What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2022-02-22 compared with 2021-02-18 · 274 added, 406 removed, 969 unchanged (41% of the section changed)

18 unchanged sentences

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the Finance & Audit Committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Property, plant and equipment, net—Peace Valley Facility in British Columbia—Refer to Notes 1 and 15 to the financial statements

Retirement Plans and Post-Retirement Benefits— Refer to Notes 1 and 17 to the financial statements

Critical Audit Matter Description

The Company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amounts are no longer recoverable.

As part of this evaluation, the Company determines the lowest level for which identifiable cash flows are largely independent of other groups of assets.

During the prior year, the

Company indefinitely curtailed production at the Peace Valley facility in British Columbia (the “Facility”).

The Company concluded that the Facility is temporarily idled rather than abandoned, and it remains within its historical asset group, for which no impairment is required.

We identified the Company’s conclusion that the Facility continues to be temporarily idled rather than abandoned, including the reasonableness of the Company’s assertion that it could restart the facility, as a critical audit matter because of the significant judgment required by the Company in reaching this conclusion.

Our audit procedures performed to evaluate this conclusion required a high degree of auditor judgment.

The Company has a number of frozen defined benefit pension plans in the U.S.

and Canada covering many of their employees.

In November 2021, the Company initiated the termination of its U.S.

and Canadian defined benefit pension plans (“Plans”).

The Plans are expected to be settled at the end of 2022, subject to required regulatory approvals.

Plan participants will have a choice of receiving their full accrued benefits by electing either lump sum

distributions or annuity contracts with a qualifying third-party annuity provider.

Expenses and liabilities related to the defined benefit pension obligation are recorded based on various actuarial assumptions, including discount rate, assumed rates of return, and assumptions related to the rate of election by participants to receive lump sum payments or annuities upon the termination of the Plans in 2022.

We identified the Company’s actuarial assumptions used in valuing the defined benefit pension obligation as a critical audit matter given the requirement of management to make assumptions related to the selection of the discount rates, expected rate of return on plan assets, and the lump sum selection rate.

Performing audit procedures to evaluate the reasonableness of these assumptions required a high degree of auditor judgement and increased extent of effort, which included the need to involve an actuarial specialist.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the Company’s determination that the Facility is temporarily idled or abandoned included the following, among others:

• We tested the effectiveness of controls over the Company’s consideration of available information to determine whether the Facility is temporarily idled or abandoned.

• We evaluated the reasonableness of the Company’s conclusion by:

◦ Inquiring of senior financial and operational personnel to (1) corroborate that the Company has not committed to a plan to abandon the Facility and (2) understand the market conditions that would support restarting the Facility.

◦ Comparing the market conditions identified that support restarting the Facility to (1) historical conditions, (2) internally forecasted conditions, and (3) forecasted conditions included in industry and analyst reports for the Company.

◦ Inspecting internal and external communications regarding the planned future usage of the Facility, including the Company’s announcement subsequent to year-end that it will be initiating a process to restart the Facility.

◦ Inspecting evidence of ongoing maintenance activities at the Facility.

Our audit procedures related to the Company’s actuarial assumptions for the defined benefit pension obligation included the following, among others:

• We tested the effectiveness of the internal controls over the valuation of the defined benefit pension obligation.

• With the assistance of our actuarial specialist, we evaluated the reasonableness of the discount rates, expected rate of return on plan assets, and the lump sum election rate by:

• Evaluating the methodology utilized to select the discount rates, expected rate of return on assets, and lump sum election rate for conformity with applicable accounting guidance.

• Testing the underlying source information.

• Developing independent estimates using externally published information and comparing to the calculations based on management’s selected assumptions.

• We compared the actuarial assumptions used by management to historical trends and evaluated the change in the defined benefit pension obligation from the prior year due to the change in service cost, interest cost, actuarial gains and losses, benefit payments and the impacts to the assumptions as a result of the announced plan termination.

/s/ Deloitte & Touche LLP

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Other non-operating items ( 16 ) — 6

Income from continuing operations before income taxes 621 ( 23 ) 524

Income before income taxes 1,795 621 ( 23 )

Provision for income taxes ( 426 ) ( 125 ) 13

Equity in unconsolidated affiliate 4 1 —

Income from continuing operations 497 ( 10 ) 399

Loss from discontinued operations before income taxes — — ( 5 )

Provision for income taxes from discontinued operations — — 1

Loss from discontinued operations — — ( 4 )

Net income $ 1,373 $ 497 $ ( 10 )

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Net income attributed to LP $ 1,377 $ 499 $ ( 5 )

Amounts attributed to LP common shareholders:

Income from continuing operations, net of tax $ 499 $ ( 5 ) $ 399

Loss from discontinued operations, net of tax — — ( 4 )

$ 499 $ ( 5 ) $ 395

Basic net income per share attributed to LP:

Income per share from continuing operations $ 4.48 $ ( 0.04 ) $ 2.79

Loss per share from discontinued operations — — ( 0.03 )

Net income per share - basic $ 14.19 $ 4.48 $ ( 0.04 )

Diluted net income per share attributed to LP:

Income per share from continuing operations $ 4.46 $ ( 0.04 ) $ 2.76

Loss per share from discontinued operations — — ( 0.03 )

Net income per share - diluted $ 14.09 $ 4.46 $ ( 0.04 )

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Unrealized gains on securities, net of reversals — ( 3 ) ( 1 )

Defined benefit pension plans:

Change benefit obligations 3 — 3

Amortization of amounts included in net periodic benefit cost 5 4 6

Changes in defined benefit pension plans 5 8 4

Other — ( 2 ) —

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Cash and cash equivalents $ 358 $ 535

Receivables, net of allowance for doubtful accounts of $2 million and $1 million at December 31, 2020, and 2019, respectively 184 164

Receivables, net of allowance for doubtful accounts of $ 2 million at December 31, 2021, and 2020, respectively

Inventories 323 259

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Income taxes payable 13 18

Current portion of contingency reserves 1 2

Total current liabilities 351 286

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Stockholders’ equity:

Preferred stock, $1 par value, 15,000,000 shares authorized, no shares issued — —

Preferred stock, $ 1 par value;

15,000,000 shares authorized, no shares issued

Common stock, $ 1 par value;

200,000,000 shares authorized;

123,547,974 shares and 106,240,030 shares issued and outstanding, respectively, as of December 31, 2020;

129,665,899 shares and 111,945,021 shares issued and outstanding, respectively, as of December 31, 2019

102,415,883 shares issued and 85,636,154 shares issued and outstanding, respectively, as of December 31, 2021;

123,547,974 shares issued and 106,240,030 shares issued and outstanding, respectively, as of December 31, 2020

Additional paid-in capital 458 452

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Treasury stock, 16,779,729 shares and 17,307,944 shares, at cost as of December 31, 2021, and 2020, respectively

( 390 ) ( 397 )

Accumulated comprehensive loss ( 174 ) ( 151 )

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Gain on acquisition — — ( 14 )

Loss on early debt extinguishment 11 — —

Deferred taxes 7 2 10

Pension contributions — ( 1 ) ( 41 )

Other adjustments, net 13 18 19

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Acquisition of businesses, net of cash acquired — — 30

Receipt of proceeds from note receivable from asset sales — — 22

Proceeds from business divestiture — 15 —

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Balance as of December 31, 2018 153 $ 153 16 $ ( 378 ) $ 458 $ 1,613 $ ( 146 ) $ 1,700

Cumulative effect of the adoption of accounting principles — — — — — 12 ( 17 ) ( 5 )

Net income attributed to LP — — — — — ( 5 ) — ( 5 )

Cash dividends on common stock paid ($ 0.135 per share)

— — — — — ( 65 ) — ( 65 )

Issuance of shares under stock plans, net of taxes withheld — — — 10 ( 13 ) — — ( 3 )

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Cash dividends on common stock paid ($ 0.145 per share)

— — — — — ( 65 ) — ( 65 )

Issuance of shares under stock plans, net of taxes withheld — — ( 1 ) 9 ( 12 ) — — ( 3 )

1 unchanged sentence

Compensation expense associated with stock-based compensation — — — — 12 — — 12

Noncontrolling interest redemption value adjustment — — — — ( 2 ) — — ( 2 )

Other comprehensive loss — — — — — — 2 2

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Net income attributed to LP — — — — — 1,377 — 1,377

Cash dividends on common stock paid ($0.145 per share) — — — — — ( 65 ) — ( 65 )

Cash dividends on common stock paid ($ 0.16 per share for the first and second quarters and $ 0.18 per share for the third and fourth quarters)

— — — — — ( 66 ) — ( 66 )

Issuance of shares under stock plans, net of taxes withheld — — — 7 ( 12 ) — — ( 5 )

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Compensation expense associated with stock-based compensation — — — — 17 — — 17

Noncontrolling interest redemption value adjustment — — — — ( 2 ) — — ( 2 )

Other comprehensive loss — — — — — — ( 23 ) ( 23 )

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Note 3 Revenue

Note 4 Fair Value Measurements

Note 4 Earnings Per Share

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Note 6 Investments in and Advances to Affiliates

Note 8 Acquisitions

Note 9 Noncontrolling Interest

Note 7 Divestitures

Note 8 Redeemable Noncontrolling Interest

Note 9 Income Taxes

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Note 17 Retirement Plans and Post-Retirement Benefits

Note 19 Accumulated Comprehensive Income (loss)

Note 18 Accumulated Comprehensive Income

Note 19 Segment Information

Interim financial results (unaudited)

Note 20 Subsequent Event

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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The accompanying Consolidated Financial Statements have been prepared in accordance with U.S.

generally accepted accounting principles (U.S.

The preparation of financial statements in conformity with U.S.

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Trade receivables are primarily generated by sales of our products to our wholesale and retail customers.

Other receivables at December 31, 2020, and 2019, primarily consist of sales tax receivables, vendor rebates, a receivable associated with an affiliate and other miscellaneous receivables.

Other receivables at December 31, 2021 and 2020, primarily consisted of sales tax receivables, vendor rebates, a receivable associated with an affiliate, and other miscellaneous receivables.

Our long-term investments are classified as available-for-sale and are reported at estimated fair value.

Unrealized gains and losses, net of tax, on these investments are reported as a separate component of “Accumulated comprehensive loss” in Stockholders’ Equity until realized.

Unrealized gains and losses, net of tax, on these investments are reported as a component of accumulated comprehensive loss in stockholders’ equity until realized.

Impairment losses are charged to income for other-than-temporary declines in fair value.

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For purposes of computing realized gains and losses, the cost is identified on a specific identification basis.

As of December 31, 2020, we had no available-for-sale securities and at December 31, 2019, we had $ 5 million ($ 19 million, par value) invested in auction rate securities (ARS).

During 2020, we sold our ARS and recognized a $3 million gain on available-for-sale securities, which is included in investment income in the Consolidated Statements of Income.

Fair Value of Financial Instruments

We have, where appropriate, estimated the fair value of financial instruments.

These fair value amounts may be significantly affected by the assumptions used, including the discount rate and estimates of cash flows.

