What changed in this filing

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Item 1. Financial Statements

2023-05-03 compared with 2022-11-03 · 103 added, 219 removed, 360 unchanged (47% of the section changed)

2 unchanged sentences

Dollar and share amounts in millions, except per share amounts

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Three Months Ended March 31,

Net sales $ 584 $ 1,167

13 unchanged sentences

Net income $ 22 $ 483

Net loss attributed to noncontrolling interest — — 1 1

Net (income) loss attributed to noncontrolling interest ( 1 ) 1

Net income attributed to LP $ 21 $ 484

7 unchanged sentences

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

Basic 74 94 80 100

Diluted 72 86

2 unchanged sentences

Dollar amounts in millions

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Three Months Ended March 31,

Net income $ 22 $ 483

2 unchanged sentences

Changes in defined benefit pension plans 4 1

Other comprehensive income (loss), net of tax ( 9 ) ( 19 ) ( 16 ) ( 18 )

Other comprehensive income, net of tax 19 24

Comprehensive income 42 508

Comprehensive loss associated with noncontrolling interest — — 1 1

Comprehensive (income) loss associated with noncontrolling interest ( 1 ) 1

Comprehensive income attributed to LP $ 41 $ 508

2 unchanged sentences

Dollar amounts in millions

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

Cash and cash equivalents $ 126 $ 369

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

Receivables, net of allowance for doubtful accounts of $1 million as of March 31, 2023 and December 31, 2022

Inventories 415 337

Prepaid expenses and other current assets 23 20

Current assets of discontinued operations — 68

Total current assets 713 854

1 unchanged sentence

Property, plant, and equipment, net 1,397 1,326

Operating lease assets 44 50

Operating lease assets, net 42 44

Goodwill and other intangible assets 36 36

3 unchanged sentences

Deferred tax asset 10 7

Long-term assets of discontinued operations — 87

Total assets $ 2,259 $ 2,350

LIABILITIES AND EQUITY

LIABILITIES AND STOCKHOLDERS' EQUITY

Accounts payable and accrued liabilities $ 227 $ 317

Income tax payable 88 13

Current liabilities of discontinued operations — 34

Income taxes payable 1 19

Total current liabilities 229 336

4 unchanged sentences

Other long-term liabilities 56 53

Long-term liabilities of discontinued operations — 42

Total liabilities $ 808 $ 916

2 unchanged sentences

Common stock, $ 1 par value, 200,000,000 shares authorized;

87,986,865 and 71,690,061 shares issued and outstanding, respectively, as of September 30, 2022;

87,986,865 and 72,031,465 shares issued and outstanding, respectively, as of March 31, 2023;

and 87,986,865 and 71,748,200 shares issued and outstanding, respectively, as of December 31, 2022

1 unchanged sentence

Retained earnings 1,375 1,371

Treasury stock, 16,296,804 shares and 16,779,729 shares, at cost as of September 30, 2022, and December 31, 2021, respectively

Treasury stock, 15,955,400 shares and 16,238,665 shares, at cost as of March 31, 2023, and December 31, 2022, respectively

( 388 ) ( 388 )

5 unchanged sentences

Dollar amounts in millions

Nine Months Ended September 30,

Three Months Ended March 31,

CASH FLOWS FROM OPERATING ACTIVITIES:

3 unchanged sentences

Gain on sale of assets — ( 39 )

Pension loss due to settlement 6 —

Deferred taxes ( 2 ) 11

Loss on early debt extinguishment — 11

Other adjustments, net 9 5

1 unchanged sentence

Receivables ( 8 ) ( 127 )

Prepaid expenses and other current assets ( 11 ) ( 5 )

Inventories ( 76 ) ( 55 )

Prepaid expenses and other current assets ( 2 ) 3

Accounts payable and accrued liabilities ( 66 ) ( 2 )

Income taxes payable, net of receivables ( 30 ) 116

Net cash provided by operating activities 1,103 1,283

Net cash (used) provided by operating activities ( 119 ) 425

CASH FLOWS FROM INVESTING ACTIVITIES:

4 unchanged sentences

CASH FLOWS FROM FINANCING ACTIVITIES:

