LP Reports First Quarter 2006 Profits.NASHVILLE Nashville, city (1990 pop. 487,969), state capital, coextensive with Davidson co., central Tenn., on the Cumberland River, in a fertile farm area; inc. as a city 1806, merged with Davidson co. 1963. , Tenn. -- Louisiana-Pacific Louisiana-Pacific Corporation NYSE: LPX, commonly known as "LP", is a building materials manufacturer. It was founded in 1973 and is based in Nashville, Tennessee. Corporation (LP) (NYSE NYSE See: New York Stock Exchange : LPX LPX Louisiana Pacific (stock symbol) LPX Leipzig Power Exchange LPX Low Profile Extended LPX Long-Pulse Experiment LPX Low Profile Extension ) reported today first quarter net income of $84 million, or $0.79 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, on sales from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the of $678 million. In the first quarter of 2005, LP's net income was $102 million, or $0.92 per diluted share, on sales from continuing operations of $661 million. For the first quarter of 2006, income from continuing operations was $85 million, or $0.80 per diluted share. In the first quarter of 2005, LP's income from continuing operations was $105 million, or $0.95 per diluted share. "LP had a very strong first quarter," said CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. Rick Frost. "Sales volumes were higher in most of our product lines as our sales force was able to capitalize on Cap´i`tal`ize on` v. t. 1. To turn (an opportunity) to one's advantage; to take advantage of (a situation); to profit from; as, to capitalize on an opponent's mistakes s>. the strategic investments we have made to increase capacity over the last several years and continued healthy demand for our building products. Oriented strand board Oriented strand board, or OSB, or waferboard, or Sterling board (UK), is an engineered wood product formed by layering strands (flakes) of wood in specific orientations. (OSB OSB abbr. Order of Saint Benedict ) sales volume grew 14% over the same quarter last year resulting from our reinvestment Reinvestment Using dividends, interest and capital gains earned in an investment or mutual fund to purchase additional shares or units, rather than receiving the distributions in cash. 1. In terms of stocks, it is the reinvestment of dividends to purchase additional shares. program and the production ramp-up at our Peace Valley joint venture mill in British Columbia British Columbia, province (2001 pop. 3,907,738), 366,255 sq mi (948,600 sq km), including 6,976 sq mi (18,068 sq km) of water surface, W Canada. Geography . Other product lines showing volume growth over the same quarter last year were LP SmartSide(R), laminated veneer lumber Laminated veneer lumber (LVL) is an engineered wood product that uses multiple layers of thin wood assembled with adhesives. It offers several advantages over typical milled lumber: it is stronger, straighter, and more uniform. (LVL LVL In currencies, this is the abbreviation for the Latvian Lats. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. ), Decking decking multiple decks in animal accommodation or transportation facilities. Common for young animals, chiefly piglets, commercial poultry, laboratory animals, cats and dogs. and Moulding." Frost continued, "While OSB pricing was lower by 18% compared to Q1 of 2005, the price levels for most of our other products were higher, partially to offset raw material cost increases. Raw materials costs did moderate from the high level experienced last quarter, but with the recent volatility Volatility 1. A statistical measure of the tendency of a market or security to rise or fall sharply within a period of time. 2. A variable in option pricing formulas that denotes the extent to which the return of the underlying asset will fluctuate between now and the of oil pricing, controlling and predicting these costs will be an ongoing challenge." At 11:00 a.m. ET (8:00 a.m. PT) today, LP will host a webcast on its first quarter 2006 financial results. To access the live webcast and accompanying ac·com·pa·ny v. ac·com·pa·nied, ac·com·pa·ny·ing, ac·com·pa·nies v.tr. 1. To be or go with as a companion. 2. presentation, visit www.lpcorp.com and go to the "Investor Relations Investor relations The process by which the corporation communicates with its investors. " section from the main menu. LP is a premier supplier of building materials Building materials used in the construction industry to create . These categories of materials and products are used by and construction project managers to specify the materials and methods used for . , delivering innovative, high-quality commodity and specialty A contract under seal. A specialty is a written document that has been sealed and delivered and is given as security for the payment of a specifically indicated debt. 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 forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and 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 forestry, the management of forest lands for wood, water, wildlife, forage, and recreation. Because the major economic importance of the forest lies in wood and wood products, forestry has been chiefly concerned with timber management, especially reforestation, , land use, environmental and other governmental regulations; the ability to obtain regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. approvals; and the risk of losses from fires, floods By Chronology Note:This is in reverse chronological order. 2000s
LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES
FINANCIAL AND QUARTERLY DATA
(Dollar amounts in millions, except per share amounts) (Unaudited)
Quarter Ended
March 31,
---------------
2006 2005
------ ------
Net sales $678.3 $661.4
Income before taxes and equity in earnings of
unconsolidated affiliates $128.0 $165.0
Income from continuing operations excluding (gain) loss
on sale or impairment of long-lived assets and other
operating credits and charges, net $ 84.9 $105.1
Income from continuing operations $ 84.9 $105.4
Net income $ 83.7 $101.7
Net income per share - basic $ 0.79 $ 0.92
- diluted $ 0.79 $ 0.91
Average shares outstanding (in millions)
Basic 105.8 110.5
Diluted 106.3 111.3
Calculation of income from continuing operations excluding (gain) loss
on sale or impairment of long-lived assets and other operating credits
and charges, net:
Income from continuing operations $84.9 $105.4
(Gain) loss on sale or impairment of long-lived assets (0.1) (0.2)
Other operating credits and charges, net 0.1 (0.3)
------ -------
- (0.5)
Provision for income taxes on above items - 0.2
------ -------
- (0.3)
$84.9 $105.1
====== =======
Per share - basic $0.80 $0.96
diluted $0.80 $0.95
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES
(Dollar amounts in millions, except per share amounts) (Unaudited)
Quarter Ended
March 31,
---------------
2006 2005
------- -------
Net Sales $678.3 $661.4
------- -------
OPERATING COSTS AND EXPENSES
Cost of sales 485.5 425.6
Depreciation, amortization and cost of timber
harvested 34.5 32.9
Selling and administrative 42.0 37.6
(Gain) loss on sale or impairment of long-lived
assets (0.1) (0.2)
Other operating credits and charges, net 0.1 (0.3)
------- -------
Total operating costs and expenses 562.0 495.6
------- -------
Income from operations 116.3 165.8
------- -------
NON-OPERATING INCOME (EXPENSE)
Foreign currency exchange (loss) gain 2.1 (0.6)
Interest expense, net of capitalized interest (13.4) (15.7)
Investment income 23.0 15.5
------- -------
Total non-operating income (expense) 11.7 (0.8)
------- -------
Income before taxes and equity in earnings
of unconsolidated affiliates 128.0 165.0
Provision for income taxes 44.3 60.3
Equity in earnings of unconsolidated affiliates (1.2) (0.7)
------- -------
Income from continuing operations 84.9 105.4
------- -------
DISCONTINUED OPERATIONS
Loss from discontinued operations (2.0) (6.0)
Benefit for income taxes (0.8) (2.3)
------- -------
Loss from discontinued operations (1.2) (3.7)
------- -------
Net income $83.7 $101.7
======= =======
Net income per share of common stock (basic):
Income from continuing operations $0.80 $0.95
Loss from discontinued operations (0.01) (0.03)
------- -------
Net Income - per share basic $0.79 $0.92
======= =======
Net income per share of common stock (diluted):
Income from continuing operations $0.80 $0.95
Loss from discontinued operations (0.01) (0.04)
------- -------
Net Income - per share diluted $0.79 $0.91
======= =======
Average shares of stock outstanding - basic 105.8 110.5
Average shares of stock outstanding - diluted 106.3 111.3
CONDENSED CONSOLIDATED BALANCE SHEETS
LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES
(Dollar amounts in millions) (Unaudited)
March 31, 2006 December 31, 2005
----------------- ------------------
ASSETS
Cash and cash equivalents $ 698.1 $ 607.6
Short-term investments 612.6 717.3
Receivables, net 177.2 146.8
Inventories 280.3 240.3
Prepaid expenses and other
current assets 7.3 14.4
Deferred income taxes 4.9 -
Current portion of notes
receivable from asset sales 70.8 70.8
--------------- ----------------
Total current assets 1,851.2 1,797.2
Timber and timberlands 92.7 92.9
Property, plant and equipment 1,877.1 1,848.9
Accumulated depreciation (1,096.7) (1,065.6)
--------------- ----------------
Net property, plant and equipment 780.4 783.3
Goodwill 273.5 273.5
Notes receivable from asset sales 333.0 333.0
Long-term investments 22.7 13.5
Restricted cash 40.1 55.6
Investments in and advances to
affiliates 216.5 211.0
Other assets 37.8 38.0
--------------- ----------------
Total assets $ 3,647.9 $ 3,598.0
=============== ================
LIABILITIES AND EQUITY
Current portion of long-term debt $ 0.7 $ 18.9
Current portion of limited
recourse notes payable 69.7 69.7
Accounts payable and accrued
liabilities 244.7 245.5
Current portion of contingency
reserves 12.0 12.0
--------------- ----------------
Total current liabilities 327.1 346.1
Long-term debt, excluding current portion:
Limited recourse notes
payable 326.8 326.8
Other long-term debt 407.2 408.0
--------------- ----------------
Total long-term debt,
excluding current
portion 734.0 734.8
Contingency reserves, excluding
current portion 26.8 31.4
Other long-term liabilities 67.3 65.8
Deferred income taxes 376.4 377.0
Commitments and contingencies
Stockholders' equity:
Common stock 116.9 116.9
Additional paid-in capital 432.7 435.5
Retained earnings 1,877.5 1,809.7
Treasury stock (245.7) (257.0)