Accordingly, the estimates presented are not necessarily indicative of the amounts that could be realized in a current market exchange.

Fair Value Measurements

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

The fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

We are required to classify these financial assets and liabilities into two groups:

(1) recurring, measured on a periodic basis, and (2) non-recurring, measured on an as-needed basis.

There are three levels of inputs that may be used to measure fair value:

Level 1 Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

Level 2 Quoted prices for similar assets or liabilities in active markets;

quoted prices for identical or similar assets or liabilities in inactive markets;

or valuations based on models where the significant inputs are observable or can be corroborated by observable market data.

Level 3 Valuations based on models where significant inputs are not observable.

Unobservable inputs are used when little or no market data is available and reflect the Company’s own assumptions about the assumptions market participants would use.

The Company's financial instruments consist of cash and cash equivalents, short-term receivables, trade payables, debt instruments, and trading securities.

Carrying amounts reported on the balance sheet for cash and cash equivalents, receivables, and accounts payable approximate fair value due to the short-term maturity of these instruments.

See discussion on fair market values for long-term debt included within Note 11 below.

Trading securities consist of rabbi trust financial assets, which are recorded in other assets in our Consolidated Balance Sheets.

The rabbi trust holds assets attributable to the elections of certain management employees to defer the receipt of a portion of their compensation.

The assets of the rabbi trust are invested in mutual funds and are reported at fair value based on active market quotations, which represent Level 1 inputs.

Inventories are valued at the lower of cost or net realizable value.

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Property, plant, and equipment, including capitalized interest, are recorded at cost and consisted of the following:

Property, plant, and equipment, at cost:

Land, land improvements, and logging roads, net of road amortization $ 182 $ 172

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Property, plant, and equipment, net $ 1,069 $ 918

Depreciation is calculated on the straight-line basis over the estimated useful lives of the assets, which typically range from 10 to 20 years for buildings and land improvements, 3 to 15 years for equipment and the shorter of the lease term or estimated useful lives for leasehold improvements.

Depreciation and amortization expense on property, plant, and equipment is included in our Consolidated Statements of Income as noted below:

Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets, which typically range from 10 to 20 years for buildings and land improvements, 3 to 15 years for equipment, and the shorter of the lease term or estimated useful lives for leasehold improvements.

Depreciation and amortization expense on property, plant, and equipment was included in our Consolidated Statements of Income as noted below:

Year Ended December 31,

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Impairment losses would be recognized whenever the implied fair value of goodwill is less than its carrying value.

During the year ended December 31, 2020, we recognized a non-cash impairment charge of $5 million associated with our off-site construction operation Entekra Holdings, LLC (Entekra) related, in part, to the impacts of the COVID-19 pandemic on that operation.

Our 2019 and 2018 annual impairment assessment, which were performed during the fourth quarter of each year, did not result in impairments of our goodwill or intangible assets during the those years.

During each of the years ended December 31, 2021 and 2020, we recognized non-cash impairment charges of $ 5 million, associated with goodwill from the purchase of our off-site construction operation, Entekra.

Our 2019 annual impairment assessment did not result in impairments of our goodwill or intangible assets.

See Note 5 below for further discussion of goodwill and intangible assets.

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Current portion of operating lease liabilities 7 8

Current portion of contingency reserve 1 1

Other accrued liabilities 11 13

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Other accrued liabilities at December 31, 2021, and 2020, primarily consisted of reforestation liabilities, accrued rent, accrued interest, worker compensation liabilities, warranty reserves, and other items.

Additionally, included in Accounts payable is $ 16 million and $ 15 million related to capital expenditures that had not yet been paid as of December 31, 2020 and 2019, respectively.

Additionally, included in trade accounts payable is $ 46 million and $ 16 million related to capital expenditures that had not yet been paid as of December 31, 2021 and 2020, respectively.

Other Long-Term Liabilities

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Total Other long-term liabilities $ 105 $ 86

Other long-term liabilities at December 31, 2021 and 2020, consisted primarily of stumpage liability for harvested timber, reforestation liabilities, and other items.

Asset Retirement Obligations

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Over time, the liability is accreted to its settlement value, and the capitalized cost is depreciated over the useful life of the related asset.

Upon settlement of the liability, we recognize a gain or loss for any difference

between the settlement amount and the liability recorded.

Upon settlement of the liability, we recognize a gain or loss for any difference between the settlement amount and the liability recorded.

The activity in our asset retirement obligation liability for 2021 and 2020 is summarized in the following table.

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Accretion expense 1 1

Adjusted to expense during the year ( 1 ) ( 2 )

Adjusted to other operating credits and charges, net — —

Adjusted to expense (cost of sales and other operating credits and charges, net) ( 2 ) ( 1 )

Payments made — ( 1 )

Ending balance $ 8 $ 10

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Additionally, deferred tax assets are reduced by a valuation allowance when it is more likely than not that some portion of the deferred tax assets will not be realized.

We recognize liabilities for uncertain tax positions through a two-step process.

The first step is to evaluate the tax position for recognition by determining if the weight of the available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation process, if any.

The second step requires us to estimate and measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement.

It is inherently difficult and subjective to estimate such amounts, as we determine the probability for various outcomes.

We evaluate these uncertain tax provisions when new information becomes available.

These revaluations are based upon factors including, but not limited to, changes in circumstances, changes in tax law, successful settlement of issues under audit, and new audit activity.

Such a change in recognition or measurement could result in recognition of a tax benefit or an increase to the related provision.

We recognize the effect of income tax positions only if those positions are more likely than not to be sustained.

Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized.

Changes in recognition or measurement are reflected in the period in which the change in judgment occurs.

We classify interest related to income tax liabilities or uncertain tax positions as interest expense or interest income and, if applicable, penalties are recognized as a component of income tax expense.

We are subject to global intangible low-taxed income, an incremental tax on foreign income.

We have made an accounting election to record this tax in the period the tax arises.

Redeemable Noncontrolling Interest

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Stock-Based Compensation

We have stock award plans covering certain key employees and directors, which provide for awards of restricted stock, restricted stock units, performance stock units, stock-settled stock appreciation rights (SSARS), and stock options.

We have stock award plans covering certain key employees and directors, which provide for awards of restricted stock units, performance stock units, stock-settled stock appreciation rights (SSARS), and stock options.

In addition, we offer an Employee Stock Purchase Plan (ESPP) to employees.

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The fair value of our performance stock units is estimated using the Monte Carlo simulation pricing model.

The key assumptions used in this model include expected volatility, risk-free rate, average

and grant date stock prices.

The key assumptions used in this model include expected volatility, risk-free rate, and average and grant date stock prices.

The estimate of expected volatility for performance units is based upon historical stock price volatility and the length of the performance period.

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Other Operating Credits and Charges, Net

We classify significant amounts unrelated to ongoing core operating activities as “Other operating credits and charges, net” in the Consolidated Statements of Income.

Such items include, but are not limited to, restructuring charges (including severance charges), charges to establish and maintain litigation or environmental reserves, product reserves, retirement charges, gains or losses from settlements with governmental or other organizations, and gains (loss) on the sale of long-lived assets.

We classify significant amounts unrelated to ongoing core operating activities as other operating credits and charges,

net in the Consolidated Statements of Income.

Such items include, but are not limited to, restructuring charges (including severance charges), charges to establish and maintain litigation or environmental reserves, product reserves, gains or losses from settlements with governmental or other organizations, and gains (loss) on the sale or disposal of long-lived assets.

Due to the nature of these items, amounts in the income statement can fluctuate from year to year.

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Recently Adopted Accounting Policies

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326).

This ASU sets forth a "current expected credit loss" (CECL) model, which requires the measurement of all expected credit losses for financial instruments or other assets (e.g., trade receivables), held at the reporting date based on historical experience, current conditions, and reasonable supportable forecasts.

The Company adopted ASU 2016-13 on January 1, 2020.

This adoption did not have a material impact on the Company’s Consolidated Financial Statements.

In January 2017, the FASB issued ASU 2017-04, Intangibles—Goodwill and Other (Topic 350).

The standard simplifies the accounting for goodwill impairments by eliminating step 2 from the goodwill impairment test.

The Company adopted ASU 2017-14 on January 1, 2020.

This adoption did not have a material impact on the Company’s Consolidated Financial Statements.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement (Topic 820).

The standard amends ASC 820 to add and remove disclosure requirements related to fair value measurement.

The Company adopted ASU 2018-13 on January 1, 2020.

This adoption did not have a material impact on the Company’s Consolidated Financial Statements.

In August 2018, the FASB issued ASU 2018-15, Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract (Subtopic 350-40).

The standard provides additional guidance on the accounting for costs of implementation activities performed in a cloud computing arrangement that is a service contract.

The Company adopted ASU 2018-15 on January 1, 2020, using the prospective transition method.

This adoption did not have a material impact on the Company’s Consolidated Financial Statements.

In August 2018, the FASB issued ASU 2018-14, Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans, which amends ASC 715 to add, remove, and clarify disclosure requirements related to defined benefit pension and other postretirement plans.

The amended guidance modifies the disclosure requirements for employers that sponsor defined benefit pension or other post-retirement plans by removing and adding certain disclosures for these plans.

The eliminated disclosures include (a) the amounts in accumulated other comprehensive income expected to be recognized in net periodic benefit costs over the next fiscal year, and (b) the effects of a one percentage point change in assumed health care cost trend rates on the net periodic benefit costs and the benefit obligation for post-retirement health care benefits.

Additional disclosures include descriptions of significant gains and losses affecting the benefit obligation for the period.

The Company adopted ASU 2018-14 during 2020.

The adoption of this guidance modified our disclosures but did not have a material effect on our Consolidated Financial Statements.

Accounting Standards Issued But Not Yet Adopted

In December 2019, the FASB issued ASU No.

2019-12, Simplifying the Accounting for Income Taxes (Topic 740).

This ASU simplifies the accounting for income taxes by, among other things, eliminating certain existing exceptions related to the general approach in ASC 740 relating to franchise taxes, reducing complexity in the interim-period accounting for year-to-date loss limitations and changes in tax laws, and clarifying the accounting for transactions outside of business combination that result in a step-up in the tax basis of goodwill.

The transition requirements are primarily prospective, and the effective date is for interim and annual reporting periods beginning after December 15, 2020, with early adoption permitted.

We are currently evaluating the impact of the new guidance on our Consolidated Financial Statements.

This ASU simplifies the accounting for income taxes by, among other things, eliminating certain existing exceptions related to the general approach in ASC 740 relating to franchise taxes, reducing complexity in the interim-period accounting for year-to-date loss limitations and changes in tax laws, and clarifying the accounting for transactions outside of business combinations that result in a step-up in the tax basis of goodwill.

The Company adopted ASU 2019-12 effective as of January 1, 2021.

There was no impact on our Consolidated Financial Statements upon adoption.

The following table presents our reportable segment revenues, disaggregated by revenue source.

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We have determined that disaggregating revenue into these categories depicts how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors.

