Item 1. Financial Statements
ITEM 1. FINANCIAL STATEMENTS
Condensed Consolidated Statements of Income
Dollar amounts in millions, except per share amounts
(Unaudited)
Three Months Ended March 31,
2022 2021
Net sales $ 1,337 $ 1,017
Cost of sales ( 676 ) ( 538 )
Gross profit 661 479
Selling, general, and administrative expenses ( 65 ) ( 48 )
Other operating credits and charges, net 38 —
Income from operations 633 431
Interest expense ( 3 ) ( 5 )
Investment income 1 —
Other non-operating items ( 10 ) ( 10 )
Income before income taxes 621 416
Provision for income taxes ( 139 ) ( 96 )
Equity in unconsolidated affiliate 1 —
Net income $ 483 $ 320
Net loss attributed to noncontrolling interest 1 1
Net income attributed to LP $ 484 $ 320
Net income per share of common stock:
Net income per share - basic $ 5.64 $ 3.02
Net income per share - diluted $ 5.60 $ 3.00
Average shares of common stock used to compute net income per share:
Basic 86 106
Diluted 86 107
The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.
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Condensed Consolidated Statements of Comprehensive Income
Dollar amounts in millions
(Unaudited)
Three Months Ended March 31,
2022 2021
Net income $ 483 $ 320
Other comprehensive income, net of tax
Foreign currency translation adjustments 23 ( 7 )
Changes in defined benefit pension plans 1 —
Other comprehensive income (loss), net of tax 24 ( 6 )
Comprehensive income 508 313
Comprehensive loss associated with noncontrolling interest 1 1
Comprehensive income attributed to LP $ 508 $ 314
The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.
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Condensed Consolidated Balance Sheets
Dollar amounts in millions
(Unaudited)
March 31, 2022 December 31, 2021
ASSETS
Cash and cash equivalents $ 624 $ 358
Receivables, net of allowance for doubtful accounts of $ 2 million as of March 31, 2022, and December 31, 2021
320 191
Inventories 382 323
Prepaid expenses and other current assets 15 18
Total current assets 1,341 890
Timber and timberlands 54 84
Property, plant, and equipment, net 1,132 1,069
Operating lease assets 51 52
Goodwill and other intangible assets 38 39
Investments in and advances to affiliates 7 21
Restricted cash 14 13
Other assets 25 25
Deferred tax asset 8 2
Total assets $ 2,670 $ 2,194
LIABILITIES AND EQUITY
Accounts payable and accrued liabilities $ 330 $ 338
Income tax payable 129 13
Total current liabilities 459 351
Long-term debt 346 346
Deferred income taxes 103 86
Non-current operating lease liabilities 44 44
Contingency reserves, excluding current portion 23 24
Other long-term liabilities 80 105
Total liabilities 1,054 955
Redeemable noncontrolling interest 3 4
Stockholders’ equity:
Common stock, $1 par value, 200,000,000 shares authorized; 100,884,145 and 84,496,113 shares issued and outstanding, respectively, at March 31, 2022; and 102,415,883 and 85,636,154 shares issued and outstanding, respectively, at December 31, 2021
101 102
Additional paid-in capital 451 458
Retained earnings 1,601 1,239
Treasury stock, 16,388,032 shares and 16,779,729 shares, at cost as of March 31, 2022, and December 31, 2021, respectively
( 391 ) ( 390 )
Accumulated comprehensive loss ( 149 ) ( 174 )
Total stockholders’ equity 1,613 1,235
Total liabilities and stockholders’ equity $ 2,670 $ 2,194
The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.