Borrowing of long-term debt — 350

Repayment of long-term debt, including redemption premium — ( 359 )

Payment of cash dividends ( 17 ) ( 19 )

3 unchanged sentences

EFFECT OF EXCHANGE RATE ON CASH, CASH EQUIVALENTS, AND RESTRICTED CASH 3 11

Net increase in cash, cash equivalents, and restricted cash 111 84

Net (decrease) increase in cash, cash equivalents, and restricted cash ( 257 ) 266

Cash, cash equivalents, and restricted cash at beginning of period 383 371

1 unchanged sentence

Supplemental cash flow information:

Cash paid for income taxes, net of cash received $ 242 $ 305

Cash paid for interest, net of cash received $ 14 $ 16

Cash paid for income taxes, net $ 33 $ 12

Cash paid for interest, net $ 7 $ 4

Unpaid capital expenditures $ 28 $ 41

15 unchanged sentences

Taxes paid related to net settlement of stock-based awards — — — ( 10 ) — — — ( 10 )

Purchase of stock ( 2 ) ( 2 ) — — — ( 102 ) — ( 104 )

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

2 unchanged sentences

88 $ 88 16 $ ( 388 ) $ 455 $ 1,375 $ ( 80 ) $ 1,450

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

Dividends paid ($ 0.22 per share)

— — — — — ( 18 ) — ( 18 )

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

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

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

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

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

Balance, June 30, 2022

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

Net income attributed to LP — — — — — 226 — 226

Dividends paid (0.22 per share)

— — — — — ( 16 ) — ( 16 )

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

Purchase of stock ( 6 ) ( 6 ) — — — ( 320 ) — ( 325 )

Compensation expense associated with stock-based compensation — — — — 2 — — 2

Other comprehensive loss — — — — — — ( 9 ) ( 9 )

Balance, September 30, 2022

88 $ 88 16 $ ( 390 ) $ 459 $ 1,395 $ ( 190 ) $ 1,361

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

Common Stock Treasury Stock Additional

13 unchanged sentences

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

Other comprehensive loss — — — — — — ( 6 ) ( 6 )

Balance, March 31, 2021

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

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

Dividends paid ($ 0.16 per share)

— — — — — ( 16 ) — ( 16 )

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

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

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

Other comprehensive income — — — — — — 24 24

Balance, June 30, 2021

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

Net income attributed to LP — — — — — 365 — 365

Dividends paid ($0.18 per share)

— — — — — ( 17 ) — ( 17 )

Purchase of stock ( 7 ) ( 7 ) — — ( 392 ) — ( 399 )

Compensation expense associated with stock-based compensation — — — — 5 — — 5

Other comprehensive income — — — — — — ( 19 ) ( 19 )

Balance, September 30, 2021

Balance, March 31, 2022

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

4 unchanged sentences

Louisiana-Pacific Corporation and our subsidiaries are a leading provider of high-performance building solutions that meet the demands of builders, remodelers, and homeowners worldwide.

Serving the new home construction, repair and remodeling, and outdoor structures markets, we have leveraged our expertise to become an industry leader known for innovation, quality, and reliability.

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

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, reliability, and sustainability.

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, an d 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.

In August 2022, LP and one of its wholly-owned subsidiaries sold the assets related to the Engineered Wood Products (EWP) segment to P acific Woodtech Corporation, a Washington corporation, and Pacific Woodtech Canada Holdings Limited, a British Columbia limited company (collectively, the Purchaser) for $ 217 million in gross cash proceeds after taking into account working capital adjustments (including $ 3 million received subsequent to September 30, 2022).

Upon closing, the Company entered into a transition services agreement (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 .

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

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

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 to Pacific Woodtech Corporation, a Washington corporation, and Pacific Woodtech Canada Holdings Limited, a British Columbia limited company (collectively, the Purchaser).

Accordingly, the results of our previously-owned EWP segment have been presented as discontinued operations in our Condensed Consolidated Statements of Income for all periods presented.

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

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We disaggregate revenue from contracts with customers into major product lines.

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

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

As noted in the segment reporting information in Note 16 below, our reportable segments are Siding, Oriented Strand Board (OSB), and South America (dollar amounts in millions).

