SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarterly Period Ended March 31, 1996
Commission File Number 1-7107
LOUISIANA-PACIFIC CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 93-0609074
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
111 S. W. Fifth Avenue, Portland, Oregon 97204-3699
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (503) 221-0800
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 the number of shares outstanding of each of the issuer's
classes of common stock: 108,596,581 shares of Common Stock, $1 par
value, outstanding as of April 30, 1996.
FORWARD LOOKING STATEMENTS
Statements in this report, to the extent they are not based on historical
events, constitute forward-looking statements. Forward-looking statements
include, without limitation, statements regarding the outlook for future
operations, forecasts of future costs and expenditures, evaluation of market
conditions, the outcome of legal proceedings, the adequacy of reserves, or
plans for product development. Investors are cautioned that forward-looking
statements are subject to an inherent risk that actual results may vary
materially from those described herein. Factors that may result in such
variance, in addition to those accompanying the forward looking statements,
include changes in interest rates, commodity prices, and other economic
conditions; actions by competitors; changing weather conditions and other
natural phenomena; actions by government authorities; uncertainties associated
with legal proceedings; technological developments; future decisions by
management in response to changing conditions; and misjudgments in the course
of preparing forward-looking statements.
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements.
Consolidated Summary Statements of Income
Louisiana-Pacific Corporation and Subsidiaries
(Dollar amounts in millions except per share) (Unaudited)
Three Months Ended March 31, 1996 1995
Net sales $ 584.1 $ 686.8
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Costs and expenses:
Cost of sales 510.8 525.6
Depreciation, amortization and depletion 43.1 45.0
Selling and administrative 35.2 29.7
Interest expense .1 2.3
Interest income (.1) (3.1)
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Total costs and expenses 589.1 599.5
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Income (loss) before taxes and minority interest (5.0) 87.3
Provision (benefit) for income taxes (1.9) 32.1
Minority interest in net income (loss)
of consolidated subsidiaries .5 .9
------- -------
Net income (loss) $ (3.6) $ 54.3
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Net income (loss) per share $ (.03) $ .50
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Cash dividends per share $ .14 $ .125
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Consolidated Summary Balance Sheets
Louisiana-Pacific Corporation and Subsidiaries
(Dollar amounts in millions) (Unaudited)
Mar. 31, 1996 Dec. 31, 1995
Cash and cash equivalents $ 47.2 $ 75.4
Accounts receivable, net 134.9 128.7
Inventories 288.1 317.7
Prepaid expenses 14.6 14.3
Deferred income taxes 82.4 82.4
-------- --------
Total current assets 567.2 618.5
-------- --------
Timber and timberlands 680.0 689.6
Property, plant and equipment 2,647.2 2,592.5
Less reserves for depreciation (1,169.9) (1,140.2)
-------- --------
Net property, plant and equipment 1,477.3 1,452.3
Investments and other assets 43.7 45.0
-------- --------
Total assets $2,768.2 $2,805.4
======== ========
Current portion of long-term debt $ 40.6 $ 38.6
Short-term notes payable 78.6 98.3
Accounts payable and accrued liabilities 163.0 161.6
Current portion of contingency reserves 150.0 150.0
Income taxes payable 3.6 ---
-------- --------
Total current liabilities 435.8 448.5
-------- --------
Long-term debt, excluding current portion 205.5 201.3
Deferred income taxes 205.8 207.5
Contingency reserves, net of current portion 229.3 250.5
Other long-term liabilities and minority interest 45.5 41.6
Stockholders' equity:
Common Stock 117.0 117.0
Additional paid-in-capital 472.6 472.4
Retained earnings 1,382.2 1,400.8
Treasury stock (187.2) (192.7)
Loans to Employee Stock Ownership Trusts (78.4) (85.5)
Other equity adjustments (59.9) (56.0)
-------- --------
Total stockholders' equity 1,646.3 1,656.0
-------- --------
Total liabilities and equity $2,768.2 $2,805.4
======== ========
Consolidated Summary Statements of Cash Flows
Louisiana-Pacific Corporation and Subsidiaries
(Dollar amounts in millions) (Unaudited)
Three Months Ended March 31, 1996 1995
Cash flows from operating activities:
Net income (loss) $ (3.6) $ 54.3
Depreciation, amortization and depletion 43.1 45.0
Other adjustments (14.3) 8.7
Decrease (increase) in certain working
capital components 27.5 12.7
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Net cash provided by operating activities 52.7 120.7
