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Item 1. Financial Statements

2022-08-09 compared with 2022-05-03 · 217 added, 80 removed, 335 unchanged (47% of the section changed)

2 unchanged sentences

Dollar amounts in millions, except per share amounts

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

Net sales $ 1,130 $ 1,168 $ 2,297 $ 2,062

10 unchanged sentences

Equity in unconsolidated affiliate 1 1 2 2

Income from continuing operations 348 486 769 802

Income from discontinued operations, net of income taxes 37 11 99 14

Net income $ 385 $ 497 $ 868 $ 817

1 unchanged sentence

Net income attributed to LP $ 384 $ 498 $ 868 $ 818

Net income per share of common stock:

Net income attributed to LP per share of common stock:

Income per share continuing operations - basic $ 4.30 $ 4.82 $ 9.25 $ 7.76

Income per share discontinued operations - basic 0.46 0.11 1.18 0.14

Net income per share - basic $ 4.76 $ 4.93 $ 10.43 $ 7.90

Income per share continuing operations - diluted $ 4.28 $ 4.79 $ 9.19 $ 7.71

Income per share discontinued operations - diluted 0.45 0.11 1.18 0.14

Net income per share - diluted $ 4.73 $ 4.90 $ 10.36 $ 7.85

Average shares of common stock used to compute net income per share:

Basic 81 101 83 103

Diluted 81 102 84 104

2 unchanged sentences

Dollar amounts in millions

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

Net income $ 385 $ 497 $ 868 $ 817

9 unchanged sentences

Dollar amounts in millions

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Cash and cash equivalents $ 503 $ 358

Receivables, net of allowance for doubtful accounts of $ 2 million as of March 31, 2022, and December 31, 2021

Receivables, net of allowance for doubtful accounts of $ 1 million as of June 30, 2022, and December 31, 2021

Inventories 309 278

Prepaid expenses and other current assets 28 17

Current assets held for sale 148 68

Total current assets 1,208 890

7 unchanged sentences

Deferred tax asset 4 2

Long-term assets held for sale — 87

Total assets $ 2,547 $ 2,194

2 unchanged sentences

Income tax payable 80 13

Current liabilities held for sale 69 34

Total current liabilities 464 351

4 unchanged sentences

Other long-term liabilities 64 63

Long-term liabilities held for sale — 42

Total liabilities 1,059 955

2 unchanged sentences

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

93,546,332 and 77,241,859 shares issued and outstanding, respectively, as of June 30, 2022;

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

Additional paid-in capital 457 458

Retained earnings 1,505 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

Treasury stock, 16,304,473 shares and 16,779,729 shares, at cost as of June 30, 2022, and December 31, 2021, respectively

( 390 ) ( 390 )

5 unchanged sentences

Dollar amounts in millions

Three Months Ended March 31,

Six Months Ended June 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

43 unchanged sentences

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 ) — — —

2 unchanged sentences

Compensation expense associated with stock-based compensation — — — — 7 — — 7

Other comprehensive loss — — — — — — 24 24

Other comprehensive income — — — — — — 24 24

Balance, March 31, 2022

101 $ 101 16 $ ( 391 ) $ 451 $ 1,601 $ ( 149 ) $ 1,613

Net income attributed to LP — — — — — 384 — 384

Dividends paid ($ 0.22 per share)

— — — — — ( 18 ) — ( 18 )

Issuance of shares under stock plans — — — 2 — — — 2

Taxes paid related to net settlement of stock-based awards — — — ( 1 ) — — — ( 1 )

Purchase of stock ( 7 ) ( 7 ) — — — ( 463 ) — ( 471 )

Compensation expense associated with stock-based compensation — — — — 7 — — 7

Other comprehensive loss — — — — — — ( 31 ) ( 31 )

Balance, June 30, 2022

94 $ 94 16 $ ( 390 ) $ 457 $ 1,505 $ ( 181 ) $ 1,484

The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.

