<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[x] Annual Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the fiscal year ended Commission File Number
December 31, 1993 1-7107
LOUISIANA-PACIFIC CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 93-0609074
(State of Incorporation) (I.R.S. Employer
Identification No.)
111 S.W. Fifth Avenue Registrant's telephone number
Portland, Oregon 97204 (including area code)
(Address of principal 503-221-0800
executive offices)
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
Common Stock, $1 par value New York Stock Exchange
Preferred Stock Purchase Rights New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that
the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [ ]
State the aggregate market value of the voting stock held by nonaffiliates
of the registrant: $4,207,432,000 as of March 16, 1994.
Indicate the number of shares outstanding of each of the registrant's
classes of common stock: 110,276,380 shares of Common Stock, $1 par
value, outstanding as of March 16, 1994.
Documents Incorporated by Reference
Definitive Proxy Statement for 1994 Annual Meeting: Part III
<PAGE>
PART I
ITEM 1. Business
General
Louisiana-Pacific Corporation, a Delaware corporation,
is a major forest products firm headquartered in Portland,
Oregon. It manufactures lumber, pulp, structural and other panel
products, hardwood veneers, windows and doors and cellulose
insulation. It operates 129 plants and mills in 27 U.S. states,
Mexico, and three provinces in Canada, and has approximately
13,000 employees. It distributes its products primarily through
distributors and home centers, and to a minor extent through its
own distribution centers.
The business of Louisiana-Pacific Corporation and its
wholly-owned subsidiaries (except where the context otherwise
requires, hereinafter referred to collectively as "the
registrant" or "L-P") is generally divided into two industry
segments: building products and pulp. For 1993, building
products accounted for approximately 97 percent of the
registrant's gross sales revenues, compared to approximately
3 percent for pulp. With respect to operating profit in 1993,
building products contributed approximately 111 percent, offset
by an 11 percent loss for pulp.
Building Products
Lumber. The registrant is among the three largest
producers of lumber in the United States. The registrant has
22 Western (whitewood and redwood) sawmills with an annual
production capacity of 1,370 million board fee (MMBF), while its
28 Southern sawmills have an annual production capacity of
945 MMBF. Lumber represented 33 percent of the registrant's
sales revenue in 1993, down from 53 percent in 1980. The
registrant's sawmills produce a variety of standard U.S.
dimension lumber as well as specialty grades and sizes, primarily
for the North American home building market. A sawmill in
Ketchikan, Alaska, produces lumber for export in the traditional
sizes used in the Japanese building industry, but has the
capability of switching to standard U.S. dimensions. The
registrant also operates a planing mill in El Sauzal, Mexico.
Panel Products. The registrant manufactures plywood
and a variety of reconstituted panel products, including
Inner-Seal(R) oriented strand board (OSB) and such other panel
products as industrial particleboard, medium density fiberboard,
and hardboard. In recent years, the registrant has emphasized
development and expansion of its reconstituted panel product
lines. While such products accounted for 6 percent of the
registrant's sales in 1980, they comprised 33 percent of its
sales in 1993. Plywood sales have risen from 12 percent of sales
in 1980 to 15 percent of sales in 1993.
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The largest consumption of panel products is for
structural uses in building and remodeling such as subfloors,
walls and roofs. The total structural panel market in the United
States (plywood, OSB and other waferboards) is approximately
26 billion square feet annually, of which plywood currently
constitutes about 17 billion square feet. In recent years,
environmental pressure on timber harvesting, especially in the
West, has resulted in reduced supplies and higher costs, causing
many plywood mills to close permanently. The lost volume from
those closed mills (approximately 2 billion square feet annually
according to industry sources) has been replaced by reconstituted
structural panel products. The registrant operates seven plywood
plants in the South with a combined annual capacity of
1.5 billion square feet.
The registrant is the largest domestic producer of
oriented strand board through 17 Inner-Seal(R) OSB plants with an
aggregate annual capacity of approximately 3.5 billion square
feet. Approximately 50 percent of the registrant's 1993 sales
volume in this category came from higher margin specialty
products such as tongue and groove subflooring, siding, soffit
and facia.
The registrant's other reconstituted panel products--
industrial particleboard, medium density fiberboard, and
hardboard--produced at a total of seven plants, are used
primarily in the manufacture of furniture and cabinets.
Other Building Products. The registrant's new fiber
gypsum wallboard, known as FiberBond(TM), is made from gypsum and
waste paper and has improved capabilities over standard
wallboard. Other FiberBond(TM) products include fire retardant
sheathing and underlayment. The registrant's first fiber gypsum
plant, with a production capacity of 78 million square feet, is
the first of its kind in North America, although a similar
product is manufactured in Europe. The plant began operations in
Nova Scotia, Canada, in early 1991. A second plant is scheduled
for start-up in mid-1994 in East Providence, Rhode Island.
Seven plants in Ohio and one in Nevada manufacture
windows and doors.
The registrant produces various hardwood veneers at a
plant in Wisconsin with both rotary and sliced manufacturing
processes. These veneers are sold to customers who overlay the
veneers on other materials for use in paneling, furniture and
cabinets.
The registrant has three engineered I-joist plants
located in Red Bluff, California, Fernley, Nevada, and
Wilmington, North Carolina. Inner-Seal(R) OSB is cut into
sections and used as the web for the I-joists.
The registrant also produces laminated veneer lumber
(LVL) at Wilmington, North Carolina, and Fernley, Nevada. LVL is
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a high grade structural product used where extra strength is
required. It is also used as the flange material in I-joists.
Four plants produce cellulose residential insulation
from recycled newspaper under the name Nature Guard(TM). This
insulation has a higher R-value than comparable thicknesses of
conventional fiberglass insulation.
Pulp
The registrant has three pulp mills located in
Ketchikan, Alaska, Samoa, California, and Chetwynd, British
Columbia, Canada, with a total annual capacity of 612 million
short tons. The Chetwynd mill utilizes a state-of-the-art
mechanical pulping process and a zero effluent discharge system
to produce 100 percent aspen pulp. The Samoa mill can produce
bleached kraft pulp by a chlorine-free process, thereby
eliminating dioxins.
Competition
The registrant competes internationally with several
thousand forest products firms, ranging from very large, fully
integrated firms to smaller firms which may manufacture only one
or a few items. The registrant estimates that approximately 25
forest products firms comprise its major competition. The
registrant also competes less directly with firms which
manufacture substitutes for wood building products. A majority
of the products manufactured by the registrant, including lumber,
structural panels and pulp, are commodity products sold primarily
on the basis of price in competition with numerous other forest
products companies.
In recent years, the registrant has introduced a number
of new value-enhanced products to complement its traditional
lumber and panel products, such as Inner-Seal(R) OSB panels,
siding and concrete form. These innovative products are made
from abundant, smaller-diameter and affordably-priced tree
species, as well as treetops and mill shavings. Such trees have
generally not been the target of environmentalist pressure, which
has seriously restricted wood supplies for much of the industry,
especially in the West. Similarly, the registrant's new fiber
gypsum and cellulose insulation products utilize wood fiber from
waste paper. The registrant believes development of these new
products gives it a competitive advantage through lower and more
predictable supply costs, resulting in higher profit margins.
Environmental Compliance
The registrant is subject to federal, state and local
pollution control laws and regulations in all areas in which it
has operating facilities. The registrant maintains an accounting
reserve for environmental fines and certain other environmental
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<PAGE>
costs. Over the past two years, $19.2 million in expense related
to these costs has been recorded. At December 31, 1993,
$8.1 million remained in the reserve. Amounts which may be
required in future years depend on the extent to which more
stringent pollution control laws, regulations, and policies may
be enacted by Congress, the states, localities, or adopted by
enforcement agencies. From time to time, the registrant
undertakes construction projects for environmental control
facilities or incurs other environmental costs which extend an
asset's useful life, improves efficiency or improves the
marketability of certain properties.
Information concerning legal proceedings related to
environmental compliance is set forth under Item 3, Legal
Proceedings.
Additional Statistical Information
Additional information regarding the business of the
registrant, including segment information, production volumes,
and industry product price trends are presented in the following
tables labeled "Sales and Operating Profit by Major Product
Group," "Summary of Production Volumes," "Industry Product Price
Trends," and "Logs by Source." Additional financial information
about industry segments is presented in the table labeled
"Industry Segment Information" located within Part II, Item 8,
Notes to the Financial Statements.
Reference is made to Item 2 for additional information
as to sources and availability of raw materials and the locations
of the registrant's manufacturing facilities.
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<PAGE>
LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES
SALES AND OPERATING PROFIT BY MAJOR PRODUCT GROUP
(Dollar amounts in millions)
<TABLE>
<CAPTION>
Year ended December 31 1993 1992 1991 1990 1989
Sales:
<S> <C> <C> <C> <C> <C>
Lumber $ 816 33% $ 653 30% $ 526 31% $ 578 32% $ 695 35%
Structural panels 1,005 40 888 41 600 35 607 34 630 31
Other panels 194 8 150 7 146 9 139 8 146 7
Other building products 411 16 309 14 260 15 264 15 274 14
----- --- ----- --- ----- --- ----- --- ----- ---
Building products 2,426 97 2,000 92 1,532 90 1,588 89 1,745 87
Pulp 85 3 185 8 170 10 205 11 265 13
----- --- ----- --- ----- --- ----- --- ----- ---
Total sales $2,511 100% $2,185 100% $1,702 100% $1,793 100% $2,010 100%
===== === ===== === ===== === ===== === ===== ===
Export sales
(included above) $ 252 10% $ 339 16% $ 315 19% $ 381 21% $ 418 21%
===== === ===== === ===== === ===== === ===== ===
Operating profit:
Building products $ 562 111% $ 364 106% $ 139 102% $ 139 82% $ 253 74%
Pulp (59)(11) (20) (6) (3) (2) 31 18 89 26
----- --- ----- --- ----- --- ----- --- ----- ---
Total operating profit 503 100% 344 100% 136 100% 170 100% 342 100%
----- === ----- === ----- === ----- === ----- ===
Unallocated expense, net (70) (47) (30) (25) (38)
Interest expense, net (5) (14) (19) (8) (12)
----- ----- ----- ----- -----
Income before taxes $ 428 $ 283 $ 87 $ 137 $ 292
===== ===== ===== ===== =====
</TABLE>
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<PAGE>
LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES
SUMMARY OF PRODUCTION VOLUMES
<TABLE>
<CAPTION>
Volume amounts stated in millions (except pulp) and as a percent of normal capacity.
Year ended December 31 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C>
Lumber, board feet 1,796 87% 1,850 71% 1,838 69% 2,189 79% 2,441 89%
Softwood plywood,
square feet 3/8" basis 1,507 105 1,405 80 1,318 75 1,541 88 1,515 86
Inner-Seal(R)/OSB,
square feet 3/8" basis 3,100 100 2,850 101 2,481 81 2,507 94 2,239 102
Medium density fiberboard,
square feet 3/4" basis 206 93 160 97 164 99 165 100 164 100
Particleboard,
square feet 3/4" basis 359 106 335 93 324 91 269 100 281 104
Hardboard,
square feet 1/8" basis 191 91 201 93 201 100 194 97 198 99
Hardwood veneer,
square feet surface measure 260 108 252 89 229 80 272 109 253 112
Pulp, short tons (thousands) 224 37 459 72 365 80 400 95 391 93
</TABLE>
LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES
INDUSTRY PRODUCT PRICE TRENDS
Prices represent yearly averages stated in dollars per thousand board feet
(MBF), thousand square feet (MSF) or short ton.