------- -------
Cash flows from investing activities:
Plant, equipment and logging road additions (61.1) (80.9)
Timber and timberland additions, net --- (15.9)
Other investing activities, net 4.1 2.6
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Net cash used in investing activities (57.0) (94.2)
------- -------
Cash flows from financing activities:
New borrowing 22.5 ---
Repayment of long-term debt (16.4) (52.3)
Increase (decrease) in short-term notes payable (19.7) (.2)
Cash dividends (15.0) (13.7)
Purchase of treasury stock --- (115.6)
Other financing activities, net 4.7 .3
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Net cash used in financing activities (23.9) (181.5)
------- -------
Net increase (decrease) in cash and cash equivalents (28.2) (155.0)
Cash and cash equivalents at beginning of year 75.4 315.9
------- -------
Cash and cash equivalents at end of period $ 47.2 $ 160.9
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Consolidated Statements of Stockholders' Equity
Louisiana-Pacific Corporation and Subsidiaries
(Dollar amounts in millions except per share) (Unaudited)
Three Months Ended
March 31, 1996
Shares Amount
Common Stock 116,937,022 $ 117.0
=========== ========
Additional Paid-in-Capital:
Beginning balance $ 472.4
Net transactions .2
--------
Ending balance $ 472.6
========
Retained Earnings:
Beginning balance $1,400.8
Net loss (3.6)
Cash dividends, $.14 per share (15.0)
--------
Ending balance $1,382.2
========
Treasury stock:
Beginning balance 8,588,427 $ (192.7)
Shares reissued for employee stock
plans and other purposes (244,818) 5.5
--------- --------
Ending balance 8,343,609 $ (187.2)
========= ========
Loans to ESOTs:
Beginning balance $ (85.5)
Accrued contribution 7.1
--------
Ending balance $ (78.4)
========
Other Equity Adjustments:
Beginning balance $ (56.0)
Currency translation adjustment and
amortization of deferred compensation (3.6)
--------
Ending balance $ (59.9)
========
Notes To Financial Statements
Louisiana-Pacific Corporation and Subsidiaries
1. The interim period information included herein reflects all
adjustments which are, in the opinion of the management of L-P, necessary for
a fair statement of the results of the respective interim periods. Such
adjustments are of a normal recurring nature. Results of operations for
interim periods are not necessarily indicative of results to be expected for
an entire year. It is suggested that these summary financial statements be
read in conjunction with the financial statements and the notes thereto
included in L-P's 1995 Annual Financial Report to Stockholders. Interim
financial statements are by necessity somewhat tentative; judgments are used
to estimate quarterly amounts for items that are normally determinable only on
an annual basis.
2. Earnings per share is based on the weighted average number of
shares of common stock outstanding during the periods (107,200,000 in 1996 and
107,040,000 in 1995). The effect of common stock equivalents is not material.
3. The effective income tax rate is based on estimates of annual
amounts of taxable income, foreign sales corporation income and other factors.
These estimates are updated quarterly.
4. Determination of interim LIFO inventories requires estimates of
year-end inventory quantities and costs. These estimates are revised
quarterly and the estimated annual change in the LIFO inventory reserve is
expensed over the remainder of the year.
5. Reference is made to "Legal Proceedings" and to elsewhere in this
report for a description of certain contingencies which may have a materially
adverse effect on L-P and for a description of settlements of certain class
action proceedings.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
RESULTS OF OPERATIONS
General
An oversupply in structural panel markets, seasonal weakness in other
building products and high pulp inventories around the world combined to cause
L-P's sales and earnings to decline from year-ago levels. Overall net income
fell to a net loss of $3.6 million ($.03 per share) in the first quarter of
1996 compared to net income of $54.3 million ($.50 per share) in 1995. Sales
fell approximately 15 percent to $584.1 million in the first quarter of 1996
from $686.8 million in the first quarter of 1995.
L-P operates in two segments: building products and pulp. Building
products is the most significant segment, accounting for more than 85 percent
of sales during the first quarter of 1996 and 1995. The results of operations
are discussed separately for each segment below. Key segment information,
production volumes and industry product price trends are presented in the
following tables labeled "Sales and Operating Profit by Major Product Group,"
and "Summary of Production Volumes" and "Industry Product Price Trends."