During 2020, LP CanExel ® prefinished siding was reclassified from Siding to our Other segment, reflecting changes in organizational structure and, accordingly, the information that the chief operating decision maker uses to evaluate performance and allocate resources to our business segments.

All prior periods have been adjusted for comparability.

As noted in the segment reporting information in Note 19 below, our reportable segments are:

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Siding OSB EWP South America Other Inter-segment Total

SmartSide $ 915 $ — $ — $ 20 $ — $ — $ 935

Fiber siding 36 — — — — — 36

Siding Solutions $ 1,158 $ — $ — $ 33 $ — $ — $ 1,191

OSB - Structural Solutions — 1,152 — 227 — — 1,379

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— 1,221 48 — — — 1,269

CanExel ® siding

— — — — 14 — 14

Other products 12 14 39 5 95 — 166

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Siding OSB EWP South America Other Inter-segment Total

SmartSide $ 797 $ — $ — $ 19 $ — $ — $ 816

Fiber siding 101 — — — — — 101

Siding Solutions $ 915 $ — $ — $ 20 $ — $ — $ 935

OSB - Structural Solutions — 580 — 146 — — 726

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— 632 25 — — ( 1 ) 656

CanExel ® siding

— — — — 46 — 46

Other products 44 9 30 3 52 — 137

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Siding OSB EWP South America Other Inter-segment Total

SmartSide $ 725 $ — $ — $ 22 $ — $ — $ 746

Fiber siding 106 — — — — — 106

Siding Solutions $ 797 $ — $ — $ 19 $ — $ — $ 816

OSB - Structural Solutions 1 381 8 138 — — 528

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9 387 28 — — ( 5 ) 419

CanExel ® siding

— — — — 37 — 37

Other products 110 9 31 3 66 — 218

$ 917 $ 777 $ 396 $ 159 $ 66 $ ( 5 ) $ 2,310

Revenue is recognized when obligations under the terms of a contract (i.e., purchase orders) with our customers are satisfied;

Revenue is recognized when obligations under the terms of a contract ( i.e.

, purchase orders) with our customers are satisfied;

generally, this occurs with the transfer of control of our products at a point in time.

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No individual customer exceeded 10% of our sales in 2021, 2020, or 2019.

Our businesses routinely incur customer program costs to obtain favorable product placement, to promote sales of products and to maintain competitive pricing.

Customer program costs and incentives, including rebates and promotion and volume allowances, are accounted for as deductions from net sales at the time the program is

Our businesses routinely incur customer program costs to obtain favorable product placement, promote sales of products, and maintain competitive pricing.

Customer program costs and incentives, including rebates and promotion and volume allowances, are accounted for as deductions from net sales at the time the program is initiated.

These reductions from revenue are recorded at the time of sale or the implementation of the program based on management’s best estimates.

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The amount of consignment inventory as of December 31, 2021 and 2020, was $ 2 million and $ 7 million, respectively.

FAIR VALUE MEASUREMENTS

The fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

We are required to classify these financial assets and liabilities into two groups:

recurring—measured on a periodic basis and non-recurring—measured on an as-needed basis.

There are three levels of inputs that may be used to measure fair value:

Level 1 Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

Level 2 Quoted prices for similar assets or liabilities in active markets;

quoted prices for identical or similar assets or liabilities in inactive markets;

or valuations based on models where the significant inputs are observable or can be corroborated by observable market data.

Level 3 Valuations based on models where significant inputs are not observable.

Unobservable inputs are used when little or no market data is available and reflect the Company’s own assumptions about the assumptions market participants would use.

Assets and liabilities measured at fair value on a recurring basis as of December 31, 2020, and 2019, are summarized in the following tables.

2020 Quoted Prices in

Active Markets

for Identical

(Level 1) Significant

Other Observable

(Level 2) Significant

Available-for-sale securities $ — $ — $ — $ —

Trading securities 5 5 — —

2019 Quoted Prices in

Active Markets

for Identical

(Level 1) Significant

Other Observable

(Level 2) Significant

Available-for-sale securities $ 5 $ — $ — $ 5

Trading securities 4 4 — —

Trading securities consist of rabbi trust financial assets, which are recorded in other assets in our Consolidated Balance Sheets.

The rabbi trust holds assets attributable to the elections of certain management employees to defer the receipt of a portion of their compensation.

The assets of the rabbi trust are invested in mutual funds and are reported at fair value based on active market quotations, which represent Level 1 inputs.

The valuation of our ARS investment portfolio was subject to uncertainties that are difficult to predict.

Factors that may have impacted our valuation included changes to credit ratings of the securities as well as to the underlying assets supporting those securities, rates of default of the underlying assets, underlying collateral value, discount rates, counterparty risk, and ongoing strength and quality of market credit and liquidity.

During 2020, we sold our ARS and recognized a $3 million gain on available-for-sale securities, which is included in investment income in the Consolidated Statements of Income.

As of December 31, 2020, we had no available-for-sale securities, and at December 31, 2019, we had $ 5 million ($ 19 million, par value) invested in ARS.

The following table summarizes changes in assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the twelve months ended December 31, 2020, and 2019.

Available-for-

sale securities

Balance at December 31, 2018 $ 6

Return of principal on ARS ( 1 )

Total realized/unrealized gains —

Balance at December 31, 2019 5

Return of principal on ARS ( 3 )

Total realized/unrealized gains

Included in investment income 3

Included in other comprehensive income ( 4 )

Balance at December 31, 2020 $ —

Carrying amounts reported on the balance sheet for cash and cash equivalents, receivables, and accounts payable approximate fair value due to the short-term maturity of these instruments.

See discussion on fair market values for Long-term Debt included within Note 12 below.

EARNINGS PER SHARE

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Adjusted weighted average shares 98 112 123

For the year ended December 31, 2019, approximately one million of the outstanding restricted stock and shares of common stock issuable upon exercise of outstanding stock option awards have been excluded from the calculation of diluted earnings per share because the net loss for the year ended December 31, 2019, causes such securities to be anti-dilutive.

For the year ended December 31, 2019, approximately 1 million of the outstanding restricted stock and shares of common stock issuable upon exercise of outstanding stock option awards have been excluded from the calculation of diluted earnings per share because the net loss for the year ended December 31, 2019, causes such securities to be anti-dilutive .

GOODWILL AND OTHER INTANGIBLE ASSETS

Changes in goodwill by segment for the year ended December 31, 2020, and 2019, are provided in the following table:

Changes in goodwill by segment for the years ended December 31, 2021 and 2020, are provided in the following table:

Siding OSB Other Total

Balance at December 31, 2019 $ 4 $ 16 $ 10 $ 30

Additions (see Note 8) 4 — 10 14

Impairment charges — — ( 5 ) ( 5 )

Balance at December 31, 2020 4 16 5 25

Additions — — — —

Impairment charges — — ( 5 ) ( 5 )

Balance at December 31, 2021 $ 4 $ 16 $ — $ 19

Changes in other intangible assets for the year ended December 31, 2020, and 2019, are provided in the following table:

Changes in other intangible assets for the years ended December 31, 2021 and 2020, are provided in the following table:

Timber Licenses 1

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Balance at December 31, 2019 $ 38 $ 20 $ 3 $ 61

Additions (see Note 8) — 12 3 15

Amortization ( 4 ) ( 1 ) — ( 5 )

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1 Timber licenses are included in Timber and timberlands on the Consolidated Balance Sheets.

During the second quarter of 2020, we performed an interim evaluation of impairment on the goodwill associated with our off-site construction operation Entekra Holdings, LLC (Entekra) due in part to the impacts of the COVID-19 pandemic on this reporting unit.

As a result, we recognized a non-cash impairment charge of $ 5 million during the year ended December 31, 2020, within loss on impairment in the Consolidated Statements of Income.

The Company’s goodwill is evaluated for impairment annually during the fourth quarter or more frequently if events indicate the carrying value of a reporting unit may not be recoverable.

The Company’s annual goodwill impairment test performed considered the recent financial performance of the Company, including our off-site construction operation, Entekra.

The 2021 impairment test for Entekra indicated carrying value exceeded the estimated fair value.

The difference was recorded as a non-cash loss on impairment of $ 5 million for the year ended December 31, 2021, within loss on impairments in the Consolidated Statements of Income.

During 2020, we performed an interim evaluation of impairment on the goodwill associated with Entekra and recorded a non-cash loss on impairment of $ 5 million for the year ended December 31, 2020, within loss on impairments in the Consolidated Statements of Income.

The annual impairment test for all other reporting units in 2021, 2020, and 2019 indicated that the estimated fair value exceeded carrying value, and therefore no impairment was recorded.

In performing the goodwill impairment test, we used an income approach to estimate the fair value of our reporting units.

Determining fair value requires substantial judgment and the use of significant unobservable inputs, which are categorized as Level 3 fair value measurements.

We applied a discounted cash flow model in which cash flows are projected using internal forecasts over future periods, plus a terminal value, and discounted to present value using a risk-adjusted rate of return.

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The discount rate assumptions were based on an assessment of the risk inherent in the future cash flows of each reporting unit using industry, peer group, and company-specific information.

Included in the balance of timber licenses are values allocated to Canadian forest licenses whose initial value of $ 91 million is amortized over the estimated useful life of twenty to twenty-five yea rs.

Amortization expense related to definite-lived intangible assets was $ 5 million, $ 5 million and $ 4 million for the years ended December 31, 2020, 2019 and 2018, respectively.

Amortization expense related to definite-lived intangible assets was $ 5 million for each of the years ended December 31, 2021, 2020, and 2019.

Amortization of the above intangible assets will be $ 5 million per year over the next five years.

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Each partner owns 50 % of the venture.

We both sell products and raw materials to Resolute-LP, and purchase products for resale from Resolute-LP.

We sell OSB web stock and LVL flanges to the Resolute-LP joint venture, both of which are used as raw materials for I-Joist manufacture.

We purchase I-Joists manufactured by Resolute-LP for subsequent resale and distribution.

We eliminate profits on these sales and purchases, to the extent the inventory has not been sold through to third parties, based on its 50 % interest.

For the years ended December 31, 2020, 2019 and 2018, we sold $ 21 million, $ 12 million and $ 17 million, respectively, of products to Resolute-LP and purchased $ 73 million, $ 70 million and $ 58 million, respectively, of I-Joists from Resolute-LP.

For the years ended December 31, 2021, 2020, and 2019, we sold $ 58 million, $ 21 million, and $ 12 million, respectively, of OSB and LVL to Resolute-LP and purchased $ 170 million, $ 73 million, and $ 70 million, respectively, of I-Joists from Resolute-LP.

Included in our Consolidated Balance Sheets at December 31, 2021 and 2020, are $ 5 million and $ 7 million, respectively, in accounts receivable associated with Resolute-LP.

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We are the exclusive distributor of the I-Joists produced and sold by the joint venture, and it is considered an integral part of our operations.

We are classifying the income from the joint venture as a reduction in cost of sales.

We classify the income from the joint venture as a reduction in cost of sales.

LP recorded income from affiliates of $ 11 million in 2021, $ 4 million in 2020, and $ 11 million in 2019.