Common Stock Treasury Stock Additional

5 unchanged sentences

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 ) — — —

4 unchanged sentences

Balance, March 31, 2021

121 $ 121 17 $ ( 393 ) $ 443 $ 1,390 $ ( 157 ) $ 1,404

Net income attributed to LP — — — — — 498 — 498

Dividends paid ($ 0.16 per share)

— — — — — ( 16 ) — ( 16 )

Issuance of shares under stock plans — — — 2 ( 1 ) — — 1

Purchase of stock ( 7 ) ( 7 ) — — — ( 458 ) — ( 465 )

Compensation expense associated with stock-based compensation — — — — 4 — — 4

Other comprehensive income — — — — — — 8 8

Balance, June 30, 2021

114 $ 114 17 $ ( 390 ) $ 446 $ 1,413 $ ( 149 ) $ 1,433

The accompanying notes are an integral part of these unaudited Condensed Consolidated Financial Statements.

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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 Company operates 22 plants in our continuing operations across the U.S., Canada, Chile, and Brazil through foreign subsidiaries, an d it 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.

In June 2022, LP and one of its wholly-owned subsidiaries entered into an asset purchase agreement with Pacific Woodtech Corporation, a Washington corporation, and Pacific Woodtech Canada Holdings Limited, a British Columbia limited company (collectively, the Purchaser).

Pursuant to the terms and conditions of the asset purchase agreement, LP agreed to sell to the Purchaser the assets related to its Engineered Wood Products (EWP) segment in exchange for the Purchaser’s payment to the Company of $ 210 million in cash, subject to certain purchase price adjustments, and the Purchaser’s assumption of certain liabilities of the EWP segment.

On August 1, 2022, the Company completed the sale of the EWP assets to the Purchaser.

Upon closing, the Company entered into a transition services agreement with the Purchaser, pursuant to which the Company agreed to support the various activities of the EWP segment for a period not to exceed eight months .

As of June 30, 2022, we have classified the related assets and liabilities associated with the EWP segment as held for sale in our Condensed Consolidated Balance Sheets.

The results of our EWP segment have been presented as discontinued operations in our Condensed Consolidated Statements of Income for all periods presented.

See Note 7 –Discontinued Operations for additional information.

Basis for Presentation

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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).

Three Months Ended March 31, 2022

As noted in the segment reporting information in Note 17 below, our reportable segments are Siding, Oriented Strand Board (OSB), and South America (dollar amounts in millions).

Three Months Ended June 30, 2022

By product type and family:

Siding OSB EWP South America Other Inter-segment Total

Siding OSB South America Other Inter-segment Total

Siding Solutions $ 356 $ — $ 6 $ — $ — $ 362

OSB - Structural Solutions — 384 64 — ( 1 ) 448

I-Joist — — 79 — — — 79

LVL — — 65 — — — 65

356 384 70 — ( 1 ) 810

OSB - commodity — 287 — — — 287

Plywood — — 11 — — — 11

Other products 1 2 — 30 — 33

$ 358 $ 673 $ 70 $ 30 $ ( 1 ) $ 1,130

Three Months Ended June 30, 2021

By product type and family:

Siding OSB South America Other Inter-segment Total

Siding Solutions $ 288 $ — $ 10 $ — $ — $ 298

OSB - Structural Solutions — 350 63 — — 414

288 350 74 — — 712

OSB - commodity — 425 — — — 425

Other products 3 2 — 26 — 31

$ 291 $ 778 $ 74 $ 26 $ — $ 1,168

Three Months Ended March 31, 2021

Six Months Ended June 30, 2022

By product type and family:

Siding OSB EWP South America Other Inter-segment Total

Siding OSB South America Other Inter-segment Total

Siding Solutions $ 686 $ — $ 12 $ — $ — $ 698

OSB - Structural Solutions — 791 123 — ( 2 ) 913

I-Joist — — 48 — — — 48

LVL — — 43 — — — 43

LSL — — 8 — — — 8

686 791 135 — ( 2 ) 1,611

OSB - commodity — 621 — — — 621

Plywood — — 13 — — — 13

Other products 3 5 2 55 — 66

$ 689 $ 1,417 $ 137 $ 55 $ ( 2 ) $ 2,297

Six Months Ended June 30, 2021

By product type and family:

Siding OSB South America Other Inter-segment Total

Siding Solutions $ 570 $ — $ 20 $ — $ — $ 589

OSB - Structural Solutions — 605 104 — — 709

570 605 124 — — 1,298

OSB - commodity — 707 — — — 707

Other products 6 5 3 43 ( 1 ) 57

6 unchanged sentences

The expected costs associated with our warranties continue to be recognized as an expense when the products are sold.