Three Months Ended September 30, 2022

By product type and family:

Siding OSB South America Other Inter-segment Total

Siding Solutions $ 393 $ — $ 6 $ — $ — $ 399

OSB - Structural Solutions — 205 47 — — 251

393 205 53 — — 650

OSB - commodity — 180 — — — 180

Other products 1 3 — 17 — 22

$ 394 $ 388 $ 53 $ 17 $ ( 1 ) $ 852

Three Months Ended September 30, 2021

By product type and family:

Siding OSB South America Other Inter-segment Total

Siding Solutions $ 310 $ — $ 9 $ — $ — $ 319

OSB - Structural Solutions — 307 65 — — 372

310 307 75 — — 691

OSB - commodity — 290 — — — 290

Other products 3 4 2 30 ( 1 ) 38

$ 312 $ 600 $ 76 $ 30 $ ( 1 ) $ 1,018

Nine Months Ended September 30, 2022

Three Months Ended March 31, 2023

By Product type and family:

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$ 331 $ 189 $ 55 $ 8 $ — $ 584

Nine Months Ended September 30, 2021

Three Months Ended March 31, 2022

By Product type and family:

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Estimates are based on historical and projected experience for each type of program or customer.

Volume allowances are accrued based on management’s estimates of customer volume achievement and other factors incorporated into customer agreements, such as new product purchases, store sell-through, and merchandising support.

Volume allowances are accrued based on management’s estimation of customer volume achievement and other factors incorporated into customer agreements, such as new product purchases, store sell-through, and merchandising support.

Management adjusts accruals when circumstances indicate (typically as a result of a change in volume expectations).

5 unchanged sentences

EARNINGS PER SHARE

Basic earnings per share is based upon the weighted-average number of shares of common stock outstanding.

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, stock-settled appreciation rights (SSARs), restricted stock units, and performance stock units) be excluded from the calculation of diluted earnings per share for the periods in which losses are reported because the effect is anti-dilutive.

The following table sets forth the computation of basic and diluted earnings per share (dollar and share amounts in millions, except per share amounts):

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Three Months Ended March 31,

Income from continuing operations $ 22 $ 421

Net loss attributed to noncontrolling interest — — 1 1

Net (income) loss attributed to noncontrolling interest ( 1 ) 1

Income attributed to LP from continuing operations 21 422

17 unchanged sentences

(i) recurring—measured on a periodic basis, and (ii) non-recurring—measured on an as-needed basis.

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

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

The fair value of the 3.625 % Senior Notes due in 2029 (2029 Senior Notes) was estimated to be $ 276 million and $ 358 million as of September 30, 2022, and December 31, 2021, respectively, based on market quotations.

The fair value of the 3.625 % Senior Notes due in 2029 (2029 Senior Notes) was estimated to be $ 302 million and $ 306 million as of March 31, 2023 and December 31, 2022, respectively, based on market quotations.

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

GAAP fair value hierarchy.

are based on trading activity among the Company’s lenders and the average bid and ask price is determined using published rates.

There were no outstanding amounts borrowed under our Amended Credit Facility (defined below) as of September 30, 2022.

Fair values are based on trading activity among the Company’s lenders and the average bid and ask price is determined using published rates.

In November 2022, LP entered into a Second Amended and Restated Credit Agreement with American AgCredit, PCA, as administrative agent and sole lead arranger, 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, and all loans thereunder, become due on November 29, 2028.

As of March 31, 2023, there were no outstanding amounts borrowed under our Amended Credit Facility.

As of May, 3, 2023, there was $45 million outstanding under the Amended Credit Facility.

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

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

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

Trade receivables $ 112 $ 106

4 unchanged sentences

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

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

Other receivables as of March 31, 2023 and December 31, 2022, primarily consist of sales tax receivables, vendor rebates, and other miscellaneous receivables.