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Condensed Consolidated Statements of Cash Flows
Dollar amounts in millions
(Unaudited)
Three Months Ended March 31,
2022 2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 483 $ 320
Adjustments to net income:
Depreciation and amortization 32 29
Gain on sale of joint ventures ( 39 ) —
Deferred taxes 11 4
Loss on early debt extinguishment — 11
Other adjustments, net 5 3
Changes in assets and liabilities (net of acquisitions and divestitures):
Receivables ( 127 ) ( 74 )
Prepaid expenses and other current assets 3 3
Inventories ( 55 ) ( 50 )
Accounts payable and accrued liabilities ( 2 ) ( 3 )
Income taxes payable, net of receivables 116 71
Net cash provided by operating activities 425 314
CASH FLOWS FROM INVESTING ACTIVITIES:
Property, plant, and equipment additions ( 92 ) ( 34 )
Proceeds from business divestiture 59 —
Other investing activities 1 2
Net cash used in investing activities ( 33 ) ( 32 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowing of long-term debt — 350
Repayment of long-term debt, including redemption premium — ( 359 )
Payment of cash dividends ( 19 ) ( 17 )
Purchase of stock ( 104 ) ( 122 )
Other financing activities ( 15 ) ( 10 )
Net cash used in financing activities ( 137 ) ( 158 )
EFFECT OF EXCHANGE RATE ON CASH, CASH EQUIVALENTS AND RESTRICTED CASH 11 ( 2 )
Net increase in cash, cash equivalents and restricted cash 266 122
Cash, cash equivalents, and restricted cash at beginning of period 371 535
Cash, cash equivalents, and restricted cash at end of period $ 637 $ 658
Supplemental cash flow information:
Cash paid for income taxes, net of cash received $ 12 $ 21
Cash paid for interest, net of cash received $ 4 $ 9
Unpaid capital expenditures $ 41 $ 14
The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.
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Condensed Consolidated Statements of Stockholders' Equity
Dollar and share amounts in millions, except per share amounts
(Unaudited)
Common Stock Treasury Stock Additional
Paid-in
Capital Retained
Earnings Accumulated
Comprehensive
Loss Total
Stockholders'
Equity
Shares Amount Shares Amount
Balance, December 31, 2021 102 $ 102 17 $ ( 390 ) $ 458 $ 1,239 $ ( 174 ) $ 1,235
Net income attributed to LP — — — — — 484 — 484
Dividends paid ($0.22 per share) — — — — — ( 19 ) — ( 19 )
Issuance of shares under stock plans — — ( 1 ) 14 ( 14 ) — — —
Taxes paid related to net settlement of stock-based awards — — — ( 15 ) — — — ( 15 )
Purchase of stock ( 2 ) ( 2 ) — — — ( 102 ) — ( 104 )
Compensation expense associated with stock-based compensation — — — — 7 — — 7
Other comprehensive loss — — — — — — 24 24
Balance, March 31, 2022 101 $ 101 16 $ ( 391 ) $ 451 $ 1,601 $ ( 149 ) $ 1,613
Common Stock Treasury Stock Additional
Paid-in
Capital Retained
Earnings Accumulated
Comprehensive
Loss Total
Stockholders'
Equity
Shares Amount Shares Amount
Balance, December 31, 2020 124 $ 124 17 $ ( 397 ) $ 452 $ 1,206 $ ( 151 ) $ 1,234
Net income attributed to LP — — — — — 320 — 320
Dividends paid ($0.16 per share) — — — — — ( 17 ) — ( 17 )
Issuance of shares under stock plans — — — 11 ( 11 ) — — —
Taxes paid related to net settlement of stock-based awards — — — ( 6 ) — — — ( 6 )
Purchase of stock ( 2 ) ( 2 ) — — — ( 120 ) — ( 122 )
Compensation expense associated with stock-based compensation — — — — 1 — — 1
Other comprehensive loss — — — — — — ( 6 ) ( 6 )
Balance, March 31, 2021 121 $ 121 17 $ ( 393 ) $ 443 $ 1,390 $ ( 157 ) $ 1,404
The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.
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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. NATURE OF OPERATIONS AND BASIS FOR PRESENTATION
Nature of Operations
Louisiana-Pacific Corporation and our subsidiaries are a leading provider of high-performance building solutions that meet the demands of builders, remodelers, and homeowners worldwide. Serving the new home construction, repair and remodeling, and outdoor structures markets, we have leveraged our expertise to become an industry leader known for innovation, quality, and reliability. The Company operates 25 plants across the U.S., Canada, Chile, and Brazil, through foreign subsidiaries, and operates facilities through joint ventures. The principal customers for our building solutions are retailers, wholesalers, and homebuilding and industrial businesses, in North America and South America, with limited sales to Asia, Australia, and Europe. References to "LP," the "Company," "we," "our," and "us" refer to Louisiana-Pacific Corporation and its consolidated subsidiaries as a whole.
Basis for Presentation
The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles in the United States (U.S. GAAP) for interim financial information. Accordingly, they do not include all the information and footnotes required by U.S. GAAP for complete consolidated financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included and are of a normal and recurring nature. These Condensed Consolidated Financial Statements and related Notes should be read in conjunction with our annual report on Form 10-K for the fiscal year ended December 31, 2021, filed with the SEC on February 22, 2022 (2021 Annual Report on Form 10-K). Results of operations for interim periods are not necessarily indicative of results to be expected for an entire year.