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

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.

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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,

Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

Income from continuing operations $ 348 $ 486 $ 769 $ 802

Net loss attributed to noncontrolling interest — — 1 1

Income from continuing operations attributed to LP 348 486 770 803

Income for discontinued operations, net of income taxes 37 11 99 14

Net income attributed to LP $ 384 $ 498 $ 868 $ 818

2 unchanged sentences

Shares used for diluted earnings per share 81 102 84 104

Earnings per share:

Basic earnings $ 5.64 $ 3.02

Diluted earnings $ 5.60 $ 3.00

Net income attributed to LP per share - basic:

Continuing operations $ 4.30 $ 4.82 $ 9.25 $ 7.76

Discontinued operations 0.46 0.11 1.18 0.14

Net income attributed to LP per share - basic $ 4.76 $ 4.93 $ 10.43 $ 7.90

Net income attributed to LP per share – diluted:

Continuing operations $ 4.28 $ 4.79 $ 9.19 $ 7.71

Discontinued operations 0.45 0.11 1.18 0.14

Net income attributed to LP per share - diluted $ 4.73 $ 4.90 $ 10.36 $ 7.85

FAIR VALUE MEASUREMENTS

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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 fair value of the 3.625 % Senior Notes due in 2029 (2029 Senior Notes) was estimated to be $ 279 million and $ 358 million as of June 30, 2022, and December 31, 2021, respectively, based on market quotations.

The 2029 Senior Notes and other long-term debt are categorized as Level 1 in the U.S.

1 unchanged sentence

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.

There were no outstanding amounts borrowed under our Amended Credit Facility (defined below) as of June 30, 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.

Receivables consisted of the following (dollar amounts in millions):

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Trade receivables $ 199 $ 156

4 unchanged sentences

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.

Other receivables as of June 30, 2022, and December 31, 2021, primarily consist of sales tax receivables, vendor rebates, and other miscellaneous receivables.

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

1 unchanged sentence

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

June 30, 2022 December 31, 2021

Logs $ 47 $ 50

3 unchanged sentences

Total $ 309 $ 278

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.

DISCONTINUED OPERATIONS

Engineered Wood Products (EWP)

In June 2022, LP and one of its wholly-owned subsidiaries entered into an asset purchase agreement with the Purchaser.

Pursuant to the terms and conditions of the asset purchase agreement, the Company agreed to sell to the Purchaser the assets related to the EWP segment in exchange for the Purchaser’s payment to the Company of $ 210 million in cash, subject to certain purchase price adjustments, and the Purchaser’s assumption of certain liabilities of the EWP segment.

On August 1, 2022, the Company completed the sale of the EWP assets to the Purchaser.

As a result of the sale, the Company received $ 210 million, subject to post-closing adjustments, and we anticipate recognizing a pre-tax gain on the sale of between $ 120 million to $ 125 million in the third quarter.

The Company has classified the results of its EWP segment as discontinued operations in its Condensed Consolidated Statements of Income for all periods presented.

As of June 30, 2022, and December 31, 2021, we have classified the related assets and liabilities associated with our EWP segment as discontinued operations held for sale in our Condensed Consolidated Balance Sheets.

EWP Joint Ventures

In March 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

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.

The total net carrying value of our equity method investment at the date of sale was $ 19 million, and we recognized a gain associated with the sale of $ 39 million within Income from discontinued operations in the Condensed Consolidated Statements of Income.

