
Long term borrowings - 17.1
Repayment of long-term debt (37.1) (17.0)
Other financing activities, net 1.5 (4.2)
------------ ------------
Net cash used in financing activities (65.6) (36.1)
------------ ------------
EFFECT OF EXCHANGE RATE ON CASH: 1.3 0.1
------------ ------------
Net increase in cash and cash equivalents 20.7 36.1
Cash and cash equivalents at beginning of
period 137.3 61.6
------------ ------------
Cash and cash equivalents at end of period $158.0 $97.7
============ ============
LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES
SELECTED SEGMENT INFORMATION
(Dollar amounts in millions) (Unaudited)
Quarter Ended June Six Months Ended
30, June 30,
------------------- -------------------
2003 2002 2003 2002
--------- --------- --------- ---------
Net sales:
OSB $229.2 $194.8 $423.5 $383.6
Composite Wood Products 100.8 101.8 189.5 188.1
Plastic Building Products 57.6 43.7 100.2 73.8
Engineered Wood Products 72.8 67.8 137.3 121.3
Pulp - 0.6 - 0.7
Other 25.6 40.1 52.4 84.0
Less: Intersegment sales (7.5) (16.5) (11.3) (30.0)
--------- --------- --------- ---------
$478.5 $432.3 $891.6 $821.5
========= ========= ========= =========
Operating profit (loss):
OSB $37.1 $25.0 $50.9 $48.1
Composite Wood Products 10.5 17.6 20.2 28.4
Plastic Building Products 6.1 1.3 9.3 2.0
Engineered Wood Products (1.1) 2.0 (2.1) 4.3
Pulp - (2.3) - (3.6)
Other (1.0) 1.9 2.3 5.7
Other operating credits and
charges, net (25.4) (1.5) (25.4) 0.4
Gain (loss) on sale or
impairment of long-lived
assets 29.2 5.8 41.7 4.2
General corporate and other
expenses, net (21.8) (22.1) (45.1) (43.1)
Interest income (expense),
net (14.3) (16.6) (29.4) (32.5)
--------- --------- --------- ---------
Income (loss) before taxes,
minority interest and equity
in earnings of unconsolidated
subsidiary $19.3 $11.1 $22.4 $13.9
========= ========= ========= =========
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. On May 8, 2002, LP announced that its board of directors had
approved a plan to sell selected businesses and assets in order to
significantly reduce LP's current debt. As revised in May 2003, the
plan involves divesting LP's plywood, industrial panels, timber and
timberlands, wholesale and distribution businesses and certain
lumber mills. 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 sold or anticipated to be sold within one year as
discontinued operations. Additionally, as a result of the planned
divestitures, LP was required to modify its segment reporting under
SFAS No. 131, "Disclosures about Segments of Enterprise and Related
Information."
3. Other Operating Charges and Credits, Net:
The major components of "Other operating charges and credits, net"
in the Condensed Consolidated Statements Of Income for the quarter
and six months ended June 30 are reflected in the table below and
are described in the paragraphs following the table:
Quarter Ended June 30, 2003 2002
------------------- -------------------
Pre-tax After tax Pre-tax After tax
Additions to product related
contingency reserves $(6.7) $(4.1) $- $-
Additions to environmental
contingency reserves (2.7) (1.6) - -
Loss related to assets and
liabilities transferred under
contractual arrangement (16.0) (9.8) - -
Severance charges - - (1.5) (0.9)
--------- --------- --------- ---------
$(25.4) $(15.5) $(1.5) $(0.9)
========= ========= ========= =========
Six Months Ended June 30, 2003 2002
------------------- -------------------
Pre-tax After tax Pre-tax After tax
Insurance recoveries $- $- $1.9 $1.1
Additions to product related
contingency reserves (6.7) (4.1) - -
Additions to environmental
contingency reserves (2.7) (1.6) - -
Loss related to assets and
liabilities transferred under
contractual arrangement (16.0) (9.8) - -
Severance charges - - (1.5) (0.9)
--------- --------- --------- ---------
$(25.4) $(15.5) $0.4 $0.2
========= ========= ========= =========
In the first quarter of 2002, LP recorded a net gain of $1.9
million ($1.1 million after taxes, or $0.01 per diluted share) from
business interruption insurance recoveries related to incidents at
facilities that occurred in past years.
In the second quarter of 2002, LP recorded a loss of $1.5 million
($0.9 million after tax, or $.01 per share) on severance accrued as
part of the divestiture plan.
In the second quarter of 2003, LP recorded a loss of $16.0 million
($9.8 million after taxes, or $0.15 per share) related to assets
and liabilities transferred under contractual arrangement due to
the increase in a valuation allowance associated with notes
receivable from Samoa Pacific; a loss of $6.7 million ($4.1 million
after taxes, or $0.04 per share) from increases in product related
contingency reserves associated with the National OSB class action
settlement and a loss of $2.7 million ($1.6 million after taxes, or
$0.01 per diluted share) associated with environmental reserves at
our Ketchikan Pulp Company operations.