Building Products Segment
Building products segment sales in the first quarter of 1996 were $533.6
million, a 10 percent decrease from first quarter 1995 sales of $591.1
million. The decrease was spread across all product categories within the
building products segment and was caused by seasonally weak demand compounded
by a harsh winter across much of North America. Structural panel sales were
negatively impacted by concerns about a flood of new OSB capacity hitting the
market. Total structural panel sales declined by approximately 11 percent to
$234.0 million from $261.9 million on 18 percent lower average selling prices,
partially offset by higher volume from new OSB plants started up during the
quarter. Total lumber sales dropped about 9 percent to $138.4 million from
$152.0 million. Lumber sales volume dropped approximately 3 percent due to
mill closures within the company which were offset by a higher volume of
lumber sold through L-P's wholesale operations. Lumber prices dropped an
average of 6 percent. Industrial panel products sales declined slightly more
than 20 percent due a decrease of 6 percent in volume sold and an average
selling price reduction of 15 percent. The decrease in sales in the other
building products category was primarily attributable decreases in the sales
of windows and doors, engineered wood products, veneer and by-products. These
decreases were partially offset by an increase in sales of logs from L-P's
California timberlands due to weather conditions which permitted increased
logging.
Building products segment operating profits decreased nearly 67 percent
to $30.0 million from $90.4 million in the first quarter of 1995. This
decrease is primarily attributable to the decrease in sales discussed above.
L-P was beginning to experience lower log costs in most areas of the country
toward the end of the quarter.
L-P's building products are primarily sold as commodities and therefore
sales prices fluctuate based on market factors over which L-P has no control.
L-P cannot predict whether the prices of its building products will remain at
current levels, or will increase or decrease in the future because supply and
demand are influenced by many factors, only one of which is the cost and
availability of raw materials. Therefore, L-P is not able to determine to
what extent, if any, it will be able to pass any future increases in the price
of raw materials on to customers through product price increases.
Pulp Segment
Pulp sales dropped 47 percent in the first quarter of 1996 over first
quarter 1995. Prices decreased an average of approximately 11 percent while
volume decreased approximately 41 percent. World-wide pulp inventories were
high at the beginning of 1996 and remained high through the first quarter,
creating very weak pulp markets. Production volume was 60 percent of capacity
in the first quarter of 1996 compared to 90 percent in the first quarter of
1995. The decreased volume resulted from the lack of demand and from
unscheduled maintenance shut-downs. Pulp sales decreases have also caused
export sales to decrease significantly as L-P sells the substantial majority
of pulp to export customers.
Pulp segment operating profits were severely negatively impacted by the
decreased sales, falling to a $21.9 million loss in the first three months of
1996 from an $18.8 million profit in the first three months of 1995. Pulp
profits were also hurt by market write-downs of inventories during the
quarter. L-P was beginning to experience lower wood chip costs in some areas
in the first quarter of 1996.
L-P's pulp products are primarily sold as commodities and therefore
sales prices fluctuate based on world-wide market factors over which L-P has
no control. L-P cannot predict whether the prices of its pulp products will
remain at current levels, or will increase or decrease in the future because
supply and demand are influenced by many factors, only one of which is the
cost and availability of raw materials. Therefore, L-P is not able to
determine to what extent, if any, it will be able to pass any future increases
in the price of raw materials on to customers through product price increases.
Unallocated Expense
The decrease in unallocated expense is due to several factors. First,
expense from stock compensation plans (plans with awards based on company
performance) decreased due to the small loss in the first quarter of 1996.
Second, contingency accruals were increased in the first quarter of 1995,
while there was no significant increase in contingency accruals in 1996.
Also, several non-recurring credits offset the total unallocated expense in
the first quarter of 1996.
Interest Income (Expense)
L-P's interest expense was almost completely offset by capitalized
interest in the first quarter of 1996, due to large construction amounts for
new plants. Interest income decreased primarily due to lower levels of cash
and cash equivalents in 1996.
Legal and Environmental Matters
Refer to the "Legal Proceedings" section of this Form 10-Q for a
discussion of certain environmental litigation and other litigation and its
potential impact on L-P.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
Cash provided by operations decreased significantly in 1996 over 1995
primarily due to the decrease in net income coupled with cash payments against
contingency reserves. Cash used in investing activities decreased primarily
because of decreased capital expenditures as several of the large construction
projects for new OSB plants were winding down. Significant capital has also
been expended for environmental projects (such as pollution control equipment)
and upgrades of existing production facilities. L-P is budgeting capital
expenditures, including timber and logging road additions, for all of 1996 of
$275 million to $325 million.