<TABLE>
<CAPTION>
Year ended December 31 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C>
Framing lumber, composite prices, MBF $396 $283 $235 $229 $240
OSB, MSF, 7/16" 24/16 span rating (North Central price) 236 217 148 131 171
Southern pine plywood, MSF, 1/2" CDX (3ply) 282 248 191 182 201
Industrial particleboard, 3/4" basis, MSF 258 200 198 199 219
Bleached softwood sulfate pulp, short ton<F1> 418 509 519 723 753
<FN>
<F1> Discounting sometimes occurs from the published price.
</TABLE>
LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES
LOGS BY SOURCE
Stated as a percent of total log volume
<TABLE>
<CAPTION>
Year ended December 31 1993 1992 1991 1990 1989
<S> <C> <C> <C> <C> <C>
Fee owned lands 12% 14% 15% 20% 20%
Private cutting contracts 15 15 15 15 13
Government contracts 10 12 17 14 18
Purchased logs 63 59 53 51 49
Total log volume (million board feet) 2,940 2,856 2,641 2,987 3,077
</TABLE>
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<PAGE>
ITEM 2. Properties
The registrant has three sawmills (redwood and
whitewood) located in California with an annual production
capacity of 200 MMBF. Twelve other Western sawmills operate in
the following states or provinces: Alaska, Montana, Idaho,
Oregon, Colorado, Washington, and Sundre, Alberta, Canada. These
sawmills have an annual production capacity of 700 MMBF. Western
studmills total seven in the following states: Montana,
California, Idaho, Wyoming, and Washington, with an annual
production capacity of 470 MMBF. The remaining 28 sawmills have
an annual production capacity of 945 MMBF and are located in the
South in the following states: Louisiana, Texas, Alabama,
Florida, Georgia, Mississippi, and North Carolina.
The registrant has seven plywood plants located in
Texas and Louisiana with a combined annual production capacity of
1.5 billion square feet. There are 17 OSB plants with a combined
capacity of 3.5 billion square feet located in Idaho, Texas,
Virginia, Alabama, Wisconsin, Maine, Georgia, Colorado, Michigan,
Minnesota, Louisiana, and British Columbia, Canada. The
registrant has three medium density fiberboard plants located in
Alabama, California and Louisiana with a combined capacity of
220 MMSF; three particleboard plants in California, Montana and
Texas with a capacity of 350 MMSF; and a hardboard plant in
California with an annual production capacity of 210 MMSF.
Under the category of other building products, the
registrant operates two hardwood veneer plants in Wisconsin,
seven window and door plants in Ohio and Nevada, three I-joist
and two laminated veneer lumber plants in Nevada, North Carolina,
and California, two fingerjoint studmills in Montana and Idaho,
and fiber gypsum plants in Nova Scotia, Canada and Rhode Island.
The registrant operates three pulp mills with an annual
capacity of 612 million short tons in Alaska, California, and
British Columbia, Canada.
Other manufacturing facilities include: a brick plant,
four cellulose insulation plants, a cement fiber shake plant,
three chip mills, an insulated glass and vinyl extrusion plant, a
planing mill, and ten wood treating plants in these various
locations: Mexico, Canada, Texas, Alabama, Florida, Georgia,
Mississippi, Missouri, Ohio, Maryland, and California. The
registrant also operates seven distribution centers in
California, Texas, Kansas, and Oklahoma.
Information relating to the registrant's production
volumes is located in the table labeled "Summary of Production
Volumes" in Item 1. The information on capacities reflects
normal operating rates and normal production mixes under current
market conditions. Capacities also consider known constraints
such as log supply.
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<PAGE>
At December 31, 1993, the registrant owned in fee
approximately 1,585,900 acres of timberland in the United States.
The timberland holdings including whitewoods, fir, pine, redwood,
and hardwoods are located in the following states: California,
Idaho, Louisiana, Minnesota, North Carolina, Oregon, Texas,
Washington, Wisconsin and Wyoming.
In addition to its fee-owned timberlands, the
registrant has timber cutting rights, under long-term contracts
(five years and over) on approximately 110,000 acres and under
contracts for shorter periods on approximately 278,000 acres, on
government and privately owned timberlands in the vicinities of
certain of its manufacturing facilities. Information regarding
the sources of the registrant's log requirements is located under
the table labeled "Logs By Source" in Item 1.
ITEM 3. Legal Proceedings
The registrant has received a Notice of Violation
issued by the U.S. Environmental Protection Agency alleging air
emissions violations at the registrant's Dungannon, Virginia, OSB
plant. The registrant has also received a Notice of Violation
issued by the state of Michigan alleging air emissions violations
at the registrant's Newberry, Michigan, OSB plant. The potential
costs to the registrant cannot be determined at this time, but
are not expected to have a material adverse effect on the
registrant.
The registrant has been informed that it and one or
more employees at its Olathe, Colorado, oriented strand board
plant are the targets of a federal grand jury investigation
concerning alleged tampering with emissions monitoring equipment
and alteration of plant records. The registrant does not know
when the investigation will be completed. The registrant began
an internal investigation in the summer of 1992 and reported its
initial findings of irregularities to governmental authorities in
September, 1992.
On September 9, 1992, the U.S. Department of Justice
filed suit in the U.S. District Court in Anchorage, Alaska,
against the registrant's wholly-owned subsidiary Ketchikan Pulp
Company ("KPC") alleging that the pulp mill in Ketchikan, Alaska,
operated by KPC violated the Clean Air Act and the terms of KPC's
wastewater discharge permit. The plaintiff seeks to require KPC
to correct the alleged violations and also seeks penalties in an
unspecified amount. Settlement discussions are currently
underway.
The registrant has been informed that KPC and one or
more employees at KPC's pulp mill are the targets of a federal
grand jury investigation concerning wastewater discharges. No
charges have been made and the registrant does not know when the
investigation will be completed.
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<PAGE>
The registrant understands that a federal grand jury is
investigating possible violations in connection with the disposal
by a contractor of a transformer containing polychlorinated
biphenyls (PCBs) previously located at the registrant's former
sawmill at Pendleton, Oregon. The registrant does not know
whether it or any of its employees are targets of the
investigation.
On October 19, 1992, the State of Wisconsin filed a
suit against the registrant in state court in Dane County Circuit
Court alleging that the registrant's oriented strand board plant
at Hayward, Wisconsin, is in violation of state and federal clean
air laws. The plaintiff seeks to require the registrant to
correct the alleged violations and also seeks penalties in an
unspecified amount. The case was settled in 1993 for $550,000.
Management of the registrant believes that the outcome
of the above matters will not have a materially adverse effect on
the consolidated business or financial condition or results of
operations of the registrant.
ITEM 4. Submission of Matters to a Vote of Security Holders
No matter was submitted to a vote of the registrant's
security holders during the fourth quarter of 1993.
Executive Officers of the Registrant
The following table sets forth the name of each
executive officer of the registrant (including certain executives
whose duties may cause them to be classified as executive
officers under applicable SEC rules), the age of the officer and
all positions and offices held with the registrant as of
March 16, 1994:
<TABLE>
<CAPTION>
Positions and Offices
Name Age Held with the Registrant
<S> <C> <C>
Harry A. Merlo 69 Chairman and President
James Eisses 57 Executive Vice President and General
Manager, Northern Division
Ronald L. Paul 50 Vice President, Operations, and General
Manager, Southern Division
Melf U. Lorenzen 59 General Manager, Weather-Seal Division
Martin R. Pihl 59 President and General Manager, Ketchikan
Pulp Company
Robert M. Simpson 35 General Manager, Western Division
William L. Hebert 43 Treasurer and Chief Financial Officer
</TABLE>
Messrs. Merlo, Eisses, and Paul are also directors of
the registrant.
All executive officers serve at the pleasure of the
board of directors. The terms of office for which they are
elected run
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<PAGE>
until the next annual meeting of the board of directors, unless
earlier removed.
Except as set forth below, all of the executive
officers have served in their present capacities for more than
five years. In January 1994, Mr. Eisses became executive vice
president; from June 1992 to January 1994, he was vice president,
operations; previously he was general manager of L-P's Northern
Division, a position he still holds. Mr. Paul became vice
president, operations, in January 1994; previously he was general
manager of L-P's Southern Division, a position he continues to
hold. Prior to assuming his present position in March 1992,
Mr. Simpson was president of Tricon Forest Products, Inc., a
forest products broker. Mr. Hebert became treasurer and chief
financial officer in January 1994; previously he was L-P's
controller, finance.
PART II
ITEM 5. Market for Registrant's Common Equity and Related
Stockholder Matters
The common stock is listed on the New York Stock
Exchange, the Dow-Jones newspaper quotations symbol is "LaPac,"
and the ticker symbol is "LPX." Information regarding market
prices for the registrant's common stock is included in the
following table labeled "High and Low Stock Prices." Holders of
the registrant's common stock may automatically reinvest
dividends toward purchase of additional shares of the company's
common stock. At March 16, 1994, L-P had approximately
24,600 stockholders of record.
LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES
HIGH AND LOW STOCK PRICES
<TABLE>
<CAPTION>
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
<S> <C> <C> <C> <C>
1993 High $39.38 $38.07 $36.38 $42.13
Low 29.63 28.75 29.75 30.88
1992 High 22.34 23.44 25.32 31.50
Low 14.59 18.59 20.88 22.25
</TABLE>
Information regarding dividends on its common stock declared by the registrant
during the past two years is located in the following table.
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<PAGE>
LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES
QUARTERLY DATA<F2>
(Dollar amounts in millions except per share)
<TABLE>
<CAPTION>
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
1993<F3>
<S> <C> <C> <C> <C>
Net sales $649.2 $596.6 $629.4 $636.1
Gross profit<F1> 142.2 105.8 85.4 99.2
Income before taxes 140.3 104.7 84.3 98.3
Income 87.7 65.7 41.5 59.5
Income per share .80 .60 .38 .54
Cash dividends per share .10 .11 .11 .11
1992
Net sales $475.5 $539.1 $641.4 $528.7
Gross profit <F1> 60.1 74.4 96.5 66.5
Income before taxes 56.7 69.6 92.7 64.0
Net income 36.0 44.1 55.7 41.1
Net income per share .34 .40 .52 .37
Cash dividends per share .09 .10 .10 .10
<FN>
<F1> Gross profit is income before taxes and interest.
<F2> All per share amounts have been retroactively adjusted for a two-for-one stock
split paid June 8, 1993.
<F3> Does not include cumulative effects of accounting changes.