ACQUISITIONS AND DIVESTITURES

On February 14, 2022, we entered an agreement to sell our 50 % equity interest in two joint ventures that produce I-joists to Resolute Forest Products Inc.

for $ 50 million, subject to customary adjustments.

The completion of the sale, subject to regulatory approvals and certain closing conditions, is expected to close in the first half of 2022.

During the second quarter of 2020, we sold LP’s East River facility located in Nova Scotia, Canada (the East River facility), as well as the assets and brand rights for CanExel ® , the fiber-based prefinished siding product manufactured at that facility, for a total purchase price of $ 17 million, $ 15 million of which was received in cash in connection with the closing and $ 2 million of which is payable under a promissory note due in three equal annual installments beginning in June 2021.

The current portion is included in prepaid expenses and other current assets and the long-term portion is included in other assets within the Consolidated Balance Sheet.

The current portion is included in prepaid expenses and other current assets and the long-term portion is included in other assets within the Consolidated Balance Sheets.

We recognized a gain on sale of $ 2 million for the year ended December 31, 2020, within other operating credits and charges, net in the Consolidated Statements of Income.

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The Consolidated Statements of Income for the year ended December 31, 2019, include net sales of $ 46 million related to the East River facility.

Acquisitions have been accounted for as business combinations using the acquisition method and, accordingly, the results of operations of the acquired businesses have been included in our Consolidated Financial Statements since their dates of acquisition.

Asset acquisitions have been accounted for under ASU 2017-01.

The assets and liabilities of these businesses were recorded in the financial statements at their estimated fair values as of the acquisition dates.

During the first quarter of 2019, we obtained a controlling interest in Entekra.

Entekra's results of operations have been fully consolidated for periods after December 31, 2018, and we established a redeemable noncontrolling interest related to the minority holders.

Due to the pre-existing ownership interest in Entekra, this acquisition was accounted for as a step acquisition in accordance with ASC 805, "Business Combinations." We recognized a gain of $ 14 million, recorded within Other non-operating items on our Consolidated Statements of Income in connection with this transaction to record our ownership interest in Entekra at fair value on the acquisition date.

Including our previously owned interest, we acquired net assets of $ 56 million, consisting of $ 41 million in current assets (including $ 40 million in cash), $ 6 million in fixed assets, $ 25 million of goodwill and other intangible assets less $ 1 million in current liabilities and $ 15 million in noncontrolling interest.

During the second quarter of 2019, we acquired certain assets and liabilities of a pre-finishing siding company located in Wisconsin.

The purchase resulted in goodwill of $ 4 million.

During the fourth quarter of 2019, we acquired certain assets of an Illinois pre-finishing facility.

The purchase resulted in $ 3 million of property, plant, and equipment.

REDEEMABLE NONCONTROLLING INTERESTS

REDEEMABLE NONCONTROLLING INTEREST

Redeemable noncontrolling interest is interest in subsidiaries that is redeemable outside of our control, either for cash or other assets.

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Beginning balance $ 10 $ 10

Purchase of redeemable common and preferred units — 15

Adjustment to redemption value (through accumulated paid-in capital) ( 1 ) 2

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We paid income taxes, net of refunds, of $ 421 million, $ 70 million, and $ 20 million during 2021, 2020, and 2019, respectively.

Included in our Consolidated Balance Sheets at December 31, 2020, is a net income tax payable of $ 15 million, and at December 31, 2019, we had a net income tax receivable of $ 35 million.

Included in our Consolidated Balance Sheets at December 31, 2021 and 2020, is a net income tax payable of $ 12 million, and $ 15 million, respectively.

Deferred Taxes

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Pension and post-retirement benefits 4 5

Share-based compensation 4 5

Stock-based compensation 4 4

Benefit relating to capital loss, NOL carryforwards, and credit carryforwards 7 9

Inventories 8 7

Market value write-down of ARS — 3

Operating lease liabilities 8 5

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$ ( 84 ) $ ( 75 )

The benefit relating to capital loss, net operating loss (NOL) and credit carryforwards included in the above table at December 31, 2020 consists of:

Net Operating Loss Benefit Amount Valuation Allowance Expiration Beginning in

State NOL carryforwards 109 $ 2 $ — 2021

Chile NOL carryforwards 4 1 — No expiration

The benefit relating to capital loss and credit carryforwards included in the above table at December 31, 2021, consisted of:

Benefit Amount Valuation Allowance Expiration Beginning in

State credit carryforwards $ 1 $ — 2034

Canadian capital loss carryforwards 6 ( 6 ) No expiration

Canadian credit carryforwards 1 — 2024

We periodically review the need for valuation allowances against deferred tax assets and recognize these deferred tax assets to the extent that their realization is more likely than not.

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cash generation to be sufficient to meet our future U.S.

result, no deferred taxes have been recorded with respect to the difference between the financial accounting value and the tax basis in these subsidiaries.

As a result, no deferred taxes have been recorded with respect to the difference between the financial accounting value and the tax basis in these subsidiaries.

Since most of these earnings have previously been subject to the one-time U.S.

transition tax on foreign earnings required by the 2017 Tax Cuts and Jobs Act, they are eligible to be repatriated without additional U.S.

Any additional taxes due with respect to such earnings, if repatriated to the U.S., would generally be limited to foreign withholding taxes, which we estimate could be up to $ 26 million.

Any additional taxes due with respect to such earnings, if repatriated to the U.S., would generally be limited to foreign withholding taxes, net of U.S.

foreign tax credits, which we estimate could be up to $ 23 million.

Tax Rate Reconciliation

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federal tax rate 21 % 21 % 21 %

State and local income taxes 3 11 3

State and local income taxes net of federal benefit 3 3 11

Effect of foreign tax rates 1 1 9

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Uncertain tax positions — ( 4 ) ( 7 )

Effect of U.S.

federal rate change on deferred taxes — — ( 1 )

Other, net ( 1 ) — 1

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federal income tax as well as income taxes of multiple state jurisdictions.

Our foreign subsidiaries are subject to income tax in Canada, Chile, Brazil, Peru, Colombia, and Argentina.

Our foreign subsidiaries are subject to income tax in Canada, Chile, Brazil, Peru, Colombia, Argentina, and Paraguay.

We generally remain subject to U.S.

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Our tax returns are currently under examination by tax authorities in Canada for years 2017 and 2018, and in Chile for years 2016 through 2018.

GAAP, we are allowed to make an accounting policy election relating to the inclusion of Global Intangible Low-Taxed Income (GILTI) to treat taxes due on future U.S.

income inclusions in taxable income related to GILTI as either (1) a current period expense (the period cost method) or (2) factoring in such amounts into our measurement of deferred taxes (the deferred method).

We have elected to treat taxes due on future U.S.

inclusions in taxable income related to GILTI as a current period expense when incurred using the period cost method.

Uncertain Tax Positions

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Tax positions taken in prior years — 1 —

Tax positions taken in current year — — —

Tax positions taken in prior years — — —

Settlements during the year — — ( 4 )

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Included in the above balances at December 31, 2021, is $ 9 million of tax benefits that, if recognized, would affect our effective tax rate.

We accrued and paid no interest during 2020 and accrued $ 1 million interest and paid $ 2 million interest during 2019.

Included in our Consolidated Balance Sheets at December 31, 2019, was a $2 million liability for accrued interest.

After the statute of limitations lapsed in 2020, we reversed the liability for accrued interest and had no remaining interest accrued as of December 31, 2020.

We accrued and paid no interest during 2021and 2020.

Our lease portfolio consists primarily of real estate, mobile equipment at our manufacturing facilities, rail cars to transport our products, and a fleet of vehicles.

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The lease term for all of our leases includes the non-cancellable period of the lease plus any additional periods covered by either an option to extend (or not to terminate) the lease that we are reasonably certain to exercise, or an option to extend (or not to terminate) the lease controlled by the lessor.

As of December 31, 2020, our weighted average discount rates were five percent and four percent for operating and finance leases, respectively.

As of December 31, 2020, our weighted average remaining lease terms were 12 and 2 years for operating and finance leases, respectively.

Our operating and finance leases are included in our Consolidated Balance Sheet and Consolidated Statement of Income as follows:

As of December 31, 2021, our weighted average discount rate was four percent, and our weighted average remaining lease term was twelve years for operating leases.

Our operating leases are included in our Consolidated Balance Sheets and Consolidated Statement of Incomes as follows:

Classification December 31,

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Operating lease assets Operating lease assets $ 52 $ 40

Finance lease assets Property, plant, and equipment, net — 1

Total lease assets $ 52 $ 40

Operating Accounts payable and accrued liabilities $ 7 $ 8

Finance Current portion of long-term debt — —

Operating Non-current operating lease liabilities 44 32

Finance Long-term debt, excluding current portion — 1

Total lease liabilities $ 51 $ 40

Classification December 31,

Consolidated Statement of Income 2020 2019

Operating lease cost Cost of sales and Selling, general and administrative expenses $ 12 $ 10

Finance lease cost

Amortization of leased assets Cost of sales — —

Interest on lease liabilities Interest expense — —

Total lease cost $ 12 $ 10

For the year ended December 31, 2020, we incurred short-term lease and variable lease costs of $ 2 million, and we made cash payments of $ 9 million in operating leases.

For the year ended December 31, 2019, we incurred short-term lease and variable lease costs of $ 31 million, and we made cash payments of $ 9 million in operating leases.

We obtained right to use (ROU) assets in exchange for new operating lease liabilities of $ 4 million and $ 47 million for the years ended December 31, 2020, and 2019, respectively.

We did not enter into any financing leases during 2020.

We obtained ROU assets in exchange for new finance lease liabilities of $ 1 million for the year ended December 31, 2019.

For the years ended December 31, 2021, and 2020, we incurred operating lease expenses of $ 11 million and $ 12 million, respectively, included within costs of sales and selling, general and administrative expenses.

We made cash payments of $ 8 million and $ 9 million during the years ended December 31, 2021, and 2020, respectively, related to our operating leases.

We obtained the right to use (ROU) assets in exchange for new operating lease liabilities of $ 18 million and $ 4 million for the years ended December 31, 2021, and 2020, respectively.

We did not enter into any financing leases during 2021 or 2020.

The following table sets forth the minimum lease payments that are expected to be made in each of the years indicated.

Operating Leases Finance Leases Total

2021 $ 9 $ — $ 9

Operating Leases

2027 and thereafter 39

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Senior unsecured notes, maturing 2029, interest rates fixed 3.625 % $ 350 $ ( 4 ) $ 346 $ — $ — $ —

Senior unsecured notes, maturing 2024, interest rates fixed 4.875 % — — — 350 ( 2 ) 348

Amended Credit Facility, maturing 2023 to 2024, interest rates variable varies — — — — — —

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Long-term portion $ 350 $ ( 4 ) $ 346 $ 351 $ ( 2 ) $ 348

In March 2020, we borrowed $ 350 million under our revolving credit facility dated as of June 27, 2019 (the Credit Facility) with American AgCredit, PCA, as administrative agent and CoBank, ACB, as a letter of credit issuer, as a precautionary measure, to ensure funds were available to meet our obligations for a substantial period of time in response to the COVID-19 pandemic.