4. Gain (Loss) on Sale or Impairment of Long-Lived Assets:
The major components of "Gain (loss) on sale or impairment of
long-lived assets" in the Condensed Consolidated Statements Of
Income for the quarter and year ended December 31 are reflected in
the table below and are described in the paragraphs following the
table:
Quarter Ended June 30, 2003 2002
------------------- -------------------
Pre-tax After tax Pre-tax After tax
Gain on sales of timber $29.3 $17.9 $- $-
Loss on other long-lived
assets (0.1) (0.1) 7.1 4.3
Impairment charges on fixed
assets - - (1.3) (0.8)
--------- --------- --------- ---------
$29.2 $17.8 $5.8 $3.5
========= ========= ========= =========
Six months ended June 30, 2003 2002
------------------- -------------------
Pre-tax After tax Pre-tax After tax
Gain on sales of timber $41.8 $25.5 $- $-
Loss on other long-lived
assets (0.1) (0.1) 7.1 4.3
Impairment charges on fixed
assets - - (2.9) (1.8)
--------- --------- --------- ---------
$41.7 $25.4 $4.2 $2.5
========= ========= ========= =========
In the first quarter of 2002, LP recorded a loss of $1.6 million
($1.0 million after taxes, or $0.01 per diluted share) associated
with impairment charges on assets held.
In the second quarter of 2002, LP recorded a loss of $1.3 million
($0.8 million after taxes, or $0.01 per diluted share) associated
with impairment charges on assets held and a gain of $7.1 million
($4.3 million after taxes, or $0.04 per share) on the sale of
certain assets.
In the first quarter of 2003, LP recorded a gain of $12.5 million
($7.7 million after taxes, or $0.07 per diluted share) associated
with the sale of a portion of LP's timberlands as part of LP's
divestiture plan.
In the second quarter of 2003, LP recorded a gain of $29.3 million
($17.9 million after taxes, or $0.17 per share) associated with the
sale of a portion of LP's timberlands as part of LP's divestiture
plan and a loss of $0.1 million ($0.1 million after taxes, or $0.00
per diluted share) associated with the sale of certain other
assets.
5. Income Taxes
Quarter Ended Six months ended
June 30, June 30,
------------------- -------------------
2003 2002 2003 2002
--------- --------- --------- ---------
Continuing operations $18.9 $11.8 $22.0 $16.0
Discontinued operations (42.3) (33.4) (43.2) (42.8)
Cumulative effect of change in
accounting principle - - 0.2 (6.3)
--------- --------- --------- ---------
(23.4) (21.6) (21.0) (33.1)
Total tax provision (benefit) (6.2) (8.4) (5.3) (10.4)
--------- --------- --------- ---------
Net income (loss) $(17.2) $(13.2) $(15.7) $(22.7)
========= ========= ========= =========
Accounting standards require that the estimated effective income
tax rate (based upon estimated annual amounts of taxable income and
expense) by income component for the year be applied to year-to-
date income or loss at the end of each quarter. The primary
difference between the statutory rate (38%) on continuing
operations and the calculated rate relates to permanent difference
associated with certain inter-company debt which is denominated in
Canadian dollars. The components and associated estimated effective
income tax rates applied to each period are as follows:
Quarter Ended June 30,
--------------------------------------------
2003 2002
--------------------- ---------------------
Tax Tax Rate Tax Tax Rate
Provision Provision
---------- ---------- ---------- ----------
Continuing operations $10.0 53% $4.3 36%
Discontinued operations (16.2) 38% (12.7) 38%
Cumulative effect of
accounting change - - - -
---------- ----------
$(6.2) 26% $(8.4) 39%
========== ==========
Six Months Ended June 30,
--------------------------------------------
2003 2002
--------------------- ---------------------
Tax Tax
Provision Tax Rate Provision Tax Rate
---------- ---------- ---------- ----------
Continuing operations $11.1 50% $8.4 53%
Discontinued operations (16.5) 38% (16.3) 38%
Cumulative effect of
accounting change 0.1 38% (2.5) 38%
---------- ----------
$(5.3) 26% $(10.4) 31%
========== ==========
6. Cumulative Effect of Change in Accounting Principles:
LP adopted Statement of Financial Accounting Standards No. 143,
"Accounting for Asset Retirement Obligations," as of January 1,
2003. This statement addresses the retirement of long-lived assets
and the associated retirement costs. Under this statement, we will
record both an initial asset and a liability for the present value
of estimated costs of legal obligations associated with the
retirement of long-lived assets. These initial assets will be
depreciated over the expected useful life of the asset. Upon
adoption of this statement, we changed our accounting for landfill
closures, reforestation obligations associated with certain timber
licenses in Canada and other assets. Implementation of this
standard resulted in income of $0.2 million (or $0.1 million after
tax) recorded as a "cumulative effect of change in accounting
principle" as of January 1, 2003.
LP adopted Statement of Financial Accounting Standards No. 142,
"Goodwill and other Intangible Assets," as of January 1, 2002. As
of January 1, 2002, LP discontinued amortization of goodwill. LP
has determined that $6.3 million of goodwill recorded in the
Engineered Wood Products business was impaired as of January 1,
2002, and this amount is recorded net of income tax effects as a
"cumulative effect of change in accounting principle" as of January
1, 2002.
LOUISIANA-PACIFIC CORPORATION
SUMMARY OF PRODUCTION VOLUMES
Quarter Ended Six Months Ended
June 30, June 30,
----------------- -----------------
2003 2002 2003 2002
-------- -------- -------- --------
Oriented strand board, million
square feet 3/8" basis 1,298 1,363 2,587 2,723
Wood-based siding, million square
feet 3/8" basis 213 202 420 389
Engineered I-Joist, million lineal
feet 21 23 43 41
Laminated veneer lumber (LVL),
thousand cubic feet 2,551 2,277 4,755 4,293
Composite Decking, thousand lineal
feet 8,462 5,773 16,444 8,449
Vinyl Siding, squares 747 722 1,302 1,205
CONTACT: Louisiana-Pacific Corporation David Dugan, 503-821-5285 (Media Relations) Bill Hebert, 503-821-5100 (Investor Relations)
SOURCE: Louisiana-Pacific Corporation