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

1 unchanged sentence

The major types of inventories (work in process is not material and is included in Semi-finished inventory) are as follows (dollar amounts in millions):

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

Logs $ 102 $ 59

Other raw materials 75 72

Semi-finished inventory 25 20

Semi-finished inventories 34 25

Finished products 204 180

Total $ 415 $ 337

DIS CONTINUED OPERATIONS

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, resulting in a pre-tax gain associated with the sale of $ 39 million recorded in the year ended December 31, 2022 within Income from discontinued operations, net of income taxes in the Condensed 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 (including $ 3 million received subsequent to September 30, 2022).

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 in the Condensed 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 three months ended September 30, 2022, the Company collected $ 33 million on the Purchaser's behalf pursuant to the TSA.

As of September 30, 2022, the Company has $ 14 million due to the Purchaser, which is included in the Condensed Consolidated Balance Sheets.

The Company has classified the results of its EWP segment as discontinued operations in its Condensed Consolidated Statements of Income and we have classified the related assets and liabilities associated with the EWP segment as discontinued operations in our Condensed Consolidated Balance Sheets.

EWP Joint Ventures

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

for $ 59 million.

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

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

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

During the year ended December 31, 2022, the Company recorded a pre-tax gain of approximately $ 118 million within Income from discontinued operations, net of income taxes in the Condensed Consolidated Statements of Income.

Upon closing, the Company entered into the transition services agreement (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, which concluded during the three months ended March 31, 2023.

During the three months ended March 31, 2023, the Company collected $ 11 million on the Purchaser's behalf pursuant to the TSA.

As of March 31, 2023, the

Company had no amounts due to or due from the Purchaser.

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

The following table presents the financial results of the EWP segment for the three months ended March 31, 2022 (dollar amounts in millions):

Three Months Ended March 31, 2022

Net sales $ 170

8 unchanged sentences

Income from discontinued operations, net of income taxes $ 62

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

Nine Months Ended September 30,

The following summarizes the total cash provided by operations and total cash provided by investing activities related to the EWP segment and included in the Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2022 (dollar amounts in millions):

Net cash provided by discontinued operating activities $ 13

Net cash provided by (used in) discontinued investing activities $ 258 $ ( 25 )

Net cash provided by discontinued investing activities for the nine months ended September 30, 2022, includes $ 59 million of proceeds from the sale of our 50 % equity interest in two joint ventures that produce I-joists and $ 202 million of net proceeds from the sale of the EWP segment assets.

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

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

Net cash provided by discontinued investing activities $ 59

Net cash provided by discontinued investing activities for the three months ended March 31, 2022, includes $ 59 million of proceeds from the sale of our 50 % equity interest in two joint ventures that produce I-joists.

GOODWILL AND OTHER INTANGIBLES

1 unchanged sentence

The Company’s annual assessment date is October 1.

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

Changes in goodwill and other intangible assets for the three months ended March 31, 2023, are provided in the following table (dollar amounts in millions):

Timber Licenses 1

3 unchanged sentences

Amortization ( 1 ) — — —

Ending balance September 30, 2022

Ending balance March 31, 2023

$ 27 $ 19 $ 15 $ 2

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

REDEEMABLE NONCONTROLLING INTEREST

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

These interests are classified as mezzanine equity and measured at the greater of estimated redemption value or carrying value at the end of each reporting period.

Net loss attributed to noncontrolling interest is recorded in the Condensed Consolidated Statements of Income.

Any adjustments to the redemption value of redeemable noncontrolling interest are recognized in either net income or through accumulated paid-in capital, depending on the nature of the underlying security (preferred or common units).

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

Beginning balance December 31, 2021

Net loss attributed to noncontrolling interest ( 1 )

Ending balance September 30, 2022

For interim periods, we recognize income tax expense by applying the estimated annual effective income tax rate to year-to-date results unless this method does not result in a reliable estimate of year-to-date income tax expense.

1 unchanged sentence

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

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

The total effective tax rate for continuing operations for the three and nine months ended September 30, 2022, was 26 % and 24 %, compared to 25 % and 24 % for the comparable periods in 2021, respectively.

We recognized net discrete tax benefits of $ 9 million and $ 7 million in the nine months ended September 30, 2022 and 2021, respectively.

The discrete tax benefits primarily relate to excess tax benefits from stock-based compensation and changes to estimates in the prior year including our deferred tax rate.