In May 2020, we entered into an amendment to the Credit Facility to provide a total capacity of $ 550 million and later in May 2020, we entered into a second amendment to the Credit Facility (as amended, the Amended Credit Facility), which modified certain representations and warranties included in the Credit Facility related to the impacts of the ongoing COVID-19 pandemic on the Company’s business, operations or financial conditions as more particularly set forth in the second amendment.

We repaid the $ 350 million borrowed under the Credit Facility in June 2020.

The Amended Credit Facility provides for revolving credit facilities in the aggregate principal amount of up to $ 550 million, with a $ 60 million sub-limit for letters of credit.

The initial $350 million revolving facility provided pursuant to the Credit Facility (Revolving A Loan) terminates, and all loans made thereunder become due, on June 27, 2024.

The incremental $ 200 million revolving facility provided pursuant to the Amended Credit Facility in May 2020 (Revolving B Loan) terminates, and all loans made thereunder become due, on May 1, 2023.

Certain of LP’s existing and future wholly-owned domestic subsidiaries may guaranty our obligations under the Amended Credit Facility and, subject to certain limited exceptions, provide security through a lien on substantially all the personal property of these subsidiaries.

In March 2021, we issued $ 350 million of the 3.625 % Senior Notes due in 2029 (2029 Senior Notes).

We may redeem the 2029 Senior Notes, in whole or in part, prior to March 15, 2024, at a redemption price equal to 100 % of the principal amount thereof plus a “make-whole” premium set forth in the indenture governing our 2029 Senior Notes, plus accrued and unpaid interest, if any, to, but not including, the date of redemption.

On or after March 15, 2024, we may, at our option on one or more occasions, redeem all or any portion of these notes at the redemption prices set forth in the indenture governing the 2029 Senior Notes, plus accrued and unpaid interest, if any, to, but not including, the date of redemption.

The indenture governing the 2029 Senior Notes contains certain covenants that, among other things, limit our ability to grant liens to secure indebtedness, engage in sale and leaseback transactions and merge or consolidate or sell all or substantially all of our assets.

If we are subject to a "change of control," as defined in the indenture, we are required to offer to repurchase the 2029 Senior Notes at a purchase price equal to 101 % of the principal amount thereof plus accrued and unpaid interest, if any, thereon to, but not including, the date of purchase.

The indenture governing the 2029 Senior Notes contains customary events of default, including failure to make required payments on the 2029 Senior Notes, failure to comply with certain agreements or covenants contained in the indenture, failure to pay or acceleration of certain other indebtedness and certain events of bankruptcy and insolvency.

An event of default in the indenture allows either the indenture trustee or the holders of at least 25 % in aggregate principal amount of the then-outstanding 2029 Senior Notes to accelerate, or in certain cases, automatically causes the acceleration of, the amounts due under the 2029 Senior Notes.

In September 2016, we issued $ 350 million aggregate principal amount of the Senior Notes due 2024 (2024 Senior Notes).

In March 2021, we used the proceeds from the issuance of the 2029 Senior Notes and cash on hand to redeem all of the 2024 Senior Notes at a redemption price of 102.438 % of the principal amount thereof plus accrued and unpaid interest to, but not including, the redemption date.

In connection with this redemption, we recorded an early debt extinguishment charge of $ 11 million, recorded within Other non-operating items on the Condensed Consolidated Statements of Income, which included $ 9 million of redemption premium and $ 2 million of unamortized debt costs associated with these notes.

Deferred debt costs are amortized over the life of the related debt using a straight-line basis which approximates the effective interest method.

If the debt is retired early, the related unamortized deferred financing costs are written off in the period the debt is retired to Other non-operating items.

During the year ended December 31, 2021, $ 2 million were written off in association with the 2024 Senior Notes extinguishment, and we paid $ 4 million in debt issuance costs that will be deferred and amortized over the life of the 2029 Senior Notes.

Credit Facility

In June 2021 and August 2021, LP entered into third and fourth amendments to its revolving credit facility, dated as of June 27, 2019 (Credit Facility), with American AgCredit, PCA, as administrative agent, and CoBank, ACB, as letter of credit issuer (as amended, the Amended Credit Facility).

The Amended Credit Facility provides a revolving credit facility in the principal amount of up to $ 550 million, with a $ 60 million sub-limit for letters of credit.

The revolving facility, pursuant to the Amended Credit Facility, terminates, and all loans made thereunder become due, in June 2027.

LP has granted a security interest in substantially all of its U.S.

personal property to secure the Amended Credit Facility, and certain of LP’s existing and future wholly-owned domestic subsidiaries may guarantee its obligations under the Amended Credit Facility and, subject to certain limited exceptions, provide security through a security interest in substantially all the personal property of these subsidiaries.

The Amended Credit Facility provides a release of security interest after obtaining an Investment Grade rating from any one of Moody's, S&P, or Fitch.

There were no outstanding amounts borrowed under the Amended Credit Facility as of December 31, 2021.

Revolving borrowings under the Amended Credit Facility accrue interest, at our option, at either a “base rate” plus a margin of 0.875 % to 2.000 % for Revolving A Loans and 1.125 % to 2.250 % for Revolving B Loans or LIBOR plus a margin of 1.875 % to 3.000 % for Revolving A Loans and 2.125 % to 3.250 % for Revolving B Loans.

The Amended Credit Facility also includes an unused commitment fee, due quarterly, ranging from 0.3% to 0.6% for both Revolving A Loans and Revolving B Loans.

Revolving borrowings under the Amended Credit Facility accrue interest, at our option, at either (a) a “base rate” plus a margin of 0.500 % to 1.500 % or (b) LIBOR plus a margin of 1.500 % to 2.500 %.

The Amended Credit Facility also includes an unused commitment fee, due quarterly, ranging from 0.200 % to 0.425 %.

The applicable margins and fees within these ranges are based on our ratio of consolidated EBITDA to cash interest charges.

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The Amended Credit Facility contains various restrictive covenants and customary events of default, the occurrence of which could result in the acceleration of our obligation to repay the indebtedness outstanding thereunder.

The Amended Credit Facility also contains financial covenants that require us and our consolidated subsidiaries to have, as of the end of each quarter, (i) a capitalization ratio (i.e., funded debt less unrestricted cash to total capitalization) of no more than 57.5% and (ii) a minimum consolidated net worth of at least $475 million plus 70% of consolidated net income after December 31, 2019, without a deduction for net losses.

In September 2016, we issued $ 350 million aggregate principal amount of the 2024 Senior Notes, which mature on

September 15, 2024.

We may, at our option on one or more occasions, redeem all or any portion of these notes at the redemption prices set forth in the indenture governing the 2024 Senior Notes, plus accrued and unpaid interest, if any, to, but not including, the date of redemption.

The indenture governing the 2024 Senior Notes contains certain covenants that, among other things, limit our ability to grant liens to secure indebtedness, engage in sale and leaseback transactions and merge or consolidate or sell all or substantially all of our assets.

If we are subject to a "change of control," as defined in the indenture, we are required to offer to repurchase the 2024 Senior notes at a purchase price equal to 101% of the principal amount thereof plus accrued and unpaid interest, if any, thereon to, but not including, the date of purchase.

The indenture governing the 2024 Senior Notes contains customary events of default, including failure to make required payments on the 2024 Senior Notes, failure to comply with certain agreements or covenants contained in the indenture, failure to pay or acceleration of certain other indebtedness and certain events of bankruptcy and insolvency.

An event of default in the indenture allows either the indenture trustee or the holders of at least 25% in aggregate principal amount of the then-outstanding 2024 Senior Notes to accelerate, or in certain cases, automatically causes the acceleration of, the amounts due under the 2024 Senior Notes.

The Amended Credit Facility also contains financial covenants that require us and our consolidated subsidiaries to have, as of the end of each quarter, a capitalization ratio ( i.e.

, funded debt less unrestricted cash to total capitalization) of no more than 57.5 %.

In March 2020, LP entered into a letter of credit facility agreement (Letter of Credit Facility) with Bank of America, N.A., which provides for the funding of letters of credit up to an aggregate outstanding amount of $ 20 million, which may be secured by certain cash collateral of LP.

The Letter of Credit Facility includes a letter of credit fee, due quarterly, ranging from 0.50 % to 1.875 % of the daily available amount to be drawn on each letter of credit issued under the Letter of Credit Facility.

The Letter of Credit Facility is subject to similar affirmative, negative, and financial covenants as those set forth in the Amended Credit Facility, including capitalization ratio and minimum net worth covenants.

As of December 31, 2020, we were in compliance with all financial covenants under the Amended Credit Facility and the Letter of Credit Facility.

The weighted average interest rate for all long-term debt at December 31, 2020, and 2019, was approximately 4.9 %.

The Letter of Credit Facility is subject to similar affirmative, negative, and financial covenants as those set forth in the Amended Credit Facility, including capitalization ratio covenants.

As of December 31, 2021, we were in compliance with all financial covenants under the 2029 Senior Notes, the Amended Credit Facility and the Letter of Credit Facility.

Deferred debt costs are amortized over the life of the related debt using a straight-line basis, which approximates the effective interest method.

Included in such amortized amounts are deferred debt costs associated with our Amended Credit Facility, which are recorded within Other assets on our Condensed Consolidated Balance Sheets .

We amortized deferred debt costs of $ 2 million for each of the years ended December 31, 2021, 2020, and 2019.

The weighted average interest rate for all long-term debt at December 31, 2021 and 2020, was approximately 3.6 % and 4.9 %, respectively.

Required repayment of principal for long-term debt is as follows:

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2027 and after 350

Deferred debt costs are amortized over the life of the related debt using a straight-line basis, which approximates the effective interest method.

We amortized deferred debt costs of $ 2 million, $ 2 million and $ 1 million for the years ended December 31, 2020, 2019 and 2018, respectively.

Included in these amortized amounts are deferred debt costs associated with our Amended Credit Facility, which is recorded within "Other assets" on our Consolidated Balance Sheets.

We estimated the 2024 Senior Notes to have a fair value of $ 360 million and $ 362 million at December 31, 2020, and 2019, respectively, based upon market quotations.

We estimated the 2029 Senior Notes to have a fair value of $ 358 million at December 31, 2021, based upon market quotations.

We estimated the 2024 Senior Notes to have a fair value of $ 360 million at December 31, 2020, based upon market quotations.

Fair values were based on trading activity among the Company’s lenders and the average bid and ask price as determined using published rates (Level 1 in the U.S.

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All outstanding SSARs were vested as of December 31, 2021.

Restricted Shares, Restricted Stock Units, and Performance Stock Units

We grant time-vested restricted stock units and performance stock units to certain key employees and directors under our stock award plan.

Generally, time-vested restricted stock units granted prior to January 1, 2020, are subject to cliff-vesting for a period of three years from the date of grant for employees and one year for directors.

Those awards granted after January 1, 2020, vest ratably over the three-year vesting period Performance stock units vest based upon the attainment of certain performance metrics over a three-year cumulative performance period.

