<PAGE>
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
SEPTEMBER 14, 1999
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED)
----------
LOUISIANA-PACIFIC CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
----------
DELAWARE 1-7107 93-0609074
(STATE OF INCORPORATION) (COMMISSION FILE NUMBER) (IRS EMPLOYER
IDENTIFICATION NUMBER)
--------------
111 S.W. FIFTH AVENUE, PORTLAND, OREGON 97204
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)
(503) 221-0800
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
================================================================================
<PAGE>
Louisiana-Pacific Corporation ("Louisiana-Pacific") hereby amends Item
7 of, and the exhibits to, its Current Report on Form 8-K dated September 14,
1999. Exhibits 2.1, 2.2, 99.1, 99.2, 99.3 and 99.4 listed below were previously
filed with Louisiana-Pacific's Current Report dated September 14, 1999 and are
not being changed by this amendment.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED. The financial
statements and accountants' report required to be filed by
Item 7(a) of Form 8-K are filed herewith as Exhibit 99.5.
(b) PRO FORMA FINANCIAL INFORMATION. The pro forma financial
information required to be filed by Item 7(b) of Form 8-K is
filed herewith as Exhibit 99.6.
(c) EXHIBITS. The following exhibits are filed with this report,
as amended:
2.1 Amended and Restated Support Agreement, dated August 12, 1999, between
Louisiana-Pacific and Forex (incorporated herein by reference to
Exhibit 2.1 to the Current Report on Form 8-K filed by
Louisiana-Pacific on August 18, 1999).
2.2 Amended and Restated Lock-up Agreement, dated August 12, 1999, among
Louisiana-Pacific and each of the parties identified in Schedule B
thereof (incorporated herein by reference to Exhibit 2.2 to the Current
Report on Form 8-K filed by Louisiana-Pacific on August 18, 1999).
23.1 Consent of KPMG LLP.
99.1 Circular Bid, dated August 16, 1999, of the Offeror (incorporated
herein by reference to Exhibit 99.1 to the Current Report on Form 8-K
filed by Louisiana-Pacific on August 18, 1999).
99.2 Letter Agreement, dated September 8, 1999, between the Offeror and Bank
of America, N.A., together with related Guaranty Agreement by
Louisiana-Pacific in favor of Bank of America, N.A. (previously filed).
99.3 Loan Agreement, dated September 10, 1999, between the Offeror and
Centric Capital Corporation, together with related Guaranty of
Louisiana-Pacific in favor of Centric Capital Corporation (previously
filed).
99.4 Press release, dated August 24, 1999, issued by Louisiana-Pacific
(previously filed).
99.5 Unaudited Financial Statements of Le Groupe Forex Inc. as at June 30,
1999 and for the six months ended June 30, 1999 and 1998; and Audited
Financial Statements of Le Groupe Forex Inc. as at December 31, 1998
and 1997 and for the years ended December 31, 1998, 1997 and 1996 with
Auditors' Report.
99.6 Unaudited Pro Forma Condensed Consolidated Balance Sheet of
Louisiana-Pacific Corporation as of June 30, 1999; and Unaudited Pro
Forma Condensed Consolidated Statements of Income of Louisiana-Pacific
Corporation for the six months ended June 30, 1999 and for the year
ended December 31, 1998.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
LOUISIANA-PACIFIC CORPORATION
By: /s/ Gary C. Wilkerson
----------------------------------
Gary C. Wilkerson
Vice President and General Counsel
Date: November 29, 1999
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement
Nos. 2-97014, 33-42276, 33-62944, 333-10987, 333-53695, 333-53715, 333-73157,
333-87771, 333-87775, and 333-87803 of Louisiana-Pacific Corporation of our
report dated January 29, 1999, with respect to the financial statements of Le
Groupe Forex Inc. appearing in this Current Report on Form 8-K of
Louisiana-Pacific Corporation dated September 14, 1999, as amended.
/s/ KPMG LLP
KPMG LLP
Chartered Accountants
Val-d'Or, Quebec
November 29, 1999
<PAGE>
EXHIBIT 99.5
Unaudited Consolidated Financial Statements of
LE GROUPE FOREX INC.
As at June 30, 1999 and for the six months ended June 30, 1999
and 1998
<PAGE>
LE GROUPE FOREX INC.
CONSOLIDATED
BALANCE SHEET
UNAUDITED, PREPARED IN ACCORDANCE WITH GENERALLY
ACCEPTED ACCOUNTING PRINCIPLES IN CANADA
(IN THOUSANDS OF CANADIAN DOLLARS)
<TABLE>
<CAPTION>
BALANCE SHEET AS AT JUNE 30
1999
- ----------------------------------------------------------------------------------------------
<S> <C>
Current assets:
Cash 8,423
Short-Term Investments 90,051
Accounts receivable 33,515
Income taxes receivable -
Inventories 39,359
Prepaid expenses 2,980
---------------------
$ 174,328
Investments 2,224
Fixed assets 297,206
Other assets 10,137
--------------------------------------
$ 483,895
--------------------------------------
--------------------------------------
Current liabilities:
Bank indebtedness -
Accounts payable and accrued
liabilities 33,158
Income taxes payable 10,519
Current portion of long-term debt 8,612
---------------------
$ 52,289
Long-term debt 196,903
Deferred income taxes 43,746
Shareholders' equity:
Convertible debentures 14,983
Capital stock 17,805
Retained earnings 158,169
---------------------
$ 190,957
--------------------------------------
$ 483,895
--------------------------------------
--------------------------------------
- ------------------------------------------------------- ---------------- ---------------------
WORKING CAPITAL $ 122,039
- ------------------------------------------------------- ---------------- ---------------------
</TABLE>
<PAGE>
LE GROUP FOREX INC.
CONSOLIDATED STATEMENT
OF EARNINGS
UNAUDITED, PREPARED IN ACCORDANCE WITH GENERALLY
ACCEPTED ACCOUNTING PRINCIPLES IN CANADA
(IN THOUSANDS OF CANADIAN DOLLARS, EXCEPT AMOUNTS
PER SHARE)
<TABLE>
<CAPTION>
EARNINGS SIX MONTHS ENDED
JUNE 30
1999 1998
- --------------------------------------------- ----------------- ----------------
<S> <C> <C>
REVENUE:
Sales $ 204,548 $ 87,870
Interest 1,348 442
----------------- ----------------
205,896 88,312
EXPENSES:
Cost of goods sold 111,981 67,354
Selling and administrative expenses 6,257 5,338
Financial expenses 8,437 6,233
Other expenses (revenues) 903 (959)
----------------- ----------------
127,578 77,966
----------------- ----------------
EARNINGS BEFORE INCOME TAXES 78,318 10,346
INCOME TAXES:
CURRENT 17,318 3,096
DEFERRED 8,292 756
----------------- ----------------
25,610 3,852
----------------- ----------------
NET EARNINGS BEFORE MINORITY INTEREST 52,708 6,494
MINORITY INTEREST (508)
----------------- ----------------
NET EARNINGS $ 52,708 $ 5,986
----------------- ----------------
NET EARNINGS PER SHARE $ 3.25 $ 0.35
NET EARNINGS PER SHARE FULLY DILUTED $ 2.32 $ 0.29
- --------------------------------------------- ----------------- ----------------
</TABLE>
<PAGE>
LE GROUP FOREX INC.
CONSOLIDATED STATEMENT
OF CHANGES IN FINANCIAL
POSITION
UNAUDITED, PREPARED IN ACCORDANCE WITH GENERALLY
ACCEPTED ACCOUNTING PRINCIPLES IN CANADA
(IN THOUSANDS OF CANADIAN DOLLARS)
<TABLE>
<CAPTION>
CHANGES IN FINANCIAL POSITION SIX MONTHS ENDED
JUNE 30
1999 1998
- --------------------------------------------- ----------------- -----------------
<S> <C> <C>
CASH PROVIDED BY (USED IN):
OPERATIONS:
NET EARNINGS $ 52,708 $ 5,986
ITEMS NOT INVOLVING CASH:
DEPRECIATION OF FIXED ASSETS
AND OTHER ASSETS 10,218 6,024
DEFERRED INCOME TAXES 8,292 756
LOSS ON DISPOSAL OF INVESTMENT
AND FIXED ASSETS 453 -
MINORITY INTEREST - 508
INTEREST ON THE EQUITY COMPONENT (623) (437)
OF THE CONVERTIBLE DEBENTURE
NET CHANGE IN NON-CASH WORKING
CAPITAL ITEMS 11,045 (3,357)
----------------- ----------------
$ 82,093 $ 9,470
INVESTMENTS:
ACQUISITION OF FIXED ASSETS (9,734) (2,842)
PROCEEDS ON SALE OF FIXED ASSETS - 10
ACQUISITION OF INVESTMENTS (59) (69)
PROCEEDS ON SALE OF INVESTMENTS - 18
ACQUISITION OF A MINORITY INTEREST (49,908) (69,500)
ACQUISITION OF OTHER ASSETS (1,413) (5,911)
DISPOSAL OF OTHER ASSETS - 2,870
----------------- ----------------
$ (61,114) $ (75,424)
FINANCING:
LONG-TERM DEBT 46,500 163,835
REPAYMENTS OF LONG-TERM DEBT (2,573) (104,363)
----------------- ----------------
$ 43,927 $ 59,472
INCREASE (DECREASE) IN CASH POSITION 64,906 (6,482)
CASH POSITION, BEGINNING OF YEAR 33,568 19,100
----------------- ----------------
CASH POSITION, END OF YEAR $ 98,474 $ 12,618
----------------- ----------------
----------------- ----------------
CASH POSITION:
CASH 8,423 11,169
BANK INDEBTEDNESS - (3,150)
TEMPORARY INVESTMENTS 90,051 4,599
----------------- ----------------
$ 98,474 $ 12,618
- --------------------------------------------- ----------------- ----------------
</TABLE>
<PAGE>
LE GROUPE FOREX INC.