Cash used in financing activities decreased to $23.9 million in 1996
from $181.5 million in 1995. Most of the decrease is due to the purchase of
$115.6 million of treasury stock in the first quarter of 1995, while there
were no treasury stock purchases in 1996. L-P also repaid less debt in 1996.
Contingency reserves, which represent an estimate of future cash needs
for various contingencies (principally payments for siding litigation costs),
total $379.3 million at March 31, 1996, of which $150 million is estimated to
be payable within one year. As with all accounting estimates, there is
inherent uncertainty concerning the reliability and precision of such
estimates. As described in the "legal proceedings" section of this form 10-Q,
L-P has been named as a defendant in other litigation for which reserves have
not been established.
L-P continues to be in a strong financial condition with $47 million in
cash and cash equivalents and a low ratio of long-term debt as a percent of
total capitalization. Although cash and cash equivalents have decreased,
existing amounts, combined with borrowings available under L-P's $300 million
revolving credit facility and cash to be generated from operations are
expected to be sufficient to meet projected cash needs including the payments
related to the siding litigation costs referred to above. The company also
believes that because of its conservative financial structure and policies, it
has substantial financial flexibility to generate additional funds should the
need arise.
Sales and Operating Profit by Major Product Group
Louisiana-Pacific Corporation and Subsidiaries
(Dollar amounts in millions) (Unaudited)
Three Months Ended March 31, 1996 1995
Sales:
Structural panel products $ 234.0 $ 261.9
Lumber 138.4 152.0
Industrial panel products 46.6 58.5
Other building products 114.6 118.7
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Total building products 533.6 591.1
Pulp 50.5 95.7
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Total sales $ 584.1 $ 686.8
======= =======
Export sales $ 79.5 $ 127.3
======= =======
Operating profit (loss):
Building products $ 30.0 $ 90.4
Pulp (21.9) 18.8
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Total operating profit (loss) 8.1 109.2
Unallocated expense, net (13.1) (22.7)
Interest income (expense), net -- .8
------- -------
Income (loss) before taxes and minority interest $ (5.0) $ 87.3
======= =======
Louisiana-Pacific Corporation and Subsidiaries
Summary of Production Volumes
(Volume amounts stated in millions unless otherwise
noted and as a percent of normal capacity)
Quarter Ended March 31
----------------------
1996 1995
Inner-Seal/OSB,
square feet 3/8" basis 828 82% 816 89%
Softwood plywood,
square feet 3/8" basis 410 107 324 80
Lumber, board feet 282 69 340 56
Medium density fiberboard,
square feet 3/4" basis 66 117 53 94
Particleboard,
square feet 3/4" basis 80 89 90 100
Hardboard,
square feet 1/8" basis 54 99 50 91
Hardwood veneer,
square feet surface measure 50 79 73 116
Pulp, thousand short tons 87 60 134 90
Chips, thousand BDU's 422 472
Industry Product Price Trends
Louisiana-Pacific Corporation and Subsidiaries
OSB Plywood Lumber Particleboard
----------- -------- --------- -------------
N. Central Southern
7/16" basis Pine 1/2" Framing
24/16 basis lumber Inland
span CDX composite industrial
rating 3 ply prices 3/4" basis
----------- -------- --------- -------------
Annual Average
1991 148 191 236 198
1992 217 248 287 200
1993 236 282 394 258
1994 265 302 405 295
1995 245 303 337 290
1995 First Quarter Average
287 362 386 301
1995 Fourth Quarter Average
253 285 325 277
1996 First Quarter Average
191 254 341 277
Weekly Average
April 5 184 240 354 277
April 12 196 242 356 277
April 19 207 245 369 277
April 26 218 255 385 277
PART II
OTHER INFORMATION
Item 1. Legal Proceedings.