Restricted Stock Units and Performance Stock Units

We grant time-vested restricted stock units and performance stock units (PSUs) to certain key employees and directors under our stock award plan.

Those awards granted after January 1, 2020, vest ratably over the three-year vesting period for employees and vest in full on the first anniversary of the grant date for non-employee directors.

Certain of these awards are eligible to receive dividend equivalent shares.

The grant date fair value of these awards approximates market value of the shares.

PSUs vest based upon the attainment of certain performance and market metrics over a three-year cumulative performance period.

For awards based upon the achievement of the performance goals, the awards are earned ratably from 0% to 200%.

If the performance goals are met at the end of the performance period, the award is adjusted to reflect LP's three-year total shareholder return (TSR) performance relative to a capital market peer group.

If the performance goals are met at the end of the performance period,

the award is adjusted to reflect LP's three-year total shareholder return (TSR) performance relative to a capital market peer group.

This TSR modifier can increase or decrease the award by 20%, although the TSR modifier cannot cause the award to exceed the maximum of 200%.

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The following table summarizes stock awards as of December 31, 2021, as well as activity during the last year.

Stock Options / SSARS Restricted stock Restricted Stock Units and Performance Stock Units

Stock Options / SSARS Restricted Stock Units and Performance Stock Units

Number of Awards Weighted

Exercise Price Number of Awards Weighted Average Grant Date Fair Value Number of Awards Weighted Average Grant Date Fair Value

Exercise Price Number of Awards Weighted Average Grant Date Fair Value

Outstanding at December 31, 2020 387,541 $ 15.56 1,228,330 $ 27.42

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Vested — — ( 429,590 ) 27.97

Forfeited — — — — ( 92,608 ) 27.22

Forfeited/cancelled — — ( 249,033 ) 32.51

Outstanding at December 31, 2021 239,329 $ 16.93 1,087,994 $ 36.39

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(1) Expected to vest based upon historical forfeiture rate.

In July 2021, LP modified the performance vesting criteria of approximately 149,000 PSU awards granted in 2020.

The modification was considered a Type III modification under Accounting for Share-Based Payments (ASC 718), in which the original awards were canceled, and the modified awards were considered granted on the modification date.

Post-modification stock-based compensation expense related to these awards will be recognized over the remaining service period using modification date fair values of between $ 56.35 and $ 64.12 and the number of awards expected to vest.

The aggregate intrinsic value of the stock options and SSARs is the total pre-tax intrinsic value (the difference between our closing stock price on the last trading day of 2021 and the exercise price, multiplied by the number of in-the-money options and SSARs) that would have been received by the holders had all holders exercised their awards on December 31, 2021.

This amount changes based on the market value of our stock, as reported by the New York Stock Exchange.The intrinsic value of SSARs exercised in the years ended December 31, 2020, 2019, and 2018 was $ 8 million, $ 13 million, and $ 35 million, respectively.

This amount changes based on the market value of our stock, as reported by the New York Stock Exchange.

The intrinsic value of SSARs exercised in the years ended December 31, 2021, 2020, and 2019 was $ 8 million, $ 8 million, and $ 13 million, respectively.

The total fair value of awards vested during the years ended December 31, 2021, 2020, and 2019, was $ 20 million, $ 13 million, and $ 11 million, respectively.

Share Repurchases

On February 6, 2020, LP’s Board of Directors authorized LP to repurchase up to $ 200 million of shares of LP’s common stock (the Share Repurchase Program).

On November 4, 2020, LP’s Board of Directors authorized an expansion of LP's Share Repurchase Program under which the Company may repurchase up to additional $ 300 million of shares of LP’s common stock.

We repurchased approximately six million shares of our common stock at an average price of $ 32.69 per share through market purchases during 2020, with a remaining capacity of $ 300 million under the Share Repurchase Program.

On February 6, 2020, we announced that our Board of Directors authorized a share repurchase program (2020 Share Repurchase Program) under which LP may repurchase up to $ 200 million of shares of LP’s common stock, and on November 4, 2020, we announced that our Board of Directors expanded the 2020 Share Repurchase Program by authorizing repurchases of an additional $ 300 million of our common stock.

On May 4, 2021, our Board of Directors authorized an additional share repurchase program (First 2021 Share Repurchase Program) under which we may repurchase up to $ 1 billion of shares of our common stock.

November 2, 2021, our Board of Directors authorized an additional share repurchase plan under which we may repurchase up to $ 500 million shares of our common stock (Second 2021 Share Repurchase Program).

We repurchased approximately 21 million shares of our common stock at an average price of $ 61.52 per share through market purchases during 2021, with a remaining capacity of $ 500 million under the Second 2021 Share Repurchase Program as of December 31, 2021.

Employee Stock Purchase Plan

Our employee stock purchase plan (ESPP) provides our participating employees an opportunity to obtain shares of our common stock at a discount (through payroll deductions over three-month periods).

Our employee stock purchase plan (ESPP) provides our participating employees an opportunity to obtain shares of our common stock at a discount (through payroll deductions over six-month periods).

At December 31, 2021, two million shares of common stock were reserved for issuance under the ESPP provisions.

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Reorganization and facility curtailment charges $ ( 1 ) $ ( 5 ) $ ( 12 )

Insurance recoveries 3 — —

Canadian wage subsidies — 9 —

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$ 1 $ ( 4 ) $ ( 1 )

During 2021, we recognized a charge of $ 4 million related to additional estimated environmental costs associated with a non-operating site.

We incurred severance and other charges of $ 1 million related to certain reorganizations.

Additionally, we received $ 3 million in insurance recoveries related to business interruption claims for weather-related downtime sustained in the prior year.

During 2020, we recognized a charge of $ 3 million related to additional estimated environmental costs to be paid by a third party associated with a non-operating site.

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We also recognized $ 12 million of severance and other charges related to certain reorganizations.

During 2018, we recognized a $ 8 million gain related to the reduction of product-related warranty reserves associated with CanExel ® products and a gain of $ 8 million related to the settlement of environmental costs to be paid by a third party associated with a non-operating site.

We also recognized $ 10 million of severance and other charges related to certain reorganizations within the corporate offices and $5 million related to property damage sustained.

Non-operating income (expense)

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Foreign currency gains (losses) ( 3 ) 1 ( 5 )

Loss on early debt extinguishment ( 11 ) — —

Pension settlement charges ( 2 ) — —

Gain on acquisition of controlling interest — — 14

Other non-operating income $ — $ 6 $ ( 4 )

Other non-operating items $ ( 16 ) $ — $ 6

Interest expense was $ 15 million, $ 17 million, and $ 18 million for the years ended December 31, 2021, 2020, and 2019, respectively.

During 2021, we recorded an early debt extinguishment charge of $ 11 million, which included $ 9 million of redemption premium and $ 2 million of unamortized debt costs associated with the early redemption of the 2024 Senior Notes.

Additionally, we recognized $ 2 million of pension settlement expense related to a portion of the unrecognized actuarial loss.

During 2020, we sold our auction rate securities (ARS) and recognized a $ 3 million gain on available-for-sale securities.

During 2019, we obtained a controlling interest in Entekra.

Entekra's results of operations have been fully consolidated, and we established a redeemable noncontrolling interest related to the minority holders.

Due to the pre-existing ownership interest in Entekra, this acquisition was accounted for as a step acquisition in accordance with ASC 805, Business Combinations .

We recognized a gain of $ 14 million, recorded within Other non-operating items on our Consolidated Statements of Income in connection with this transaction to record our ownership interest in Entekra at fair value on the acquisition date.

IMPAIRMENT OF LONG-LIVED ASSETS

We review the carrying values of our long-lived assets for potential impairments and believe we have adequate support for the carrying value of our long-lived assets.

If demand and pricing for our products fall to levels significantly below cycle average demand and pricing, or should we decide to invest capital in alternative projects, or should changes occur related to our wood supply for our mills, it is possible that future impairment charges will be required.

As of December 31, 2020, we believe the current impacts of the COVID-19 pandemic did not warrant an impairment of our long-lived assets.

However, future changes in the long-term effects of the COVID-19 pandemic on the demand and pricing of our products may result in future impairment charges, including curtailed facilities.

As of December 31, 2021, the fair values of LP's facilities were in excess of their carrying value, which supported the conclusion that no impairment is necessary for those facilities.

However, if demand and pricing for our products fall to levels significantly below cycle average demand and pricing, or should we decide to invest capital in alternative projects, or should changes occur related to our wood supply for our mills, it is possible that future impairment charges will be required.

We also review from time to time potential dispositions of various assets, considering current and anticipated economic and industry conditions, our strategic plan, and other relevant factors.

Because a determination to dispose of particular assets can require management to make assumptions regarding the transaction structure of the disposition and to estimate the net sales proceeds, which may be less than previous estimates of undiscounted future net cash flows, we may be required to record impairment charges in connection with decisions to dispose of assets.

net cash flows, we may be required to record impairment charges in connection with decisions to dispose of assets.

During 2020, we recorded $ 9 million in pre-tax impairment charges primarily related to our fiber-producing assets at a Siding facility.

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and Silsbee, Texas;

and $ 39 million related to an EWP facility producing LSL and OSB and $ 5 million related to a Siding facility that we expect to sell.

These impairment charges reflect changes to anticipated usage of these facilities driven by market changes and improved operating efficiencies across our remaining facilities.

During 2018, we recorded an impairment of long-lived assets of $ 11 million related to non-operating assets.

$ 39 million related to an EWP facility producing LSL and OSB, and $ 5 million related to a Siding facility that was held for sale.

These impairment charges reflect changes to the anticipated usage of these facilities driven by market changes and improved operating efficiencies across our remaining facilities.

COMMITMENTS AND CONTINGENCIES

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Long-term portion $ 24 $ 13

*The current portion of the contingency reserve is included in Accounts payable and accrued liabilities on our Consolidated Balance Sheets.

Estimates of our loss contingencies are based on various assumptions and judgments.

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Beginning balance $ 13 $ 10

Adjustments to expense during the year 2 1

Adjustments to amounts to be paid be paid by a third party 2 —

Adjustments to expense during the year (other operating credits charges, net and cost of sales) 7 2

Adjustments to amounts to be paid by a third party 6 2

Payments made ( 1 ) ( 1 )

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Other Proceedings

We and our subsidiaries are parties to other legal proceedings in the ordinary course of business.

We and our subsidiaries are parties to legal proceedings in the ordinary course of business.

Based on the information currently available, management believes that the resolution of such proceedings should not have a material adverse effect on our financial position, results of operations, cash flows, or liquidity.

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We cannot estimate the potential amount of future payments under these agreements until events arise that would trigger the liability.

Additionally, in connection with certain sales of assets and divestitures of businesses, we have agreed to indemnify

the buyer and related parties for certain losses or liabilities incurred by the buyer or such related parties with respect to (1) the representations and warranties made to the buyer by us in connection with the sales and (2) liabilities related to the pre-closing operations of the assets sold.