Notes to Unaudited Consolidated Financial Statements
As at June 30, 1999 and for the six month periods ended June 30, 1999 and 1998
(in thousands of Canadian dollars)
1. These consolidated summary financial statements should be read in
conjunction with the consolidated financial statements and the notes thereto as
at and for the years ended December 31, 1998, 1997 and 1996 included elsewhere
in this report.
These consolidated summary financial statements reflect all adjustments
(consisting only of normal recurring adjustments) which are, in the opinion of
the management, necessary to present fairly, in all material respects, the
consolidated financial position and results of operations of Le Groupe Forex
Inc. ("Forex") and its subsidiaries. Certain amounts have been reclassified to
conform to the current period presentation.
Results of operations for interim periods are not necessarily
indicative of results to be expected for an entire year.
2. Basic earnings per share are based on the weighted average number of
shares of common stock outstanding during the applicable period. Diluted
earnings per share include the effects of potentially dilutive common stock
equivalents.
3. The preparation of interim financial statements requires the
estimation of Forex's effective income tax rate based on estimated annual
amounts of taxable income and expenses. These estimates are updated quarterly.
4. On March 31, 1998, Forex acquired the minority interest in each of
its subsidiaries Forex St-Michel Inc. and Forex Maniwaki Inc. for a cash
consideration of $71,843, including acquisition costs. The excess of the price
paid of $14,307 over the book value of the net assets acquired has been
allocated to fixed assets.
On April 13, 1999, Forex acquired a joint venture partner's 50%
interest in its subsidiary Panneaux Chambord Inc. for a total consideration of
$63,560, including acquisition costs. Of the total consideration, $52,000 was
paid in cash and $11,560 was paid through the issuance of promissory notes. The
excess of the price paid of $23,046 over the book value of the net assets
acquired has been allocated to fixed assets.
5. Forex is organized along its product lines.
The following table sets forth selected segment data for the periods
ended June 30, 1999 and 1998:
<TABLE>
<CAPTION>
1999 SIX MONTHS ENDED JUNE 30
- -------------------------------------------------------------------------------------------------------------
CONSOLIDATED
OSB LUMBER ALL OTHERS ELIMINATION FINANCIAL
STATEMENTS
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SALES FROM EXTERNAL CUSTOMERS $ 181,424 $ 19,840 $ 3,438 $ (154) $ 204,548
- -------------------------------------------------------------------------------------------------------------
SEGMENT EARNINGS (LOSS) BEFORE
INCOME TAXES, DEPRECIATION,
INTEREST AND MINORITY
INTEREST 85,488 707 13,654 (4,009) 95,840
- -------------------------------------------------------------------------------------------------------------
SEGMENT ASSETS 310,403 33,524 37,850 102,118 483,895
- -------------------------------------------------------------------------------------------------------------
SEGMENT ACQUISITION OF CAPITAL
ASSETS 9,470 (217) 481 9,734
- -------------------------------------------------------------------------------------------------------------
</TABLE>
-4-
<PAGE>
<TABLE>
<CAPTION>
1998 SIX MONTHS ENDED JUNE 30
- -------------------------------------------------------------------------------------------------------------
CONSOLIDATED
OSB LUMBER ALL OTHERS ELIMINATION FINANCIAL
STATEMENTS
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SALES FROM EXTERNAL CUSTOMERS $ 74,775 $ 9,362 $ 3,820 $ (87) $ 87,870
- -------------------------------------------------------------------------------------------------------------
SEGMENT EARNINGS (LOSS) BEFORE
INCOME TAXES, DEPRECIATION,
INTEREST AND MINORITY
INTEREST 17,571 (46) 3,918 (874) 20,569
- -------------------------------------------------------------------------------------------------------------
SEGMENT ACQUISITION OF CAPITAL
ASSETS 2,217 389 235 2 2,843
- -------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30
RECONCILIATION TO NET EARNINGS 1999 1998
-----------------------------------------------------------------------------
<S> <C> <C>
SEGMENT EARNINGS BEFORE INCOME TAXES,
DEPRECIATION, INTERESTS AND MINORITY
INTEREST $ 95,840 $ 20,569
-----------------------------------------------------------------------------
AMORTIZATION OF FIXED ASSETS AND OTHER ASSETS (10,101) (6,024)
-----------------------------------------------------------------------------
INTEREST EXPENSES (7,866) (5,600)
-----------------------------------------------------------------------------
INTEREST REVENUES 1,348 442
-----------------------------------------------------------------------------
OTHER REVENUES (EXPENSES) (903) 959
-------------------------------
EARNINGS BEFORE INCOME TAXES
AND MINORITY INTEREST $ 78,318 $ 10,346
-----------------------------------------------------------------------------
</TABLE>
-5-
<PAGE>
6. RECONCILIATION BETWEEN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN CANADA
AND IN THE UNITED STATES:
The Forex unaudited consolidated summary financial statements were
prepared in accordance with generally accepted accounting principles in Canada,
which differ in some respects from those applicable in the United States
("U.S."). The following tables set forth the impact of material differences
between Canadian GAAP and U.S. GAAP on Forex's unaudited consolidated summary
financial statements.
<TABLE>
<CAPTION>
(A) CONSOLIDATED STATEMENTS OF EARNINGS: 1999 1998
<S> <C> <C>
Net earnings, as reported under Canadian GAAP $52,708 $5,986
Adjustments:
Unrealized foreign exchange gain on long-term debt 5,589 163
Foreign exchange contracts (297) (358)
Start-up costs 809 2,431
Interest expenses on convertible debentures (575) (444)
Amortization of deferred financing costs (31) (31)
Deferred income taxes (1,962) (2,944)
Stock-based compensation (3,175) (184)
Depreciation of fixed assets (585) (220)
Deferred income taxes on the above adjustments 1,004 (474)
-------- --------
Net earnings in accordance with U.S. GAAP $53,486 $3,925
======= ======
Net earnings per share under U.S. GAAP:
Basic $ 3.32 $ 0.25
Fully diluted $ 2.46 $ 0.23
(B) CONSOLIDATED BALANCE SHEET AS AT JUNE 30, 1999:
CANADA UNITED STATES
Current assets 174,328 174,328
Investments 2,224 2,121
Fixed assets 297,206 319,666
Other assets 10,137 7,279
Current liabilities 52,289 55,515
Long-term debt 196,903 211,792
Deferred income taxes 43,746 74,132
Shareholders' equity 190,957 161,955
(C) CONSOLIDATED STATEMENT OF CHANGES IN FINANCIAL POSITION:
1999 1998
---- ----
Supplemental disclosure:
(i) Cash paid during the year for:
Interest 8,822 6,329
Income taxes 8,256 (425)
(ii) Forex's statements of changes in financial position
reconcile the changes in cash, temporary investments,
bank indebtedness and bank loan. Under U.S. GAAP, changes
in bank indebtedness and bank loan amounting to $335 in
1999 ($2,392 in 1998) would have been classified as
financing activities.
-6-
<PAGE>
(iii) In a portion of 1999 (January 1 to April 13) and 1998,
the consolidated statements of financial position in
accordance with Canadian GAAP include Forex's
proportionate share of activities of Panneaux Chambord
Inc.
</TABLE>
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Operations 12,823 5,184
Investments (571) (318)
Financing (181) (1,195)
</TABLE>
-7-
<PAGE>
Consolidated Financial Statements of
LE GROUPE FOREX INC.
Years ended December 31, 1998, 1997 and 1996
<PAGE>
LE GROUPE FOREX INC.
Consolidated Financial Statements
Years ended December 31, 1998, 1997 and 1996
<TABLE>
<S> <C>
AUDITORS' REPORT TO THE SHAREHOLDERS...................................... 1
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Balance Sheet........................................... 2
Consolidated Statement of Earnings................................... 3
Consolidated Statement of Retained Earnings.......................... 4
Consolidated Statement of Changes in Financial Position.............. 5
Notes to Consolidated Financial Statements........................... 6
</TABLE>
<PAGE>
AUDITORS' REPORT TO THE SHAREHOLDERS
We have audited the consolidated balance sheet of Le Groupe Forex Inc. as at
December 31, 1998 and 1997 and the consolidated statements of earnings, retained
earnings and changes in financial position for each of the years in the three
year period ended December 31, 1998. 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 audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform an audit to obtain reasonable
assurance 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.
In our opinion, these consolidated financial statements present fairly, in all
material respects, the financial position of the Company as at December 31, 1998
and 1997 and the results of its operations and the changes in its financial
position for each of the years in the three year period ended December 31, 1998
in accordance with generally accepted accounting principles in Canada.
/s/KPMG LLP
KPMG LLP
Chartered Accountants
Val-d'Or, Quebec
January 29, 1999
-1-
<PAGE>
LE GROUPE FOREX INC.
Consolidated Balance Sheet
December 31, 1998, with comparative figures for 1997
(In thousands of Canadian dollars)
<TABLE>
<CAPTION>
===============================================================================
1998 1997
- -------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current assets:
Cash $ 8,251 $ 5,178
Short-term investments (note 5) 25,652 19,464
Accounts receivable 20,504 12,199
Income taxes receivable -- 4,370
Inventories 40,614 34,486
Prepaid expenses 1,008 639
- -------------------------------------------------------------------------------
96,029 76,336
Investments (note 6) 2,244 2,425
Fixed assets (note 7) 247,122 236,419
Other assets (note 8) 17,075 13,602
- -------------------------------------------------------------------------------
$362,470 $328,782
===============================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Bank indebtedness $ -- $ 5,242
Bank loan (note 9) 335 300
Accounts payable and accrued liabilities 23,063 25,123
Income taxes payable 1,457 --
Current portion of long-term debt 4,057 8,251
- -------------------------------------------------------------------------------
28,912 38,916
Long-term debt (note 10) 167,742 114,357
Deferred income taxes 30,849 17,162
Minority interest -- 57,028
Shareholders' equity:
Convertible debentures (note 11) 19,281 18,102
Capital stock (note 12) 9,867 9,867
Retained earnings 105,819 73,350
- -------------------------------------------------------------------------------
134,967 101,319
Contingent liabilities (note 13)
- -------------------------------------------------------------------------------
$362,470 $328,782
===============================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
-2-
<PAGE>
LE GROUPE FOREX INC.