The following sets forth the current status of certain legal
proceedings:
Environmental Proceedings
In March 1995, L-P's subsidiary Ketchikan Pulp Company (KPC) entered
into agreements with the federal government to resolve the issues related to
water and air compliance problems experienced at KPC's pulp mill during the
late 1980s and early 1990s. Under the agreements, KPC entered into a civil
consent decree and pled guilty to one felony and thirteen misdemeanor
violations of the Clean Water Act. The settlement required KPC to pay civil
and criminal penalties of $6.0 million, of which $1.75 million was suspended
in consideration of KPC's expenditures and ongoing efforts to improve its
operations. The penalties were substantially reserved for at December 31,
1994. KPC also agreed to undertake further expenditures, which are primarily
capital in nature, including certain remedial and pollution control related
measures, with an estimated cost of up to approximately $20 million. KPC has
also agreed to undertake a study of whether a clean-up of Ward Cove, the body
of water adjacent to the pulp mill, is needed. If the study determines that
such clean-up is needed, KPC may be required to spend up to $6 million on the
clean-up, including the cost of the study, as part of the overall $20 million
of expenditures. At this time, the company cannot estimate what portion, if
any, of the clean-up expenditures will be required.
The United States Department of Justice has stated its intention to seek
civil penalties from KPC based upon alleged violations of the Clean Air Act
involving a waste wood incinerator at KPC's Annette Island, Alaska, cant mill.
KPC is engaged in discussions for a settlement that, if implemented, would
require payment of a penalty.
In March 1996, an information was filed in the United States District
Court for the Eastern District of Washington charging L-P with two misdemeanor
counts related to alleged record-keeping violations in connection with the
disposal by an independent contractor of transformers from a mill owned by L-P
in 1991.
Although L-P's policy is to comply with all applicable environmental
laws and regulations, the company has in the past been required to pay fines
for non-compliance and sometimes litigation has resulted from contested
environmental actions. Also, L-P is involved in other environmental actions
and proceedings which could result in fines or penalties. Management believes
that any fines, penalties or other losses resulting from the matters discussed
above in excess of the reserve for environmental loss contingencies will not
have a material adverse effect on the business, financial position or results
of operations of L-P. See "Colorado Criminal Proceedings" for further
discussion of an environmental action against the company.
Colorado Criminal Proceedings
L-P began an internal investigation at L-P's Montrose (Olathe),
Colorado, oriented strand board (OSB) plant of various matters, including
certain environmental matters, in the summer of 1992 and reported its initial
finding of irregularities to governmental authorities in September 1992.
Shortly thereafter, a federal grand jury commenced an investigation of L-P
concerning alleged environmental violations at that plant. In 1995, additional
subpoenas were issued requiring the production of evidence and testimony
relating to alleged fraud in connection with the submission of
unrepresentative OSB product samples to the APA-The Engineered Wood
Association (APA), an industry product certification agency, by L-P's Montrose
plant and certain of its other OSB plants. L-P then commenced an independent
investigation, which was concluded in 1995, under the direction of former
federal judge Charles B. Renfrew concerning irregularities in sampling and
quality assurance in its OSB operations. In June 1995, the grand jury returned
an indictment in the U.S. District Court in Denver, Colorado, against L-P, a
former manager of the Montrose mill, and a former superintendent at the mill.
L-P has been charged with 23 felony counts related to environmental matters at
the Montrose mill, including alleged conspiracy, tampering with opacity
monitoring equipment, and making false statements under the Clean Air Act. The
indictment also charges L-P with 25 felony counts of fraud relating to alleged
use of the APA trademark on OSB structural panel products produced by the
Montrose mill as a result of L-P's allegedly improper sampling practices in
connection with the APA quality assurance program. No trial date has been
set.
In December 1995, L-P received a notice of suspension from the United
States Environmental Protection Agency ("EPA") stating that, because of
criminal proceedings pending against L-P in Colorado, agencies of the federal
government would be prohibited from purchasing from L-P's Northern Division.
L-P is negotiating to have the EPA suspension lifted or modified based on
positive environmental programs actively underway. While negotiations are
continuing, the EPA has approved a preliminary agreement limiting the
prohibition to L-P's Montrose, Colorado, facility for a period of six months
in recognition of L-P's environmental compliance efforts. Under recently
revised regulations of the United States Department of Agriculture, the EPA
suspension may also have the effect of prohibiting L-P's Northern Division
from purchasing timber from the United States Forest Service.
At the present time, L-P cannot predict whether or to what extent these
circumstances will result in further civil litigation or investigation by
government authorities, or the potential financial impact of any such current
or future proceedings. However, the resolution of the above matters could have
a materially adverse impact on L-P.
