LP Reports Third Quarter 2007 Results
NASHVILLE, Tenn.--(BUSINESS WIRE)--Oct. 29, 2007--Louisiana-Pacific Corporation (LP) (NYSE: LPX) reported today a third quarter net loss of $68 million, or $0.65 per diluted share, on sales from continuing operations of $473 million. In the third quarter of 2006, LP's net income was $9.5 million, or $0.09 per diluted share, on sales from continuing operations of $527 million. For the first nine months of 2007, LP reported a net loss of $128 million, or $1.23 per diluted share, on sales from continuing operations of $1.3 billion compared to net income of $148 million, or $1.40 per diluted share, on sales from continuing operations of $1.8 billion for the first nine months of 2006.
For the third quarter of 2007, loss from continuing operations was $55 million, or $0.52 per diluted share. In the third quarter of 2006, LP's income from continuing operations was $12 million, or $0.12 per diluted share. For the first nine months of 2007, loss from continuing operations was $106 million, or $1.02 per diluted share. For the first nine months of 2006, income from continuing operations was $153 million, or $1.45 per diluted share. Results for the quarter and first nine months of 2007 included charges for impairments of long-lived assets and other net operating charges totaling $48 million ($29 million after tax, or $0.28 per diluted share) for the quarter and $34 million ($21 million after tax, or $0.20 per diluted shares) for the nine month period.
"Both the continued deterioration in the market for new residential construction and the rising Canadian dollar drove our third-quarter operating results down," said Chief Executive Officer Rick Frost. "In addition, the negative near-term housing forecast led us to curtail production at several operations and to permanently close two mills."
At 11:00 a.m. ET (8:00 a.m. PT) today, LP will host a webcast on its third quarter 2007 financial results. To access the live webcast and accompanying presentation, visit www.lpcorp.com and go to "Investor Relations" in the "About LP" 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,
------------------- -------------------
2007 2006 2007 2006
--------- --------- --------- ---------
Net sales $ 472.5 $ 527.0 $1,328.3 $ 1,819.2
Income (loss) before income
taxes and equity in earnings
of unconsolidated affiliates $ (88.0) $ 12.6 $ (173.6) $ 215.5
Income (loss) from continuing
operations excluding (gain)
loss on sale or impairment
of long-lived assets and
other operating credits and
charges, net $ (25.4) $ 11.1 $ (85.5) $ 152.2
Income (loss) from continuing
operations $ (54.6) $ 12.3 $ (106.2) $ 153.4
Net income (loss) $ (67.8) $ 9.5 $ (128.4) $ 148.3
Net income (loss) per share
- basic $ (0.65) $ 0.09 $ (1.23) $ 1.41
- diluted $ (0.65) $ 0.09 $ (1.23) $ 1.40
Average shares outstanding
(in millions)
Basic 103.6 104.9 104.0 105.5
Diluted 103.6 105.2 104.0 106.0
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 $ (54.6) $ 12.3 $ (106.2) $ 153.4
(Gain) loss on sale or
impairment of long-lived
assets 48.4 0.9 53.6 0.9
Other operating credits and
charges, net (0.7) (2.9) (19.9) (2.8)
--------- --------- --------- ---------
47.7 (2.0) 33.7 (1.9)
Provision (benefit) for
income taxes on above items (18.5) 0.8 (13.0) 0.7
--------- --------- --------- ---------
29.2 (1.2) 20.7 (1.2)
$ (25.4) $ 11.1 $ (85.5) $ 152.2
========= ========= ========= =========
Per share - basic $ (0.24) $ 0.11 $ (0.82) $ 1.44
Per share - diluted $ (0.24) $ 0.10 $ (0.82) $ 1.43
CONDENSED 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,
------------------- -------------------
2007 2006 2007 2006
--------- --------- --------- ---------
Net sales $ 472.5 $ 527.0 $1,328.3 $1,819.2
--------- --------- --------- ---------
Operating costs and expenses:
Cost of sales 446.6 460.8 1,275.9 1,417.4
Depreciation, amortization
and cost of timber
harvested 27.2 30.8 83.1 94.8
Selling and administrative 36.7 38.3 115.2 118.0