Consolidated Statement of Earnings
Years ended December 31, 1998, with comparative figures for 1997 and 1996
(In thousands of Canadian dollars, except earnings per share)
<TABLE>
<CAPTION>
====================================================================================
1998 1997 1996
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
Revenue:
Sales $ 228,736 $ 120,748 $ 160,100
Interest 1,423 640 1,580
- ----------------------------------------------------------------------------------
230,159 121,388 161,680
Cost of goods sold 151,934 111,884 115,386
Selling and administrative expenses 10,746 9,519 10,641
Financial expenses 16,878 4,502 5,237
- ----------------------------------------------------------------------------------
179,558 125,905 131,264
- ----------------------------------------------------------------------------------
Earnings (loss) before income taxes and
minority interest 50,601 (4,517) 30,416
Income taxes (note 3):
Current (recovery) 2,758 (3,075) 6,204
Deferred 14,030 1,521 3,135
- ----------------------------------------------------------------------------------
16,788 (1,554) 9,339
- ----------------------------------------------------------------------------------
Net earnings (loss) before minority interest 33,813 (2,963) 21,077
Minority interest 508 (568) 10,431
- ----------------------------------------------------------------------------------
Net earnings (loss) $ 33,305 $ (2,395) $ 10,646
==================================================================================
Net earnings (loss) per share (note 17) $ 2.05 $ (.19) $ .67
Net earnings (loss) per share fully diluted
(note 17) $ 1.51 $ (.19) $ .61
==================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
-3-
<PAGE>
LE GROUPE FOREX INC.
Consolidated Statement of Retained Earnings
Years ended December 31, 1998, with comparative figures for 1997 and 1996
(In thousands of Canadian dollars)
<TABLE>
<CAPTION>
=======================================================================================
1998 1997 1996
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance, beginning of year $ 73,350 $ 76,351 $ 72,051
Net earnings (loss) 33,305 (2,395) 10,646
- --------------------------------------------------------------------------------------
106,655 73,956 82,697
Dividends:
Class A and B shares -- -- (6,346)
Interest on equity component of convertible
debentures net of taxes of $343 (1997 - $231)
(note 11) (836) (606) --
- ---------------------------------------------------------------------------------------
Balance, end of year $ 105,819 $ 73,350 $ 76,351
=======================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
-4-
<PAGE>
LE GROUPE FOREX INC.
Consolidated Statement of Changes in Financial Position
Years ended December 31, 1998, with comparative figures for 1997 and 1996
(In thousands of Canadian dollars)
<TABLE>
<CAPTION>
============================================================================================
1998 1997 1996
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash provided by (used in):
Operations:
Net earnings (loss) $ 33,305 $ (2,395) $ 10,646
Items not involving cash:
Depreciation of fixed assets 12,502 7,754 8,199
Amortization of other assets 3,762 1,946 3,477
Amortization of deferred loss on foreign
exchange 491 -- --
(Gain) loss on disposal of fixed assets (13) 128 107
Loss on write-down of investment 300 261 --
Loss on write-off of other assets -- 1,301 --
Deferred income taxes 14,030 1,521 3,135
Minority interest 508 (568) 10,431
Interest on the equity component of the
convertible debentures (903) (608) --
Net change in non-cash working capital items (11,035) (4,126) (6,896)
- ------------------------------------------------------------------------------------------
52,947 5,214 29,099
Investments:
Acquisition of investments (138) (469) (120)
Proceeds on sale of investments 19 272 6,562
Acquisition of fixed assets (8,922) (56,348) (87,841)
Proceeds on sale of fixed assets 37 304 547
Other assets (1,150) (11,310) (2,382)
Acquisition of minority interest (note 2) (71,843) -- --
- ------------------------------------------------------------------------------------------
(81,997) (67,551) (83,234)
Financing:
Long-term debt 163,836 88,283 26,301
Principal payments on long-term debt (120,318) (55,259) (14,813)
Investment by minority interest -- -- 14,120
Dividends paid by a subsidiary to minority
interest -- -- (8,150)
Issue of convertible debentures, net of costs -- 32,596 --
Deferred income taxes relative to issue costs -- (465) --
Dividends on Class A and B shares -- -- (6,346)
- ------------------------------------------------------------------------------------------
43,518 65,155 11,112
- ------------------------------------------------------------------------------------------
Increase (decrease) in cash position 14,468 2,818 (43,023)
Cash position, beginning of year 19,100 20,575 63,598
Cash position, beginning of year
Panneaux Chambord inc. (note 21) -- (4,293) --
- ------------------------------------------------------------------------------------------
Cash position, end of year (note 14) $ 33,568 $ 19,100 $ 20,575
==========================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
-5-
<PAGE>
LE GROUPE FOREX INC.
Notes to Consolidated Financial Statements
Years ended December 31, 1998, 1997 and 1996
(In thousands of Canadian dollars)
- -------------------------------------------------------------------------------
Le Groupe Forex Inc. is incorporated under Part 1A of the Quebec Business
Corporations Act. The Company manages investments, manufactures finished
lumber and OSB structural boards, sells forestry products, operates a
helicopter transportation business and manufactures parts for optics and
aeronautical lighting equipment.
1. SIGNIFICANT ACCOUNTING POLICIES:
(a) Consolidation:
These consolidated financial statements include the accounts of the
Company and those of its subsidiary Forex St-Michel Inc. and of its
joint-venture Panneaux Chambord Inc. On December 1998, Forex Maniwaki
Inc. has been liquidated in Forex St-Michel Inc.
Panneaux Chambord Inc. is under the joint control of its shareholders;
consequently, it is proportionately consolidated in the statements of
the company Le Groupe Forex Inc.
(b) Inventories:
Finished products, logs, raw materials and supplies are valued at the
lower of cost or net realizable value. Cost is determined by the
average cost method.
Wood chips are valued at net realizable value.
Parts are valued at the lower of cost or replacement cost. Cost is
determined by the first in, first out method or by the average cost
method.
(c) Foreign exchange:
Monetary assets and liabilities in foreign currency are translated
using the year-end exchange rate. Transactions included in the
statement of earnings are translated using the exchange rate at the
date of the transaction. Gains and losses on exchange are included in
earnings unless they relate to long-term monetary assets and
liabilities in which case they are deferred and amortized over the
remaining term of the asset or liability to which they relate.
(d) Investments:
Investments are carried at cost. Short term investments are carried at
the lower of cost or market value.
-6-
<PAGE>
LE GROUPE FOREX INC.
Notes to Consolidated Financial Statements, Continued
Years ended December 31, 1998, 1997 and 1996
(In thousands of Canadian dollars)
===============================================================================
1. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
(e) Depreciation and amortization:
Fixed assets are depreciated over their estimated useful lives
according to the following methods, annual rates and periods:
<TABLE>
<CAPTION>
============================================================================================================
Asset Method Rate and period
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Land improvements Declining balance 10%
Buildings Declining balance 5%
Office furniture and data processing Declining balance, 10% to 30%
equipment straight-line and 3 years
Machinery and automotive equipment Declining balance 10% to 30%
based on usage and useful lives
estimated
at 15 years
Helicopters Straight-line with a 40%
residual value 10%
Logging roads Declining balance 7%
Timber cutting rights Straight-line 25 years
============================================================================================================
</TABLE>
The amortization of other assets is calculated according to the straight-line
method over the following periods:
<TABLE>
============================================================================================================
<S> <C>
Start-up costs 5 years
Financing costs Over the term of the debts
Other deferred costs 3 years
============================================================================================================
</TABLE>
2. ACQUISITION OF MINORITY INTEREST:
On March 31, 1998, the Company has acquired the minority interest in each
of its subsidiaries Forex St-Michel Inc. and Forex Maniwaki inc. for a cash
consideration of $71,843, including acquisition costs. The excess of the
price paid of $14,307 over the book value of the net assets acquired has
been allocated to fixed assets.
-7-
<PAGE>
LE GROUPE FOREX INC.
Notes to Consolidated Financial Statements, Continued
Years ended December 31, 1998, 1997 and 1996
(In thousands of Canadian dollars)
================================================================================
3. INCOME TAXES:
The difference between the effective and basic tax rates results from the
following:
<TABLE>
<CAPTION>
=========================================================================================
1998 1997 1996
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Federal and provincial basic tax rates 38.0 % 38.0 % 38.0 %
Manufacturing and processing tax deductions (7.0)% (7.0)% (7.0)%
Others 2.2 % 3.4 % (0.3)%
- -----------------------------------------------------------------------------------------
33.2 % 34.4 % 30.7 %
=========================================================================================
</TABLE>
The financial statements do not reflect potential tax reductions available
through the application of capital losses. These losses amounting to $4,772
are deductible from future capital gains and are available for an
indefinite period.
