What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2023-02-21 compared with 2022-02-22 · 313 added, 349 removed, 894 unchanged (43% 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 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 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 and 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.

3 unchanged sentences

and Canada covering many of their employees.

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

In November 2021, the Company initiated the termination of both the 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.

Such Plans were substantially settled during the year ended December 31, 2022 and accordingly, the net pension obligations were removed from the Company’s consolidated balance sheet as of December 31, 2022.

Legal termination of the Plans will not occur until all regulatory requirements are satisfied, which is expected to occur in 2023.

Under the termination, Plan participants received their full accrued benefits by having elected to receive either a lump sum distribution or an annuity contract with a qualifying third-party annuity provider.

Expenses and liabilities related to the defined benefit pension obligation were recorded based on various actuarial assumptions, including discount rate, assumed rates of return, and assumptions related to the rate above mentioned by participants.

We identified the Company’s settlement of the pension plans as a critical audit matter given the subjectivity pertaining to the remeasurement period and non-routine nature of such transaction.

Performing audit procedures to evaluate the settlement 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 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.

Our audit procedures related to the Company’s remeasurement and settlement of 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 at remeasurement and the settlement.

• We consulted with technical experts as to the accounting treatment

• We tested the completeness and accuracy of the underlying source information by:

• Selecting a sample of the annuity & lump sum elections and related payments

• Selecting a sample of census data changes.

• With the assistance of our actuarial specialist, we evaluated the settlement methodology utilized to select the measurement date, census date, service cost, interest cost, and amortization of prior service costs and (gain)/losses for conformity with applicable accounting guidance.

/s/ Deloitte & Touche LLP

5 unchanged sentences

Year Ended December 31,

2021 2020 2019

Net sales $ 3,854 $ 3,915 $ 2,399

11 unchanged sentences

Equity in unconsolidated affiliate 4 4 1

Income from continuing operations 885 1,302 484

Income from discontinued operations, net of income taxes 198 71 12

Net income $ 1,083 $ 1,373 $ 497

1 unchanged sentence

Net income attributed to LP $ 1,086 $ 1,377 $ 499

Basic net income per share attributed to LP:

Net income attributed to LP per share of common stock:

Income per share continuing operations - basic $ 11.40 $ 13.46 $ 4.37

Income per share discontinued operations - basic 2.54 0.73 0.11

Net income per share - basic $ 13.94 $ 14.19 $ 4.48

Diluted net income per share attributed to LP:

Income per share continuing operations - diluted $ 11.34 $ 13.37 $ 4.35

Income per share discontinued operations - diluted 2.52 0.73 0.11

Net income per share - diluted $ 13.87 $ 14.09 $ 4.46

6 unchanged sentences

Year Ended December 31,

2021 2020 2019

Net income $ 1,083 $ 1,373 $ 497

15 unchanged sentences

Prepaid expenses and other current assets 20 17

Current assets of discontinued operations — 68

Total current assets 854 890

1 unchanged sentence

Property, plant and equipment, net 1,326 1,039

Operating lease assets 52 40

Operating lease assets, net 44 50

Goodwill and other intangible assets 36 39

3 unchanged sentences

Deferred tax asset 7 2

Long-term assets of discontinued operations — 87

Total assets $ 2,350 $ 2,194

2 unchanged sentences

Income taxes payable 19 13

Current liabilities of discontinued operations — 34

Total current liabilities 336 351

4 unchanged sentences

Other long-term liabilities 53 63

Long term liabilities of discontinued operations — 42

Total liabilities 916 955

Commitments and contingencies (Note 14)

Redeemable noncontrolling interest — 4

17 unchanged sentences

Year Ended December 31,

2021 2020 2019

CASH FLOWS FROM OPERATING ACTIVITIES

3 unchanged sentences

Loss on impairment 1 6 16

Gain on acquisition — — ( 14 )

Gain on sale of assets, net ( 157 ) — —

Pension loss due to settlement 82 2 —

Loss on early debt extinguishment — 11 —

1 unchanged sentence

Other adjustments, net 33 11 18

Changes in assets and liabilities (net of acquisitions):

Changes in assets and liabilities (net of acquisitions and divestitures):

Receivables 22 ( 14 ) ( 53 )

Inventories ( 66 ) ( 71 ) ( 12 )

Prepaid expenses — ( 4 ) ( 1 )

Prepaid expenses and other current assets ( 7 ) — ( 4 )

Accounts payable and accrued liabilities 15 46 30

Income taxes payable, net of receivables 6 ( 5 ) 54

Net cash provided by continuing operating activities 1,484 659 160

Net cash used in discontinued operating activities — — ( 1 )

Net cash provided by operating activities 1,144 1,484 659

1 unchanged sentence

Property, plant, and equipment additions ( 414 ) ( 254 ) ( 77 )

Acquisition of businesses, net of cash acquired — — 30

Proceeds from business divestiture 268 — 15

Redemption of insurance cash surrender value — — 10

Investment in unconsolidated affiliates — — ( 3 )

Other investing activities, net — 5 3

26 unchanged sentences

Balance as of December 31, 2019

130 $ 130 18 $ ( 406 ) $ 454 $ 966 $ ( 153 ) $ 991

Net income attributed to LP — — — — — 499 — 499

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

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

— — — — — ( 65 ) — ( 65 )

2 unchanged sentences

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

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

Other comprehensive loss — — — — — — 2 2

Balance as of December 31, 2020

124 124 17 ( 397 ) 452 1,206 ( 151 ) 1,234

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

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

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 )

2 unchanged sentences

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

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

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

Balance as of December 31, 2021

102 102 17 ( 390 ) 458 1,239 ( 174 ) 1,235

Net income attributed to LP — — — — — 1,086 — 1,086

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)

Cash dividends on common stock paid ($ 0.22 per share quarterly)

— — — — — ( 69 ) — ( 69 )

4 unchanged sentences

Balance as of December 31, 2022

88 $ 88 16 $ ( 388 ) $ 462 $ 1,371 $ ( 99 ) $ 1,433

See Notes to the Consolidated Financial Statements.

6 unchanged sentences

Note 5 Goodwill and Other Intangible Assets

Note 6 Investments in and Advances to Affiliates

Note 7 Divestitures

Note 6 Discontinued Operations

Note 7 Redeemable Noncontrolling Interest

10 unchanged sentences

Note 18 Segment Information

Note 20 Subsequent Event

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

3 unchanged sentences

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 operate 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.