The following table presents the financial results of the EWP segment (in millions):

Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

Net sales $ 218 $ 158 $ 388 $ 280

Cost of sales ( 171 ) ( 136 ) ( 299 ) ( 248 )

Gross profit 48 22 89 33

Selling, general, and administrative expenses ( 6 ) ( 4 ) ( 9 ) ( 9 )

Income from operations of discontinued operations 42 18 80 25

Other non-operating items — ( 3 ) — ( 5 )

Gain on disposal before income taxes — — 39 —

Income from discontinued operations before income taxes 42 15 119 19

Provision for income taxes ( 5 ) ( 4 ) ( 20 ) ( 5 )

Income from discontinued operations, net of income taxes $ 37 $ 11 $ 99 $ 14

The following summarizes the total cash provided by operations and total cash used for investing activities related to the EWP segment and included in the Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2022 and 2021 (in millions):

Six Months Ended June 30,

Net cash provided by discontinued operating activities $ 46 $ 4

Net cash provided by (used in) discontinued investing activities $ 56 $ ( 3 )

Net cash provided by discontinued investing activities for the six months ended June 30, 2022, includes $ 59 million of proceeds from the sale of our 50 % equity interest in two joint ventures that produce I-joists.

The following table presents the aggregate carrying amounts of discontinued operations related to the EWP segment in the Condensed Consolidated Balance Sheets (in millions):

June 30, 2022 December 31, 2021

Carrying amounts of assets included as part of discontinued operations:

Accounts receivable, net $ 36 $ 22

Inventories 54 46

Timber and timberlands 27 42

Property, plant, and equipment, net 30 30

Operating lease assets 1 1

Investments in and advances to affiliates — 14

Total assets classified as discontinued operations in the condensed consolidated balance sheet $ 148 $ 156

Carrying amounts of liabilities included as part of discontinued operations:

Accounts payable and accrued liabilities $ 42 $ 34

Other liabilities 27 42

Total liabilities classified as discontinued operations in the condensed consolidated balance sheet $ 69 $ 76

GOODWILL AND OTHER INTANGIBLES

1 unchanged sentence

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):

Changes in goodwill and other intangible assets for the six months ended June 30, 2022, are provided in the following table (dollar amounts in millions):

Timber licenses 1

1 unchanged sentence

Beginning balance December 31, 2021

$ 30 $ 19 $ 17 $ 2

Amortization ( 1 ) — ( 1 ) —

Ending balance March 31, 2022 $ 31 $ 19 $ 16 $ 2

Ending balance June 30, 2022

$ 29 $ 19 $ 16 $ 2

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

4 unchanged sentences

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):

The components of redeemable noncontrolling interest as of June 30, 2022, were as follows (dollar amounts in millions):

Beginning balance December 31, 2021

Net loss attributed to noncontrolling interest ( 1 )

Ending balance March 31, 2022 $ 3

Ending balance June 30, 2022

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.

1 unchanged sentence

Changes in profitability estimates in various jurisdictions will impact our quarterly effective income tax rates.

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.

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.

The tax provision for income taxes from continuing operations for the six months ended June 30, 2022 and 2021, reflected an estimated annual effective tax rate of 25 % and 24 %, respectively, excluding discrete items discussed below.

The total effective tax rate for continuing operations for the three and six months ended June 30, 2022, was 25 % and 24 %, compared to 23 % for the comparable periods in 2021, respectively.

We recorded a net discrete tax benefit of $ 9 million in both the six months ended June 30, 2022 and 2021, with the most significant benefit related to excess tax benefits from stock-based compensation in 2022 and the most significant benefits related to stock-based compensation and adjustments to the prior year, including an adjustment to the deferred tax rate in 2021.

COMMITMENTS AND CONTINGENCIES

We maintain reserves for various contingent liabilities as follows (dollar amounts in millions):

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Environmental reserves $ 27 $ 25

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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.

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

As of June 30, 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.

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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,

The activity in warranty reserves for the three and six months ended June 30, 2022 and 2021, is summarized in the following table (dollar amounts in millions):

Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

Beginning balance $ 8 $ 8 $ 7 $ 8

4 unchanged sentences

Long-term portion of warranty reserves (included in Other long-term liabilities) $ 6 $ 6 $ 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.

We continue to monitor warranty and other claims associated with our products and believe, as of June 30, 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.

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,

The following table summarizes our net periodic pension cost for our defined benefit pension and postretirement plans during the three and six months ended June 30, 2022 and 2021 (dollar amounts in millions):

Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

Service cost $ 1 $ — $ 2 $ 1

7 unchanged sentences

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.

and Canadian defined benefit pension plans (collectively, 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.

2 unchanged sentences

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

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).