4. INFORMATION FROM THE EARNINGS STATEMENT:
<TABLE>
<CAPTION>
=======================================================================================
1998 1997 1996
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
Depreciation of purchased goodwill $ 87 $ 44 $ 15
Amortization of deferred loss on foreign
exchange 491 -- --
Depreciation of fixed assets 12,502 7,754 8,199
Amortization of financing costs 2,341 1,116 1,503
Amortization of other assets 1,334 786 1,959
Interest on long-term debt 12,636 3,014 3,293
=======================================================================================
</TABLE>
5. SHORT-TERM INVESTMENTS:
<TABLE>
<CAPTION>
=======================================================================================
1998 1997
- ---------------------------------------------------------------------------------------
<S> <C> <C>
Term deposits and accrued interest $ 11,302 $ 19,464
Bankers' acceptances 14,350 --
- ---------------------------------------------------------------------------------------
$25,652 $19,464
=======================================================================================
</TABLE>
-8-
<PAGE>
LE GROUPE FOREX INC.
Notes to Consolidated Financial Statements, Continued
Years ended December 31, 1998, 1997 and 1996
(In thousands of Canadian dollars)
================================================================================
6. INVESTMENTS:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
1998 1997
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Advances to an affiliated company, at prime rate plus 0.5%,
without specified repayment term $ 1,661 $ 1,542
Others 583 883
- -----------------------------------------------------------------------------------------------------
$ 2,244 $ 2,425
=====================================================================================================
</TABLE>
7. FIXED ASSETS:
<TABLE>
<CAPTION>
===============================================================================================
1998 1997
- -----------------------------------------------------------------------------------------------
Accumulated Net book Net book
Cost depreciation value value
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Land $ 1,459 $ -- $ 1,459 $ 1,446
Land improvements 3,659 850 2,809 2,614
Buildings 29,916 3,125 26,791 27,299
Office furniture and data
processing equipment 4,206 2,405 1,801 2,183
Machinery and automotive
equipment 239,733 37,380 202,353 195,205
Helicopters 5,001 1,087 3,914 3,977
Logging roads 1,923 450 1,473 1,604
Construction in progress 5,092 -- 5,092 594
Timber cutting rights 1,501 71 1,430 1,497
- -----------------------------------------------------------------------------------------------
$292,490 $ 45,368 $247,122 $236,419
===============================================================================================
</TABLE>
8. OTHER ASSETS:
<TABLE>
<CAPTION>
==============================================================================================
1998 1997
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
Start-up costs at unamortized cost $ 4,791 $ 9,019
Financing costs at unamortized cost 6,147 4,383
Deferred loss on foreign exchange related
to long-term debt 6,085 --
Others 52 200
- ----------------------------------------------------------------------------------------------
$17,075 $13,602
==============================================================================================
</TABLE>
-9-
<PAGE>
LE GROUPE FOREX INC.
Notes to Consolidated Financial Statements, Continued
Years ended December 31, 1998, 1997 and 1996
(In thousands of Canadian dollars)
================================================================================
9. BANK LOAN:
The Company has an authorized line of credit of $55,000, $335 of which is
used as at December 31, 1998, secured by a charge on all the present and
future assets of the Company and on the shares of its subsidiary.
The interest rate varies in relation to the ratio of debt to earnings
before interest, taxes, depreciation and amortization.
The maximum interest rate is based on either the Canadian or US prime rate
plus 1.5% or on the bankers' acceptance or eurodollar rate plus 2.5%.
10. LONG-TERM DEBT:
<TABLE>
<CAPTION>
===========================================================================================================================
1998 1997
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Debt component of convertible debentures (note 11) $ 13,591 $ 14,494
Term loan (US$101,490), bearing interest at Libor plus 2.75%, repayable in
semi-annual contractual defined amounts, due June 30, 2005, secured by a
charge on all present and future assets and the shares of its subsidiary
(a) (c) (d) 155,615 --
Loan, without interest, payable in annual instalments of $159, maturing June
1, 2000 318 478
Loan, maturing March 1999, payable in monthly instalments of $8, including
interest at the rate of 4.38%, secured by a data processing equipment
with a book value of $152 127 217
Bank loan, prime rate plus 0.75%, payable in one instalment of $565 and one
last instalment of $590, maturing June 1999 (b) 1,155 3,415
Loan, 9.50% fixed rate, payable in monthly instalments of $12 including
interest maturing May 2006, secured by an hypothec on an aircraft with a
book value of $1,009 949 1,004
Loan, maturing February 2000, payable in monthly instalments of $7
including interest at the rate of 9.70%, secured by automotive equipment
with a book value of $47 44 --
First mortgage bonds -- 83,000
Term loan -- 20,000
- ---------------------------------------------------------------------------------------------------------------------------
171,799 122,608
Current portion of long-term debt 4,057 8,251
- ---------------------------------------------------------------------------------------------------------------------------
$167,742 $114,357
===========================================================================================================================
</TABLE>
-10-
<PAGE>
LE GROUPE FOREX INC.
Notes to Consolidated Financial Statements, Continued
Years ended December 31, 1998, 1997 and 1996
(In thousands of Canadian dollars)
===============================================================================
10. LONG-TERM DEBT (CONTINUED):
(a) Under the term loan agreement, the Company is limited in respect of its
ability to increase its borrowings, to invest in a party, to use the
proceeds of a new issue of capital stock, to repay certain debts, and
to enter into business combinations, poolings, reorganizations and sell
assets.
(b) This bank loan is secured by a first ranking moveable hypothec on
specific equipment and second and third ranking moveable hypothec on
receivables and inventories.
(c) The interest rate varies in relation to the ratio of debt to earnings
before interest, taxes, depreciation and amortization (ebitda).
The maximum interest rate is based on either the US base rate plus
1.5% or the eurodollar rate based on Libor plus 2.5%.
(d) The Company has fixed the interest rate on the Libor based rate at 5.81%
in respect of 75% of the principal amount of the loan, with a swap
that expires in 2005.
Instalments on long-term debt for the next five years are: 1999 - $4,057;
2000 - $2,977; 2001 -$2,972; 2002 - $3,111 and 2003 - $32,241.
11. CONVERTIBLE DEBENTURES:
<TABLE>
<CAPTION>
=================================================================================================================
Debt Equity 1998 1997
component component Total Total
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Convertible unsecured subordinated
debentures (net of issue costs of $383)
bearing interest at 8%, maturing March 12,
2007, convertible at $7.15 per subordinate
Class B share at any time prior to March 12,
2002. Thereafter the debentures will be
convertible at $7.90 per subordinate Class B
share $ 13,591 $ 19,281 $ 32,872 $ 32,596
=================================================================================================================
</TABLE>
Since the provisions of the debentures allow the Company to repay the
holders with subordinate Class B shares, the debentures are presented with
shareholders' equity net of the debt component and net of issue costs, net
of income taxes.
The Company calculated the debt component as the present value of the
future interest payments discounted at the rate applicable to
non-convertible debt at the time the debentures were issued.
-11-
<PAGE>
LE GROUPE FOREX INC.
Notes to Consolidated Financial Statements, Continued
Years ended December 31, 1998, 1997 and 1996
(In thousands of Canadian dollars)
================================================================================
12. CAPITAL STOCK:
Authorized:
Unlimited number of Class A shares, ten votes per share, participating,
convertible into subordinate Class B shares on a share-for-share basis,
without par value.
Unlimited number of subordinate Class B shares, one vote per share,
participating, without par value.
<TABLE>
<CAPTION>
Issued and paid:
=================================================================================
1998 1997
- ---------------------------------------------------------------------------------
<S> <C> <C>
11,176,783 (1997 - 11,181,883) Class A shares $ 6,581 $ 6,584
4,655,549 (1997 - 4,650,449) Class B shares 3,286 3,283
- ---------------------------------------------------------------------------------
$ 9,867 $ 9,867
=================================================================================
</TABLE>
Conversion:
During the year, 5,100 Class A shares have been converted into 5,100
Class B shares.
Shares reserved:
The Company granted to employees options to purchase 1,625,000 Class B
shares at prices ranging from $4.50 to $4.75 per share. These options
can be exercised throughout a five year period ending January 31, 2001.
The Company granted to a lender an option to purchase 1,000,000
subordinate Class B shares at a price of $4.50 per share. The option is
exercisable for 5 years maturing October 10, 2002. The sale, the
transfer and the exercise of this option are subject to a first right
of refusal in favor of the Company.
13. CONTINGENT LIABILITIES:
(a) Le Groupe Forex Inc. is a party to a lawsuit as a codefendant in a
claim by First Nations. This claim is contested and management believes
it will not have adverse effect on Forex's financial condition.
(b) Le Groupe Forex Inc. has appealed a decision against the Company
regarding the payment of stumpage rights for the year 1989-90, in an
amount of $193 in principal plus interest. The amount has not been
recorded in the financial statements.
-12-
<PAGE>
LE GROUPE FOREX INC.
Notes to Consolidated Financial Statements, Continued
Years ended December 31, 1998, 1997 and 1996
(In thousands of Canadian dollars)
================================================================================
13. CONTINGENT LIABILITIES (CONTINUED):
(c) Some OSB Plants do not fully comply with environmental laws as their
emissions are slightly higher than permitted under applicable
environmental laws. In order to remediate this problem, the Company
will purchase, during the next year, $2,250 of equipment and machinery.
14. CASH POSITION:
<TABLE>
<CAPTION>
===================================================================================
1998 1997 1996
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash position:
Cash $ 8,251 $ 5,178 $ --
Short-term investments 25,652 19,464 23,058
Restricted Funds -- -- 5,905
Bank indebtedness -- (5,242) (2,842)
Bank loan (335) (300) (5,546)
- -----------------------------------------------------------------------------------
$ 33,568 $ 19,100 $ 20,575
===================================================================================
</TABLE>
15. COMMITMENTS:
As at December 31, 1998, the Company has signed contracts for the purchase
of machinery and equipment for a total of $9,524.