(Gain) loss on sale or
impairment of long-lived
assets 48.4 0.9 53.6 0.9
Other operating credits
and charges, net (0.7) (2.9) (19.9) (2.8)
--------- --------- --------- ---------
Total operating costs
and expenses 558.2 527.9 1,507.9 1,628.3
--------- --------- --------- ---------
Income (loss) from operations (85.7) (0.9) (179.6) 190.9
--------- --------- --------- ---------
Non-operating income
(expense):
Foreign currency exchange
loss (15.0) (0.2) (30.5) (8.7)
Interest expense, net of
capitalized interest (7.7) (11.2) (27.7) (38.9)
Investment income 20.4 24.9 64.2 72.2
--------- --------- --------- ---------
Total non-operating
income (expense) (2.3) 13.5 6.0 24.6
--------- --------- --------- ---------
Income (loss) before taxes
and equity in earnings of
unconsolidated affiliates (88.0) 12.6 (173.6) 215.5
Provision (benefit) for
income taxes (37.5) (3.6) (79.7) 59.7
Equity in loss of
unconsolidated affiliates 4.1 3.9 12.3 2.4
--------- --------- --------- ---------
Income (loss) from continuing
operations (54.6) 12.3 (106.2) 153.4
--------- --------- --------- ---------
Discontinued operations:
Loss from discontinued
operations before income
taxes (21.4) (4.5) (36.2) (8.3)
Income tax benefit (8.2) (1.7) (14.0) (3.2)
--------- --------- --------- ---------
Loss from discontinued
operations (13.2) (2.8) (22.2) (5.1)
--------- --------- --------- ---------
Net income (loss) $ (67.8) $ 9.5 $ (128.4) $ 148.3
========= ========= ========= =========
Net income (loss) per share
of common stock (basic):
Income (loss) from continuing
operations $ (0.52) $ 0.12 $ (1.02) $ 1.45
Loss from discontinued
operations (0.13) (0.03) (0.21) (0.05)
--------- --------- --------- ---------
Net income (loss) per share -
basic $ (0.65) $ 0.09 $ (1.23) $ 1.41
========= ========= ========= =========
Net income (loss) per share
of common stock (diluted):
Income (loss) from continuing
operations $ (0.52) $ 0.12 $ (1.02) $ 1.45
Loss from discontinued
operations (0.13) (0.03) (0.21) (0.05)
--------- --------- --------- ---------
Net income (loss) per share -
diluted $ (0.65) $ 0.09 $ (1.23) $ 1.40
========= ========= ========= =========
Average shares of stock
outstanding - basic 103.6 104.9 104.0 105.5
========= ========= ========= =========
Average shares of stock
outstanding - diluted 103.6 105.2 104.0 106.0
========= ========= ========= =========
CONDENSED CONSOLIDATED BALANCE SHEETS
LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES
(Dollar amounts in millions) (Unaudited)
September 30, December 31,
2007 2006
------------- -------------
ASSETS
Cash and cash equivalents $ 345.1 $ 265.7
Short-term investments 444.4 797.0
Receivables, net 219.2 157.4
Inventories 222.5 221.6
Prepaid expenses and other current assets 11.4 9.3
Deferred income taxes 8.8 28.5
Current portion of notes receivable from
asset sales 54.4 -
Current assets of discontinued operations 10.1 24.5
------------- -------------
Total current assets 1,315.9 1,504.0
Timber and timberlands 63.8 98.7
Property, plant and equipment 2,152.1 1,986.1
Accumulated depreciation (1,182.1) (1,135.7)
------------- -------------
Net property, plant and equipment 970.0 850.4
Goodwill 273.5 273.5
Notes receivable from asset sales 278.6 333.0
Long-term investments 70.8 40.4
Restricted cash 56.5 51.8
Investments in and advances to affiliates 205.5 212.9
Other assets 31.2 27.1
Long-term assets of discontinued
operations 25.0 44.6
------------- -------------
Total assets $ 3,290.8 $ 3,436.4
============= =============
LIABILITIES AND EQUITY
Current portion of long-term debt $ 0.2 $ 0.4
Current portion of limited recourse notes
payable 53.5 -
Short-term notes payable 40.2 3.0
Accounts payable and accrued liabilities 233.8 237.9
Current portion of deferred tax
liabilities 14.6 14.6
Current portion of contingency reserves 9.0 9.0
------------- -------------
Total current liabilities 351.3 264.9
Long-term debt, excluding current portion:
Limited recourse notes payable 273.3 326.8
Other long-term debt 353.2 317.8