Accumulated comprehensive
loss (65.1) (62.2)
--------------- ----------------
Total stockholders'
equity 2,116.3 2,042.9
--------------- ----------------
Total liabilities and
equity $ 3,647.9 $ 3,598.0
=============== ================
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES
(Dollar amounts in millions) (Unaudited)
Quarter Ended March 31,
------------------------
2006 2005
------------ -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 83.7 $ 101.7
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation, amortization and cost of timber
harvested 34.5 33.3
Earnings of unconsolidated affiliates (1.2) (0.7)
(Gain) loss on sale or impairment of long-lived
assets (0.1) 0.3
Stock based compensation expense related to
stock plans 1.5 0.4
Excess tax benefits from stock based
compensation (2.5) -
Tax effect of exercise of stock options - 2.6
Exchange (gain) loss on remeasurement (0.2) 2.6
Cash settlement of contingencies (4.5) (2.1)
Cumulative translation adjustment and
other 0.8 (3.7)
Increase in receivables (30.6) (36.7)
Increase in inventories (41.2) (55.3)
Decrease in prepaid expenses 7.1 5.5
Increase in accounts payable and accrued
liabilities 8.3 3.0
Increase (decrease) in deferred income taxes (7.4) 14.8
------------ -----------
Net cash provided by operating activities 48.2 65.7
------------ -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Property, plant, and equipment additions (37.6) (20.8)
Investments in and advances to joint ventures (4.4) (23.6)
Cash paid for purchase of investments (2,325.1) (1,159.2)
Proceeds from sales of investments 2,421.9 1,172.4
(Increase) decrease in restricted cash under
letter of credit requirements 15.5 (0.6)
Other investing activities, net 0.3 (0.7)
------------ -----------
Net cash provided by (used in) investing
activities 70.6 (32.5)
------------ -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of debt (20.0) -
Sale of common stock under equity plans 4.6 8.4
Payment of cash dividends (15.9) (11.0)
Excess tax benefits from stock-based
compensation 2.5 -
------------ -----------
Net cash used in financing activities (28.8) (2.6)
------------ -----------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND
CASH EQUIVALENTS 0.5 (0.9)
------------ -----------
Net increase in cash and cash equivalents 90.5 29.7
Cash and cash equivalents at beginning period 607.6 544.7
------------ -----------
Cash and cash equivalents at end of period $ 698.1 $ 574.4
============ ===========
LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES
SELECTED SEGMENT INFORMATION
(Dollar amounts in millions)(Unaudited)
Quarter Ended
March 31,
---------------
2006 2005
------- -------
Net sales:
OSB $397.6 $416.2
Siding 120.7 95.4
Engineered Wood Products 112.4 109.3
Other 47.6 42.8
Less: Intersegment sales - (2.3)
------- -------
$678.3 $661.4
======= =======
Operating profit (loss):
OSB $111.0 $171.3
Siding 18.6 7.0
Engineered Wood Products 11.3 5.6
Other 5.4 5.5
Other operating credits and charges, net (0.1) 0.3
Gain (loss) on sales or impairment of
long-lived assets 0.1 0.2
General corporate and other expenses, net (28.8) (23.4)
Foreign currency gains (losses) 2.1 (0.6)
Investment income (interest expense), net 9.6 (0.2)
------- -------
Income from operations before taxes 129.2 165.7
Provision for income taxes 44.3 60.3
------- -------
Income from continuing operations $84.9 $105.4
======= =======
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
March 31 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 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.
3. Income Taxes
Quarter Ended March 31,
------------------------------
2006 2005
------------------------------
Income from continuing operations $ 129.2 $ 165.7
Loss from discontinued operations (2.0) (6.0)
--------------- --------------
127.2 159.7
Total tax provision (43.5) (58.0)
--------------- --------------
Net income $ 83.7 $ 101.7
=============== ==============
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. 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 quarters ended
March 31, 2006 and 2005, 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 and
state income taxes.
The components and associated effective income tax rates applied
to each period are as follows:
Quarter Ended March 31,
----------------------------------------------------
2006 2005
-------------------------- -------------------------
Tax Provision Tax Rate Tax Provision Tax Rate
--------------- ---------- --------------- ---------
Continuing
operations $44.3 34% $60.3 36%
Discontinued
operations (0.8) 40% (2.3) 38%
--------------- ---------------
$43.5 34% $58.0 36%
=============== ===============
LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES
SUMMARY OF PRODUCTION VOLUMES
Quarter Ended March 31
----------------------
2006 2005
----------- ----------
Oriented strand board, million square feet 3/8"
basis 1,414 1,371
Oriented strand board, million square feet 3/8"
basis (produced by wood-based siding mills) 68 -
Wood-based siding, million square feet 3/8"
basis 251 250
Engineered I-Joist, million lineal feet 21 27
Laminated veneer lumber (LVL), thousand cubic
feet 2,963 3,193
Composite Decking, million lineal feet 15 12
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