16. RELATED COMPANY TRANSACTIONS:
During the year, the Company concluded the following transactions with
related companies:
<TABLE>
<CAPTION>
=================================================================================================================
1998 1997 1996
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Expenses paid to an affiliated company with
respect to staff and others $ 13,720 $ 12,236 $ 13,570
Management fees $ 375 $ 905 $ 1,280
=================================================================================================================
</TABLE>
Management is of the opinion that these transactions were undertaken under
the same terms and conditions as transactions with non-related parties.
-13-
<PAGE>
LE GROUPE FOREX INC.
Notes to Consolidated Financial Statements, Continued
Years ended December 31, 1998, 1997 and 1996
(In thousands of Canadian dollars)
================================================================================
17. NET EARNINGS (LOSS) PER SHARE:
The net earnings (loss) per share is calculated based on the net earnings
(net loss) for the year of $33,305 (($2,395) in 1997 and $10,646 in 1996)
adjusted for the interest on equity component of convertible debentures of
$836 ($606 in 1997), divided by the weighted average number of Class A and
B shares outstanding during the year, 15,832,332 (15,832,332 in 1997 and
15,832,332 in 1996).
The fully diluted net earnings (loss) per share is calculated using the
weighted average number of Class B shares which would have been outstanding
assuming the additional shares had been issued at the beginning of the year
or on the date of issue of the convertible debentures and the outstanding
stock options.
18. FINANCIAL INSTRUMENTS:
(a) Foreign currency rate risk:
The Company realizes a significant portion of its sales in foreign
currencies and enters into various types of foreign exchange contracts
to manage its foreign exchange risk. The Company does not hold or issue
financial instruments for trading purposes. At December 31, 1998, the
Company held US$31,250 in forward contracts at an average rate of
1.5415 expiring at various dates to May 1999. The market rate for the
forward contracts at December 31, 1998 is 1.5333.
(b) Credit risk:
The Company does not have a significant exposure to any individual
customer or counter party. The Company reviews new customers' credit
history before extending credit and conducts regular reviews of its
customers' credit performance. The Company may require payment
guarantees, such as letters of credit or obtain credit insurance
coverage. An allowance for doubtful accounts is established based upon
factors surrounding the credit risk of specific customers, historical
trends and other information.
The Company's short-term investments are mainly with various financial
institutions with strong credit ratings and it has established
guidelines relative to diversification and maturities to maintain
safety and liquidity. The Company has not experienced any losses on its
investments.
-14-
<PAGE>
LE GROUPE FOREX INC.
Notes to Consolidated Financial Statements, Continued
Years ended December 31, 1998, 1997 and 1996
(In thousands of Canadian dollars)
===============================================================================
18. FINANCIAL INSTRUMENTS (CONTINUED):
(c) Fair value of financial instruments:
The carrying amount of cash, short-term investments, accounts
receivable, bank loan and accounts payable approximate the fair value
because of the near-term maturity of those instruments; similarly,
long-term investments and variable rate debt have a carrying value
which approximates their fair value.
The fair value of long-term debt was $173,118 (1997, $122,966) as at
December 31, 1998 compared to a book value of $171,799 (1997,
$122,608). The fair value has been determined by discounting the future
cash flows at the rate currently available for debt of similar terms
(note 10).
(d) Interest rate risk management:
The Company has entered into an interest rate swap on its US
denominated debt which fixed the interest rate on the debt with the
expiring of the debt in 2005.
Under the swap, the Company pays a fixed base rate of 5.8133% on 75% of
the outstanding principal amount of the US debt from time to time.
19. SEGMENTED INFORMATION:
The Company operates three Oriented Strand Board "OSB" plants as well as
two sawmills. Their products are used into the residential and commercial
construction sector and for repairs and renovations.
Four business segments do not meet the quantitative criteria for separate
disclosure. These sectors are the sale of forest products, helicopter
transportation, manufacturing part of optics and aeronautical lighting
equipment and head office.
Accounting principles used for segment reporting are the same as those
described in the accounting policies section.
The Company assesses the performance based on operating income before taxes
and minority interest, excluding non recurring gains and losses and foreign
exchange gains or losses.
The Company is organized along its products lines.
-15-
<PAGE>
LE GROUPE FOREX INC.
Notes to Consolidated Financial Statements, Continued
Years ended December 31, 1998, 1997 and 1996
(In thousands of Canadian dollars)
- --------------------------------------------------------------------------------
19. SEGMENTED INFORMATION (CONTINUED):
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
1998
-----------------------------------------------------------------------------------------------------------------------
Consolidated
financial
OSB Lumber All others Elimination statements
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Sales from external customers $ 197,603 $ 23,387 $ 7,746 $ - $ 228,736
Intersegment sales - - 13,698 (13,698) -
Interest revenues 638 - 785 - 1,423
Segment earnings before income
taxes, depreciation, interest
and minority interest 69,099 666 11,747 668 82,180
Segment amortization of fixed
assets and other assets 12,039 1,988 1,975 262 16,264
Intersegment interest revenues 531 - 4,624 (5,155) -
Interest expense 2,820 - 11,717 - 14,537
Intersegment interest expenses 4,624 - 531 (5,155) -
Segment assets 253,759 35,569 34,827 38,315 362,470
Segment acquisition of capital
assets and other assets 7,357 947 618 - 8,922
-----------------------------------------------------------------------------------------------------------------------
</TABLE>
-16-
<PAGE>
LE GROUPE FOREX INC.
Notes to Consolidated Financial Statements, Continued
Years ended December 31, 1998, 1997 and 1996
(In thousands of Canadian dollars)
- --------------------------------------------------------------------------------
19. SEGMENTED INFORMATION (CONTINUED):
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
1997
-----------------------------------------------------------------------------------------------------------------------
Consolidated
financial
OSB Lumber All others Elimination statements
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Sales from external customers $ 88,508 $ 26,105 $ 6,135 $ - $ 120,748
Intersegment sales - - 5,047 (5,047) -
Interest revenues 328 - 312 - 640
Segment earnings before income
taxes, depreciation, interest
and minority interest
4,128 3,230 2,413 488 10,259
Segment amortization of fixed
assets and other assets 6,459 2,097 1,144 - 9,700
Intersegment interest revenues 1,635 - - (1,635) -
Interest expense 2,452 - 934 - 3,386
Intersegment interest expenses 21 - 1,667 (1,688) -
Segment assets 262,600 33,344 37,510 (4,672) 328,782
Segment acquisition of capital
assets and other assets 62,075 608 804 4,171 67,658
-----------------------------------------------------------------------------------------------------------------------
</TABLE>
-17-
<PAGE>
LE GROUPE FOREX INC.
Notes to Consolidated Financial Statements, Continued
Years ended December 31, 1998, 1997 and 1996
(In thousands of Canadian dollars)
- --------------------------------------------------------------------------------
19. SEGMENTED INFORMATION (CONTINUED):
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
1996
-----------------------------------------------------------------------------------------------------------------------
Consolidated
financial
OSB Lumber All others Elimination statements
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Sales from external customers $ 127,042 $ 28,418 $ 3,806 $ 834 $ 160,100
Intersegment sales - - 10,096 (10,096) -
Interest revenues 2,148 - 308 (876) 1,580
Segment earnings before income
taxes, depreciation, interest
and minority interest 35,891 3,442 7,478 (877) 45,934
Segment amortization of fixed
assets and other assets 8,146 2,226 1,767 (462) 11,677
Intersegment interest revenues 433 - 185 (618) -
Interest expense 3,232 380 163 (42) 3,733
Intersegment interest expenses - - 2,285 (2,285) -
Segment assets 208,494 36,126 18,198 34,580 297,398
Segment acquisition of capital
assets and other assets 86,155 4,115 1,970 (4,399) 87,841
-----------------------------------------------------------------------------------------------------------------------
</TABLE>
-18-
<PAGE>
LE GROUPE FOREX INC.
Notes to Consolidated Financial Statements, Continued
Years ended December 31, 1998, 1997 and 1996
(In thousands of Canadian dollars)
- --------------------------------------------------------------------------------
19. SEGMENTED INFORMATION (CONTINUED):
Reconciliation to net earnings:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
1998 1997 1996
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Segment earnings before income taxes,
depreciation, interests and minority
interest $ 82,180 $ 10,259 $ 45,934
Amortization of fixed assets and other assets (16,264) (9,700) (11,677)
Interest expenses (14,537) (3,386) (3,733)
Amortization of deferred loss on foreign exchange (491) - -
Other losses (287) (1,690) (108)
-----------------------------------------------------------------------------------------------------------------------
Earnings (loss) before income taxes and
minority interest $ 50,601 $ (4,517) $ 30,416
-----------------------------------------------------------------------------------------------------------------------
</TABLE>
Revenue by geographic area are as follows:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
1998 1997 1996
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Canada $ 66,907 $ 32,103 $ 33,803
United States 161,241 85,783 127,877
Overseas 2,011 3,502 -
-----------------------------------------------------------------------------------------------------------------------
$ 230,159 $ 121,388 $ 161,680
-----------------------------------------------------------------------------------------------------------------------
</TABLE>
-19-
<PAGE>
LE GROUPE FOREX INC.
Notes to Consolidated Financial Statements, Continued
Years ended December 31, 1998, 1997 and 1996
(In thousands of Canadian dollars)
- --------------------------------------------------------------------------------
20. RECONCILIATION BETWEEN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN CANADA
AND IN THE UNITED STATES:
The Company consolidated financial statements are prepared in accordance
with generally accepted accounting principles (GAAP) in Canada which differ
in some respects from those applicable in the United States (U.S.). The
following table sets forth the impact of material differences between
Canadian GAAP and U.S. GAAP on the Company's consolidated financial
statements.