Additionally, in connection with certain sales of assets and divestitures of businesses, we have agreed to indemnify the buyer and related parties for certain losses or liabilities incurred by the buyer or such related parties with respect to (1) the representations and warranties made to the buyer by us in connection with the sales and (2) liabilities related to the pre-closing operations of the assets sold.

Indemnities related to pre-closing operations generally include environmental liabilities, tax liabilities, and other liabilities not assumed by the buyer.

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These indemnities generally are capped at a maximum potential liability and have an unspecified duration.

• In connection with the sale by LP Canada Pulp Ltd (LPCP) of its pulp mill in Chetwynd, BC, Canada, to Tembec, Ltd in October 2002, we provided an indemnity of unspecified duration provided by LPCP for liabilities arising out of pre-closing operations.

• In connection with the sale by LP Canada Pulp Ltd (LPCP) of its pulp mill in Chetwynd, BC, Canada, to Tembec, Ltd in October 2002, LCLP provided an indemnity of unspecified duration for liabilities arising out of pre-closing operations.

These indemnities, which do not extend to environmental liabilities, are capped at CAD$ 15 million in the aggregate.

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Accrued to expense during the year 1 2

Reduced to other operating credits and charges — ( 4 )

Payments made ( 2 ) ( 2 )

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The current portion of the warranty reserve is included in Accounts payable and accrued liabilities, and the long-term portion is included in Other long-term liabilities on our Consolidated Balance Sheets.

We changed the warranty reserves related to CanExel ® products sold in certain geographic areas for a specific time period, reducing our warranty reserve by $ 4 million in 2019.

The changes to the reserve reflected revised estimates of future claims.

We believe that the warranty reserve balances at December 31, 2020, are adequate to cover future warranty

We believe that the warranty reserve balances at December 31, 2021, are adequate to cover future warranty payments.

However, it is possible that additional charges may be required.

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Pension benefits are earned generally based upon years of service and compensation during active employment.

Contributions to the qualified defined benefit pension plans are based on actuarial calculations of amounts to cover current service costs and amortization of prior service costs over periods ranging up to 20 years.

Contributions to the defined benefit pension plans are based on actuarial calculations of amounts to cover current service costs and amortization of prior service costs over periods ranging up to 20 years.

We contribute additional funds as necessary to maintain desired funding levels.

Benefit accruals under our most significant plan, which account for approximately 79 % of the assets and 82 % of the benefit obligations in the tables below, had been credited at the rate of five percent of eligible compensation with an interest credit based upon the 30-year U.S.

Benefit accruals under our most significant plan, which account for approximately 80 % of the assets and 82 % of the benefit obligations in the tables below, had been credited at the rate of three percent of eligible compensation with an interest credit based upon the 30-year U.S.

Treasury rate.

The Company discontinued providing contribution credits effective January 1, 2010, to its U.S.

The remaining defined benefit pension plans in Canada use a variety of benefit formulas, and we discontinued providing contribution credits effective January 1, 2020.

The remaining defined benefit pension plans in Canada used a variety of benefit formulas, and we discontinued providing contribution credits effective January 1, 2020.

In November 2021, the Company initiated the termination of our frozen U.S.

and Canadian defined benefit pension plans (the Plan), which would result in the full settlement of the Company's Plan obligations.

The distribution of Plan assets pursuant to the termination will not be made until the Plan termination satisfies all regulatory requirements, which is expected to occur by the end of 2022.

Plan participants will receive their full accrued benefits from Plan assets by electing either lump-sum distributions or annuity contracts with a qualifying third-party annuity provider.

The Plan termination is expected to result in pension settlement expense in 2022, which will be determined based on prevailing market conditions, the actual lump-sum distributions, and annuity purchase rates at the date of distribution.

As a result, we are currently unable to reasonably estimate the timing or final amount of such settlement charges.

Upon settlement, we expect to recognize pre-tax pension settlement charges that will include a non-cash charge for the recognition of all pre-tax actuarial losses accumulated in Accumulated Other Comprehensive Loss ($ 101 million as of December 31, 2021) and (2) any cash contributions to settle the Plan’s obligations ($ 6 million net projected benefit obligation as of December 31, 2021).

The actual amount of the settlement charges and any potential cash contribution will depend on various factors, including interest rates, Plan asset returns, and the lump-sum election rate.

The projected benefit obligation is the actuarial present value of benefits attributable to employee service rendered to date, including the effects of estimated salary increases.

The following table details information regarding our pension plans at December 31:

The following table details information regarding our pension plans at December 31, 2021 and 2020:

Change in benefit obligation:

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Interest cost 7 9

Actuarial losses, net 17 24

Actuarial (gains) losses, net ( 8 ) 17

Foreign exchange rate changes 1 1

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Net amount recognized $ ( 6 ) $ ( 10 )

The 2020 and 2019 actuarial losses of $ 17 million and $ 24 million, respectively, were largely the result of the actual return on assets exceeding the expected asset return offset by the increase in liability due a decrease in discount rate used to measure the obligations under the pension plans.

The pretax amounts recognized in accumulated comprehensive loss were as follows:

Actuarial losses Prior service cost Total

December 31, 2018 $ ( 116 ) $ ( 7 ) $ ( 123 )

Other comprehensive income (loss) before reclassifications — — —

Amounts reclassified from accumulated comprehensive loss 5 ( 1 ) 4

December 31, 2019 ( 111 ) ( 8 ) ( 119 )

Other comprehensive income (loss) before reclassifications 4 — 4

Amounts reclassified from accumulated comprehensive loss 6 — 6

December 31, 2020 $ ( 101 ) $ ( 8 ) $ ( 109 )

Weighted average assumptions used to calculate our benefit obligations at December 31:

Amounts in accumulated other comprehensive income:

Net actuarial loss $ ( 95 ) $ ( 101 )

Prior service costs ( 6 ) ( 8 )

Total pre-tax amounts in accumulated other comprehensive income $ ( 101 ) $ ( 109 )

The 2021 actuarial gains of $ 8 million were primarily related to the impact of plan termination assumptions on the

discount rate.

The 2020 actuarial losses of $ 17 million were largely the result of the actual return on assets exceeding the expected asset return offset by the increase in liability due to a decrease in the discount rate used to measure the obligations under the pension plans.

The changes recognized in other comprehensive loss were as follows:

Year Ended December 31,

2021 2020 2019

Net actuarial gain (loss) and prior service (cost) arising during the period, net of tax $ ( 1 ) $ 3 $ —

Amortization of actuarial loss, prior service cost and settlements, net of tax 6 5 4

Total amounts recognized in other comprehensive income $ 5 $ 8 $ 4

Weighted-average assumptions used to calculate our benefit obligations at December 31, 2021 and 2020:

Discount rate:

Canada 2.6 % 2.3 %

Rate of compensation increase:

Canada NA 3.5 %

Benefit obligations by plan category are as follows:

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2027– 2031 72

These estimated benefit payments are based upon assumptions about future events.

These estimated benefit payments are based upon assumptions about future events, including planned termination and expected settlements in 2022.

Actual benefit payments may vary significantly from these estimates.

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Net periodic pension cost included in other non-operating items 3 1 3

Weighted average assumptions used to calculate our net periodic pension costs for the year ended December 31:

Weighted average assumptions used to calculate our net periodic pension costs for the years ended December 31, 2021, 2020, and 2019:

2021 2020 2019

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Canada 2.3 % 3.0 % 3.8 %

SERP NA NA 4.0 %

Expected return on plan assets:

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Canada 2.3 % 3.2 % 3.4 %

SERP NA NA NA

Rate of compensation increase:

Canada 3.5 % 3.5 % 3.5 %

SERP NA NA N/A

Canada NA 3.5 % 3.5 %

The expected long-term rate of return on plan assets reflects the weighted average expected long-term rates of return for the broad categories of investments currently held in the plans (adjusted for expected changes), based on historical rates of return for each broad category, as well as factors that may constrain or enhance returns in the broad categories in the future.

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Multi-Strategy Funds — % 59 % 60 %

Cash and cash equivalents 46 % 19 % — %

Total Allocation for Non-U.S.

Plans 100 % 100 % 100 %

* Target allocation relates to the Company's Plan as of December 31, 2021.

During fiscal 2021, the investment policy for the Company's Plan was updated to establish modified asset allocation targets.

The updated investment objective is intended to reduce risk assets in favor of fixed-income investments as a result of the planned termination and expected settlement of the Plan in fiscal 2022.

Our investment policies for the defined benefit pension plans provide target asset allocations by broad categories of investment and ranges of acceptable allocations.

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(Level 3) Net Asset Value

Equity investment funds:

Domestic stock funds $ 56 $ 56 $ — $ — $ —

International stock funds 46 46 — — —

Fixed-income investment funds:

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Under the profit-sharing feature of these plans, we may elect to contribute a discretionary amount as a percentage of eligible wages.

Included in the assets of the 401(k) and profit-sharing plans are one million shares of LP common stock that represented approximately eight percent of the total market value of plan assets at December 31, 2020.

Included in the assets of the 401(k) and profit-sharing plans are one million shares of LP common stock that represented approximately nine percent of the total market value of plan assets at December 31, 2021.

In Canada, we sponsor both defined contribution plans and Registered Retirement Savings Plans for hourly and salaried employees that allow for employee tax deferrals.

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Expenses related to the U.S.

and Canadian defined contribution plans and the Registered Retirement Savings Plans were $ 9 million in 2020, and $ 10 million in both 2019 and 2018.

and Canadian defined contribution plans and the Registered Retirement Savings Plans, including the profit-sharing feature, were $ 22 million, $ 16 million, and $ 10 million in 2021, 2020, and 2019, respectively.

Other Benefit Plans

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and certain groups of Canadian employees.

The obligation at December 31, 2020, and 2019, for these post-retirement benefits was $ 10 million and $ 7 million, respectively.

The obligation at December 31, 2021 and 2020, for these post-retirement benefits was $ 10 million for each period.

The net expense related to these plans was not significant in 2021 or 2020.

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Employer contributions and associated earnings vest over periods not exceeding five years .

The liability under the Deferred Compensation Plan amounted to $ 2 million at December 31, 2020, and 2019, and is included in “Other long-term liabilities” on our Consolidated Balance Sheets.

ACCUMULATED COMPREHENSIVE INCOME

Accumulated comprehensive income includes cumulative translation adjustments, unrealized gains (losses) on certain financial instruments and pension and post-retirement adjustments.

The liability under the Deferred Compensation Plan amounted to $ 2 million at December 31, 2021, and 2020, respectively, and is included in Other long-term liabilities on our Consolidated Balance Sheets.

ACCUMULATED OTHER COMPREHENSIVE INCOME

Accumulated other comprehensive income includes cumulative translation adjustments, unrealized gains (losses) on certain financial instruments, and pension and post-retirement adjustments.