NOTE 2. REVENUE
The following table presents our reportable segment revenues, disaggregated by revenue source. We disaggregate revenue from contracts with customers into major product lines. We have determined that disaggregating revenue into these categories achieves the disclosure objective to depict how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors.
As noted in the segment reporting information in Note 18 below, our reportable segments are Siding, Oriented Strand Board (OSB), Engineered Wood Products (EWP), and South America (dollar amounts in millions).
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Three Months Ended March 31, 2022
By product type and family: Siding OSB EWP South America Other Inter-segment Total
Value-add
Siding Solutions $ 330 $ — $ — $ 6 $ — $ — $ 336
OSB - Structural Solutions — 406 — 58 — ( 1 ) 464
I-Joist — — 79 — — — 79
LVL — — 65 — — — 65
330 406 144 64 — ( 1 ) 945
Commodity
OSB - commodity — 334 — — — — 334
Plywood — — 11 — — — 11
— 334 11 — — — 345
Other
Other products 2 4 14 2 26 — 48
$ 332 $ 744 $ 170 $ 67 $ 26 $ ( 1 ) $ 1,337
Three Months Ended March 31, 2021
By product type and family: Siding OSB EWP South America Other Inter-segment Total
Value-add
Siding Solutions $ 282 $ — $ — $ 9 $ — $ — $ 291
OSB - Structural Solutions — 254 — 41 — — 295
I-Joist — — 48 — — — 48
LVL — — 43 — — — 43
LSL — — 8 — — — 8
282 254 100 50 — — 686
Commodity
OSB - commodity — 282 — — — — 281
Plywood — — 13 — — — 13
— 282 13 — — — 294
Other
Other products 3 3 11 3 18 — 37
$ 285 $ 539 $ 123 $ 53 $ 18 $ — $ 1,017
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. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods. The shipping cost incurred by us to deliver products to our customers is recorded in cost of sales. The expected costs associated with our warranties continue to be recognized as an expense when the products are sold.
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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 initiated. These reductions from revenue are recorded at the time of sale or the implementation of the program based on management’s best estimates. Estimates are based on historical and projected experience for each type of program or customer. Volume allowances are accrued based on management’s estimates of customer volume achievement and other factors incorporated into customer agreements, such as new product purchases, store sell-through, and merchandising support. Management adjusts accruals when circumstances indicate (typically as a result of a change in volume expectations).
We ship some of our products to customers’ distribution centers on a consignment basis. We retain title to our products stored at the distribution centers. As our products are removed from the distribution centers by retailers and shipped to retailers’ stores, title passes from us to the retailers. At that time, we invoice the retailers and recognize revenue for these consignment transactions. We do not offer a right of return for products shipped to the retailers’ stores from the distribution centers.
NOTE 3. EARNINGS PER SHARE
Basic earnings per share is based upon the weighted-average number of shares of common stock outstanding. Diluted earnings per share is based upon the weighted-average number of shares of common stock outstanding, plus all potentially dilutive securities that were assumed to be converted into common shares at the beginning of the period under the treasury stock method. This method requires that the effect of potentially dilutive common stock equivalents (stock options, stock-settled appreciation rights (SSARs), restricted stock units, and performance stock units) be excluded from the calculation of diluted earnings per share for the periods in which losses are reported because the effect is anti-dilutive.
The following table sets forth the computation of basic and diluted earnings per share (dollar amounts in millions, except per share amounts):
Three Months Ended March 31,
2022 2021
Net income attributed to LP $ 484 $ 320
Weighted average common shares outstanding - basic 86 106
Dilutive effect of employee stock plans 1 1
Shares used for diluted earnings per share 86 107
Earnings per share:
Basic earnings $ 5.64 $ 3.02
Diluted earnings $ 5.60 $ 3.00
NOTE 4. 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: (i) recurring—measured on a periodic basis, and (ii) non-recurring—measured on an as-needed basis.
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Trading securities consist of rabbi trust financial assets, which are recorded in Other assets in our Condensed Consolidated Balance Sheets. 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 fair value of the 3.625% Senior Notes due in 2029 (2029 Senior Notes) was estimated to be $ 324 million and $ 358 million as of March 31, 2022, and December 31, 2021, respectively, based upon market quotations. The 2029 Senior Notes and other long-term debt are categorized as Level 1 in the U.S. GAAP fair value hierarchy. Fair values are based on trading activity among the Company’s lenders and the average bid and ask price as determined using published rates.