(a) Consolidated statements of earnings:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
1998 1997
------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net earnings (loss), as reported under Canadian GAAP $ 33,305 $ (2,395)
Adjustments:
Unrealized foreign exchange loss on long-term debt (i) (6,085) -
Forward exchange contracts (ii) 488 (206)
Start-up costs (iii) 3,981 (6,137)
Interest expenses on convertible debentures (iv) (903) (609)
Amortization of deferred financing costs (iv) (61) (52)
Deferred income taxes (v) (3,624) 543
Stock-based compensation (vi) (497) -
Share in income of a company subject to significant
influence (vii) 169 (283)
Minority interest (viii) (31) 1,560
Depreciation of fixed assets (v) (713) -
Deferred income taxes on the above adjustments (899) 2,218
------------------------------------------------------------------------------------------------------------------
Net earnings (loss) in accordance with U.S. GAAP $ 25,130 $ (5,361)
------------------------------------------------------------------------------------------------------------------
Net earnings (loss) per share under
U.S. GAAP (x):
Basic $ 1.59 $ (0.34)
Fully diluted 1.27 (0.34)
------------------------------------------------------------------------------------------------------------------
</TABLE>
-20-
<PAGE>
LE GROUPE FOREX INC.
Notes to Consolidated Financial Statements, Continued
Years ended December 31, 1998, 1997 and 1996
(In thousands of Canadian dollars)
- --------------------------------------------------------------------------------
20. RECONCILIATION BETWEEN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN CANADA
AND IN THE UNITED STATES (CONTINUED):
(i) Unrealized foreign exchange loss on long-term debt:
Under Canadian GAAP, unrealized exchange losses arising from the
translation of long-term debt denominated in foreign currencies
are deferred and amortized over the remaining life of the related
debt. Under U.S. GAAP, these losses would have been included in
income and, consequently, no amount would have been deferred in
Other assets.
(ii) Forward exchange contracts:
Under Canadian GAAP, unrealized and realized gains and losses on
foreign currency transactions identified as hedges may be deferred
as long as there is reasonable assurance that the hedge will be
effective. Under U.S. GAAP, deferral is allowed only on foreign
currency transactions intended to hedge identifiable firm foreign
currency commitments.
(iii) Start-up costs:
Under Canadian GAAP, certain costs incurred to start up new
facility were deferred and amortized over future periods. Under
U.S. GAAP, such costs were expensed as incurred.
(iv) Convertible debentures:
Under Canadian GAAP, the Company's convertible debentures are
recorded in part as debt and in part as shareholders' equity.
Under U.S. GAAP, the convertible subordinated debentures would be
recorded as debt. Consequently, interest expenses and issue costs
were adjusted.
(v) Deferred income taxes:
Under Canadian GAAP, income taxes are provided on the deferral
method basis whereas under U.S. GAAP, income taxes are accounted
for by liability method. Statement of Financial Accounting
Standards ("SFAS") No. 109, "Accounting for Income Taxes",
requires the recognition of deferred tax assets and liabilities
for the expected future tax consequences of events that have been
recognized in the Company's financial statements or tax returns.
U.S. GAAP adjustments relate primarily to the recording of taxes
on the difference between the book value and the tax value of the
investment in Panneaux Chambord Inc., income tax consequences
resulting from purchase price allocation following business
combination accounted for as a purchase and the effect on income
taxes as a result of changes in tax rates over the years.
-21-
<PAGE>
LE GROUPE FOREX INC.
Notes to Consolidated Financial Statements, Continued
Years ended December 31, 1998, 1997 and 1996
(In thousands of Canadian dollars)
- --------------------------------------------------------------------------------
20. RECONCILIATION BETWEEN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN CANADA
AND IN THE UNITED STATES (CONTINUED):
(a) Consolidated statements of earnings (continued):
(vi) Stock-based compensation:
In accordance with U.S. GAAP, FAS 123 requires that all
transactions in which goods or services are the consideration
received for the issuance of equity instruments shall be
accounted for based on fair value of the consideration received
or the fair value of the equity instruments issued. In 1998, the
Company granted to a lender an option to purchase 1,000,000
shares at a price of $4.50 per share. The fair value of the
option was estimated at $1,626,000 and accounted for as deferred
financing costs. These costs are being amortized over the period
of the loan.
(vii) Investment in company subject to significant influence:
Share in income (loss) of a company subject to significant
influence has been adjusted to take into consideration U.S. GAAP
adjustment recorded for that company.
(viii) Minority interest:
Minority interest was adjusted to take into consideration
minority interest resulting from the U.S. GAAP adjustments in
each of the subsidiaries of the Company.
(ix) Effect of proportionate consolidation on the financial statement:
The Company has interests in a jointly controlled entity which
have been proportionately consolidated in the Company's financial
statements under Canadian GAAP. For purposes of U.S. GAAP, this
interest would be accounted for by the equity method. Net income,
earnings per share and shareholders' equity under U.S. GAAP are
not impacted by the proportionate consolidation of this interest
in a jointly controlled entity.
In 1998 and 1997, the consolidated statements of earnings in
accordance with Canadian GAAP include the Company's proportionate
share of operations of Panneaux Chambord Inc.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
1998 1997
------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Revenues $ 47,566 $ 21,648
Cost of goods sold 31,558 21,291
Selling and administrative expenses 470 1,411
Financial expenses 382 324
Income taxes (recovery) 4,799 (438)
------------------------------------------------------------------------------------------------------------
</TABLE>
-22-
<PAGE>
LE GROUPE FOREX INC.
Notes to Consolidated Financial Statements, Continued
Years ended December 31, 1998, 1997 and 1996
(In thousands of Canadian dollars)
- --------------------------------------------------------------------------------
20. RECONCILIATION BETWEEN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN CANADA
AND IN THE UNITED STATES (CONTINUED):
(a) Consolidated statements of earnings (continued):
(x) Earnings per share:
For the purpose of reporting under U.S. GAAP, SFAS No. 128 requires
to replace the presentation of primary earnings per share ("EPS")
with a presentation of basic EPS. This is consistent with the
calculation for Canadian GAAP. The statement also requires dual
presentation of basic and fully diluted EPS ( which includes the
effect of stock options and convertible debentures having a dilutive
impact) for all entities with complex capital structures. In 1997,
options and convertible debentures are anti-dilutive.
(b) Consolidated statement of changes in financial position:
Supplemental disclosure of cash flow information:
(i) Cash paid during the year for:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------
1998 1997
-------------------------------------------------------------------------------------------------------------
<S> <C>
Interests $ 15,374 $ 2,967
Income taxes 1,301 1,295
-------------------------------------------------------------------------------------------------------------
</TABLE>
(ii) The Company's statements of changes in financial position
reconcile the changes in cash, temporary investment, bank
indebtedness and bank loan. Under the U.S. GAAP, changes in bank
indebtedness and bank loan amounting to $5,542 in 1998 ($1,882 in
1997) would have been classified as financing activities.
(iii)In 1998 and 1997, the consolidated statements of financial
position in accordance with Canadian GAAP include the Company's
proportionate share of activities of Panneaux Chambord Inc.
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------
1998 1997
-------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations $ 17,123 $ 5,617
Investments (936) (5,674)
Financing (2,260) (2,260)
-------------------------------------------------------------------------------------------------------------
</TABLE>
-23-
<PAGE>
LE GROUPE FOREX INC.
Notes to Consolidated Financial Statements, Continued
Years ended December 31, 1998, 1997 and 1996
(In thousands of Canadian dollars)
- --------------------------------------------------------------------------------
20. RECONCILIATION BETWEEN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN CANADA
AND IN THE UNITED STATES (CONTINUED):
(c) Consolidated balance sheet:
The following summarizes the balance sheet amounts in accordance with
U.S. GAAP:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
1998 1997
------------------------------------------------------------------------------------------------------------------
Canada United States Canada United States
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Current assets (i), (ii) $ 96,029 $ 73,462 $ 76,336 $ 66,001
Investments (i), (iii), (iv) 2,244 40,908 2,425 27,415
Fixed assets (i), (v) 247,122 231,029 236,419 210,516
Other assets (i), (v), (vi) 17,075 7,696 13,602 3,740
Current liabilities (i), (ii) 28,912 20,814 38,916 32,308
Long-term debt (i), (vii) 167,742 186,901 114,357 131,458
Deferred income taxes (i), (v) 30,849 44,614 17,162 18,520
Minority interests (viii) - - 57,028 51,863
Shareholders' equity (ii), (iii),
(iv), (v), (vi), (vii) and (viii) 134,967 100,766 101,319 73,523
------------------------------------------------------------------------------------------------------------------
</TABLE>
(i) The Company has interests in a jointly controlled entity which
have been proportionately consolidated in the Company's financial
statements under Canadian GAAP. For purposes of U.S. GAAP, this
interest would be accounted for by the equity method. Net income,
earnings per share and shareholders' equity under U.S. GAAP are
not impacted by the proportionate consolidation of this interest
in a jointly controlled entity.
In 1998 and 1997, the consolidated balance sheet in accordance
with Canadian GAAP include the Company's proportionate share of
assets and liabilities of Panneaux Cambord Inc.
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------
1998 1997
-------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Current assets $ 22,850 $ 10,335
Fixed assets 25,093 25,903
Other assets 1,628 1,827
Current liabilities (8,462) (6,814)
Long-term debt - (1,155)
Deferred income taxes (4,841) (4,205)
-------------------------------------------------------------------------------------------------------------
</TABLE>
-24-
<PAGE>
LE GROUPE FOREX INC.