</TABLE>
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<PAGE>
ITEM 6. Selected Financial Data
LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES
FINANCIAL SUMMARY
(Dollar amounts in millions except per share)<F2>
<TABLE>
<CAPTION>
Year ended December 31 1993 1992 1991 1990 1989
Summary Income Statement Data:
<S> <C> <C> <C> <C> <C>
Net sales $2,511.3 $2,184.7 $1,702.1 $1,793.3 $2,009.5
Gross profit<F1> 432.6 297.5 106.3 144.6 304.1
Interest expense, net 5.0 14.4 18.9 7.6 12.2
Provision for income taxes 173.2 106.2 31.5 45.9 99.3
Income<F3> 254.4 176.9 55.9 91.1 192.6
Income per share<F3> 2.32 1.63 .52 .82 1.68
Cash dividends per share .43 .39 .36 .35 .33
Average shares of common stock
outstanding (thousands) 109,670 108,500 107,980 111,060 114,600
Summary Balance Sheets:
Current assets $ 614.1 $ 539.1 $ 461.4 $ 509.1 $ 653.6
Timber and timberlands, at
cost less cost of timber
harvested 673.5 531.2 532.7 518.3 513.0
Property, plant and
equipment, net 1,145.9 1,070.3 1,066.1 1,036.8 827.0
Investments and other assets 32.8 65.4 46.9 39.9 38.1
-------- -------- -------- -------- --------
Total assets $2,466.3 $2,206.0 $2,107.1 $2,104.1 $2,031.7
======== ======== ======== ======== ========
Current liabilities $ 317.2 $ 295.5 $ 259.5 $ 195.5 $ 180.0
Long-term debt, excluding
current portion 288.6 386.3 492.7 588.7 529.5
Deferred income taxes and other 289.1 163.2 151.3 153.2 145.7
Stockholders' equity 1,571.4 1,361.0 1,203.6 1,166.7 1,176.5
-------- -------- -------- -------- --------
Total liabilities and
stockholders' equity $2,466.3 $2,206.0 $2,107.1 $2,104.1
$2,031.7
======== ======== ======== ======== ========
Key Financial Trends:
Working capital $ 296.9 $ 243.6 $ 201.9 $ 313.6 $ 473.6
======== ======== ======== ======== ========
Plant and logging road
additions $ 208.4 $ 161.4 $ 152.3 $ 330.4 $ 223.1
Timber additions, net 81.5 40.1 49.6 44.4 36.9
-------- -------- -------- -------- --------
Total capital additions $ 289.9 $ 201.5 $ 201.9 $ 374.8 $ 260.0
======== ======== ======== ======== ========
Long-term debt as a percent
of total capitalization 16% 22% 29% 34% 31%
<FN>
<F1> Gross profit is income before income taxes and interest.
<F2> All per share amounts and numbers of shares have been retroactively
adjusted for a two-for-one stock split paid June 8, 1993.
<F3> Does not include cumulative effects of accounting changes.
</TABLE>
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ITEM 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
GENERAL
Building Products
Continued growth in demand for building products fueled
by a gradually improving economy in the United States pushed
product prices higher. Tightening timber supplies, due to
reductions in federal timber harvest volumes, also contributed to
the rise in product prices.
Interest rates remained very favorable for the housing
industry. Housing starts, an important measure of building
products demand, rose for the fourth consecutive year totaling
1.285 million housing starts in 1993, a 7 percent increase over
1992. The low interest rate environment continues to benefit the
repair and remodelling business as well.
Export markets for building products were quite weak in
1993 as both the Far East and European economies were slow.
Pulp
High worldwide inventories of market pulp combined with
extremely depressed economic conditions in many of the countries
that use market pulp caused the worst pulp market in recent
memory. As a result the industry experienced sizable losses and
significant downtime.
The following discussion of L-P's operations and
financial condition presents specific highlights, and discusses
material changes or trends affecting the results of operations.
A thorough review of the table "Financial Summary" in Item 6 and
the tables labeled "Sales and Operating Profit by Major Product
Group," "Summary of Production Volumes," "Industry Product Price
Trends," and "Logs by Source" located in Item 1 will provide a
greater understanding of the factors which affect L-P's
businesses. Those present, in a tabular format, many of the
variables, volumes, operating rates of capacity, representative
industry prices, and segment information to enhance the
understanding of the financial statements.
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<PAGE>
RESULTS OF OPERATIONS
Building Products
L-P's building products segment, which in 1993
accounted for 97 percent of total sales, posted a record year,
both in terms of sales and profits. Sales in 1993 totalled
$2.4 billion compared with $2.0 billion in 1992 and $1.5 billion
in 1991. The record sales in 1993 resulted from higher volumes
and prices of nearly every building products category.
Particularly strong performers in 1993 were panel products:
oriented strand board (OSB), plywood and industrial panel
products. Also turning solid sales gains was L-P's Other
Building Products category which includes, among other products,
engineered wood products: I-joists and laminated veneer lumber.
Operating profits also were a record in 1993 totaling
$562 million compared with $364 million in 1992 and $139 million
in 1991.
Operating profits in each of the past three years have
increased despite the rising costs of raw materials. Logs
purchased in the open market for sawmills and plywood plants have
increased 20-30 percent in each of the past three years.
However, purchased wood for L-P's OSB plants has increased 6-8
percent per year in each of the past three years. Sawdust and
wood shavings which are the raw materials for industrial panel
products have also increased in each of the past three years,
primarily due to reductions in sawmill production caused by
timber shortages.
Pulp
Significant downtime in L-P's pulp mills and record low
prices resulted in pulp sales for 1993 of only $85 million
compared with $185 million in 1992 and $170 million in 1991. L-
P's three pulp mills operated at only 37 percent of normal
capacity in 1993 due to market related downtime. Operating
profits also reflected the conditions in the pulp industry
posting a record $59 million loss versus losses of $20 million in
1992 and $3 million in 1991.
ENVIRONMENTAL UPDATE
The greatest challenge confronting L-P today is the
ever changing rules and regulations concerning the environment.
Our plants face increasingly stringent standards for air and
water emissions. Our timberlands are subject to challenges from
preservationist groups focused on locking up the nations' timber
supply.
L-P's management is dedicated to meeting these
challenges by effectively resolving past environmental issues and
committing substantial human and financial resources to its
future
- 15 -
<PAGE>
environmental performance. In 1993, the company spent over
$100 million in environmental costs and capital projects. Its
actions are overseen by the company's Department of Environmental
Affairs and by the Environmental Affairs Committee of the board
of directors.
A few examples of the company's environmental
performance in the past several years are: the conversion of the
company's Samoa, California pulp mill to a chlorine-free process,
thereby eliminating dioxins; L-P's agreement with the
Environmental Protection Agency (EPA) to install state-of-the-art
regenerative thermal oxidization technology at fifteen of its
wood panel plants; and, voluntarily eliminating the practice of
clear-cutting on the company's timberlands.
Although L-P's corporate policy is to comply with all
applicable laws, L-P has in the past been required to pay fines
for non-compliance and sometimes litigation has resulted from
contested environmental actions. Where the environmental
infractions were caused by others, L-P vigorously pursues
recovery through legal channels. Listed below are some of the
environmental actions recently resolved or currently pending
against the company.
In 1992, as part of as industry-wide inquiry, L-P
received notices of violation from the EPA involving fifteen of
its wood panel manufacturing facilities. In 1993, L-P reached a
precedent-setting settlement which called for L-P to pioneer
pollution control technology at these facilities. The agreement
also required L-P to pay an $11.1 million fine to EPA. The fine
was paid in 1993, but had been substantially accrued for in 1992.
L-P has been informed that it and one or more of its
employees are the subjects of separate federal grand jury
investigations regarding air emissions at its Montrose, Colorado,
plant and wastewater discharges at its Ketchikan Pulp Company
subsidiary's pulp mill. The investigations have not been
completed and no charges against the company or any of its
employees have been made. Also, Ketchikan Pulp Company is the
subject of a civil enforcement action alleging violations of the
Clean Water Act and Clean Air Act. Settlement of this action
will likely involve fines and future capital expenditures for
environmental projects.
Certain of L-P's plants or properties held for sale are
suspected of having substances in the ground and groundwater that
are considered pollutants. Under the direction of the company's
Department of Environmental Affairs, corrective action or plans
for corrective action are underway.
Management believes that the costs of complying with
the above actions will not have a material adverse effect on the
business, financial condition or results of operations of the
company. Generally, L-P expenses the costs of such actions
currently as they become known.
- 16 -
<PAGE>
FINANCIAL POSITION AND LIQUIDITY
Sales for 1993 totalled a record $2.5 billion compared
with $2.2 billion in 1992 and $1.7 billion in 1991. Income
before cumulative effects of accounting changes for 1993 was
$254.4 million, including a $4.4 million charge related to the
1 percent increase in the federal statutory tax rate used to
calculate beginning of the year deferred income taxes, compared
with net income of $176.9 million in 1992 and $55.9 million in
1991. The cumulative effects of accounting changes relate to
adoption of Financial Accounting Standards Board Statement
No. 109, "Accounting for Income Taxes" which resulted in an
after-tax charge of $7.2 million, $.07 per share and Financial
Accounting Standards Board Statement No. 106, "Employers'
Accounting for Post-retirement Benefits Other Than Pensions"
which resulted in a net charge of $3.2 million, $.03 per share.
L-P's financial position and liquidity continues to be
among the strongest in the industry. Long-term debt as a percent
of total capitalization was only 15.5 percent at December 31,
1993 compared with 22 percent at year end 1992 and 29 percent
at year end 1991. The company's ratio of current assets to
current liabilities was 1.94 at December 31, 1993, 1.82 at
December 31, 1992, and 1.78 at December 31, 1991. Cash and cash
equivalents totalled $261.6 million at December 31, 1993, up from
$228.1 million at December 31, 1992.
Record profits in 1993 also resulted in record cash
provided from operations of $438.5 million, compared with
$360.3 million in 1992 and $250.2 million in 1991. This strong
cash flow has allowed the company to invest in environmental
projects, added capacity, continued improvement and upgrading of
its existing facilities and make investments in timber. It has
also allowed the company to make its mandatory debt repayments
and consistently increase cash dividends to its stockholders.
L-P has an unused line of credit with banks totaling
$100 million that is available for general corporate purposes.
It maintains short-term credit ratings of A-1 with Standard &
Poors and D-1 Plus with Duff & Phelps.
L-P has a stock purchase program whereby at
management's discretion the company may purchase 2.2 million
shares of L-P stock. The company purchased 200,000 shares of L-P
common stock in 1993.
In 1994, L-P plans capital expenditures of about $325-
350 million. Other cash needs include mandatory debt repayments
of $105 million and cash dividends, which at the current dividend
rate totals $48 million.
- 17 -
<PAGE>
ITEM 8. Financial Statements and Supplementary Data
The consolidated financial statements and accompanying
notes to financial statements together with the report of
independent public accountants are located on the following
pages. Quarterly data for the registrant's latest two
fiscal years is located in the tables labeled "1993 Quarterly
Data" and "1992 Quarterly Data" in Item 5.