There were no outstanding amounts borrowed under our Amended Credit Facility (defined below) as of March 31, 2022.
Carrying amounts reported on the balance sheet for cash and cash equivalents, accounts receivables, and accounts payable approximate fair value due to the short-term maturity of these items.
NOTE 5. RECEIVABLES
Receivables consisted of the following (dollar amounts in millions):
March 31, 2022 December 31, 2021
Trade receivables $ 305 $ 172
Income tax receivable — 1
Other receivables 17 20
Allowance for doubtful accounts ( 2 ) ( 2 )
Total $ 320 $ 191
Trade receivables are primarily generated by sales of our products to our wholesale and retail customers. Other receivables as of March 31, 2022 and December 31, 2021, primarily consist of sales tax receivables, vendor rebates, and other miscellaneous receivables.
NOTE 6. INVENTORIES
Inventories are valued at the lower of cost or net realizable value. Inventory cost includes materials, labor, and operating overhead. The major types of inventories (work in process is not material and is included in Semi-finished inventory) are as follows (dollar amounts in millions):
March 31, 2022 December 31, 2021
Logs $ 86 $ 59
Other raw materials 69 59
Semi-finished inventory 38 38
Finished products 189 168
Total $ 382 $ 323
NOTE 7. DIVESTITURES
During the three months ended March 31, 2022, we sold our 50% equity interest in two joint ventures that produce I-joists to Resolute Forest Products Inc. (Resolute) for $ 59 million. The total net carrying value of our equity method
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investment at the date of sale was $19 million, and we recognized a gain associated with the sale of $ 39 million in the three-month period ended March 31, 2022, within Other operating credits and charges, net, in the Condensed Consolidated Statements of Income. The Condensed Consolidated Statements of Income for the three months ended March 31, 2022 and 2021, include income from these joint ventures of $ 5 million and $ 2 million, respectively.
In connection with the closing of the sale of our equity interest in the joint ventures, LP entered into separate agreements with Resolute to continue serving as the exclusive distributor of the engineered wood products manufactured at the two operations.
NOTE 8. GOODWILL AND OTHER INTANGIBLES
Goodwill and indefinite-lived intangible assets are not amortized and are subject to assessment for impairment by applying a fair value-based test on an annual basis or more frequently, if circumstances indicate a potential impairment. The Company’s annual assessment date is October 1.
Changes in goodwill and other intangible assets for the three months ended March 31, 2022, are provided in the following table (dollar amounts in millions):
Timber licenses 1
Goodwill Developed Technology Trademarks
Beginning balance December 31, 2021 $ 31 $ 19 $ 17 $ 2
Amortization ( 1 ) — ( 1 ) —
Ending balance March 31, 2022 $ 31 $ 19 $ 16 $ 2
1 Timber licenses are included in Timber and timberlands on the Condensed Consolidated Balance Sheets.
NOTE 9. REDEEMABLE NONCONTROLLING INTEREST
Redeemable noncontrolling interest is interest in subsidiaries that is redeemable outside of our control either for cash or other assets. These interests are classified as mezzanine equity and measured at the greater of estimated redemption value or carrying value at the end of each reporting period. Net loss attributed to noncontrolling interest is recorded in the Condensed Consolidated Statements of Income. Any adjustments to the redemption value of redeemable noncontrolling interest are recognized in either net income or through accumulated paid-in capital, depending on the nature of the underlying security (preferred or common units).
The components of redeemable noncontrolling interest as of March 31, 2022, are as follows (dollar amounts in millions):
Beginning balance December 31, 2021 $ 4
Net loss attributed to noncontrolling interest ( 1 )
Ending balance March 31, 2022 $ 3
NOTE 10. INCOME TAXES
For interim periods, we recognize income tax expense by applying the estimated annual effective income tax rate to year-to-date results unless this method does not result in a reliable estimate of year-to-date income tax expense. Each period, the income tax accrual is adjusted to the latest estimate, and the difference from the previously accrued year-to-date balance is adjusted in the current quarter. Changes in profitability estimates in various jurisdictions will impact our quarterly effective income tax rates.