Notes to Consolidated Financial Statements, Continued
Years ended December 31, 1998, 1997 and 1996
(In thousands of Canadian dollars)
- --------------------------------------------------------------------------------
20. RECONCILIATION BETWEEN GENERALLY ACCEPTED ACCOUNTING PRINCIPLES IN CANADA
AND IN THE UNITED STATES (CONTINUED):
(c) Consolidated balance sheet (continued):
(ii) Refer to (a) (ii) above.
(iii) Refer to (a) (vii) above.
(iv) In accordance with U.S. GAAP, FAS 115 requires that investments
available for sale be measured at fair value. Unrealized gains
or losses were excluded from earnings and reported in
shareholders' equity.
(v) Refer to (a) (v) above.
(vi) Refer to (a) (i), (iii) and (iv) above.
(vii) Refer to (a) (iv) above.
(viii) Refer to (a) (viii) above.
(d) Consolidated statement of comprehensive income:
SFAS 130, "Reporting comprehensive Income", requires that a statement
of comprehensive income be displayed with the same prominence as other
financial statements. Comprehensive income, which incorporates net
income, includes all changes in equity during a period except those
resulting from investments by and distributions to owners. There is
no requirement to disclose comprehensive income under Canadian GAAP.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
1998 1997
------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net earnings (loss) in accordance with U.S. GAAP $ 25,130 $ (5,361)
Other comprehensive earnings (loss), net of taxes:
Unrealized losses on available-for-sale-securities 487 (281)
------------------------------------------------------------------------------------------------------------------
Consolidated comprehensive earnings (loss) $ 25,617 $ (5,642)
------------------------------------------------------------------------------------------------------------------
</TABLE>
-25-
<PAGE>
LE GROUPE FOREX INC.
Notes to Consolidated Financial Statements, Continued
Years ended December 31, 1998, 1997 and 1996
(In thousands of Canadian dollars)
- --------------------------------------------------------------------------------
21. PRO FORMA 1996 - PROPORTIONATE CONSOLIDATION:
The conditions which had previously enabled Forex to consolidate in its
financial statements those of Panneaux Chambord Inc. are not present
anymore. Consequently, it was decided that beginning with the year
commencing on January 1, 1997, the Company will consolidate Panneaux
Chambord Inc. using the proportionate consolidation method. The summarized
financial statements hereafter, for the year ended December 31, 1996,
present the effect of this change on a pro forma basis:
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
December 31,
1996 1996 1996
Chambord pro forma
----------------------------------------------------------------------------------------------------------------------
(1) (2) (3)
<S> <C> <C> <C>
Assets
Non-cash working capital item $ 30,616 $ 8,171 $ 22,445
Investments 2,529 40 2,489
Fixed assets 211,503 23,246 188,257
Other assets 6,387 848 5,539
----------------------------------------------------------------------------------------------------------------------
$ 251,035 $ 32,305 $ 218,730
----------------------------------------------------------------------------------------------------------------------
Liabilities
Long-term debt $ 80,767 $ 5,675 $ 75,092
Deferred income taxes 19,029 2,923 16,106
Minority interest 85,596 28,000 57,596
Shareholders' equity 86,218 - 86,218
----------------------------------------------------------------------------------------------------------------------
271,610 36,598 235,012
Cash position 20,575 4,293 16,282
----------------------------------------------------------------------------------------------------------------------
$ 251,035 $ 32,305 $ 218,730
----------------------------------------------------------------------------------------------------------------------
</TABLE>
1) Summarized financial statements.
2) Deduct 50% of Chambord.
3) Pro forma on proportionate consolidation basis.
-26-
<PAGE>
LE GROUPE FOREX INC.
Notes to Consolidated Financial Statements, Continued
Years ended December 31, 1998, 1997 and 1996
(In thousands of Canadian dollars)
- --------------------------------------------------------------------------------
21. PRO FORMA 1996 - PROPORTIONATE CONSOLIDATION (CONTINUED):
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
December 31,
1996 1996 1996
Chambord pro forma
----------------------------------------------------------------------------------------------------------------------
(1) (2) (3)
<S> <C> <C> <C>
Earnings
Revenue $ 161,680 $ 32,746 $ 128,934
Expenses 131,264 24,119 107,145
----------------------------------------------------------------------------------------------------------------------
Earnings before income taxes and
minority interest 30,416 8,627 21,789
Income taxes 9,339 2,776 6,563
----------------------------------------------------------------------------------------------------------------------
Net earnings before minority interest 21,077 5,851 15,226
Minority interest 10,431 5,851 4,580
----------------------------------------------------------------------------------------------------------------------
Net earnings $ 10,646 $ - $ 10,646
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
Net earnings per share $ 0.67 $ - $ 0.67
Net earnings per share fully diluted $ 0.61 $ - $ 0.61
----------------------------------------------------------------------------------------------------------------------
</TABLE>
1) Summarized financial statements.
2) Deduct 50% of Chambord.
3) Pro forma on proportionate consolidation basis.
-27-
<PAGE>
LE GROUPE FOREX INC.
Notes to Consolidated Financial Statements, Continued
Years ended December 31, 1998, 1997 and 1996
(In thousands of Canadian dollars)
- --------------------------------------------------------------------------------
22. UNCERTAINTY DUE TO YEAR 2000 ISSUE:
The Year 2000 Issue arises because many computerized systems use two digits
rather than four to identify a year. Date-sensitive systems may recognize
the year 2000 as 1900 or some other date, resulting in errors when
information using year 2000 dates is processed. In addition, similar
problems may arise in some systems which use certain dates in 1999 to
represent something other than a date. The effects of the Year 2000 Issue
may be experienced before, on, or after January 1, 2000, and, if not
addressed, the impact on operations and financial reporting may range from
minor errors to significant systems failure which could affect an entity's
ability to conduct normal business operations. It is not possible to be
certain that all aspects of the Year 2000 Issue affecting the entity,
including those related to the efforts of customers, suppliers, or other
third parties, will be fully resolved.
23. COMPARATIVE FIGURES:
Certain comparative figures have been reclassified to conform with the
presentation adopted in the current year.
-28-
<PAGE>
EXHIBIT 99.6
PRO FORMA FINANCIAL DATA
The unaudited pro forma financial statements presented below give effect to
the acquisition of LeGroupe Forex Inc. ("Forex") and related financing
transactions as if they had been consummated on June 30, 1999, in the case of
the Unaudited Pro Forma Condensed Consolidated Balance Sheet, and at the
beginning of the periods presented, in the case of the Pro Forma Condensed
Consolidated Statements of Income. The Forex historical financial data included
in the unaudited pro forma financial statements has been adjusted to conform to
generally accepted accounting principles in the United States. The Unaudited Pro
Forma Condensed Consolidated Statement of Income for the year ended December 31,
1998 presented below does not give effect to the acquisition by
Louisiana-Pacific Corporation ("Louisiana-Pacific") of ABT Building Products
Corporation, which was consummated on February 25, 1999, and related financing
transactions, or to the buyout by Forex of a joint venture partner's 50%
interest in a Forex subsidiary, which was consummated on April 13, 1999. These
unaudited pro forma financial statements should be read in conjunction with the
consolidated financial statements (including the notes thereto) included in
Louisiana-Pacific's Annual Report on Form 10-K for the fiscal year ended
December 31, 1998 and Quarterly Report on Form 10-Q for the fiscal quarter ended
June 30, 1999. These unaudited pro forma financial statements are presented for
illustrative purposes only and are not necessarily indicative of what
Louisiana-Pacific's actual financial position or results of operations would
have been had such transactions been consummated on such date or of the
financial position or results of operations that may be reported by
Louisiana-Pacific in the future.
<PAGE>
LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(IN MILLIONS OF US DOLLARS)
<TABLE>
<CAPTION>
AS OF JUNE 30, 1999
---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PRO FORMA
ASSETS L-P FOREX ADJUSTMENTS PRO FORMA
---------------- ---------------- -------------- --------------
Cash and cash equivalents $ 152.9 $ 66.7 $ $ 219.6
Accounts receivable, net 204.2 22.7 226.9
Inventories 239.7 26.7 6.2(c)(d) 272.6
Prepaid expenses 19.6 2.0 21.6
Income tax refunds receivable - - -
Deferred income taxes 121.8 - 121.8
---------------- ---------------- -------------- --------------
Total current assets 738.2 118.1 6.2 862.5
Timber and Timberlands 498.4 1.9 112.8(c)(d) 613.1
Net property, plant and equipment 1,010.9 214.7 68.1(c)(d) 1,293.7
Goodwill, net of amortization 132.9 - 289.7(b) 422.6
Notes receivable from asset sales 403.8 - 403.8
Other assets 30.0 6.3 0.8(c) 37.1
---------------- ---------------- -------------- --------------
TOTAL ASSETS $ 2,814.2 $ 341.0 $ 477.6 $ 3,632.8
---------------- ---------------- -------------- --------------
---------------- ---------------- -------------- --------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current portion of long-term debt $ 23.2 $ 5.8 $ 33.5(b) $ 62.5
Short-term notes payable - - -
Accounts payable and accrued 270.2 24.7 294.9
liabilities
Current portion of contingency reserves 205.0 - 205.0
Income taxes payable 13.4 7.1 20.5
---------------- ---------------- -------------- --------------
Total current liabilities 511.8 37.6 33.5 582.9
Limited recourse notes payable 396.5 - 396.5
Other debt 181.6 143.5 485.1(a)(b) 810.2
---------------- ---------------- -------------- --------------
Total long-term debt, excluding
Current portion 578.1 143.5 485.1 1,206.7
Contingency reserves, excluding
current portion 102.9 - 102.9
Deferred income taxes and other 301.8 50.2 68.7(d) 420.7
Stockholders' equity: 1,319.6 109.7 (109.7)(a)(b) 1,319.6
---------------- ---------------- -------------- --------------
TOTAL LIABILITIES & STOCKHOLDERS'
EQUITY $ 2,814.2 $ 341.0 $ 477.6 $ 3,632.8
---------------- ---------------- -------------- --------------
---------------- ---------------- -------------- --------------
See notes to unaudited pro forma condensed consolidated information.