- 18 -
<PAGE>
LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollar amounts in millions)
<TABLE>
<CAPTION>
December 31 1993 1992
<S> <C> <C>
Assets
Current Assets:
Cash and cash equivalents $ 261.6 $ 228.1
Accounts receivable, less reserves of $1.0 and $1.0 110.9 113.0
Inventories 234.7 192.3
Prepaid expenses 6.9 5.7
-------- --------
Total current assets 614.1 539.1
Timber and Timberlands, at cost less cost of timber harvested 673.5 531.2
Property, Plant and Equipment, at cost:
Land, land improvements and logging roads,
net of road amortization 143.8 137.8
Buildings 211.1 209.8
Machinery and equipment 1,631.6 1,521.5
Construction in progress 126.3 75.6
-------- --------
2,112.8 1,944.7
Less reserves for depreciation (966.9) (874.4)
-------- --------
Net property, plant and equipment 1,145.9 1,070.3
Investments and Other Assets 32.8 65.4
-------- --------
Total Assets $2,466.3 $2,206.0
======== ========
Liabilities and Stockholders' Equity
Current Liabilities:
Current portion of long-term debt $ 105.5 $ 105.4
Short-term notes payable 41.7 37.2
Accounts payable and accrued liabilities 149.2 145.6
Income taxes payable 20.8 7.3
-------- --------
Total current liabilities 317.2 295.5
Long-term Debt, excluding current portion 288.6 386.3
Deferred Income Taxes 264.8 154.5
Other Long-term Liabilities 24.3 8.7
Stockholders' Equity:
Common stock, $1 par value, 200,000,000 shares authorized,
116,937,022 shares issued 117.0 58.5
Preferred stock, $1 par value, 15,000,000 shares authorized,
no shares issued -- --
Additional paid-in capital 431.5 422.5
Retained earnings 1,217.2 1,079.3
Less treasury stock, 6,755,938 shares, at cost (85.6) (88.5)
Loans to Employee Stock Ownership Trusts (72.5) (87.0)
Other equity adjustments (36.2) (23.8)
-------- --------
Total stockholders' equity 1,571.4 1,361.0
-------- --------
Total Liabilities and Stockholders' Equity $2,466.3 $2,206.0
======== ========
See notes to financial statements.
</TABLE>
- 19 -
<PAGE>
LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Dollar amounts in millions except per share)
<TABLE>
<CAPTION>
Year ended December 31 1993 1992 1991
<S> <C> <C> <C>
Net Sales $2,511.3 $2,184.7 $1,702.1
-------- -------- --------
Costs and Expenses:
Cost of sales 1,779.9 1,620.5 1,366.3
Depreciation and amortization 133.0 121.4 114.6
Cost of timber harvested 50.2 41.6 35.2
Selling and administrative 115.6 103.7 79.7
Interest income (7.8) (7.3) (12.1)
Interest expense, net of capitalized
interest of $3.5, $4.9 and $12.8 12.8 21.7 31.0
-------- -------- --------
Total costs and expenses 2,083.7 1,901.6 1,614.7
Income before taxes and cumulative
effects of accounting changes 427.6 283.1 87.4
Provision for income taxes (173.2) (106.2) (31.5)
-------- -------- --------
Income before cumulative effects of
accounting changes 254.4 176.9 55.9
Cumulative effects of accounting changes,
net of income taxes of $1.9 (10.4) -- --
-------- -------- --------
Net Income $ 244.0 $ 176.9 $ 55.9
======== ======== ========
Earnings per share:
Income before cumulative effects of
accounting changes $2.32 $1.63 $.52
Cumulative effects of accounting changes (.09) -- --
-------- -------- --------
Net Income $2.23 $1.63 $.52
======== ======== ========
Cash Dividends Per Share of Common Stock $ .43 $ .39 $.36
======== ======== ========
Average Shares of Common Stock (thousands) 109,670 108,500 107,980
See notes to financial statements.
</TABLE>
- 20 -
<PAGE>
LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollar amounts in millions)
<TABLE>
<CAPTION>
Year ended December 31 1993 1992 1991
<S> <C> <C> <C>
Cash Flows From Operating Activities:
Net income $ 244.0 $ 176.9 $ 55.9
Adjustments to reconcile income to net cash
provided by operating activities:
Cumulative effects of accounting changes 10.4 -- --
Depreciation, amortization and cost of
timber harvested 183.2 163.0 149.8
Other non-cash charges 29.1 29.6 15.0
Decrease (increase) in receivables 3.6 (33.3) (8.5)
Decrease (increase) in inventories (39.7) (8.0) 36.5
Decrease (increase) in prepaid expenses (1.1) .9 1.4
Increase (decrease) in accounts payable and
accrued liabilities 1.5 22.5 (3.6)
Increase (decrease) in income taxes payable 9.1 (4.8) 5.3
Increase (decrease) in deferred income taxes (1.6) 13.5 (1.6)
------- ------- -------
Net cash provided by operating activities 438.5 360.3 250.2
Cash Flows From Investing Activities:
Plant, equipment and logging road additions (208.4) (161.4) (152.3)
Timber and timberland additions, net (81.5) (40.1) (49.6)
Net book value of plant and equipment sold 4.1 11.4 8.3
Decrease (increase) in investments and
other assets 32.1 (16.4) (5.3)
------- ------- -------
Net cash used in investing activities (253.7) (206.5) (198.9)
Cash Flows From Financing Activities:
New borrowing -- long-term debt -- -- 30.7
Increase in short-term notes .6 9.6 27.6
Repayment of long-term debt (105.3) (97.7) (92.0)
Cash dividends (47.3) (42.5) (38.9)
Purchase of treasury stock (13.8) -- (3.7)
Miscellaneous financing activities 14.5 14.1 6.7
------- ------- -------
Net cash used for financing activities (151.3) (116.5) (69.6)
Net increase (decrease) in cash and
cash equivalents 33.5 37.3 (18.3)
Cash and cash equivalents at beginning of year 228.1 190.8 209.1
------- ------- -------
Cash and cash equivalents at end of year $ 261.6 $ 228.1 $ 190.8
======= ======= =======
See notes to financial statements.
</TABLE>
- 21 -
<PAGE>
LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Dollar amounts except per share)
<TABLE>
<CAPTION>
Year ended December 31 1993 1992 1991
<S> <C> <C> <C>
Common Stock:
Beginning Balance, 58,457,749, 38,959,366
and 38,948,331 shares $ 58.5 $ 39.0 $38.9
Shares issued, employee stock plans,
10,762, 20,010 and 11,035 shares -- -- .1
Shares issued under stock splits: 2-for-1 in 1993,
58,468,511 and 3-for-2 in 1992, 19,478,373 58.5 19.5 --
------ ------ ------
Ending Balance, 116,937,022, 58,457,749
and 38,959,366 shares $117.0 $ 58.5 $ 39.0
====== ====== ======
Additional Paid-In Capital:
Beginning Balance $422.5 $404.5 $402.6
Shares issued for employee stock plans 9.0 18.0 1.9
------ ------ ------
Ending Balance $431.5 $422.5 $404.5
====== ====== ======
Retained Earnings:
Beginning Balance $1,079.3 $ 964.4 $ 947.4
Net income 244.0 176.9 55.9
Par value of shares issued in stock splits:
2-for-1 in 1993 and 3-for-2 in 1992 (58.8) (19.5) --
Cash dividends, $.43, $.39 and $.36 per share (47.3) (42.5) (38.9)
-------- -------- --------
Ending Balance $1,217.2 $1,079.3 $ 964.4
======== ======== ========
Treasury Stock:
Beginning Balance, 3,848,800, 2,967,831
and 3,078,183 shares $ (88.5) $ (102.3) $ (105.9)
Reacquisition program, 200,000,
0 and 100,000 shares (13.8) -- (3.7)
Shares issued under stock splits:
2-for-1 in 1993, 3,624,075 and
3-for-2 in 1992, 1,441,916 -- -- --
Shares reissued under employee stock plans,
916,937, 560,947 and 210,352 shares 16.7 13.8 7.3
-------- -------- --------
Ending Balance, 6,755,938, 3,848,800
and 2,967,831 shares $ (85.6) $ (88.5) $ (102.3)
======== ======== ========
Loans to Employee Stock Ownership Trusts:
Beginning Balance $ (87.0) $ (101.5) $ (116.0)
Less current year contribution 14.5 14.5 14.5
-------- -------- --------
Ending Balance $ (72.5) $ (87.0) $ (101.5)
======== ======== ========
Other Equity Adjustments:
Beginning Balance $ (23.8) $ (.5) $ (.3)
Marketable equity securities adjustment (.6) 2.0 1.2
Currency translation adjustment (11.8) (25.3) (1.4)
-------- -------- --------
Ending Balance $ (36.2) $ (23.8) $ (.5)
======== ======== ========
See notes to financial statements.
</TABLE>
- 22 -
<PAGE>
NOTES TO FINANCIAL STATEMENTS
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Presentation
The consolidated financial statements include the
accounts of Louisiana-Pacific Corporation and all of its
subsidiaries (L-P), after elimination of intercompany balances
and transactions.
Earnings Per Share
Earnings per share have been computed based on the
weighted average number of shares of common stock outstanding
during the periods. The effect of common stock equivalents is
not material.
All per share amounts and number of shares have been
retroactively adjusted for a two-for-one stock split declared on
May 4, 1993, for stockholders of record on May 18, 1993. The
additional shares were issued on June 8, 1993. In 1992, L-P
declared a three-for-two stock split.
Cash and Cash Equivalents
L-P considers all highly liquid securities with a
maturity of three months or less to be cash equivalents. Cash
paid during 1993, 1992, and 1991 for interest (net of capitalized
interest) was $13.2 million, $21.9 million and $31.2 million.
Cash paid during 1993, 1992, and 1991 for income taxes (net of
refunds received) was $161.1 million, $93.5 million and
$25.3 million.
At December 31, 1993, Louisiana-Pacific Canada Ltd., a
wholly-owned subsidiary of L-P, had restricted cash balances of
USD $16.3 million related to loan agreements which require such
balances based on changes in the Canadian dollar relative to the
U.S. dollar. These balances are interest-bearing to
Louisiana-Pacific Canada Ltd. at short-term interest rates.
The carrying amounts of cash and cash equivalents
approximates fair value because of the short maturity of those
instruments.
Inventory Valuation
Inventories are valued at the lower of cost or market.
Inventory costs include material, labor and operating overhead.
The
- 23 -
<PAGE>
NOTES TO FINANCIAL STATEMENTS
LIFO method is used for most log and lumber inventories.
Inventory quantities are determined on the basis of physical
inventories, adjusted where necessary for intervening
transactions from the date of the physical inventory to the end
of the year. The major types of inventories are as follows:
<TABLE>
<CAPTION>
December 31 (in millions) 1993 1992
<S> <C> <C>
Logs $124.7 $ 89.7
Lumber 67.1 55.6
Panel products 31.3 24.9
Other building products 30.3 26.4
Pulp 26.1 25.6
Other raw materials 27.9 20.9
Supplies 16.8 16.9
LIFO reserve (89.5) (67.7)
------ ------
Total $234.7 $192.3
====== ======
</TABLE>
Timber
L-P follows an overall policy on fee timber that
amortizes timber costs over the total fiber available during the
estimated growth cycle. Timber carrying costs, such as
reforestation and forest management, are expensed as incurred.
Cost of timber harvested includes not only the cost of fee timber
but also the amortization of the cost of long-term timber deeds.
Property, Plant and Equipment
L-P uses the units of production method of depreciation
for most machinery and equipment which amortizes the cost of
equipment over the estimated units that will be produced during
its useful life.
Provisions for depreciation of buildings and the
remaining machinery and equipment have been computed using
straight-line rates based on the estimated service lives. The
effective straight-line rates for the principal classes of
property range from approximately 5 percent to 20 percent.