------------- -------------
Total long-term debt,
excluding current portion 626.5 644.6
Contingency reserves, excluding current
portion 18.1 25.6
Other long-term liabilities 83.3 70.0
Deferred income taxes 326.4 363.9
Commitments and contingencies
Stockholders' equity:
Common stock 116.9 116.9
Additional paid-in capital 437.5 435.8
Retained earnings 1,697.0 1,870.2
Treasury stock (296.7) (284.0)
Accumulated comprehensive loss (69.5) (71.5)
------------- -------------
Total stockholders' equity 1,885.2 2,067.4
------------- -------------
Total liabilities and equity $ 3,290.8 $ 3,436.4
============= =============
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES
(Dollar amounts in millions) (Unaudited)
Nine Months Ended
September 30,
---------------------
2007 2006
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (128.4) $ 148.3
Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating
activities:
Depreciation, amortization and cost of timber
harvested 84.9 99.7
Loss from unconsolidated affiliates 12.3 2.4
(Gain) loss on sale or impairment of long-
lived assets 72.5 0.4
Other operating charges and credits, net (2.0) (2.6)
Net accretion on available for sale
securities (8.1) (10.4)
Stock-based compensation expense related to
stock plans 5.2 4.8
Excess tax benefits from stock-based
compensation - (3.3)
Exchange loss on remeasurement 37.2 17.0
Cash settlement of contingencies (10.0) (10.8)
Other adjustments (0.1) (0.8)
(Increase) decrease in receivables (53.6) 24.0
Decrease in inventories 21.6 8.0
Increase in prepaid expenses (2.0) (1.6)
Decrease in accounts payable and accrued
liabilities (12.2) (35.0)
Decrease in deferred income taxes (22.0) (46.8)
---------- ----------
Net cash provided by (used in) operating
activities (4.7) 193.3
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Property, plant, and equipment additions (221.3) (122.5)
Proceeds from asset sales 2.7 2.6
Investments in and advances to joint ventures (4.7) (6.6)
Receipt of proceeds from notes receivable - 70.8
Cash paid for purchase of investments (2,187.1) (4,627.1)
Proceeds from sales of investments 2,517.0 4,436.8
(Increase) decrease in restricted cash under
letter of credit requirements (14.5) 16.2
---------- ----------
Net cash provided by (used in) investing
activities 92.1 (229.8)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings of long-term debt 17.0 -
Repayment of debt (0.3) (190.7)
Net borrowings under revolving credit
agreements 37.2 -
Sale of common stock under equity plans 2.9 5.5
Purchase of treasury stock (18.3) (41.1)
Payment of cash dividends (46.9) (47.5)
Excess tax benefits from stock-based
compensation - 3.3
---------- ----------
Net cash used in financing activities (8.4) (270.5)
---------- ----------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH
EQUIVALENTS 0.4 (4.9)
---------- ----------
Net increase (decrease) in cash and cash
equivalents 79.4 (311.9)
Cash and cash equivalents at beginning of period 265.7 607.6
---------- ----------
Cash and cash equivalents at end of period $ 345.1 $ 295.7
========== ==========
LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES
SELECTED SEGMENT INFORMATION
(Dollar amounts in millions) (Unaudited)
Dollar amounts in millions Quarter Ended Nine Months Ended
September 30, September 30,
------------------- -------------------
2007 2006 2007 2006
--------- --------- --------- ---------
Net sales:
OSB $ 228.0 $ 275.7 $ 640.1 $1,028.0
Siding 122.2 137.1 357.2 406.6
Engineered Wood Products 92.5 92.7 258.4 315.0
Other 32.2 21.5 80.0 69.6
Less: Intersegment sales (2.4) - (7.4) -
--------- --------- --------- ---------
$ 472.5 $ 527.0 $1,328.3 $1,819.2
========= ========= ========= =========
Operating profit (loss):
OSB $ (31.7) $ (9.3) $ (140.8) $ 164.0
Siding 11.3 19.0 37.9 60.7
Engineered Wood Products 3.3 8.3 13.6 28.6
Other (3.5) (1.1) (4.3) 8.5
Other operating credits and
charges, net 0.7 2.9 19.9 2.8
Gain (loss) on sales of and