The Company operates 22 plants across the U.S., Canada, Chile, and Brazil, through foreign subsidiaries, and operates additional facilities through a joint venture.

References to "LP," the "Company," "we," "our," and "us" refer to Louisiana-Pacific Corporation and its consolidated subsidiaries as a whole.

During the year ended December 31, 2022, we sold our 50 % equity interest in two joint ventures that produce I-joists to Resolute Forest Products Inc., and we sold the remaining assets related to the EWP segment.

Accordingly, we have classified the related assets and liabilities associated with the EWP segment as discontinued operations in our Consolidated Balance Sheets.

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

See Note 6 –Discontinued Operations for additional information.

See Note 18 below for further information regarding our products and segments.

7 unchanged sentences

All dollar amounts are in millions except per share.

Reclassifications

In addition to the classification of the EWP segment as discontinued operations, we have made certain immaterial reclassifications to prior period presentation in order to conform to the current year presentation.

Cash and Cash Equivalents

1 unchanged sentence

These investments are stated at cost, which approximates market value.

Receivables consisted of the following:

Receivables consisted of the following (dollars in millions):

Trade receivables $ 106 $ 156

Income tax receivable 1 2

Other receivables 19 13

Income tax receivable 4 1

Allowance for doubtful accounts ( 1 ) ( 1 )

Total $ 127 $ 169

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

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 component of accumulated comprehensive loss in stockholders’ equity until realized.

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

Realized gains and losses (including impairments) are recorded as investment income.

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

receivables at December 31, 2022 and 2021 primarily consisted of sales tax receivables, vendor rebates, a receivable associated with an affiliate, and other miscellaneous receivables.

Fair Value Measurements

12 unchanged sentences

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.

5 unchanged sentences

Included in the inventory balance is a lower of cost or market adjustment of $ 22 million as of December 31, 2022, and $ 6 million as of December 31, 2021.

Inventory consisted of the following:

Inventory consisted of the following (dollars in millions):

Logs $ 59 $ 50

8 unchanged sentences

Timber that has been severed but has not yet been delivered to a facility is included in timber and timberlands.

As of December 31, 2021, and 2020, we had timber and timberlands of $ 53 million and $ 18 million, respectively.

As of December 31, 2022, and 2021, we had timber and timberlands of $ 12 million.

Timber licenses have a life of twenty to twenty-five years .

6 unchanged sentences

Property, Plant, and Equipment

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

Property, plant, and equipment, including capitalized interest, are recorded at cost and consisted of the following (dollars in millions):

Land, land improvements, and logging roads, net of road amortization $ 193 $ 168

4 unchanged sentences

Property, plant, and equipment, net $ 1,326 $ 1,039

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:

Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets, which typically range from five to twenty years for buildings and land improvements, three to fifteen 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 (dollars in millions):

Year Ended December 31,

2021 2020 2019

Cost of sales $ 121 $ 107 $ 100

9 unchanged sentences

Goodwill and indefinite-lived intangible assets are assessed annually for impairment during the fourth quarter or earlier upon the occurrence of certain events or substantive changes in circumstances.

In accordance with ASC 350, Intangibles – Goodwill and Other, companies may opt to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount.

A qualitative assessment includes factors such as financial performance, industry and market metrics, and other factors affecting the reporting unit.

If this assessment concludes that it is more likely than not that the fair value of a reporting unit exceeds its carrying value, then goodwill is not considered impaired, and no further impairment testing is required.

Conversely, if the qualitative assessment concludes that it is more likely than not that the fair value of a reporting unit is less than

its carrying value, we must then compare the fair value of the reporting unit to its carrying value.

Impairment is evaluated by applying a fair value based test.

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

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.

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

Our 2022 annual impairment assessment did not result in impairments of our goodwill or intangible assets.

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.

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

Investments in Affiliates

We account for investments in affiliates when we do not have a controlling financial interest using the equity method under which LP’s share of earnings and losses of the affiliate is reflected in earnings, and dividends are credited against the investment in affiliate when declared.

Restricted Cash

2 unchanged sentences

Accounts Payable and Accrued Liabilities

Accounts payable and accrued liabilities were as follows:

Accounts payable and accrued liabilities were as follows (dollars in millions):

Trade accounts payable $ 178 $ 180

Salaries and wages payable 66 65

Accrued rebates 45 44

Accrued customer incentives 46 31

Taxes other than income taxes 10 12

Current portion of operating lease liabilities 8 7

Current portion of contingency reserve 1 1

Other accrued liabilities 9 9

Total Accounts payable and accrued liabilities $ 317 $ 304

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.

Other accrued liabilities at December 31, 2022, and 2021, primarily consisted of accrued interest, worker compensation liabilities, warranty reserves, and other items.

Additionally, included in trade accounts payable is $ 48 million and $ 46 million related to capital expenditures that had not yet been paid as of December 31, 2022, and 2021, respectively.

Other Long-Term Liabilities

Other long-term liabilities were as follows:

Pension benefit obligation $ 12 $ 17

Other long-term liabilities were as follows (dollars in millions):

Post-retirement obligations $ 7 $ 9

Asset retirement obligations 8 8

Uncertain tax positions 7 9

Post-retirement obligations 9 9

Warranty reserves 6 6

Pension benefit obligation 1 11

Total Other long-term liabilities $ 53 $ 63

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

Other long-term liabilities at December 31, 2022 and 2021, consisted primarily of workers' compensation liabilities and investment tax incentives associated with property, plant, and equipment.

Asset Retirement Obligations

4 unchanged sentences

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.

The activity in our asset retirement obligation liability for 2022 and 2021 is summarized in the following table (dollars in millions).

Year Ended December 31,

15 unchanged sentences

Redeemable Noncontrolling Interest

Redeemable noncontrolling interest in subsidiaries that is redeemable outside of our control is classified as mezzanine equity and measured at the greater of estimated redemption value at the end of each reporting period or the historical cost basis of the noncontrolling interest adjusted for cumulative earnings allocations.

Redeemable noncontrolling interest in subsidiaries that is redeemable outside of our control is classified as mezzanine equity and measured at the greater of the estimated redemption value at the end of each reporting period or the historical cost basis of the noncontrolling interest adjusted for cumulative earnings allocations.

Net income attributed to noncontrolling interest is recorded in the 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).

See Note 8 below for a further discussion of redeemable noncontrolling interest.

Stock-Based Compensation

16 unchanged sentences

These transaction gains or losses are recorded in other non-operating items on the Consolidated Statements of Income.