Logging road construction costs are capitalized and
included in land and land improvements. These costs are
amortized as the timber volume adjacent to the road system is
harvested.
- 24 -
<PAGE>
NOTES TO FINANCIAL STATEMENTS
L-P capitalizes interest on borrowed funds during
construction periods. Capitalized interest is charged to
machinery and equipment accounts and amortized over the lives of
the related assets. Interest capitalized during 1993, 1992, and
1991 was $3.5 million, $4.9 million, and $12.8 million.
L-P defers start-up costs on major construction
projects during the start-up phase and amortizes the deferral
over seven years. Start-up costs deferred during 1992 and 1991
were $23.8 million and $17.1 million. No start-up costs were
deferred during 1993.
Income Tax Policies
During the first quarter of 1993, L-P adopted the
provisions of Statement of Financial Accounting Standards
No. 109, "Accounting for Income Taxes" (SFAS No. 109), which
utilizes the liability method whereby deferred income taxes are
determined based on the estimated future tax effects of
differences between the financial statement and tax basis of
assets and liabilities using the tax rates applicable at the
balance sheet date. Adoption of this standard resulted in a
one-time, after tax charge of $7.2 million or seven cents per
share. In addition, inventories, timber and timberlands and
property, plant and equipment increased by approximately
$102.9 million. The effect of adopting this standard did not
have a material impact on pre-tax income or income tax expense.
- 25 -
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Income before taxes and cumulative effects of
accounting changes for the years ended December 31 was taxed
under the following jurisdictions:
<TABLE>
<CAPTION>
Year ended December 31 (in millions) 1993 1992 1991
<S> <C> <C> <C>
Domestic $416.2 $270.6 $83.1
Foreign 11.4 12.5 4.3
------ ------ -----
$427.6 $283.1 $87.4
====== ====== =====
</TABLE>
Provision (benefit) for income taxes includes the
following:
<TABLE>
<CAPTION>
Year ended December 31 (in millions) 1993 1992 1991
<S> <C> <C> <C>
Current tax provision:
U.S. federal $149.5 $ 81.9 $28.1
State and local 22.6 9.0 4.5
Foreign 2.7 1.8 .5
------ ------ -----
Total current tax provision $174.8 $ 92.7 $33.1
====== ====== =====
Deferred tax provision (benefit):
U.S. federal $ (.2) $ 12.2 $(1.5)
State and local .1 1.3 (.1)
Foreign (1.5) -- --
------ ------ -----
Total deferred tax provision (benefit) $ (1.6) $ 13.5 $(1.6)
====== ====== =====
</TABLE>
L-P increased its U.S. deferred tax liability in 1993
as a result of legislation enacted during 1993 increasing the
corporate tax rate from 34 percent to 35 percent effective
January 1, 1993. Included in the deferred tax provision is the
effect of the 1 percent increase and other tax law changes
related to L-P's deferred income tax liability which resulted in
a net charge of $4.4 million, or $.04 per share.
- 26 -
<PAGE>
NOTES TO FINANCIAL STATEMENTS
The tax effects of significant temporary differences at
December 31, 1993, were as follows:
<TABLE>
<CAPTION>
Year ended December 31 (in millions) 1993
<S> <C>
Property, plant and equipment $(155.8)
Timber and timberlands (148.6)
Inventories 4.0
Accrued liabilities 16.1
Benefit of foreign NOL carryover 10.3
Benefit of foreign ITC carryover 65.7
Other (1.1)
Valuation allowance (55.4)
-------
$(264.8)
=======
</TABLE>
L-P's subsidiary, Louisiana-Pacific Canada Ltd. (LPC),
has unrealized foreign investment tax credits (ITC) of
approximately C$87 million. These credits can be carried forward
to offset future tax of LPC. However, these credits expire
C$10 million in 1996, C$5 million in 1997, C$20 million in 1999,
C$6 million in 2000 and C$46 million in 2001. In addition, LPC
has net operating loss (NOL) carryovers of C$36 million. These
NOL carryovers expire C$22 million in 1996, C$5 million in 1997,
and C$9 million which will not expire.
The following table summarizes the differences between
the statutory federal and effective tax rate:
<TABLE>
<CAPTION>
Year ended December 31 1993 1992 1991
<S> <C> <C> <C>
Federal tax rate 35% 34% 34%
Tax-exempt investment income (1) (1) (3)
State income taxes 4 4 4
Fines 1 1 _
Other 1 _ 1
---- ---- ----
40% 38% 36%
==== ==== ====
</TABLE>
Marketable Securities and Securities Transactions
The balance sheet caption "Investments and Other
Assets" includes marketable equity securities which are carried
at the lower of aggregate quoted market value or cost.
Unrealized losses
- 27 -
<PAGE>
NOTES TO FINANCIAL STATEMENTS
on noncurrent marketable equity securities and related income tax
effects are accumulated in the other equity adjustment component
of stockholders' equity. Realized gains or losses are computed
based on actual transaction prices of the securities sold and are
reflected in income in the period in which the transaction
occurred. At December 31, 1993, the carrying value of these
securities approximates the market value.
Foreign Currency Translation
Assets and liabilities denominated in foreign
currencies are translated to U.S. dollars at the exchange rate on
the balance sheet date. Revenues, costs, and expenses are
translated at average rates of exchange prevailing during
the year. Translation adjustments resulting from this process
are shown separately in stockholders' equity.
OTHER NOTES TO FINANCIAL STATEMENTS
Accounts Payable and Accrued Liabilities
<TABLE>
<CAPTION>
December 31 (in millions) 1993 1992
<S> <C> <C>
Accounts payable $ 78.6 $ 69.9
Salaries and wages payable 19.4 19.9
Taxes other than income taxes 13.3 10.9
Workers' compensation 11.5 11.6
Other accrued liabilities 26.4 33.3
------ ------
$149.2 $145.6
====== ======
</TABLE>
- 28 -
<PAGE>
NOTES TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Interest Rate at
December 31,
Long-Term Debt (in millions) 12/31/93 1993 1992
Project Bank Financings --
<S> <C> <C> <C>
Chetwynd, B.C. pulpmill, payable semi-annually
1994-1996, balance due in 1996, interest rate
variable 4.0% $ 98.0 $116.0
Nova Scotia fiber gypsum plant, payable in 1997
and 1998, interest rate variable 2.3 34.7 34.7
Sunpine Forest Products, Sundre, Alberta,
interest rate variable 4.15 7.8 --
Project Revenue Bond Financings --
Ketchikan, AK, payable in 1995, interest
rate variable 3.8 10.7 10.7
Newberry, MI, payable in 2009, interest
rate variable 3.8 7.6 7.6
Two Harbors, MN, payable in 2004, interest
rate variable 3.8 8.0 8.0
Wilmington, NC, payable in 1999, interest
rate variable 4.3 10.0 10.0
Other, payable in varying amounts 1994-2000,
interest rates fixed 6.8-7.0 .7 1.0
Employee Stock Ownership Trust (ESOT) Loans
Hourly ESOT, payable annually 1994-1999,
interest rate fixed 8.3 42.5 51.0
Salaried ESOT, payable annually 1994-1999,
interest rate variable 3.1 30.0 36.0
Santa Fe Industries, Inc., acquisition debt,
payable semi-annually 1994-1995, interest rate
variable 4.1 36.3 108.7
Other installment notes and contracts, payable
in varying amounts 1994-1999, interest
rates vary 4.3-9.0 2.3 2.6
------ ------
$288.6 $386.3
====== ======
</TABLE>
- 29 -
<PAGE>
NOTES TO FINANCIAL STATEMENTS
The carrying amounts of L-P's long-term debt
approximates fair market value since the debt is primarily
variable rate debt.
Debt is generally unsecured except for the Santa Fe
Industries debt which is secured by the stock of Kirby Forest
Industries, Inc. The Sunpine Forest Products debt is secured by
the assets of Sunpine and also guaranteed by L-P. The debt
represents 100 percent of Sunpine's obligations, however, L-P
Canada Ltd. is a 50 percent joint venture partner. Other
installment notes and contracts were incurred primarily through
acquisitions of plants and timber.
Many of L-P's loan agreements contain lender's standard
covenants and restrictions. L-P was in compliance with all of
the covenants and restrictions of these agreements during 1993
and 1992.
L-P has a $100 million revolving credit facility with a
group of banks. Any borrowings under the credit facility will be
due and payable in 1994. The interest rate to be used for the
credit line is based on one of three variable interest rate
formulas. L-P pays a commitment fee on the unused credit line.
There were no borrowings in 1993 or 1992.
The weighted average interest rate for all debt at
December 31, 1993, and 1992 was 4.3 percent and 4.6 percent.
Required repayment of principal for long-term debt is as follows:
<TABLE>
<CAPTION>
Year ended December 31 (in millions)
<S> <C> <C>
1994 $105.5
1995 87.7
1996 95.6
1997 20.3
1998 44.4
1999 and after 40.6
------
$394.1
======
</TABLE>
Retirement Plans
L-P maintains tax-qualified Employee Stock Ownership
Trusts (ESOTs), for salaried and certain hourly employees under
which 10 percent and 5 percent, respectively, of the eligible
employees' annual earnings is contributed to the plans.
Approximately 11,000 L-P employees participate in the ESOTs.
Fully funded defined benefit plans also supplement the hourly
employees' retirement package.
- 30 -
<PAGE>
NOTES TO FINANCIAL STATEMENTS
ESOT contributions were as follows:
<TABLE>
<CAPTION>
Year ended December 31 (in millions) 1993 1992 1991
<S> <C> <C> <C>
Compensation expense $18.0 $16.8 $15.5
Interest incurred on ESOT debt 5.6 7.2 8.9
Less dividends paid on ESOT shares (3.5) (3.7) (3.9)
----- ----- -----
Total contribution $20.1 $20.3 $20.5
===== ===== =====
</TABLE>
L-P has a number of pension plans covering its hourly
employees. Contributions to its defined benefit plans are based
on actuarial calculations of amounts to cover current pension and
amortization of prior service cost over periods ranging from 10
to 20 years. Contributions to multi-employer defined benefit
plans are specified in applicable collective bargaining
agreements.
The status of L-P administered pension plans are as
follows:
<TABLE>
<CAPTION>
December 31 (in millions) 1993 1992
<S> <C> <C>
Accumulated benefit obligation
Vested portion $ 86.3 $ 73.1
Non-vested portion 3.3 3.7
------ ------
Total 89.6 76.8
Effect of future compensation 9.5 8.5
------ ------
Projected benefit obligation 99.1 85.3
Plan assets 118.3 114.1
------ ------
Net funded status 19.2 28.8
Unrecognized (asset) obligation at transition (19.2) (21.6)
Unrecognized prior service .5 .2
Unrecognized net loss in past service 8.2 1.6
------ ------
Net prepaid pension expense $ 8.7 $ 9.0
====== ======
</TABLE>
The actuarial assumptions used to determine pension
expense and the funded status of the plans for 1993 and 1992
were: a discount rate on benefit obligations of 7.5 percent in
1993 and 8.75 percent in 1992, a 3.0 percent increase in future
compensation levels in 1993 for active participants and
4.0 percent in 1992, and
- 31 -
<PAGE>
NOTES TO FINANCIAL STATEMENTS
an 8.75 percent expected long-term rate of return on plan assets
in 1993 and 9.5 percent in 1992.