Other comprehensive income activity, net of tax, is provided in the following table:

Year Ended December 31,

2020 2019 2018

Balance at beginning of period $ ( 89 ) $ ( 93 ) $ ( 84 )

Pension Translation Adjustments Other Total

Balance at December 31, 2018 $ ( 93 ) $ ( 57 ) $ 4 $ ( 146 )

Reclassified to income statement, net of taxes 1

Translation adjustments — ( 10 ) — ( 10 )

Balance at December 31, 2019 ( 89 ) ( 67 ) 3 ( 153 )

Other comprehensive income before reclassifications, net of taxes 3 — ( 2 ) 1

Amounts reclassified from accumulated other comprehensive loss to income, net of taxes 1

Total other comprehensive income 8 4 9

Reclassification of certain effects due to tax law changes 2

Balance at end of period ( 81 ) ( 89 ) ( 93 )

Reclassified to income statement, net of taxes 1

Translation adjustments — ( 1 ) — ( 1 )

Balance at beginning of period ( 67 ) ( 57 ) ( 40 )

Balance at December 31, 2020 ( 81 ) ( 68 ) ( 2 ) ( 151 )

Reclassified to income statement, net of taxes 1

Translation adjustments — ( 28 ) — ( 28 )

Balance at end of period ( 68 ) ( 67 ) ( 57 )

Balance at beginning of period 3 4 2

Other comprehensive income before reclassifications, net of taxes ( 2 ) — —

Amounts reclassified from accumulated other comprehensive loss to income, net of taxes ( 3 ) ( 1 ) 1

Total other comprehensive income ( 5 ) ( 1 ) 1

Reclassification of certain effects due to tax law changes 2

Balance at end of period ( 2 ) 3 4

Accumulated other comprehensive loss, end of period $ ( 151 ) $ ( 153 ) $ ( 146 )

Balance at December 31, 2021 $ ( 76 ) $ ( 96 ) $ ( 1 ) $ ( 174 )

1 Amounts of actuarial loss and prior service cost are components of net periodic benefit cost.

See Note 17 above for additional details.

2 We reclassified certain tax effects from tax law changes of $ 16 million from "Accumulated other comprehensive loss" to "Retained earnings" on our Consolidated Balance Sheet in accordance with ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income , which we adopted in 2018.

Foreign currency translation adjustments exclude income tax expense (benefit) given that these adjustments arise out of the translation of assets into the reporting currency that is separate from the taxable income and is deemed to be reinvested for an indefinite period of time.

The pension adjustments included an income tax provision of $ 2 million, $ 1 million and $ 3 million in 2020, 2019 and 2018, respectively.

The pension amounts reclassified from accumulated other comprehensive income included an income tax provision of $ 2 million, $ 2 million, and $ 1 million in 2021, 2020, and 2019, respectively.

SEGMENT INFORMATION

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Our results of operations are summarized below for each of these segments separately as well as for the “other” category, which comprises other products that are not individually significant.

Our LP CanExel ® prefinished siding was reclassified from Siding to our Other segment during the year ended December 31, 2020, reflecting changes in organizational structure and, accordingly, the information that the chief operating decision maker uses to evaluate performances and allocate resources to the segments.

All prior periods presented have been adjusted for comparability.

• The Siding segment consists of LP SmartSide trim and siding and LP Outdoor Building Solutions innovative products for premium outdoor buildings.

• The OSB segment manufactures and distributes OSB structural panel products in the U.S.

Our OSB structural panel products include LP OSB, LP TechShield radiant barrier, LP TopNotch sub-flooring, LP Legacy super tough, moisture-resistant sub-flooring and LP FlameBlock fire-rated sheathing.

• The Siding segment serves diverse end markets with a broad product offering of engineered wood siding, trim, and fascia, including LP® SmartSide® Trim & Siding, LP® SmartSide® ExpertFinish® Trim & Siding, LP BuilderSeries® Lap Siding, and LP® Outdoor Building Solutions® (collectively referred to as Siding Solutions).

• The OSB segment manufactures and distributes OSB structural panel products, including our value-added OSB portfolio known as LP Structural Solutions (which includes LP® TechShield® Radiant Barrier, LP WeatherLogic® Air & Water Barrier, LP Legacy® Premium Sub-Flooring, and LP® FlameBlock® Fire-Rated Sheathing) and LP® TopNotch® Sub-Flooring.

• The EWP segment consists of LP SolidStart I-Joist (I-Joist), Laminated Veneer Lumber (LVL), Laminated Strand Lumber (LSL), and other related products.

This segment also includes the sales of I-Joist and LVL products produced by our joint venture and sales of plywood produced as a by-product of the LVL production process.

This segment also includes the sales of I-Joist and LVL products produced by our joint venture and sales of plywood produced as an ancillary product of the LVL production process.

During 2021, we ceased Laminated Strand Lumber (LSL) production at our Houlton, Maine facility to begin the conversion of that facility to Siding Solutions production.

• Our South America segment manufactures and distributes OSB structural panel and siding products in South America and certain export markets.

This segment has manufacturing operations in two countries, Chile and Brazil, and operates sales offices in Chile, Brazil, Peru, Columbia, and Argentina.

This segment has manufacturing operations in two countries, Chile and Brazil, and operates sales offices in Chile, Brazil, Peru, Columbia, Argentina, and Paraguay.

We evaluate the performance of our business segments based on net sales and Adjusted EBITDA.

Accordingly, our chief operating decision maker evaluates performance and allocates resources based primarily on net sales and Adjusted EBITDA for our business segments.

Adjusted EBITDA is a non-GAAP financial measure and is defined as earnings from continuing operations before interest expense, income taxes, depreciation and amortization, and exclude stock-based compensation expense, impairment of long-lived assets, other operating credits and charges, net, loss on early debt extinguishment, investment income and other non-operating items.

Adjusted EBITDA is a non-GAAP financial measure and is defined as income attributed to LP before interest expense, provision for income taxes, depreciation and amortization, and exclude stock-based compensation expense, loss on impairment attributed to LP, product-line discontinuance charges, other operating credits and charges, net, loss on early debt extinguishment, investment income, pension settlement charges, and other non-operating items.

Information about our product segments is as follows:

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Loss from noncontrolling interest 4 2 5

Loss from discontinued operations — — 4

Income from continuing operations attributed to LP 499 ( 5 ) 399

Income from operations attributed to LP 1,377 499 ( 5 )

Provision for income taxes 426 125 ( 13 )

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Product-line discontinuance charges — 8 —

Pension settlement charges 2 — —

Interest expense 14 19 19

Investment income ( 1 ) ( 4 ) ( 10 )

Loss on early debt extinguishment 11 — —

Other non-operating items 4 — ( 6 )

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Total assets $ 1,177 $ 977 $ 1,034

Interim Financial Results (unaudited)

The tables below present summarized unaudited quarterly results of operations for the years ended December 31, 2020, and 2019.

Management believes that all necessary adjustments have been included in the amounts stated below for a fair presentation of the results of operations for the periods presented when read in conjunction with the

Company’s Consolidated Financial Statements for the years ended December 31, 2020, and 2019.

Results of operations for a particular quarter are not necessarily indicative of results of operations for an annual period and are not predictive of future periods.

1ST QTR 2ND QTR 3RD QTR 4TH QTR

(Dollars in millions, except per share) 2020 2019 2020 2019 2020 2019 2020 2019

QUARTERLY DATA

Net sales $ 585 $ 582 $ 548 $ 588 $ 795 $ 603 $ 860 $ 537

Income before income taxes $ 42 $ 34 $ 50 $ 19 $ 237 $ 3 $ 292 $ (78)

Net income $ 33 $ 26 $ 31 $ 16 $ 177 $ 1 $ 255 $ (52)

Net income attributable to LP $ 33 $ 27 $ 33 $ 17 $ 177 $ 2 $ 256 $ (51)

Income from continuing operations per share—basic $ 0.29 $ 0.20 $ 0.29 $ 0.14 $ 1.58 $ 0.02 $ 2.36 $ (0.44)

Income from continuing operations per share—diluted $ 0.29 $ 0.20 $ 0.29 $ 0.14 $ 1.57 $ 0.02 $ 2.34 $ (0.44)

Net income per share—basic $ 0.29 $ 0.20 $ 0.29 $ 0.14 $ 1.58 $ 0.02 $ 2.36 $ (0.44)

Net income per share—diluted $ 0.29 $ 0.20 $ 0.29 $ 0.14 $ 1.57 $ 0.02 $ 2.34 $ (0.44)

Cash dividends per share $ 0.145 $ 0.135 $ 0.145 $ 0.135 $ 0.145 $ 0.135 $ 0.145 $ 0.135

SALES BY SEGMENT:

Siding $ 212 $ 219 $ 220 $ 231 $ 268 $ 244 $ 259 $ 222

OSB 220 208 204 199 368 197 428 172

EWP 99 90 79 107 103 105 108 93

South America 36 45 38 40 45 36 50 38

Other 18 21 7 14 11 21 16 12

Intersegment sales — (2) — (2) — (1) (1) —

Total net sales $ 585 $ 582 $ 548 $ 588 $ 795 $ 603 $ 860 $ 537

Net income $ 33 $ 26 $ 31 $ 15 $ 177 $ 1 $ 255 $ (52)

Add (deduct):

Loss from noncontrolling interest — 1 2 2 — 1 1 1

Income from continuing operations attributed to LP 33 27 33 17 177 2 256 (51)

Provision for income taxes 9 7 19 3 60 3 37 (26)

Depreciation and amortization 28 31 28 29 28 29 27 33

Stock-based compensation expense 2 2 1 3 5 2 4 2

Loss on impairment attributed to LP 7 1 7 — 1 5 — 86

Other operating credits and charges, net 2 2 (4) (3) (2) 3 — (1)

Product-line discontinuance charges — — 10 — (1) — (1) —

Interest expense 5 3 6 4 5 6 2 5

Investment income 2 (4) (4) (2) — (2) (1) (2)

Other non-operating items (5) (11) 1 2 — 1 4 3

Adjusted EBITDA $ 83 $ 58 $ 97 $ 53 $ 273 $ 49 $ 328 $ 49

Siding $ 42 $ 39 $ 51 $ 45 $ 76 $ 44 $ 77 $ 41

OSB 35 8 46 (3) 189 (1) 249 6

EWP 9 7 3 10 9 6 2 3

South America 7 10 11 9 11 7 13 8

Other (3) 1 (5) (1) (5) (1) (6) (2)

Corporate (7) (7) (9) (7) (7) (6) (7) (7)

Total Adjusted EBITDA $ 83 $ 58 $ 97 $ 53 $ 273 $ 49 $ 328 $ 49

See Notes 14 and 15 for further discussion on the other operating charges and credits, net, and the impairments of assets mentioned above.

SUBSEQUENT EVENT

On February 14, 2022, we entered an agreement to sell our 50 % equity interest in two joint ventures that produce I-joists to Resolute Forest Products Inc.

for $ 50 million, subject to customary adjustments.

The joint ventures are comprised of Resolute-LP Engineered Wood Larouche Inc.

in Larouche, Quebec, and Resolute-LP Engineered Wood St-Prime Limited Partnership in Saint-Prime, Quebec.

We will enter into separate agreements with Resolute Forest Products to continue to serve as the exclusive distributor of the engineered wood products manufactured at the two operations .

The completion of the sale, subject to regulatory approvals and certain closing conditions, is expected to close in the first half of 2022.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data