The functional currencies of our Chilean, Brazilian, Argentinean, Columbian, and Peruvian subsidiaries are their respective local currencies, and therefore, their books and records are maintained in local currency.

The functional currencies of our Chilean, Brazilian, Argentinean, Colombian, Peruvian, and Paraguayan subsidiaries are their respective local currencies, and therefore, their books and records are maintained in local currency.

Translation adjustments, which are based upon the exchange rate at the balance sheet date for assets and liabilities and the weighted average rate for the income statement, are recorded in Accumulated comprehensive loss in stockholders’ equity on the Consolidated Balance Sheets.

3 unchanged sentences

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.

We classify 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.

3 unchanged sentences

We are required to use actuarial methods and assumptions in the valuation of defined benefit obligations and the determination of expense.

Differences between actual and expected results or changes in the values of the obligations and plan assets are not recognized in earnings as they occur but, instead, systematically and gradually over subsequent periods.

See Note 17 of the Notes to the Consolidated Financial Statements for further information.

Actuarial gains or losses, curtailments, prior service costs or credits, and transition obligations not previously recognized are recorded as a component of Accumulated comprehensive loss.

Comprehensive Income

1 unchanged sentence

PRESENT AND PROSPECTIVE ACCOUNTING PRONOUNCEMENTS

Recently Adopted Accounting Policies

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 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.

Recent Pronouncements Not Yet Adopted

In October 2021, the FASB issued Accounting Standards Update (ASU) 2021-08– Business Combinations (Topic 805) Accounting for Contract Assets and Contract Liabilities from Contracts with Customers , to improve the accounting for acquired revenue contracts with customers in a business combination by addressing diversity in practice and inconsistency related to the recognition of an acquired contract liability and to payment terms and their effect on subsequent revenue recognized by the acquirer.

The amendments in ASU 2021-08 require that an entity (acquirer) recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606.

At the acquisition date, an acquirer should account for the related revenue contracts in accordance with Topic 606 as if it had originated the contracts.

The amendments in ASU 2021-08 will become effective for us as of the beginning of our 2023 fiscal year.

We do not expect that this guidance will have a material impact upon our financial position and results of operations.

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

2 unchanged sentences

As noted in the segment reporting information in Note 18 below, our reportable segments are:

Siding, OSB, EWP, and South America.

Siding, OSB, and South America (dollars in millions).

Year Ended December 31, 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 $ 1,463 $ — $ 23 $ — — $ 1,486

OSB - Structural Solutions — 1,110 215 — ( 2 ) 1,323

I-Joist — — 309 — — — 309

LVL — — 194 — — — 194

LSL — — 47 — — ( 3 ) 44

1,463 1,110 238 — ( 2 ) 2,809

OSB - Commodity — 938 — — ( 1 ) 937

Plywood — — 48 — — — 48

— 1,221 48 — — — 1,269

Other products 6 14 3 84 — 107

2 unchanged sentences

By Product type and family:

Siding OSB EWP South America Other Inter-segment Total

Siding OSB South America Other Inter-segment Total

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

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

I-Joist — — 148 — — — 148

LVL — — 141 — — — 141

LSL — — 45 — — — 45

1,158 1,152 260 — — 2,570

OSB - Commodity — 1,221 — — — 1,221

Plywood — — 25 — — — 25

— 632 25 — — ( 1 ) 656

Other products 12 14 5 95 ( 3 ) 123

2 unchanged sentences

By Product type and family:

Siding OSB EWP South America Other Inter-segment Total

Siding OSB South America Other Inter-segment Total

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

OSB - Structural Solutions — 580 146 — — 726

I-Joist — — 137 — — — 137

LVL — — 142 — — — 141

LSL — — 50 — — — 50

915 580 166 — — 1,661

OSB - Commodity — 632 — — ( 1 ) 631

Plywood — — 25 — — — 25

9 387 28 — — ( 5 ) 419

Other products 44 9 3 52 — 107

22 unchanged sentences

EARNINGS PER SHARE

Basic earnings per share are based on the weighted average number of shares of common stock outstanding.

Diluted earnings per share are 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.

Basic earnings per share is based on 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, SSARs, restricted stock or units, and performance stock units) be excluded from the calculation of diluted earnings per share for the periods in which losses from continuing operations are reported because the effect is anti-dilutive.

The following table sets forth the computation of basic and diluted earnings per share:

The following table sets forth the computation of basic and diluted earnings per share (dollars and shares in millions):

Year Ended December 31,

Share amounts in millions 2021 2020 2019

Denominator for basic earnings per share:

Weighted average common shares outstanding 97 111 123

Effect of dilutive securities:

Income from continuing operations $ 885 $ 1,302 $ 484

Net loss attributed to noncontrolling interest 3 4 2

Income attributed to LP from continuing operations 888 1,306 487

Income for discontinued operations, net of income taxes 198 71 12

Net income attributed to LP $ 1,086 $ 1,377 $ 499

Weighted average common shares outstanding - basic 78 97 111

Dilutive effect of employee stock plans — 1 1

Dilutive potential common shares 98 112 123

Denominator for diluted earnings per share:

Adjusted weighted average shares 98 112 123

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 .

Shares used for diluted earnings per share 78 98 112

Net income attributed to LP per share - basic:

Continuing operations $ 11.40 $ 13.46 $ 4.37

Discontinued operations 2.54 0.73 0.11

Net income attributed to LP per share - basic $ 13.94 $ 14.19 $ 4.48

Net income attributed to LP per share – diluted:

Continuing operations $ 11.34 $ 13.37 $ 4.35

Discontinued operations 2.52 0.73 0.11

Net income attributed to LP per share - diluted $ 13.87 $ 14.09 $ 4.46

GOODWILL AND OTHER INTANGIBLE ASSETS

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

Changes in goodwill by segment for the years ended December 31, 2022, and 2021, are provided in the following table (dollars in millions):

Siding OSB Other Total

Balance at December 31, 2020

$ 4 $ 16 $ 5 $ 25

Impairment charges — — ( 5 ) ( 5 )

2 unchanged sentences

Balance at December 31, 2022

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

$ 4 $ 16 $ — $ 19

Changes in other intangible assets for the years ended December 31, 2022, and 2021, are provided in the following table (dollars in millions):

Timber Licenses 1

1 unchanged sentence

Balance at December 31, 2020

$ 33 $ 19 $ 3 $ 55

Amortization ( 3 ) ( 2 ) — ( 5 )

2 unchanged sentences

Balance at December 31, 2022

$ 28 $ 15 $ 2 $ 45

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

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 2021 impairment test for Entekra indicated the 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.