OSB Siding Matters
L-P has been named as a defendant in at least 12 purported class actions
filed in various jurisdictions, as well as numerous non-class action
proceedings, brought on behalf of various persons or purported classes of
persons (including nationwide classes in the United States and Canada) who own
or have purchased or used OSB siding manufactured by L-P, because of alleged
unfair business practices, breach of warranty, misrepresentation, conspiracy
to defraud, and other theories related to alleged defects, deterioration, or
failure of OSB siding products.
A settlement of one of the OSB siding class actions has been approved by
the Circuit Court for Lake County, Florida. Under the settlement, L-P has
established a claims procedure pursuant to which members of the settlement
class may report problems with L-P's OSB siding and have their properties
inspected by an independent adjuster, who will measure the amount of damage
and also determine the extent to which improper design, construction,
installation, finishing, painting, and maintenance may have contributed to any
damage. The maximum payment for damaged siding will be $3.40 per square foot
for lap siding and $2.82 per square foot for panel siding, subject to
reduction of up to 75 percent for damage resulting from improper design,
construction, installation, finishing, painting, or maintenance, and also
subject to reduction for age of siding more than three years old. L-P has
agreed with attorneys representing the class that if the national class
settlement in the federal court in Oregon described below becomes final, then
the deduction from the payment to a member of the Florida class will be not
greater than the deduction computed for a similar claimant under the national
settlement agreement. Class members will be entitled to make claims for up to
five years after October 4, 1995.
In April 1996, the United States District Court for the District of
Oregon approved an amended settlement agreement between L-P and attorneys
representing a nationwide class composed of all persons who own, who have
owned, or who subsequently acquire property on which L-P's OSB siding was
installed prior to January 1, 1996, excluding persons who timely opt out of
the settlement and persons who are members of the settlement class in the
Florida litigation. Under the settlement agreement, an eligible claimant whose
claim is filed prior to January 1, 2003 (or earlier in certain cases), and is
approved by an independent claims administrator will be entitled to receive
from the settlement fund established under the agreement a payment equal to
the replacement cost (to be determined by a third-party construction cost
estimator) of damaged siding, reduced by a specific adjustment (of up to 65
percent) based on the age of the siding. Class members who have previously
submitted or resolved claims under any other warranty or claims program of L-P
may be entitled to receive the difference between the amount which would be
payable under the settlement agreement and the amount previously paid.
Independent adjusters will determine the extent of damage to OSB siding at
each claimant's property in accordance with a specified protocol. There will
be no adjustment to settlement payments for improper maintenance or
installation.
A claimant who is dissatisfied with the amount to be paid under
the settlement may elect to pursue claims against L-P in a binding arbitration
seeking compensatory damages without regard to the amount of payment
calculated under the settlement protocol. A claimant who elects to pursue an
arbitration claim must prove his entitlement to damages under any available
legal theory, and L-P may assert any available defense, including defenses
that otherwise had been waived under the settlement agreement. If the
arbitrator reduces the damage award otherwise payable to the claimant because
of a finding of improper installation, the claimant will be entitled to pursue
a claim against the contractor/builder to the extent the award was reduced.
L-P will be required to pay $275 million into the settlement fund in
seven annual installments beginning in mid-1996: $100 million, $55 million,
$40 million, $30 million, $20 million, $15 million, and $15 million. If at any
time after the fourth year of the settlement period the amount of approved
claims (paid and pending) equals or exceeds $275 million, then the settlement
agreement will terminate as to all claims in excess of $275 million unless L-P
timely elects to provide additional funding within 12 months equal to the
lesser of (i) the excess of unfunded claims over $275 million or (ii)
$50 million and, if necessary to satisfy unfunded claims, a second payment
within 24 months equal to the lesser of (i) the remaining unfunded amount or
(ii) $50 million. If the total payments to the settlement fund are
insufficient to satisfy in full all approved claims filed prior to January 1,
2003, then L-P may elect to satisfy the unfunded claims by making additional
payments into the settlement fund at the end of each of the next two 12-month
periods or until all claims are paid in full, with each additional payment
being in an amount equal to the greater of (i) 50 percent of the aggregate sum
of all remaining unfunded approved claims or (ii) 100 percent of the aggregate
amount of unfunded approved claims, up to a maximum of $50 million. If L-P
fails to make any such additional payment, all class members whose claims
remain unsatisfied from the settlement fund may pursue any available legal
remedies against L-P without regard to the release of claims provided in the
settlement agreement. If L-P makes all payments required under the settlement
agreement, including all additional payments as specified above, class members
will be deemed to have released L-P from all claims for damaged OSB siding,
except for claims arising under their existing 25-year limited warranty after
termination of the settlement agreement. In the event all claims filed prior
to January 1, 2003, that are approved have been paid without exhausting the
settlement fund, any amounts remaining in the settlement fund revert to L-P.