The assets of the plans at December 31, 1993, and 1992
consist mostly of government obligations, and minor amounts in
cash or cash equivalents.
Pension expense included the following components:
<TABLE>
<CAPTION>
Year ended December 31 (in millions) 1993 1992 1991
<S> <C> <C> <C>
Benefits earned by employees $ 3.9 $ 3.5 $ 3.5
Interest cost on projected benefit obligation 7.4 6.7 5.3
Return on plan assets (9.4) (9.6) (7.5)
Net amortization and deferral (2.4) (2.4) (1.8)
----- ----- -----
Net pension income (.5) (1.8) (.5)
Contributions to multi-employer pension plans .6 .6 .4
----- ----- -----
Net pension expense (income) $ .1 $(1.2) $ (.1)
===== ===== =====
</TABLE>
During the first quarter of 1993, the Company adopted
the Financial Accounting Standards Board Statement No. 106,
"Employers' Accounting for Post-retirement Benefits Other Than
Pensions." The standard requires employers to record the cost of
non-pension retirement benefits during the working years of the
employee. Adoption of this standard resulted in a one-time
charge of $3.2 million or three cents per share, net of
$1.9 million in income taxes, to first quarter 1993 earnings.
Additional future costs associated with adopting this new
standard are not expected to be material.
In November 1992, the Financial Accounting Standards
Board issued Statement No. 112, "Employers' Accounting for Post-
employment Benefits." L-P does not generally provide post-
employment benefits, and therefore adoption of this statement
will not have a material effect on the financial statements.
Stock Options and Plans
L-P grants options to key employees to purchase L-P
common stock. Options are granted at 85 to 100 percent of market
price. The options become exercisable 20 percent per year
beginning one year after the grant date and expire 10 years after
the date of grant. The options outstanding at December 31, 1993,
are exercisable 1,397,242 shares in 1994, 614,210 shares in 1995,
595,380 shares in 1996, 143,190 shares in 1997, and 50,640 shares
- 32 -
<PAGE>
NOTES TO FINANCIAL STATEMENTS
in 1998. Shares available for granting of options at December
31, 1993, and 1992 were 596,850 and 798,750.
Changes during 1993 in options outstanding and
exercisable were as follows:
<TABLE>
<CAPTION>
(Dollar amounts in millions except per share) Market Value
at
Date of Grant
or
Option Price When
Exercisable
Number Per or Exercised
of Shares Share Total Share
Total
<S> <C> <C> <C> <C> <C>
Options outstanding at
January 1, 1993 2,885,552 $ 7-20 $32.6 $ 7-23 $57.2
Options granted 254,200 30 7.6 35 8.9
Options exercised (289,760) 9-19 (3.9) 30-45 (11.1)
Options canceled (49,330) 10-30 (.7) NA NA
--------- ------ ----- ------ -----
Options outstanding at
December 31, 1993 2,800,662 $ 7-30 $35.6 $ 7-35 $55.0
========= ====== ===== ====== =====
Options exercisable
during 1993 559,575 $10-20 $ 9.5 $30-35 $22.9
========= ====== ===== ====== =====
</TABLE>
L-P also grants awards under the Louisiana-Pacific
Corporation Key Employee Restricted Stock Plan. Shares available
for grant at December 31, 1993, were 2,491,500. The shares are
issued, at no cost to the employee, only after performance
criteria are met. In 1992, the performance criteria was met, and
212,250 shares were issued in 1993. The compensation expense for
these shares was recorded in 1992, based on the year-end value,
and the additional expense of the value at issuance was recorded
in 1993. In 1993, the performance criteria was also met, which
resulted in 352,500 shares issued in December of 1993, and 90,000
shares to be issued in 1994. The compensation expense for the
shares to be issued in 1994 was recorded in 1993, based on
the year-end value.
- 33 -
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Changes during 1993 in the Restricted Stock Plan shares
were as follows:
<TABLE>
<CAPTION>
(Dollar amounts in millions except her share) Market Value at
Date of Issue
Number Per
of Shares Share Total
<S> <C> <C> <C>
Outstanding at January 1, 1993 1,224,750 NA NA
Granted 360,000 NA NA
Issued (564,750) 37-75 29.2
Canceled (60,000) NA NA
---------
Outstanding at December 31, 1993 960,000 NA NA
=========
</TABLE>
L-P offers employee stock purchase plans to all
employees. Under the plans, employees may subscribe to purchase
shares of L-P stock over 24 months at 85 percent of the market
price. At December 31, 1993, 517,336 shares and 567,830 shares
were subscribed at $29.91 and $19.12 per share under the 1993 and
1992 Employee Stock Purchase Plans. On April 30, 1993, L-P
issued 264,165 shares to employees at an average price of $17.35
upon completion of the purchase period for the 1991 Employee
Stock Purchase Plan.
Litigation; Environmental Matters
In 1992, as part of an overall industry inquiry, L-P
and Kirby Forest Industries, a wholly owned L-P subsidiary,
received notices of violation from the U.S. Environmental
Protection Agency (EPA) against fifteen of its manufacturing
facilities. During 1993, L-P reached a precedent-setting
environmental settlement with the EPA, which called for L-P and
Kirby Forest Industries to pioneer pollution control technology
for the entire wood panel products industry. The agreement also
required L-P to pay an $11.1 million civil penalty to the Federal
government. The payment was made on November 1, 1993, but had
been substantially accrued for 1992.
L-P has been informed that it and one or more of its
employees are the subjects of separate federal grand jury
investigations regarding air emissions at its Montrose, Colorado,
plant and wastewater discharges at its Ketchikan Pulp Company
subsidiary's pulp mill. The investigations have not been
completed and no charges against the company or any of its
employees have
been made. Also, Ketchikan Pulp Company is the subject of a
civil enforcement action alleging violations of the Clean Water
Act and
- 34 -
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Clean Air Act. Settlement of this action will likely involve
fines and future capital expenditures for environmental projects.
Certain of L-P's plant sites are suspected of having
substances in the ground or in the groundwater that are
considered pollutants. Under the direction of the company's
Department of Environmental Affairs, corrective action or plans
for corrective action are underway. Where the pollutants were
caused by previous owners of the property, L-P is vigorously
pursuing those parties through legal channels.
In 1991, L-P reached an agreement with the EPA relating
to past violations of wastewater discharge limits from L-P's
Samoa, California pulpmill. The amount of the settlement was
$3 million, which L-P expensed in the second quarter of 1991.
Although L-P's corporate policy is to comply with all
applicable laws, the company has in the past been required to pay
fines for non-compliance and sometimes litigation has resulted
from contested environmental actions. Also, the items discussed
above could result in fines or penalties against the company.
However, management believes that any fines or penalties
resulting from the matters discussed above will not have a
material adverse effect on the business, financial position or
results of operations of L-P.
Other Matters
L-P and its subsidiaries are party to other legal
proceedings. Management believes that the outcome of such
proceedings will not have a material adverse effect on the
business, financial position or results of operations of L-P.
Commitments; Timber Cutting Contracts
L-P is obligated to purchase timber under cutting
contracts, primarily with the U.S. Forest Service, which extend
to 2004.
- 35 -
<PAGE>
NOTES TO FINANCIAL STATEMENTS
The table below presents L-P's best estimate of its
commitment under timber cutting contracts.
<TABLE>
<CAPTION>
Year ended December 31 (in millions)
<S> <C> <C>
1994 $ 7.4
1995 3.1
1996 5.4
1997 5.8
1998 .7
1999 and after 170.4
-----
$192.8
======
</TABLE>
Leases
The table below presents L-P's future minimum rental
payments under non-cancelable operating leases.
<TABLE>
<CAPTION>
Year ended December 31 (in millions)
<S> <C> <C>
1994 $ 5.1
1995 3.4
1996 1.8
1997 1.3
1998 .6
1999 and after 1.0
-----
$ 13.2
=====
</TABLE>
Payments under all operating leases that were charged
to rental expense during 1993, 1992, and 1991 were $7.1 million,
$8.7 million and $6.8 million.
Other
During 1994, L-P plans expenditures of about
$325-350 million for plant additions and improvements, timber and
logging roads.
- 36 -
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Industry Segment Information
L-P operates in two major industry segments. The major
products included in each segment are detailed further on page 5.
Intersegment sales are chips transferred from company-owned
building products plants to company-owned pulp mills. All
transfers are made at prevailing market prices. Timber and
related assets and capital expenditures for such assets have not
been allocated to the industry segments as these are a prime
source of raw materials for both segments. The cost of logs
delivered to the plants and residual fibers are included in the
operating results of the segments.
Export sales were primarily to customers in the Far
East, Europe and Canada.
- 37 -
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Information about L-P's industry segments is as follows:
<TABLE>
<CAPTION>
Year ended December 31 (in millions) 1993 1992 1991
<S> <C> <C> <C>
Total sales
Building products $2,434 $2,013 $1,547
Pulp 85 185 170
Intersegment sales to pulp (8) (13) (15)
------ ------ ------
Total sales $2,511 $2,185 $1,702
====== ====== ======
Operating profit (loss)
Building products $ 562 $ 364 $ 139
Pulp (59) (20) (3)
------ ------ ------
Total operating profit 503 344 136
------ ------ ------
Unallocated expense, net (70) (47) (30)
Interest expense, net (5) (14) (19)
------ ------ ------
Income before taxes $ 428 $ 283 $ 87
====== ====== ======
Identifiable assets
Building products $1,040 $ 934 $ 889
Pulp 423 403 400
Timber,timberlands,logging equipment and roads 710 568 577
Unallocated assets 293 301 241
------ ------ ------
Total assets $2,466 $2,206 $2,107
====== ====== ======
Depreciation,amortization and cost of timber harvested
Building products $ 157 $ 137 $ 127
Pulp 21 22 18
Capital expenditures
Building products 144 90 47
Pulp 46 33 80
Timber,timberlands,logging equipment and roads 118 62 73
</TABLE>
Information about L-P's geographic segments is as follows:
<TABLE>
<CAPTION>
Year ended December 31 (in millions) 1993 1992 1991
<S> <C> <C> <C>
Total sales
U.S. $2,482 $2,153 $1,685
Canada 83 71 40
Intersegment sales to U.S. (54) (39) (23)
------ ------ ------
Total sales $2,511 $2,185 $1,702
====== ====== ======
Export sales (included above) $ 252 $ 339 $ 315
====== ====== ======
Operating profit (loss)
U.S. $ 479 $ 324 $ 138
Canada 24 20 (2)
------ ------ ------
Total operating profit $ 503 $ 344 $ 136
====== ====== ======
Identifiable assets
U.S. $2,116 $1,911 $1,826
Canada 341 295 281
Mexico 9 -- --
------ ------ ------
Total assets $2,466 $2,206 $2,107
====== ====== ======
</TABLE>
- 38 -
<PAGE>
Report of Independent Public Accountants
To the Stockholders and Board of Directors of
Louisiana-Pacific Corporation:
We have audited the accompanying consolidated balance
sheets of Louisiana-Pacific Corporation (a Delaware corporation)
and subsidiaries as of December 31, 1993, and 1992, and the
related consolidated statements of income, stockholders' equity
and cash flows for each of the three years in the period ended
December 31, 1993. These financial statements are the
responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that we
plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to
above present fairly, in all material respects, the financial
position of Louisiana-Pacific Corporation and subsidiaries as of
December 31, 1993, and 1992, and the results of their operations
and their cash flows for each of the three years in the period
ended December 31, 1993, in conformity with generally accepted
accounting principles.