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The tax provision for income taxes for the three months ended March 31, 2022 and 2021, reflected an estimated annual tax rate of 24 % and 25 %, respectively, excluding discrete items discussed below. The total effective tax rate for the three months ended March 31, 2022 was 22 %, compared to 23 % for the comparable period in 2021.
We recognized a net discrete tax benefit of $ 9 million and $ 5 million during the three months ended March 31, 2022 and 2021, respectively, with the most significant benefit related to excess tax benefits from stock-based compensation for both periods.
NOTE 11. STOCK-BASED COMPENSATION
We have stock award plans for key employees and directors, pursuant to which awards of stock options, SSARs, restricted stock, restricted stock units, and performance stock units are granted. In addition, we offer an employee stock purchase plan to employees.
During the three months ended March 31, 2022, we granted awards of 135,381 restricted stock units and 88,239 performance stock units, at an average grant date fair value of $ 70.55 per share.
We recognized $ 7 million and $ 1 million in stock-based compensation expense during the three months ended March 31, 2022 and 2021, respectively. At March 31, 2022, there was $ 36 million of unrecognized stock-based compensation expense related to unvested performance stock units, restricted stock units, and SSARs attributable to future service.
NOTE 12. COMMITMENTS AND CONTINGENCIES
We maintain reserves for various contingent liabilities as follows (dollar amounts in millions):
March 31, 2022 December 31, 2021
Environmental reserves $ 24 $ 25
Other reserves — —
Total contingencies 24 25
Current portion (included in Accounts payable and accrued liabilities) ( 1 ) ( 1 )
Long-term portion $ 23 $ 24
Estimates of our loss contingencies are based on various assumptions and judgments. Due to the numerous uncertainties and variables associated with these assumptions and judgments, both the precision and reliability of the resulting estimates of the related contingencies are subject to substantial uncertainties. We regularly monitor our estimated exposure to contingencies and, as additional information becomes known, may change our estimates significantly. While no estimate of the range of any such change can be made at this time, the amount that we may ultimately pay in connection with these matters could materially exceed, in either the near term or the longer term, the amounts accrued to date. Our estimates of our loss contingencies do not reflect potential future recoveries from insurance carriers except to the extent that recovery may, from time to time, be deemed probable as a result of an insurer’s agreement to payment terms.
Environmental Matters
We maintain a reserve for undiscounted estimated environmental loss contingencies. This reserve is primarily for estimated future costs of remediation of hazardous or toxic substances at numerous sites currently or previously owned by the Company. Our estimates of our environmental loss contingencies are based on various assumptions and judgments, the specific nature of which varies considering the particular facts and circumstances surrounding each environmental loss contingency. These estimates typically reflect assumptions and judgments as to the
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probable nature, magnitude, and timing of the required investigation, remediation and/or monitoring activities and the probable cost of these activities, and in some cases reflect assumptions and judgments as to the obligation or willingness and ability of third parties to bear a proportionate or allocated share of the cost of these activities. Due to the numerous uncertainties and variables associated with these assumptions and judgments, and the effects of changes in governmental regulation and environmental technologies, both the precision and reliability of the resulting estimates of the related contingencies are subject to substantial uncertainties. We regularly monitor our estimated exposure to environmental loss contingencies and, as additional information becomes known, may change our estimates significantly.
Other Proceedings
From time to time, we and our subsidiaries are parties to certain legal proceedings. Based on the information currently available, management believes the resolution of such proceedings will not have a material effect on our financial position, results of operations, cash flows, or liquidity.
NOTE 13. 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, 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 March 31, 2022, there were no indications of impairment.
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.
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NOTE 14. PRODUCT WARRANTIES
We offer warranties on the sale of most of our products and record an accrual for estimated future claims. Such accruals are based upon historical experience and management’s estimate of the level of future claims. The activity in warranty reserves for the three months ended March 31, 2022 and 2021, is summarized in the following table (dollar amounts in millions):
Three Months Ended March 31,
2022 2021
Beginning balance $ 7 $ 8
Accrued to expense 1 —
Payments made — —
Total warranty reserves 8 8
Current portion of warranty reserves (included in Accounts payable and accrued liabilities) ( 2 ) ( 2 )
Long-term portion of warranty reserves (included in Other long-term liabilities) $ 6 $ 6
We continue to monitor warranty and other claims associated with our products and believe as of March 31, 2022, that the warranty reserve balances associated with these matters are adequate to cover future warranty payments. However, it is possible that additional changes may be required in the future.