The tax provision for income taxes from continuing operations for the three months ended March 31, 2023 and 2022, reflected an estimated annual effective tax rate of 28 % and 24 %, respectively, excluding discrete items

discussed below.

The total effective tax rate for continuing operations for the three months ended March 31, 2023 was 5 %, compared to 23 % for the comparable period in 2022.

We recognized net discrete tax benefits of $ 5 million and $ 9 million in the three months ended March 31, 2023 and 2022, respectively.

The discrete benefits primarily relate to excess tax benefits from stock-based compensation and inflationary adjustments.

On August 16, 2022, the Inflation Reduction Act of 2022 ("IRA") was signed into law.

The IRA levies a 1% excise tax on net stock repurchases after December 31, 2022 and imposes a 15% corporate alternative minimum tax ("CAMT") for tax years beginning after December 31, 2022.

The Company did not repurchase any shares during the three months ended March 31, 2023.

CAMT is not expected to have a material impact on our results of operations or financial position.

COMMITMENTS AND CONTINGENCIES

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

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

Environmental reserves $ 27 $ 27

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

As of September 30, 2022, there were no indications of impairment.

As of March 31, 2023, there were no indications of impairment.

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

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 for the three and nine months ended September 30, 2022 and 2021, is summarized in the following table (dollar amounts in millions):

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

The activity in warranty reserves for the three months ended March 31, 2023 and 2022, is summarized in the following table (dollar amounts in millions):

Three Months Ended March 31,

Beginning balance $ 8 $ 7

4 unchanged sentences

Long-term portion of warranty reserves (included in Other long-term liabilities) $ 7 $ 6

We continue to monitor warranty and other claims associated with our products and believe, as of September 30, 2022, that the warranty reserve balances associated with these matters are adequate to cover future warranty payments.

We continue to monitor warranty and other claims associated with our products and believe, as of March 31, 2023, that the warranty reserve balances associated with these matters are adequate to cover future warranty payments.

However, it is possible that additional changes may be required in the future.

DEFINED BENEFIT PENSION PLANS

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

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

The following table summarizes our net periodic pension cost for our defined benefit pension and postretirement plans during the three months ended March 31, 2023 and 2022 (dollar amounts in millions):

Three Months Ended March 31,

Service cost $ — $ 1

4 unchanged sentences

Amortization of net loss — 1

Net periodic pension costs before loss due to settlement — 2

Loss due to settlement 6 —

Net periodic pension cost $ 7 $ 1 $ 11 $ 2

Total net periodic pension cost $ 6 $ 2

1 Other components of net periodic pension cost are included in Other non-operating items on our Condensed Consolidated Statements of Income.

1 unchanged sentence

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

During the three months ended September 30, 2022, we made lump-sum pension distributions and purchased non-participating group annuity contracts totaling $ 33 million which triggered partial settlement accounting for the Plan.

Accordingly, reflected in the table above is a non-cash pre-tax loss due to settlement of $ 4 million for the three and nine months ended September 30, 2022 representing the recognition of a pro rata portion of the unrecognized loss recorded within Accumulated comprehensive loss.

The changes recognized in Other comprehensive loss were as follows:

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

During the year ended December 31, 2022, the Company liquidated substantially all of the Plan assets to fund lump-sum distributions to participants and purchase non-participating group annuity contracts.

As a result, a substantial portion of the Plan was settled during the year ended December 31, 2022.

During the three months ended March 31, 2023, the Company completed the termination of the Plan resulting in recognition of non-cash, pre-tax charges of $6 million from Accumulated comprehensive loss to Other non-operating items in our Condensed Consolidated Statements of Income.

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 changes recognized in Other comprehensive loss were as follows (dollar amounts in millions):

Three Months Ended March 31,

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

1 unchanged sentence

Total amounts recognized in Other comprehensive income $ 4 $ 1

Remaining 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 remaining distribution of Plan assets pursuant to the termination will not be made until the Plan termination satisfies all regulatory requirements.

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

Upon final settlement, we expect to recognize pre-tax pension settlement charges that will include (1) a non-cash charge for the recognition of all pre-tax actuarial losses in Accumulated comprehensive loss ($ 93 million as of September 30, 2022) and (2) any cash contributions to settle the Plan’s obligations ($ 9 million net projected benefit obligation as of September 30, 2022).