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 ($ 98 million as of June 30, 2022) and (2) any cash contributions to settle the Plan’s obligations ($ 8 million net projected benefit obligation as of June 30, 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.

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):

Accumulated comprehensive loss is provided in the following table for the three months ended June 30, 2022 and 2021 (dollar amounts in millions):

Pension Translation Adjustments Other Total

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

Balance at March 31, 2022

$ ( 75 ) $ ( 73 ) $ ( 1 ) $ ( 149 )

Reclassified to income statement, net of taxes 1

Translation adjustments — ( 32 ) — ( 32 )

Balance at June 30, 2022

$ ( 74 ) $ ( 105 ) $ ( 1 ) $ ( 181 )

Pension Translation Adjustments Other Total

Balance at March 31, 2021

$ ( 81 ) $ ( 75 ) $ ( 2 ) $ ( 157 )

Reclassified to income statement, net of taxes 1

Translation adjustments — 7 — 7

Balance at June 30, 2021

$ ( 80 ) $ ( 68 ) $ ( 2 ) $ ( 149 )

Accumulated comprehensive loss is provided in the following table for the six months ended June 30, 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

Translation adjustments — ( 9 ) — ( 9 )

Balance at March 31, 2021 $ (81) $ (75) $ (2) $ (157)

Balance at June 30, 2022

$ ( 74 ) $ ( 105 ) $ ( 1 ) $ ( 181 )

Pension Translation Adjustments Other Total

Balance at December 31, 2020

$ ( 81 ) $ ( 68 ) $ ( 2 ) $ ( 151 )

Reclassified to income statement, net of taxes 1

Translation adjustments — — — —

Balance at June 30, 2021

$ ( 80 ) $ ( 68 ) $ ( 2 ) $ ( 149 )

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

1 unchanged sentence

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 operating credits and charges, net, is comprised of the following components (dollar amounts in millions):

Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

Insurance recoveries $ 13 $ 2 $ 13 $ 2

Reorganization charges — — ( 1 ) —

Environmental costs ( 2 ) — ( 2 ) —

Other — 1 — 1

Other operating credits and charges, net $ 11 $ 3 $ 10 $ 3

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.

Other non-operating items is comprised of the following components (dollar amounts in millions):

Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

Net periodic pension cost, excluding service cost $ ( 1 ) $ — $ ( 3 ) $ —

Loss on early debt extinguishment — — — ( 11 )

Foreign currency gain (loss) $ 3 $ ( 3 ) $ ( 5 ) $ —

Other non-operating items $ 2 $ ( 3 ) $ ( 8 ) $ ( 11 )

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.

We operate in three segments:

Siding, OSB, and South America.

Our business units have been aggregated into these three 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.

In June 2022, LP reached an agreement for the sale of its EWP segment assets.

As a result of this transaction, EWP has been reclassified to discontinued operations and is no longer a reportable segment of the Company.

See "Note 7 –Discontinued Operations" for additional information.

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):

Three Months Ended March 31,

Adjusted EBITDA is a non-GAAP financial measure and is defined as income attributed to LP from continuing operations 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 business segments is as follows (dollar amounts in millions):

Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

Siding $ 358 $ 291 $ 689 $ 576

OSB 673 778 1,417 1,317

South America 70 74 137 126

Other 30 26 55 43

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

4 unchanged sentences

Net loss attributed to noncontrolling interest — — 1 1

Income attributed to LP 484 320

Income from discontinued operations, net of income taxes ( 37 ) ( 11 ) ( 99 ) ( 14 )

Income attributed to LP from continuing operations 348 486 770 803

Provision for income taxes 116 144 240 239

8 unchanged sentences

Siding $ 78 $ 77 $ 160 $ 168

OSB 403 565 908 919

South America 26 34 51 54

3 unchanged sentences

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.

As previously disclosed on May 3, 2022, LP's Board of Directors authorized a share repurchase plan under which LP was authorized to repurchase shares of LP's common stock totaling up to $ 600 million (the 2022 Share Repurchase Program).

Subsequent to June 30, 2022, through August 8, 2022, we used $ 197 million to repurchase 3.4 million shares of LP common stock under the 2022 Share Repurchase Program.

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-Q

Item 1. Financial Statements