The cash flow forecasts included estimates of growth rates based on our current views of the long-term outlook of the reporting unit and may materially differ from actual results.

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 years .

Amortization expense related to definite-lived intangible assets was $5 million for each of the years ended December 31, 2022, 2021, and 2020.

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

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

DISCONTINUED OPERATIONS

Engineered Wood Products (EWP)

In March 2022, the Company sold its 50 % equity interest in two joint ventures that produce I-joists to Resolute Forest Products Inc.

for $ 59 million.

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

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

As a result of the sale, the Company received $ 217 million in gross cash proceeds after taking into account working capital adjustments.

The Company paid $ 12 million in direct transaction costs, resulting in net proceeds of $ 205 million.

The net carrying value of the EWP assets at the time of sale was $ 87 million, which resulted in a pre-tax gain of approximately $ 118 million within Income from discontinued operations, net of income taxes in the Consolidated Statements of Income.

Upon closing, the Company entered into the TSA 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 .

During the year ended December 31, 2022, the Company collected $ 76 million on the Purchaser's behalf pursuant to the TSA.

As of December 31, 2022, the Company has $ 10 million due to the Purchaser, which is included in Accounts payable and accrued liabilities within the Consolidated Balance Sheets.

The Company has classified the results of its EWP segment as discontinued operations in its Consolidated Statements of Income and has classified the related assets and liabilities associated with the EWP segment as discontinued operations in our Consolidated Balance Sheets for the prior periods presented.

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

Year Ended December 31,

2022 2021 2020

Net sales $ 455 $ 638 $ 389

Cost of sales ( 355 ) ( 531 ) ( 354 )

Gross profit 101 107 35

Selling, general, and administrative expenses ( 10 ) ( 18 ) ( 17 )

Other operating credits and charges, net — — 3

Income from operations of discontinued operations 91 90 21

Other non-operating items — 5 ( 4 )

Gain on disposal before income taxes 158 — —

Income from discontinued operations before income taxes 249 95 17

Provision for income taxes ( 51 ) ( 24 ) ( 4 )

Income from discontinued operations, net of income taxes $ 198 $ 71 $ 12

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 Consolidated Statements of Cash Flows (dollars in millions):

Year Ended December 31,

2022 2021 2020

Net cash provided by discontinued operating activities $ 16 $ 71 $ —

Net cash provided by (used in) discontinued investing activities $ 261 $ ( 6 ) $ ( 7 )

Net cash provided by discontinued investing activities for the year ended December 31, 2022, includes $ 59 million of proceeds from the sale of our 50 % equity interest in two joint ventures that produce I-joists and $ 205 million of net proceeds from the sale of the EWP segment assets.

Capital expenditures for discontinued operations totaled $ 3 million, $ 6 million, and $ 7 million for the years ended December 31, 2022, 2021, and 2020, respectively.

Included in Net cash provided by discontinued operating activities is depreciation and amortization of $ 3 million, $ 5 million, and $ 4 million for the years ended December 31, 2022, 2021, and 2020, respectively.

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

December 31, 2021

Carrying amounts of assets included as part of discontinued operations:

Accounts receivable, net $ 22

Inventories 46

Timber and timberlands 42

Property, plant, and equipment, net 30

Operating lease assets 1

Investments in and advances to affiliates 14

At December 31, 2021, and 2020, we had an investment in a joint venture with Resolute Forest Products, Inc.

to operate jointly owned I-Joist facilities in Quebec, Canada (Resolute-LP).

Each partner owns 50 % of the venture.

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, 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.

For the years ended December 31, 2021, and 2020, we received $ 5 million and $ 4 million, respectively, in dividends from Resolute-LP.

We classified the receipt of these cash dividends as cash flows from operations.

Our cumulative equity in earnings from Resolute-LP exceeds the cumulative distributions received;

therefore, the dividends were deemed to be a return on our investment and not a return of our investment.

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 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.

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 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.

The total net carrying value of assets related to the East River facility and CanExel ® at the date of sale was $ 14 million, consisting primarily of approximately $ 10 million and $ 5 million of inventories and property, plant, and equipment, net, respectively.

The Consolidated Statements of Income for the year ended December 31, 2020, include net sales of $ 14 million related to the divested East River facility and assets and brand rights for CanExel ® .

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

Total assets classified as discontinued operations in the Consolidated Balance Sheet $ 156

Carrying amounts of liabilities included as part of discontinued operations:

Accounts payable and accrued liabilities $ 34

Other liabilities 42

Total liabilities classified as discontinued operations in the Consolidated Balance Sheet $ 76

REDEEMABLE NONCONTROLLING INTEREST

3 unchanged sentences

The components of redeemable noncontrolling interests are as follows:

The components of redeemable noncontrolling interests are as follows (dollars in millions):

Beginning balance $ 4 $ 10

4 unchanged sentences

Income Tax Provision

The components of income from continuing operations before income taxes, including equity in unconsolidated affiliates, were as follows:

The components of income from continuing operations before income taxes, including equity in unconsolidated affiliates, were (dollars in millions):

Year Ended December 31,

2021 2020 2019

Domestic $ 961 $ 1,491 $ 503

1 unchanged sentence

Total $ 1,159 $ 1,704 $ 605

The following presents the components of our income tax provision (benefit) from continuing operations.

The components of our income tax provision (benefit) from continuing operations were (dollars in millions):

Year Ended December 31,

2021 2020 2019

Current tax provision (benefit):

Current tax provision:

federal $ 180 $ 284 $ 74

1 unchanged sentence

Foreign 42 56 29

Net current tax provision (benefit) 420 123 ( 23 )

Net current tax provision 273 396 119

Deferred tax provision (benefit):

4 unchanged sentences

Net deferred tax provision 1 6 2

Total income tax provision (benefit) $ 426 $ 125 $ ( 13 )

Total income tax provision $ 274 $ 402 $ 121

We paid income taxes, net of refunds, of $ 320 million, $ 421 million, and $ 70 million during 2022, 2021, and 2020, respectively.