NOTE 15. DEFINED BENEFIT PENSION PLANS
Th e following table summarizes our net periodic pension cost for our defined benefit pension and postretirement plans during the three months ended March 31, 2022 and 2021 (dollar amounts in millions):
Three Months Ended March 31,
2022 2021
Service cost $ 1 $ —
Other components of net periodic pension cost 1 :
Interest cost 2 2
Expected return on plan assets ( 2 ) ( 3 )
Amortization of prior service cost — —
Amortization of net loss 1 1
Net periodic pension cost $ 2 $ 1
1 Other components of net periodic pension cost are included in Other non-operating items on our Condensed Consolidated Statements of Income.
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 (1) a non-cash charge for the recognition of all pre-tax actuarial losses accumulated in Accumulated other comprehensive loss ($99
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million as of March 31, 2022) and (2) any cash contributions to settle the Plan’s obligations ($8 million net projected benefit obligation as of March 31, 2022). 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.
NOTE 16. ACCUMULATED COMPREHENSIVE LOSS
Accumulated comprehensive loss is provided in the following table for the three months ended March 31, 2022 and 2021 (dollar amounts in millions):
Pension Translation Adjustments Other Total
Balance at December 31, 2021 $ (76) $ (96) $ (1) $ (174)
Reclassified to income statement, net of taxes 1
1 — — 1
Translation adjustments — 23 — 23
Balance at March 31, 2022 $ (75) $ (73) $ (1) $ (149)
Pension Translation Adjustments Other Total
Balance at December 31, 2020 $ (81) $ (68) $ (2) $ (151)
Reclassified to income statement, net of taxes 1
— — — —
Translation adjustments — (7) — (7)
Balance at March 31, 2021 $ (81) $ (75) $ (2) $ (157)
1 Amounts of actuarial loss and prior service cost are components of net periodic benefit cost.
NOTE 17. OTHER OPERATING AND NON-OPERATING ITEMS
Other operating credits and charges, net
During the three months ended March 31, 2022, we recognized a gain of $ 39 million on the sale of our 50% interest in two joint ventures. See Note 7 above. In addition, we incurred severance and other charges of $ 1 million related to certain reorganizations.
During the three months ended March 31, 2021, we recorded a gain of $ 1 million related to the sale of assets previously classified as held for sale, offset by other expenses, including severance associated with certain reorganizations within the corporate office.
Other non-operating items
During the three months ended March 31, 2022, we recorded realized foreign currency losses of $ 9 million primarily related to the strengthening of the Chilean peso and Brazilian real.
During the three months ended March 31, 2021, we recorded an early debt extinguishment charge of $ 11 million related to the redemption of our 2024 Senior Notes, offset by a foreign currency gain of $ 1 million.
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NOTE 18. SELECTED SEGMENT DATA
We operate in four segments: Siding, OSB, EWP, and South America. Our business units have been aggregated into these four segments based upon the similarity of economic characteristics, customers, and distribution methods. 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.
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 income attributed to LP before interest expense, provision for income taxes, depreciation and amortization, and excludes 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 (dollar amounts in millions):
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Three Months Ended March 31,
2022 2021
Net sales
Siding $ 332 $ 285
OSB 744 539
EWP 170 123
South America 67 53
Other 26 18
Intersegment sales ( 1 ) —
Total sales $ 1,337 $ 1,017
PROFIT BY SEGMENT
Net income $ 483 $ 320
Add (deduct):
Net loss attributed to noncontrolling interest 1 1
Income attributed to LP 484 320
Provision for income taxes 139 96
Depreciation and amortization 32 29
Stock-based compensation expense 7 1
Other operating credits and charges, net ( 38 ) —
Loss on early debt extinguishment — 11
Interest expense 3 5
Investment income ( 1 ) —
Other non-operating items 10 ( 1 )
Adjusted EBITDA $ 636 $ 461
Siding $ 83 $ 90
OSB 505 354
EWP 38 7
South America 25 21
Other ( 6 ) ( 5 )
Corporate ( 9 ) ( 6 )
Adjusted EBITDA $ 636 $ 461
NOTE 19. SUBSEQUENT EVENT
On November 2, 2021, LP's Board of Directors authorized the Second 2021 Share Repurchase Program under which we may repurchase up to $500 million of shares of our common stock. Subsequent to March 31, 2022, through May 3, 2022, we used $ 182 million to repurchase 2.9 million shares of LP common stock under the Second 2021 Share Repurchase Program.
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