impairment of long-lived
assets (48.4) (0.9) (53.6) (0.9)
General corporate and other
expenses, net (21.5) (23.7) (64.6) (75.2)
Foreign currency losses (15.0) (0.2) (30.5) (8.7)
Investment income 20.4 24.9 64.2 72.2
Interest expense, net of
capitalized interest (7.7) (11.2) (27.7) (38.9)
--------- --------- --------- ---------
Income (loss) from operations
before taxes (92.1) 8.7 (185.9) 213.1
Provision (benefit) for
income taxes (37.5) (3.6) (79.7) 59.7
--------- --------- --------- ---------
Income (loss) from continuing
operations $ (54.6) $ 12.3 $ (106.2) $ 153.4
========= ========= ========= =========
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. 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 nine
month period ended September 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 mill 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. In the third quarter of 2007,
LP recorded a further gain of $0.6 associated with a favorable
verdict on a legal suit associated with our insurance on hardboard
siding, a charge of $1.5 million to reduce the carrying value of a
laminated veneer lumber mill located in Hines, Oregon to the
estimated sales prices less selling costs and a charge of $47.3
million to reduce the carrying value and associated timber assets
of an Eastern Canadian OSB mill to its net realizable value.
In the third quarter of 2006, LP recorded a gain of $2.8 million
associated with insurance recoveries related to the hurricanes
which occurred in the third and fourth quarter of 2005.
5. Income Taxes
Quarter Ended Nine Months Ended
September 30, September 30,
------------------- -------------------
2007 2006 2007 2006
--------- --------- --------- ---------
Continuing operations $ (92.1) $ 8.7 $ (185.9) $ 213.1
Discontinued operations (21.4) (4.5) (36.2) (8.3)
--------- --------- --------- ---------
(113.5) 4.2 (222.1) 204.8
Total tax provision (benefit) (45.7) (5.3) (93.7) 56.5
--------- --------- --------- ---------
Net income (loss) $ (67.8) $ 9.5 $ (128.4) $ 148.3
========= ========= ========= =========
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 nine months ended September 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 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, 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 September 30,
----------------------------------------------
2007 2006
---------------------- ----------------------
Tax Benefit Tax Rate Tax Benefit Tax Rate
------------- -------- ------------- --------
Continuing operations $ (37.5) 41% $ (3.6) (41%)
Discontinued operations (8.2) 38% (1.7) 38%
------------- -------------
$ (45.7) 40% $ (5.3) (126%)
============= =============
Nine Months Ended September 30,
----------------------------------------------
2007 2006
---------------------- ----------------------
Tax Provision
Tax Benefit Tax Rate (Benefit) Tax Rate
------------- -------- ------------- --------
Continuing operations $ (79.7) 43% $ 59.7 28%
Discontinued operations (14.0) 39% (3.2) 39%
------------- -------------
$ (93.7) 42% $ 56.5 28%
============= =============
LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES
SUMMARY OF PRODUCTION VOLUMES
Quarter Ended Nine Months Ended
September 30 September 30
------------------- ------------------
2007 2006 2007 2006
--------- --------- --------- --------
Oriented strand board, million
square feet 3/8" basis (1) 1,384 1,490 4,192 4,548
Oriented strand board, million
square feet 3/8" basis
(produced by wood-based
siding mills) 33 67 147 201
Wood-based siding, million
square feet 3/8" basis 176 245 665 758
Engineered I-Joist, million
lineal feet (1) 34 29 105 124
Laminated veneer lumber (LVL),
thousand cubic feet 2,388 1,973 6,719 7,962
(1) Includes volumes produced by joint venture operations and sold to
LP.
CONTACT: Louisiana-Pacific Corporation
Media Relations
Mary Cohn, 615-986-5886
or
Investor Relations
Becky Barckley or Mike Kinney, 615-986-5600
SOURCE: Louisiana-Pacific Corporation (LP)