1 unchanged sentence

Deferred Taxes

The tax effects of significant temporary differences creating deferred tax assets and liabilities were as follows:

The tax effects of significant temporary differences creating deferred tax assets and liabilities were (dollars in millions):

Accrued liabilities $ 20 $ 20

Pension and post-retirement benefits 4 5

Stock-based compensation 4 4

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

Research expenditures 14 —

Inventories 9 8

Operating lease liabilities 7 8

Stock-based compensation 6 4

Benefit relating to capital loss, NOL carryforwards, and credit carryforwards 6 7

Pension and post-retirement benefits 1 4

Total deferred tax assets 71 60

11 unchanged sentences

$ ( 106 ) $ ( 84 )

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

The benefit relating to capital loss, operating loss, and credit carryforwards included in the above table at December 31, 2022, consisted of (dollars in millions):

Operating Loss Benefit Amount Valuation Allowance Expiration Beginning in

State credit carryforwards $ — $ 1 $ — 2034

Chile operating loss carryforwards 8 2 — No expiration

Canadian capital loss carryforwards — 4 ( 4 ) No expiration

Total $ 8 $ 7 $ ( 4 )

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.

1 unchanged sentence

We believe that the valuation allowances provided are appropriate.

If future years’ earnings differ from the estimates used to establish these valuation allowances, or other objective positive or negative evidence arises, we may be required to record an adjustment to the valuation allowance resulting in an impact on tax provision (benefit) for that period.

As of December 31, 2021, certain of our foreign subsidiaries had accumulated undistributed earnings of approximately $ 184 million.

If future years’ earnings differ from the estimates used to establish these valuation allowances, or other objective positive or negative evidence arises, we may record an adjustment to the valuation allowance resulting in an impact on tax provision (benefit) for that period.

As of December 31, 2022, certain of our foreign subsidiaries had accumulated undistributed earnings of approximately $ 232 million, combined.

These earnings have been, and are intended to be, indefinitely reinvested in our foreign operations, and we expect future U.S.

6 unchanged sentences

Tax Rate Reconciliation

The following table summarizes the differences between the U.S.

federal statutory tax rates and the total effective tax rates from continuing operations:

Reconciliation of the U.S.

federal statutory tax rates to the total effective tax rates from continuing operations (dollars in millions):

Year Ended December 31,

2021 2020 2019

Income from continuing operations before income taxes, including equity in unconsolidated affiliates

$ 1,799 $ 621 $ ( 23 )

federal tax rate 21 % 21 % 21 %

1 unchanged sentence

Effect of foreign tax rates 1 1 1

Effect of foreign exchange on functional currencies — — ( 4 )

Tax credits — ( 1 ) 8

Noncontrolling interest — — ( 4 )

Stock-based compensation — — 5

Capital gain tax rate differential — — 5

Inflationary adjustment — — 5

Valuation allowance — — 8

Uncertain tax positions — — ( 4 )

8 unchanged sentences

Brazil and Chile for tax years 2016 and subsequent, and Canada for tax years 2017 and subsequent.

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.

Our tax returns are currently under examination by tax authorities in the U.S.

for years 2018 and 2019, in Canada for years 2017 and 2018, and in Chile for years 2016 through 2018.

Uncertain Tax Positions

In accordance with the accounting for uncertain tax positions, the following is a tabular reconciliation of the total amount of unrecognized tax benefits at the beginning and end of the years presented:

2021 2020 2019

Tabular reconciliation of the total amount of unrecognized tax benefits at the beginning and end of the years presented (dollars in millions):

Beginning balance $ 9 $ 11 $ 38

1 unchanged sentence

Tax positions taken in prior years — — 1

Settlements during the year — — ( 4 )

Lapse of statute in current year ( 4 ) ( 3 ) ( 29 )

6 unchanged sentences

As most of our leases do not provide an implicit rate, we used our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments.

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, 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:

The lease term for all 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, 2022 , our weighted average discount rate was four percent, and our weighted average remaining lease term was eleven years for operating leas es.

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

Classification December 31,

Consolidated Balance Sheet 2022

Operating lease assets Operating lease assets $ 52 $ 40

Operating lease assets Operating lease assets, net $ 44 $ 50

Total lease assets $ 44 $ 50

2 unchanged sentences

Total lease liabilities $ 49 $ 51

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.

Fo r the years ended December 31, 2022, and 2021, we incurred operating lease expenses of $ 10 million and $ 10 million, respectively, included within costs of sales and selling, general and administrative expenses.

We made cash payments of $ 9 million and $ 8 million during the years ended December 31, 2022, and 2021, 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 obtained right of use (ROU) assets in exchange for new operating lease liabilities of $ 4 million and $ 18 million for the years ended December 31, 2022, and 2021, respectively.

We did not enter into any financing leases during 2022 or 2021.

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

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

Operating Leases

4 unchanged sentences

LONG-TERM DEBT

December 31, 2021 December 31, 2020

Interest Rate Principal Unamortized Debt Costs Total Principal Unamortized Debt Costs Total

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

December 31, 2022

December 31, 2021

(Dollars in millions) Interest Rate Principal Unamortized Debt Costs Total Principal Unamortized Debt Costs Total

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

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

Other financing:

Financing leases — — — 1 — 1

Amended Credit Facility, maturing 2028, interest rates variable varies — — — — — —

Total 350 ( 4 ) 346 350 ( 4 ) 346

9 unchanged sentences

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.

In March 2021, we used the proceeds from the issuance of the 2029 Senior Notes and cash on hand to redeem all of the outstanding 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 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.

During the year ended December 31, 2021, $ 2 million was 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.

In November 2022, LP entered into a Second Amended and Restated Credit Agreement with American AgCredit, PCA, as administrative agent, and CoBank, ACB, as letter of credit issuer (the Credit Agreement), relating to its revolving credit facility (as amended, the Amended Credit Facility).

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

The Credit Agreement amended and restated the Company’s existing credit facility dated as of June 27, 2019, as amended, in its entirety to, among other things, (i) reflect the release of the collateral that secures the indebtedness evidenced by the Credit Agreement as a result of the Company’s obtaining an Investment Grade rating on November

1, 2022 (which collateral may be reinstated from time to time in accordance with the terms of the Credit Agreement), (ii) extend the maturity date to November 29, 2028, (iii) make certain changes to effect a transition from the LIBOR interest rate benchmark to Term SOFR Rate (as defined in the Credit Agreement) and (iv) provide for certain other modifications (including modifications to certain basket and threshold levels in the negative covenants) as set forth in the Credit Agreement.

There were no outstanding amounts borrowed under the Amended Credit Facility as of December 31, 2022.

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 %.

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) Adjusted Term SOFR ( i.e.

, Term SOFR Rate plus an adjustment of 0.10%) 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.

The applicable margins and fees within these ranges are based on our ratio of consolidated Earnings before interest, depreciation and amortization (EBITDA) to cash interest charges.