As discussed in the notes to the consolidated financial
statements, effective January 1, 1993, the Company changed its
methods of accounting for income taxes and post-retirement
benefits other than pensions.
Arthur Andersen & Co.
Portland, Oregon
February 4, 1994
Report of Management
The management of Louisiana-Pacific Corporation has
prepared the consolidated financial statements and related
financial data contained in this Report. The financial
statements were prepared in accordance with generally accepted
accounting principles appropriate in the circumstances and by
necessity include some amounts determined using management's best
judgments
- 39 -
<PAGE>
and estimates with appropriate consideration to materiality.
Management is responsible for the integrity and objectivity of
the financial statements and other financial data included in the
report. To meet this responsibility management maintains a
system of internal accounting controls to provide reasonable
assurance that assets are safeguarded and that accounting records
are reliable. Management supports a program of internal audits
and internal accounting control reviews to provide assurance that
the system is operating effectively.
The Board of Directors pursues its responsibility for
reported financial information through its Audit Committee,
composed of five outside directors. The Audit Committee meets
periodically with management, the internal auditors and the
independent public accountants to review the activities of each.
/s/ HARRY A. MERLO
Chairman and President
/s/ WILLIAM L. HEBERT
Treasurer and Chief Financial Officer
February 4, 1994
ITEM 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
None.
PART III
ITEM 10. Directors and Executive Officers of the Registrant
Information regarding the directors of the registrant
is incorporated herein by reference to the material included
under the caption "Item 1--Election of Directors" and "General"
in the definitive proxy statement to be filed by the registrant
for its 1994 annual meeting of stockholders (the "1994 Proxy
Statement"). Information regarding the executive officers of the
registrant is located in Part I of this report under the caption
"Executive Officers of the Registrant."
- 40 -
<PAGE>
ITEM 11. Executive Compensation
Information regarding executive compensation is
incorporated herein by reference to the material under the
captions "Compensation Committee--Interlocks and Insider
Participation," "Summary Compensation Table," "Aggregated
Option/SAR Exercises in Last Fiscal year and Fiscal year-End
Options/SAR Values," and "Director's Compensation," in the 1994
Proxy Statement.
ITEM 12. Security Ownership of Certain Beneficial Owners
and Management
Information regarding security ownership of certain
beneficial owners and management is incorporated herein by
reference to the material under the caption "Holders of Common
Stock" in the 1994 Proxy Statement.
ITEM 13. Certain Relationships and Related Transactions
Information regarding management transactions is
incorporated herein by reference to the material under the
captions "Compensation Committee--Interlocks and Insider
Participation" and "Management Transactions" in the 1994 Proxy
Statement.
PART IV
ITEM 14. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K
A. Financial Statements and Financial Statement Schedules
The financial statements included in this report and
the financial statement schedules filed as part of this report
are listed in the accompanying index to financial statements and
schedules.
B. Reports on Form 8-K
No reports on Form 8-K were filed during the quarter
ended December 31, 1993.
C. Exhibits
The exhibits filed as part of this report or
incorporated by reference herein are listed in the accompanying
exhibit index. Each management contract or compensatory plan or
arrangement is identified in the index.
- 41 -
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934, Louisiana-Pacific
Corporation, a Delaware corporation (the "registrant"), has duly
caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Date: March 29, 1994 LOUISIANA-PACIFIC CORPORATION
(Registrant)
/s/ WILLIAM L. HEBERT
William L. Hebert
Treasurer
________________________________________
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on
the dates indicated.
Date Signature and Title
March 29, 1994 /s/ HARRY A. MERLO
Harry A. Merlo
Chairman, President and Director
(Principal Executive Officer)
March 29, 1994 /s/ JAMES EISSES
James Eisses
Executive Vice President and
Director
March 29, 1994 /s/ WILLIAM L. HEBERT
William L. Hebert
Treasurer
(Principal Financial Officer)
- 42 -
<PAGE>
Date Signature and Title
March 29, 1994 /s/ JAMES F. ELLISOR
James F. Ellisor
Controller, Operations
(Principal Accounting Officer)
March 29, 1994 /s/ PIERRE S. DU PONT IV
Pierre S. du Pont IV
Director
March 29, 1994 /s/ BONNIE F. GUITON
Bonnie F. Guiton
Director
March 29, 1994 /s/ DONALD R. KAYSER
Donald R. Kayser
Director
March 29, 1994 /s/ FRANCINE I. NEFF
Francine I. Neff
Director
March 29, 1994 /s/ CHARLES E. YEAGER
Charles E. Yeager
Director
- 43 -
<PAGE>
LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
Financial Statements:
Consolidated Balance Sheets--December 31, 1993, and
1992.
Consolidated Statements of Income--years ended
December 31, 1993, 1992, and 1991.
Consolidated Statements of Cash Flows--years ended
December 31, 1993, 1992, and 1991.
Consolidated Statements of Stockholders' Equity--years
ended December 31, 1993, 1992, and 1991.
Notes to Financial Statements.
Report of Independent Public Accountants.
Financial Statement Schedules:
Report of Independent Public Accountants Covering
Financial Statement Schedules
V - Property, Plant and Equipment
VI - Accumulated Depreciation, Depletion
and Amortization of Property, Plant
and Equipment
IX - Short-Term Borrowings
X - Supplementary Income Statement
Information
All other financial statement schedules are omitted because they
are not applicable or not required.
- 44 -
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULES
To the Stockholders and Board of Directors of Louisiana-Pacific
Corporation:
We have audited in accordance with generally accepted
auditing standards, the consolidated financial statements
included in this Form 10-K, and have issued our report thereon
dated February 4, 1994. Our report on the financial statements
includes an explanatory paragraph with respect to the change in
the method of accounting for income taxes and postretirement
benefits other than pensions. Our audits were made for the
purpose of forming an opinion on those statements taken as a
whole. The schedules listed in the index to financial statements
and schedules are the responsibility of the Company's management
and are presented for purposes of complying with the Securities
and Exchange Commission's rules and are not part of the basic
financial statements. These schedules have been subjected to the
auditing procedures applied in the audits of the basic financial
statements and, in our opinion, fairly state in all material
respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
ARTHUR ANDERSEN & CO.
Portland, Oregon
February 4, 1994
- 45 -
<PAGE>
LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES
PROPERTY, PLANT AND EQUIPMENT
SCHEDULE V
(Dollar Amounts in Millions)
<TABLE>
<CAPTION>
Amortization
and cost of timber
Balance at harvested credited Balance
beginning Additions Sales and to assets and Other at end
Classification of period at cost retirements charged to income Adjustments of period
- ------------------------------- ------------ ----------- ----------- ------------------ ----------- --------
<S> <C> <C> <C> <C> <C> <C>
1991
Property, plant and
equipment at cost:
Land, improvements and
logging roads $ 130.1 $ 25.9 $ (0.2) $ (19.3) $ (0.1) $ 136.4
Buildings 166.5 39.1 (1.0) --- --- 204.6
Machinery and equipment 1,278.3 244.5 (36.5) --- --- 1,486.3
Construction in progress 198.8 (157.2) --- --- --- 41.6
------- -------- -------- --------- -------- --------
1,773.7 152.3 (37.7) (19.3) (0.1) 1,868.9
Timber and timberlands
at cost less cost of
timber harvested 518.3 49.6 --- (35.2) --- 532.7
------- -------- -------- --------- ------- -------
$2,292.0 $ 201.9 $ (37.7) $ (54.5) $ (0.1) $2,401.6
======= ======== ======== ========= ======== =======
1992
Property, plant and
equipment at cost:
Land, improvements and
logging roads $ 136.4 $ 25.8 $ (1.7) $ (22.2) $ (0.5) $ 137.8
Buildings 204.6 11.8 (2.8) --- (3.8) 209.8
Machinery and equipment 1,486.3 89.8 (32.6) --- (22.0) 1,521.5
Construction in progress 41.6 34.0 --- --- --- 75.6
------- ------- -------- --------- -------- -------
1,868.9 161.4 (37.1) (22.2) (26.3) 1,944.7
Timber and timberlands
at cost less cost of
timber harvested 532.7 40.1 --- (41.6) --- 531.2
------- ------- -------- --------- -------- -------
$2,401.6 $ 201.5 $ (37.1) $ (63.8) $ (26.3) $2,475.9
======= ======== ======== ========= ======== =======
1993
Property, plant and
equipment at cost:
Land, improvements and
logging roads $ 137.8 $ 27.5 $ (1.8) $ (21.8) $ 2.1 $ 143.8
Buildings 209.8 5.5 (3.9) --- (0.3) 211.1
Machinery and equipment 1,521.5 127.5 (20.6) --- 3.2 1,631.6
Construction in progress 75.6 47.9 --- --- 2.8 126.3
------- ------- ------- ------- ------- -------
1,944.7 208.4 (26.3) (21.8) 7.8 2,112.8
Timber and timberlands
at cost less cost of
timber harvested 531.2 81.5 (0.3) (50.2) 111.3 673.5
------- ------- ------- ------- ------- -------
$2,475.9 $ 289.9 $ (26.6) $ (72.0) $ 119.1<F1> $2,786.3
======= ======= ======= ======= ======= =======
<FN>
<F1> 1993 other adjustments includes entries made for adoption of SFAS No. 109, "Accounting for Income Taxes."
</TABLE>
- 46 -
<PAGE>
LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES
ACCUMULATED DEPRECIATION
OF PROPERTY, PLANT AND EQUIPMENT <F1>
SCHEDULE VI
(Dollar Amounts in Millions)
<TABLE>
<CAPTION>
Additions
Balance at charged to Balance
beginning costs and Sales and Other at end
Classification of period expenses retirements Adjustments of period
- ------------------------------- -------------- ----------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C>
1991
Land improvements $ 29.8 $ 3.7 $ (0.1) $ --- $ 33.4
Buildings 71.1 7.5 (0.6) --- 78.0
Machinery and equipment 636.0 84.1 (28.7) --- 691.4
----- ----- ------ ----- -----
$736.9 $ 95.3 $(29.4) $ 0.0 $802.8
===== ===== ====== ==== =====
1992
Land improvements $ 33.4 $ 3.8 $ (0.5) $ (0.1) $ 36.6
Buildings 78.0 8.8 (1.2) (0.2) 85.4
Machinery and equipment 691.4 86.6 (24.0) (1.6) 752.4
----- ----- ------ ------ -----
$802.8 $ 99.2 $(25.7) $ (1.9) $874.4
===== ===== ====== ====== =====
1993
Land improvements $ 36.6 $ 4.3 $ (1.0) $ --- $ 39.9
Buildings 85.4 9.5 (3.1) (0.3) 91.5
Machinery and equipment 752.4 97.4 (18.1) 3.8 835.5
----- ----- ------- ------- -----
$874.4 $111.2 $(22.2) $ 3.5 $966.9
===== ===== ====== ======= =====
NOTES:
<FN>
<F1> Reference is made to the notes to financial statements entitled "Property, Plant and Equipment
Policies" and "Income Tax Policies" for accounting practices concerning depreciation. Depreciation
charged to income is shown in Schedule X.