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

ACCUMULATED COMPREHENSIVE LOSS

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

Pension Translation Adjustments Other Total

Balance at June 30, 2022

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

Reclassified to income statement, net of taxes 1

Translation adjustments — ( 13 ) — ( 13 )

Balance at September 30, 2022

$ ( 71 ) $ ( 118 ) $ ( 1 ) $ ( 190 )

Pension Translation Adjustments Other Total

Balance at June 30, 2021

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

Reclassified to income statement, net of taxes 1

Translation adjustments — ( 21 ) — ( 21 )

Balance at September 30, 2021

$ ( 78 ) $ ( 89 ) $ ( 2 ) $ ( 168 )

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

See Note 14 above for additional details.

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

Accumulated comprehensive loss is provided in the following table for the three months ended March 31, 2023 and 2022 (dollar amounts in millions):

Pension Translation Adjustments Other Total

3 unchanged sentences

Translation adjustments — 15 — 15

Balance at September 30, 2022

Balance at March 31, 2023

$ — $ ( 79 ) $ — $ ( 80 )

4 unchanged sentences

Translation adjustments — 23 — 23

Balance at September 30, 2021

Balance at March 31, 2022

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

4 unchanged sentences

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

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Three Months Ended March 31,

Insurance recoveries $ — $ —

5 unchanged sentences

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

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Three Months Ended March 31,

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

Pension settlement charges ( 6 ) —

Loss on early debt extinguishment — — — ( 11 )

Foreign currency gain (loss) $ 2 $ ( 2 ) $ ( 3 ) $ ( 2 )

Other $ 1 $ — $ 1 $ —

Foreign currency loss ( 3 ) ( 9 )

Other non-operating items $ ( 8 ) $ ( 10 )

4 unchanged sentences

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.

On June 21, 2022, LP reached an agreement for the sale of its EWP segment assets which subsequently closed on August 1, 2022.

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

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

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

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

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

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 excludes stock-based compensation expense, loss on impairment attributed to LP, product-line discontinuance charges, other operating credits and charges, net, loss on early debt extinguishment, investment income, pension settlement charges, and other non-operating items.

Information about our business segments is as follows (dollar amounts in millions):

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Three Months Ended March 31,

Siding $ 331 $ 332

OSB 388 600 1,805 1,917

South America 55 67

Other 17 30 72 73

Intersegment sales — ( 1 )

Total sales $ 584 $ 1,167

PROFIT BY SEGMENT

NET INCOME TO ADJUSTED EBITDA RECONCILIATION

Net income $ 22 $ 483

Add (deduct):

Net loss attributed to noncontrolling interest — — 1 1

Net loss (income) attributed to noncontrolling interest ( 1 ) 1

Income from discontinued operations, net of income taxes — ( 62 )

4 unchanged sentences

Other operating credits and charges, net 5 1

Loss on early debt extinguishment — — — 11

Interest expense 3 3

Investment income ( 5 ) ( 1 )

Other non-operating items ( 1 ) 2 7 2

Pension settlement charges 6 —

Other non-operating items 3 10

Adjusted EBITDA $ 66 $ 598

SEGMENT ADJUSTED EBITDA

Siding $ 67 $ 83

OSB 113 381 1,021 1,300

South America 12 25

1 unchanged sentence

Corporate ( 9 ) ( 9 )

Adjusted EBITDA $ 200 $ 480 $ 1,289 $ 1,600

Total Adjusted EBITDA $ 66 $ 598

SUBSEQUENT EVENTS

In April 2023, the Company announced the shutdown of Entekra Holdings, LLC (Entekra), an off-site framing operation previously reported within our "other" operating segment, which is expected to result in a pre-tax, non-cash charges of between $ 25 million and $ 30 million in the second quarter of 2023.

In May 2023, the Company acquired substantially all of the assets of Wawa OSB Inc., an Ontario, Canada corporation, for $ 80 million .

The acquisition was funded together with cash on hand and borrowings under the Amended Credit Facility.

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

What changed 10-Q

Item 1. Financial Statements