The “base rate” is the highest of (i) the Federal funds rate plus 0.5 %, (ii) the U.S.

prime rate, and (iii) one-month LIBOR plus 1.0 %.

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, a capitalization ratio ( i.e.

prime rate, and (iii) one-month Adjusted Term SOFR plus 1.0 %.

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

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

1 unchanged sentence

The Letter of Credit Facility includes a letter of credit fee, due quarterly, ranging from 0.500 % 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 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.

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

As of December 31, 2022, we were in compliance with all financial covenants under the 2029 Senior Notes, the Credit Agreement 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 .

Included in such amortized amounts are deferred debt costs associated with our Amended Credit Facility of $ 4 million, which are recorded within Other assets on our Consolidated Balance Sheets .

We amortized deferred debt costs of $ 1 million for each of the years ended December 31, 2022, 2021, and 2020.

The weighted average interest rate for all long-term debt at December 31, 2022, and 2021, was approximately 3.6 % and 3.6 %, respectively.

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

Required repayment of principal for long-term debt is as follows (dollars in millions):

Years ending December 31,

2027 and after 350

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.

2028 and thereafter

We estimated the 2029 Senior Notes to have a fair value of $ 306 million and $ 358 million at December 31, 2022, and 2021, respectively, 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.

5 unchanged sentences

Stock Award Plan

We have a stock-based compensation plan under which stock options, SSARs, restricted stock, restricted stock units, and performance stock units are granted.

At December 31, 2021, approximately three million shares were available under the current plan for these awards.

We have a stock-based compensation plan under which stock options, SSARs, restricted stock, restricted stock units, and performance stock units may be granted.

At December 31, 2022, approximately four million shares were available under the current plan for these awards.

Year ended December 31,

2021 2020 2019

(Dollars in millions) 2022

Total stock-based compensation expense (costs of sales, selling, general and administrative, and other operating credits and charges, net) $ 19 $ 16 $ 11

8 unchanged sentences

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.

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 non-employee directors.

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.

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

Generally, time-vested restricted stock units granted prior to January 1, 2020, are subject to cliff-vesting on the third anniversary of the date of grant for employees and on the first anniversary for non-employee directors.

Those restricted stock units granted after January 1, 2020, vest ratably over a 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.

1 unchanged sentence

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.

Awards based upon the achievement of the performance goals 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.

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%.

5 unchanged sentences

Outstanding at December 31, 2021

239,329 $ 16.93 1,087,994 $ 36.39

Granted — — 258,124 66.59

3 unchanged sentences

Outstanding at December 31, 2022

182,989 $ 17.59 645,504 $ 48.49

Vested and expected to vest at December 31, 2022 (1)

1 unchanged sentence

Exercisable at December 31, 2022

182,989 $ 17.59 — —

Unrecognized compensation costs (in millions) $ — $ 15

2 unchanged sentences

(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.

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 a fiscal year 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 the last day of such fiscal year.

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 intrinsic value of SSARs and stock options exercised in the years ended December 31, 2022, 2021, and 2020 was $ 4 million, $ 8 million, and $ 8 million, respectively.

The total fair value of awards vested during the years ended December 31, 2022, 2021, and 2020, was $ 42 million, $ 20 million, and $ 13 million, respectively.

Share Repurchases

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.

On February 6, 2020, we announced that our Board of Directors authorized a share repurchase program (2020 Share Repurchase Program) under which LP had the ability to repurchase up to $ 200 million of shares of its 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 had the ability to repurchase up to $ 1 billion of shares of our common stock.

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

On May 3, 2022, we announced that our Board of Directors authorized a share repurchase program (2022 Share Repurchase Program) under which LP may repurchase up to $ 600 million of shares of its common stock.

We repurchased approximately 14 million shares of our common stock through market purchases during 2022 for a total of $ 900 million at an average price of $ 62.37 per share.

During 2021, we repurchased approximately 21 million shares of our common stock at an average price of $ 61.52 per share through market purchases and during 2020, we repurchased approximately 6 million shares of our common stock at an average price of $ 32.69 per share through market purchases.

We have remaining capacity of $ 200 million under the 2022 Share Repurchase Program as of December 31, 2022.

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 six-month periods).

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

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, 2022, two million shares of common stock were reserved for issuance under the ESPP.

OTHER OPERATING AND NON-OPERATING INCOME (EXPENSE)

Other operating credits and charges, net

The major components of other operating credits and charges, net in the Consolidated Statements of Income for the years ended December 31 are reflected in the table below and described in the paragraphs following the table:

The major components of Other operating credits and charges, net in the Consolidated Statements of Income for the years ended December 31, 2022, 2021, and 2020 are reflected in the table below and described in the paragraphs following the table (dollars in millions):

Year Ended December 31,

2021 2020 2019

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

Insurance recoveries $ 15 $ 4 $ —

Reorganization and facility curtailment charges ( 7 ) ( 1 ) ( 5 )

Canadian wage subsidies — — 6

Product-line discontinuance charges — — ( 8 )

Environment costs, net of insurance recoveries ( 4 ) ( 3 ) 9

Adjustment to product-related warranty reserves — — 4

Other 2 3 ( 2 )

Environment costs ( 2 ) ( 4 ) ( 3 )

Product liability settlement 8 — —

$ 16 $ 1 $ ( 7 )

During 2022, we received $ 15 million in insurance recoveries related to business interruption claims for weather-related downtime sustained in the prior year.

We incurred severance and other charges of $ 7 million related to certain reorganizations and we recognized a charge of $ 2 million related to additional estimated environmental costs associated with a non-operating site.

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

4 unchanged sentences

Additionally, we received $ 6 million of Canadian wage subsidies during 2020.

During 2019, we recognized a $ 4 million gain related to the reduction of product-related warranty reserves associated with CanExel ® products, and we received $ 9 million related to insurance recoveries on property damage.

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

Non-operating income (expense)

Non-operating income (expense) is comprised of the following components:

Non-operating income (expense) is comprised of the following components (dollars in millions):

Year Ended December 31,

2021 2020 2019

Interest expense $ ( 14 ) $ ( 15 ) $ ( 17 )

12 unchanged sentences

Other non-operating items $ ( 97 ) $ ( 22 ) $ 4

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

During 2022, we recognized $ 82 million of pension settlement expense related to a portion of the unrecognized actuarial loss that was included in Accumulated comprehensive loss.

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.

1 unchanged sentence

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.

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.

As of December 31, 2022, and 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.

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

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.