</TABLE>
- 47 -
<PAGE>
LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES
SHORT - TERM BORROWINGS <F1>
SCHEDULE IX
(Dollar Amounts in Millions)
<TABLE>
<CAPTION>
Maximum Average Weighted
amount amount average
Weighted outstanding outstanding interest rate
Category of aggregate Balance at average during the during the during the
short-term borrowings end of period interest rate period period <F2> period <F2>
- --------------------- -------------- -------------- ---------- ------------- -----------
<S> <C> <C> <C> <C> <C>
1991
Short-term borrowings $27.6 5.2% $27.6 $11.7 6.1%
1992
Short-term borrowings $37.2 3.9% $37.5 $37.1 4.6%
1993
Short-term borrowings $41.7 4.0% $41.7 $37.6 3.9%
NOTES:
<FN>
<F1> Short-term borrowings were incurred in varying amounts and maturities at the interest rate prevailing
at the time of sale.
<F2> The average amount outstanding and weighted average interest rate during the period is based on the
balance and interest rates outstanding each day.
</TABLE>
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<PAGE>
LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES
SUPPLEMENTARY INCOME STATEMENT INFORMATION
SCHEDULE X
(Dollar Amounts in Millions)
<TABLE>
<CAPTION>
1991 1992 1993
---------- ---------- ----------
<S> <C> <C> <C>
Maintenance and repairs $120.1 $140.4 $138.9
===== ===== =====
Depreciation and amortization $114.6 $121.4 $133.0
Cost of timber harvested 35.2 41.6 50.2
----- ----- -----
$149.8 $163.0 $183.2
===== ===== =====
Taxes, other than payroll and
income taxes:
Real and personal property $ 18.2 $ 19.8 $ 20.9
Other 5.6 5.3 7.0
----- ----- -----
$ 23.8 $ 25.1 $ 27.9
===== ===== =====
</TABLE>
- 48 -
<PAGE>
EXHIBIT INDEX
On written request, the registrant will furnish to any record holder or
beneficial holder of the registrant's common stock any exhibit to this report
upon the payment of a fee equal to the registrant's costs of copying such
exhibit plus postage. Any such request should be sent to: Pamela A. Selis,
Director of Corporate Communications, Louisiana-Pacific Corporation,
111 S.W. Fifth Avenue, Portland, Oregon 97204.
Items identified with an asterisk (*) are management contracts or compensatory
plans or arrangements.
Sequential
Exhibit Description of Exhibit Page Number
3.A Restated Certificate of Incorporation of the
registrant as amended to date. Incorporated by
reference to Exhibit 3(a) to the registrant's
Form 10-Q report for the second quarter of 1993.
3.B Bylaws of the registrant as amended to date.
Incorporated by reference to Exhibit 3(b) to
the registrant's Form 10-Q report for the second
quarter of 1993.
4.A The registrant's secured note dated
December 22, 1986, in the principal amount of
$290,000,000 payable to Santa Fe Industries,
Inc. Incorporated by reference to Exhibit 2.B
to the registrant's Form 8-K report dated as
of December 22, 1986 (File No. 1-7107).
4.B Amendment No. 1 to Secured Note (Exhibit 4.A).
Incorporated by reference to Exhibit 4.B to the
registrant's Form 10-K report for 1988.
4.C Rights Agreement as Restated as of February 3,
1991, between the registrant and First Chicago
Trust Company of New York as Rights Agent.
Incorporated by reference to Exhibit 4 to the
registrant's Form 8-K report dated as of
March 18, 1991.
Pursuant to Item 601 (b)(4)(iii) of
Regulation S-K, the registrant is not filing
certain instruments with respect to its long-
term debt because the amount authorized under
any such instrument does not exceed 10 percent
of the total consolidated assets of the
registrant at December 31, 1993. The
registrant agrees to furnish a copy of any
such instrument to the Securities and Exchange
Commission upon request.
- 49 -
<PAGE>
Sequential
Exhibit Description of Exhibit Page Number
10.A The registrant's 1984 Employee Stock Option
Plan as amended to date. Incorporated by
reference to Exhibit 10.B to the registrant's
Form 10-K report for 1989.*
10.B The registrant's 1991 Employee Stock Option
Plan. Incorporated by reference to
Exhibit 10.B to the registrant's Form 10-K
report for 1990.*
10.C 1992 Non-Employee Director Stock Option Plan
and Related Form of Option Agreement. Incorporated
by reference to Exhibit 10.C to the registrant's
Form 10-K report for 1992.*
10.D Deferred cash bonus agreement dated May 5,
1986, between the registrant and Harry A.
Merlo; and deferred cash bonus agreement
dated February 2, 1987, between the
registrant and Harry A. Merlo. Incorporated
by reference to Exhibit 10.D to the
registrant's Form 10-K report for 1986
(File No. 1-7107).*
10.E Louisiana-Pacific Corporation Directors'
Deferred Compensation Plan. Incorporated
by reference to Exhibit 10.F to the regi-
strant's Form 10-K report for 1986 (File
No. 1-7107).*
10.F(1) Share Purchase Agreement dated as of
December 3, 1986, between Santa Fe
Industries, Inc., and the registrant.
Incorporated by reference to Exhibit 2.A
to the registrant's Form 8-K report dated
as of December 22, 1986 (File No. 1-7107).
10.F(2) Pledge Agreement dated December 22, 1986,
between the registrant and Santa Fe
Industries, Inc. Incorporated by reference
to Exhibit 2.C to the registrant's Form 8-K
report dated as of December 22, 1986 (File
No. 1-7107).
10.F(3) Amendment No. 1 to Pledge Agreement
(Exhibit 10.F(2)). Incorporated by reference
to Exhibit 10.F(3) to the registrant's
Form 10-K report for 1988.
10.G(1) Agency Agreement dated as of December 22,
1986, among the registrant and ten banks,
including Morgan Guaranty Trust Company of
New York as administrative agent. Incorpor-
ated by reference to Exhibit 10.H(2) to the
registrant's Form 10-K report for 1986
(File No. 1-7107).
- 50 -
<PAGE>
Sequential
Exhibit Description of Exhibit Page Number
10.G(2) Amendment No. 1 to Agency Agreement
(Exhibit 10.G(1)). Incorporated by reference
to Exhibit 10.G(2) to the registrant's
Form 10-K report for 1988.
10.H(1) The registrant's Key Employee Restricted
Stock Plan as amended. Incorporated by
reference to Exhibit 10.H(1) to the
registrant's Form 10-K report for 1990.*
10.H(2) Form of Restricted Stock Award Agreement
under Exhibit 10.H(1). Incorporated by
reference to Exhibit 10.H(2) to the
registrant's Form 10-K report for 1992.*
10.I Lease and Option to Purchase between the
registrant as Lessor and Harry A. Merlo
as Lessee, as amended. Incorporated by
reference to Exhibit 10.I to the regi-
strant's Form 10-K report for 1988.
10.J Distribution Agreement dated as of May 23,
1988, between the registrant and Fibreboard
Corporation. Incorporated by reference to
Exhibit 2.B to the registrant's Form 8-K
report dated as of May 23, 1988.
10.K The registrant's Supplemental Benefits
Plan. Incorporated by reference to
Exhibit 10.K to the registrant's Form 10-K
report for 1989.*
11 Louisiana-Pacific Corporation and Subsi- 52
diaries: Calculation of Net Income Per
Share For the Year Ended December 31, 1993.
21 List of subsidiaries of the registrant. 53
23 Consent of Independent Public Accountants. 54
- 51 -
<PAGE>
<PAGE>
EXHIBIT 11
LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES
CALCULATION OF NET INCOME PER SHARE
FOR THE YEAR ENDED DECEMBER 31, 1993
<TABLE>
<CAPTION>
Number of Shares
Including Common Excluding Common
Stock Equivalents<F2> Stock Equivalents <F1><F2>
----------------- -----------------------
<S> <C> <C>
Weighted average number of shares
of common stock outstanding 116,933,591 116,933,591
Annualized weighted average number of shares
of treasury stock held during the period (7,264,403) (7,264,403)
Common stock equivalents:
Application of the "treasury stock" method
to stock option and purchase plans 1,209,706 ----
----------- -----------
Weighted average number of shares of common
stock and common stock equivalents 110,878,894 109,669,188
=========== ===========
Rounded to 110,880,000 109,670,000
=========== ===========
Income before cumulative effects of
accounting changes $254,400,000 $254,400,000
Cumulative effects of accounting changes,
net of income taxes of $1,940,000 ($10,400,000) ($10,400,000)
------------ -----------
Net income $244,000,000 $244,000,000
=========== ===========
Income before cumulative effects of
accounting changes per share $2.29 $2.32
Cumulative effects of accounting
changes per share ($0.09) ($0.09)
----------- -----------
Net income per share $2.20 $2.23
=========== ===========
<FN>
<F1> Accounting Principles Board Opinion No. 15, "Earnings Per Share," allows companies to disregard
dilution of less than 3 percent in the computation of earnings per share. Therefore, shares used
in computing earnings per share for financial reporting purposes is 109,670,000 shares.
<F2> The number of shares and per share data have been retroactively adjusted for the two-for-one
stock split declared May 4, 1993, to stockholders of record May 18, 1993.
</TABLE>
- 52 -
<PAGE>
<PAGE>
SUBSIDIARIES OF THE REGISTRANT
The following table lists the registrant and each of its
subsidiaries and the jurisdiction under the laws of which the registrant
and each subsidiary is incorporated. Each subsidiary is identified
underneath its immediate parent. Except as indicated, each subsidiary is
100 percent owned by its parent.
Name Jurisdiction
Louisiana-Pacific Corporation Delaware
Blue Skies Aviation, Inc. Oregon
Ketchikan Pulp Company Washington
Kirby Forest Industries, Inc. Delaware
Louisiana-Pacific, S.A. de C.V. Mexico
Louisiana Pacific de Mexico, S.A. de C.V. Mexico
Louisiana-Pacific Canada Ltd. British Columbia, Canada
Louisiana-Pacific Trucking Company Oregon
L-P Foreign Sales Corporation Guam
New Waverly Transportation, Inc. Texas
Louisiana-Pacific de Venezuela, C.A. Venezuela
Louisiana-Pacific Coillte Ireland Limited Ireland
Sunpine Forest Products, Ltd. (50 percent) Alberta, Canada
Rocky Forest Products Ltd. Alberta, Canada
Lodgepole Logging Ltd. Alberta, Canada
Pinetree Construction Co Ltd. Alberta, Canada
EXHIBIT 21
- 53 -
<PAGE>
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
of our reports included in this Form 10-K, into the Corporation's
previously filed Registration Statement Nos. 2-97014, 33-42276, 33-50958,
33-60264, and 33-62944.
ARTHUR ANDERSEN & CO.
Portland, Oregon
March 28, 1994
EXHIBIT 23
- 54 -
<PAGE>