</TABLE>
1
<PAGE>
LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 1998
(IN MILLIONS OF US DOLLARS, EXCEPT PER SHARE DATA WHICH
ARE IN US DOLLARS)
<TABLE>
<CAPTION>
PRO FORMA
L-P FOREX ADJUSTMENTS PRO FORMA
-------------------------------------------------------------------------
Net Sales $ 2,297.1 $ 122.3 $ $ 2,419.4
---------------- ---------------- -------------- --------------
<S> <C> <C> <C> <C>
COSTS AND EXPENSES:
Cost of sales 1,853.8 74.3 6.2(e) 1,934.3
Depreciation, amortization & depletion 185.4 11.9 27.1(c) 224.4
Selling and administrative 183.3 6.9 190.2
Settlements and other unusual items, 47.8 - 47.8
net
Interest expense 37.5 8.8 28.2(a)(b) 74.5
Interest Income (24.7) (0.9) (25.6)
---------------- ---------------- -------------- --------------
Total costs and expenses 2,283.1 101.0 61.5 2,445.6
---------------- ---------------- -------------- --------------
Income (loss) before taxes and
minority interest 14.0 21.3 (61.5) 1,132.4
Provision (benefit) for income taxes 15.8 11.1 (16.9)(d) 10.0
Minority interest in income (loss) of
consolidated subsidiary (3.8) 0.3 (3.5)
Equity in earnings of unconsolidated
subsidiary - 7.1 7.1
---------------- ---------------- -------------- --------------
NET INCOME (LOSS) $ 2.0 $ 17.0 $ (44.6) $ (25.6)
---------------- ---------------- -------------- --------------
---------------- ---------------- -------------- --------------
NET INCOME (LOSS) PER SHARE
BASIC AND DILUTED $ 0.02 $ (0.24)
---------------- --------------
---------------- --------------
Average shares of common stock
(millions) - basic $ 108.4 $ 108.4
---------------- --------------
---------------- --------------
Average shares of common stock
(millions) - diluted $ 108.6
----------------
----------------
</TABLE>
See notes to unaudited pro forma condensed consolidated information.
2
<PAGE>
LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
INCOME STATEMENT
FOR THE SIX MONTHS ENDED JUNE 30, 1999
(In millions of US dollars, except per share data which
are in US dollars)
<TABLE>
<CAPTION>
PRO FORMA
L-P FOREX ADJUSTMENTS PRO FORMA
---------------------------------------------------------------------------
Net Sales $ 1,368.6 $ 126.4 $ $ 1,495.0
---------------- ---------------- -------------- --------------
<S> <C> <C> <C> <C>
COSTS AND EXPENSES:
Cost of sales 999.0 60.5 6.2(e) 1,065.7
Depreciation, amortization & depletion 88.5 7.2 13.6(c) 109.3
Selling and administrative 100.6 3.6 104.2
Settlements and other unusual items, (5.2) - (5.2)
net
Interest expense 20.1 6.0 14.1(a)(b) 40.2
Interest income (19.2) (0.7) (19.9)
---------------- ---------------- -------------- --------------
Total costs and expenses 1,183.8 76.6 33.9 1,294.3
---------------- ---------------- -------------- --------------
Income (loss) before taxes and
minority interest 184.8 49.8 (33.9) 200.7
Provision (benefit) for income taxes 73.2 16.6 (9.6)(d) 80.2
Minority interest in income (loss) of
consolidated subsidiaries (0.5) - (0.5)
Equity in earnings of unconsolidated
subsidiary - 2.6 2.6
---------------- ---------------- -------------- --------------
NET INCOME (LOSS) $ 112.1 $ 35.8 $ (24.3) $ 123.6
---------------- ---------------- -------------- --------------
---------------- ---------------- -------------- --------------
NET INCOME (LOSS) PER SHARE
BASIC AND DILUTED $ 1.05 $ 1.16
---------------- --------------
---------------- --------------
AVERAGE SHARES OF COMMON STOCK
(MILLIONS) - BASIC $ 106.4 $ 106.4
---------------- --------------
---------------- --------------
AVERAGE SHARES OF COMMON STOCK
(MILLIONS) - DILUTED $ 106.6
----------------
----------------
</TABLE>
See notes to unaudited pro forma condensed consolidated information.
3
<PAGE>
LOUISIANA-PACIFIC CORPORATION
NOTES TO PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
The pro forma condensed consolidated balance sheet and the pro forma
condensed consolidated income statements are based upon the consolidated
financial statements of Le Groupe Forex Inc. and subsidiaries ("Forex"),
adjusted to conform to generally accepted accounting principles in the United
States, and of Louisiana-Pacific Corporation and subsidiaries
("Louisiana-Pacific").
The pro forma condensed consolidated financial statements have been
prepared by Louisiana-Pacific management by applying the purchase accounting
method to the acquisition in accordance with generally accepted accounting
principles. The pro forma condensed consolidated financial statements may not be
indicative of results that actually would have occurred if the proposed
acquisition had taken place on the dates indicated, or the actual results to be
expected in the future.
The accounting policies used in the preparation of the pro forma
condensed consolidated financial statements are those of Louisiana-Pacific and
Forex as detailed in the notes to their respective audited financial statements
for the year ended December 31, 1998. These pro forma condensed consolidated
financial statements should be read in conjunction with the audited consolidated
financial statements of Louisiana-Pacific and Forex for the year ended December
31, 1998.
2. PRO FORMA ASSUMPTIONS
The pro forma condensed consolidated balance sheet gives effect to the
acquisition by Louisiana-Pacific of all the outstanding shares of Forex as if
the acquisition occurred on June 30, 1999. The pro forma condensed consolidated
income statements give effect to the acquisition by Louisiana-Pacific of all the
outstanding shares of Forex as if the acquisition had occurred at the beginning
of the periods presented.
No adjustments have been made to these pro forma condensed consolidated
financial statements to reflect the operating synergies that are expected to
result from this acquisition or any integration costs which may be incurred. No
adjustments have been made to reflect possible favorable tax treatment of
certain items associated with this transaction.
The Unaudited Pro Forma Condensed Consolidated Statement of Income for
the year ended December 31, 1998 does not give effect to the purchase of ABT
Building Products, Inc. by Louisiana-Pacific, which was consummated on February
25, 1999, and related financing transactions, or to the buyout by Forex of a
joint venture partner's 50% interest in a Forex subsidiary, which was
consummated on April 13, 1999.
Except where expressed in Canadian dollars, all Canadian dollar amounts
have been converted to U.S. dollar amounts on the basis of exchange rates in
effect on June 30, 1999 in the pro forma balance sheet and on the basis of the
daily average exchange rates in effect during the periods presented in the pro
forma statements of income. All dollar amounts are stated in U.S. dollars unless
otherwise noted.
4
<PAGE>
LOUISIANA-PACIFIC CORPORATION
NOTES TO PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
3. PRO FORMA ADJUSTMENTS - BALANCE SHEET
The following pro forma adjustments have been made to the unaudited
pro forma condensed consolidated balance sheet:
(a) Adjustment to reflect the assumed conversion of the debt
component of Forex's convertible debentures of $9.2 million into
equity.
(b) Adjustment to reflect the purchase of Forex shares by
Louisiana-Pacific. For each common share of Forex acquired, the
holder had the option to receive:
Option 1 - Cdn. $33.00 cash.
Option 2 - Cdn. $33.00 payable in five installments,
together with interest thereon.
Option 3 - A combination of Option 1 and Option 2.
(c) Adjustment to reflect the estimated fair value of net assets of
Forex, with the remainder of the purchase price allocated to
goodwill.
(d) Adjustment to reflect the estimated deferred tax impact of the
increased carrying value of inventory, timber, timberlands and
fixed assets.
The total purchase price is assumed to be approximately $521.1
million, including $6.0 million of estimated financial advisory fees, printing
costs, legal fees, accounting fees and other costs of the transaction. The
entire purchase price is assumed to be debt financed by Louisiana-Pacific
through a combination of notes payable issued to Forex shareholders and
borrowings under bank credit facilities. This total purchase price will be
allocated to the assets and liabilities of Forex based upon their estimated fair
values.
The purchase price of Forex has been allocated to inventories, timber
and timberlands and fixed assets based on preliminary estimates of the fair
values of those assets. The allocation of the purchase price may change as more
information is obtained regarding the fair value of the assets and liabilities
of Forex.
4. PRO FORMA ADJUSTMENTS - INCOME STATEMENTS
The following pro forma adjustments have been made to the unaudited
pro forma condensed consolidated income statement:
(a) Adjustment to reflect additional interest expense on the $521.1
million of debt assumed to be incurred in connection with the
acquisition. The average interest rate is approximately 6.0% per
annum.
(b) Adjustment to reflect a reduction in interest expense due to the
assumed conversion of the Forex convertible debentures at the
beginning of each period presented.
5
<PAGE>
(c) Adjustment to reflect the amortization of estimated goodwill
resulting from the acquisition over a period of 15 years, the
amortization of the portion of the purchase price allocated to
timber over a period of 25 years, and the depreciation of the
portion of the purchase price allocated to fixed assets based on
an average life of approximately 12 years. The amortization of
goodwill is assumed to be non-deductible for income tax purposes.
(d) Adjustment to reflect the income tax effect of the additional
interest expense (as discussed in note 4(a) above) net of the
reduction in interest expense (as discussed in note 4(b) above)
at an assumed effective income tax rate of 38%.
(e) Adjustment to reflect the allocation of the purchase price to
value inventories at market value.
6