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

These impairment charges reflect the announced accelerated conversion of this facility from fiber production to pre-finishing in February 2020.

During 2019, we recorded an impairment of long-lived assets of $92 million related to non-operating and operating long-lived assets.

Included within these impairment charges are $ 47 million related to non-operating assets located at Val-d’Or and St Michel, Quebec, Canada;

Cook, Minnesota;

and Silsbee, Texas;

$ 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.

These impairment charges reflect the announced accelerated conversion of this facility from a fiber production facility to a finishing facility in February 2020.

COMMITMENTS AND CONTINGENCIES

We maintain reserves for various contingent liabilities as follows:

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

Environmental reserves $ 27 $ 25

16 unchanged sentences

We regularly monitor our estimated exposure to environmental loss contingencies and, as additional information becomes known, may change our estimates significantly.

The activity in our reserve for estimated environmental loss contingency reserves is summarized in the following table.

The activity in our reserve for estimated environmental loss contingency reserves is summarized in the following table (dollars in millions).

Year Ended December 31,

28 unchanged sentences

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

• In connection with the mill exchange by LP Canada of its non-operating OSB mill in Chambord, Quebec, to Norbord in November 2016, we provided an indemnity for liabilities arising out of pre-closing operations.

These indemnities are capped at CAD$ 5 million in aggregate.

We also have various other indemnities that are individually and in the aggregate immaterial.

3 unchanged sentences

Such accruals are based upon historical experience and management’s estimate of the level of future claims.

The activity in warranty reserves is summarized in the following table.

The activity in warranty reserves is summarized in the following table (dollars in millions).

Year Ended December 31,

9 unchanged sentences

RETIREMENT PLANS AND POST-RETIREMENT BENEFITS

We sponsor various defined benefit pension plans and defined contribution retirement plans that provide retirement benefits to substantially all of our employees.

We sponsor various defined contribution retirement plans and benefit pension plans that provide retirement benefits to substantially all our employees.

Most regularly scheduled employees are eligible to participate in the defined contribution retirement plans except those covered by a collective bargaining agreement unless the collective bargaining agreement explicitly allows for participation in our plans.

We contribute to a multiemployer plan for certain employees covered by collective bargaining agreements.

Participation in the defined benefit pension plans is limited to active and retired employees that were eligible prior to the plans being frozen.

We also provide other post-retirement benefits consisting primarily of healthcare benefits to certain retirees who meet age and service requirements.

The defined benefit pension plans were limited to active and retired employees that were eligible prior to the plans being frozen.

The defined benefit pension plans were substantially settled through lump sum distributions and purchase of third-party annuity contracts in 2022.

Defined Benefit Pension Plans

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

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 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 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.

and Canadian defined benefit pension plans (collectively, the Plan).

Plan participants were provided the opportunity to receive their full accrued benefits from Plan assets by either electing immediate lump sum distributions or annuity contracts with a qualifying third-party annuity provider.

During the year ended December 31, 2022, we contributed $ 5 million to fund the liquidation of the Plan.

Plan assets of $ 247 million were liquidated to fund lump sum distributions to participants and purchase annuity contracts.

As a result, a substantial portion of the Plan was settled during the year ended December 31, 2022, resulting in recognition of non-cash, pre-tax charges of $ 82 million from Accumulated comprehensive loss to Other non-operating items in our Consolidated Statements of Income.

Upon final termination of the Plan, we expect to recognize the remaining unrecognized pre-tax charges within Accumulated comprehensive loss ($ 6 million as of December 31, 2022).

Liquidation of remaining Plan assets in surplus of the defined benefit pension obligation will be made once the Plan satisfies all regulatory requirements, which is expected to be completed during 2023.

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, 2021 and 2020:

The following table details information regarding our pension plans at December 31, 2022, and 2021 (dollars in millions):

Change in benefit obligation:

5 unchanged sentences

Benefits paid ( 13 ) ( 19 )

Pension settlements ( 247 ) —

End of year balance $ 3 $ 301

5 unchanged sentences

Benefits paid ( 13 ) ( 19 )

Pension settlements ( 247 ) —

End of year balance $ 6 $ 296

5 unchanged sentences

Net amount recognized $ 2 $ ( 6 )

Amounts in accumulated other comprehensive income:

Amounts in accumulated comprehensive loss:

Net actuarial loss $ ( 1 ) $ ( 95 )

Prior service costs ( 6 ) ( 6 )

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:

Total pre-tax amounts in accumulated comprehensive loss $ ( 6 ) $ ( 101 )

The 2022 actuarial gains of $ 47 million were primarily related to a change in interest rates from prior year-end to those effective for settling the benefit plan obligations and actual return on Plan assets of $ 33 million was primarily related to market returns realized prior to the pension settlement dates.

The 2021 actuarial losses of $( 8 ) million were primarily related to the impact of Plan termination assumptions on the discount rate.

The year ended December 31, 2022 includes $ 247 million of benefits paid in accordance with the settlement of our defined benefit pension plan.

The changes recognized in other comprehensive loss were as follows (dollars in millions):

Year Ended December 31,

2021 2020 2019

Pension settlements, net of tax $ 62 $ 2 $ —

Net actuarial gain (loss) and prior service (cost) arising during the period, net of tax 5 ( 1 ) 3

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

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

Total amounts recognized in other comprehensive income $ 71 $ 5 $ 8

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

Weighted-average assumptions used to calculate our benefit obligations at December 31, 2022, and 2021 were as follows:

Discount rate:

1 unchanged sentence

Rate of compensation increase:

Benefit obligations by plan category are as follows:

Benefit obligations by plan category are as follows (dollars in millions):

Fair value of plan assets $ 1 $ 4 $ 6

4 unchanged sentences

Funded Status $ ( 11 ) $ 5 $ ( 6 )

The benefits expected to be paid from the benefit plans, which reflect expected future service, are as follows:

2027– 2031 72

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.

The following table sets forth the net periodic pension cost for our defined benefit pension plans.

The components of our net periodic pension costs consisted of the following:

The components of our net periodic pension costs consisted of the following (dollars in millions):

Year Ended December 31,

2021 2020 2019

Service cost $ 3 $ 1 $ 1

5 unchanged sentences

Net periodic pension cost before loss due to settlement 8 2 2

Loss due to settlement 2 — —

Loss due to pension settlement 82 2 —

Total net periodic pension cost $ 91 $ 4 $ 2

2 unchanged sentences

Net periodic pension cost included in other non-operating items 88 3 1

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

2021 2020 2019

Weighted average assumptions used to calculate our net periodic pension costs for the years ended December 31, 2022, 2021, and 2020 were as follows:

Discount rate:

5 unchanged sentences

Rate of compensation increase:

Canada NA 3.5 % 3.5 %

Canada NA NA 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.

3 unchanged sentences

Asset category

Equity securities — % — % 41 %

Debt securities — % — % 76 %

Multi-Strategy Funds — % — % 20 %

Cash and cash equivalents 100 % 100 % 24 %

6 unchanged sentences

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.

Our investment policies for the defined benefit pension plans are allocated to reduce risk in assets as a result of the termination and final expected settlements of the Plan in fiscal 2023.

These policies are set by an administrative committee with the goal of maximizing long-term investment returns within acceptable levels of volatility and risk.

plans include hedge funds and real return investment strategies to increase returns and reduce volatility.

Our plans do not currently invest directly in derivative securities, although such investments may be considered in the future to increase returns and/or reduce volatility.

To the extent the expected return on Plan assets varies from the actual return, an actuarial gain or loss results.

The fair value of our pension plan assets and fair value asset categories and the level of inputs as defined in Note 1 at December 31, 2021, and 2020, are as follows:

The fair value of our pension plan assets and fair value asset categories and the level of inputs as defined in Note 1 at December 31, 2022, and 2021, are as follows (dollars in millions):

December 31, 2022

6 unchanged sentences

International bond funds — — — — —

Multi-strategy funds — — — — —

Cash and cash equivalents 6 6 — — —

8 unchanged sentences

International stock funds 47 — 13 — 34

Fixed-income investment funds

Domestic bond funds 94 17 — — 77

International bond funds 64 — 26 — 38

Multi-strategy funds 48 48 — — —

Cash and cash equivalents 68 58 11 — —

4 unchanged sentences

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 nine percent of the total market value of plan assets at December 31, 2021.

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, 2022.

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

5 unchanged sentences

and certain groups of Canadian employees.

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

The obligation at December 31, 2022, and 2021, for these post-retirement benefits was $ 7 million and $10 million, respectively.

The net expense related to these plans was not significant in 2022, 2021, or 2020.

4 unchanged sentences

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, 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:

The liability under the Deferred Compensation Plan amounted to $ 2 million as of December 31, 2022, and 2021, and is included in Other long-term liabilities on our Consolidated Balance Sheets.

ACCUMULATED COMPREHENSIVE LOSS

Accumulated comprehensive loss 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 (dollars in millions):

Pension Translation Adjustments Other Total

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

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

Reclassified to income statement, net of taxes 1

Pension settlement loss, net of taxes — — — —

Translation adjustments — ( 1 ) — ( 1 )

2 unchanged sentences

Reclassified to income statement, net of taxes 1

Pension settlement loss — — — —

Translation adjustments — ( 28 ) — ( 28 )

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

Other comprehensive income before reclassifications, net of taxes — — — —

Reclassified to income statement, net of taxes 1

Pension settlement loss, net of taxes 71 — — 71

Translation adjustments — 2 — 2

3 unchanged sentences

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 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.

The pension amounts reclassified from Accumulated comprehensive loss included an income tax provision of $ 23 million, $ 2 million, and $ 2 million in 2022, 2021, and 2020, respectively.

SEGMENT INFORMATION

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.

• 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 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.

• 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 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, LP NovaCore™ Thermal Insulated Sheathing, LP ® FlameBlock ® Fire-Rated Sheathing, and LP ® TopNotch ® Sub-Flooring).

• 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, 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 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:

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

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

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

Segment Adjusted EBITDA 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 (dollars in millions):

Year Ended December 31,

2021 2020 2019

NET SALES BY BUSINESS SEGMENT

1 unchanged sentence

OSB 2,062 2,387 1,220

EWP 638 389 396

South America 241 265 169

2 unchanged sentences

Total sales $ 3,854 $ 3,915 $ 2,399

PROFIT BY SEGMENT

NET INCOME TO ADJUSTED EBITDA RECONCILIATION

Net income $ 1,083 $ 1,373 $ 497

Add (deduct):

Loss from noncontrolling interest 4 2 5

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

Net loss attributed to noncontrolling interest 3 4 2

Income from discontinued operations, net of income taxes ( 198 ) ( 71 ) ( 12 )

Income attributed to LP from continuing operations 888 1,306 487

Provision for income taxes 274 402 121

3 unchanged sentences

Other operating credits and charges, net ( 16 ) ( 1 ) 7

Product-line discontinuance charges — 8 —

Pension settlement charges 82 2 —

2 unchanged sentences

Loss on early debt extinguishment — 11 —

Other non-operating items 4 — ( 6 )

Other non-operating items, not included above 15 9 ( 4 )

Adjusted EBITDA $ 1,389 $ 1,877 $ 757

SEGMENT ADJUSTED EBITDA

Siding $ 339 $ 289 $ 246

5 unchanged sentences

Year Ended December 31,

2021 2020 2019

Depreciation and Amortization

8 unchanged sentences

Total capital expenditures $ 412 $ 250 $ 71

Information concerning identifiable assets by segment is as follows:

Information concerning identifiable assets by segment is as follows (dollars in millions):

Identifiable Assets

1 unchanged sentence

South America 151 118

Discontinued operations — 156

Non-segment related 589 608

1 unchanged sentence

Non-segment related assets include cash and cash equivalents, short-term and long-term investments, corporate assets, and other items.

Information concerning our geographic segments is as follows:

Information concerning our geographic segments is as follows (dollars in millions):

Year Ended December 31,

2021 2020 2019

GEOGRAPHIC LOCATIONS

10 unchanged sentences

Other operating credits and charges, net and loss on impairments of assets 15 ( 5 ) ( 23 )

General corporate expense, loss on early debt extinguishment, other income (expense) and interest, net ( 72 ) ( 52 ) ( 33 )

1,799 621 ( 23 )

General corporate expense, loss on early debt extinguishment, other income (expense), interest, net and equity in unconsolidated affiliates ( 139 ) ( 77 ) ( 48 )

Income before income taxes, including equity in unconsolidated affiliates 1,159 1,704 605

Provision for income taxes ( 274 ) ( 402 ) ( 121 )

1 unchanged sentence

Loss attributed to noncontrolling interest 3 4 2

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

Income attributed to LP from continuing operations $ 888 $ 1,306 $ 487

IDENTIFIABLE TANGIBLE LONG LIVED ASSETS

3 unchanged sentences

Total assets $ 1,382 $ 1,106 $ 935

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