In addition to payments to the settlement fund, L-P will be required to pay
fees of class counsel in the amount of $26.25 million, as well as expenses of
administering the settlement fund and inspecting properties for damage, any
amounts of arbitration awards in excess of the amounts calculated under the
settlement protocol, and certain other costs.
Potential members of the settlement class may elect to opt out of the
settlement class until May 27, 1996, subject to L-P's right to withdraw from
the settlement if there are excessive elections to opt out. Any notice of
appeal from the court's order approving the settlement must be filed by
May 29, 1996.
During 1995, the Attorneys General of the states of Florida, Oregon, and
Washington initiated separate proceedings concerning production, testing,
marketing, and performance of L-P's OSB siding and other attorneys general
have also made inquiries concerning the same topics. In January 1996, L-P
entered into settlement agreements with the Attorneys General of the states of
Oregon and Washington. Under the settlement agreements, L-P did not admit any
wrongdoing, but agreed to pay $1 million to the Wood Materials and Engineering
Research Activities of Washington State University, $.5 million to the Oregon
Consumer Protection and Education Revolving Account, plus a civil penalty and
costs of $.4 million. The settlement agreements also obligate L-P to ensure
that its marketing claims are appropriately substantiated. In April 1996, L-P
reached a settlement agreement concluding the Florida Attorney General's
proceeding without any admission of wrongdoing; the settlement provides for
payment by L-P of $750,000, including a $600,000 contribution to Florida A & M
University Foundation, Inc.
L-P maintains reserves for the estimated costs of these siding
settlements, although, as with any estimate, there is uncertainty concerning
the actual costs to be incurred.
Other OSB Matters
In July 1995, an action entitled MacDonald v. Louisiana-Pacific
Corporation was filed in Superior Court for the State of California for the
County of San Diego, purporting to be a consumer action brought on behalf of
the general public in California. The action alleges that L-P violated the
California Unfair Business Practices Act through allegedly fraudulent APA
certification, quality sampling, advertising, and marketing of OSB products.
The complaint seeks, among other relief, restitution to members of the public
who purchased L-P's OSB products, return of moneys obtained by L-P from
allegedly fraudulent sales, imposition of an asset freeze and constructive
trust, and various forms of injunctive relief. The action has been dismissed
without prejudice to plaintiff's right to refile the complaint at a later
date. A similar action, entitled Carney v. Louisiana-Pacific Corporation, was
filed in October 1995 in the Superior Court of the State of California for the
City and County of San Francisco seeking restitution and injunctive relief.
In September 1995, a complaint entitled Agius v. Louisiana-Pacific
Corporation was filed in the United States District Court for the Northern
District of California naming L-P as a defendant in a purported class action
seeking damages and injunctive relief for violation of the Lanham Act, breach
of warranty, and violation of California consumer protection statutes, based
on alleged fraud and misrepresentation in connection with testing, APA
certification, and marketing of OSB products.
In January 1996, an action entitled Stewart v. Louisiana-Pacific
Corporation was instituted in the United States District Court for the
District of Colorado. Plaintiff seeks to represent a purported class
consisting generally of owners and purchasers of buildings in which L-P's OSB
panels are used for flooring, sheathing, or underlayment. The complaint seeks
damages in an unspecified amount and equitable relief by reason of alleged
fraud, misrepresentation, negligence, breach of warranty, and deceptive trade
practices related to alleged improprieties in testing, certification, and
marketing of OSB structure panels and alleged premature deterioration of OSB
panels.
In February 1996, an action entitled Mellett v. Louisiana-Pacific
Corporation was instituted in the United States District Court for the
District for Oregon. Plaintiff seeks to represent a purported class consisting
generally of purchasers and owners of structures in which L-P's OSB panels are
used for sheathing. The complaint seeks damages in an unspecified amount,
including punitive damages, by reason of alleged fraud, negligent
misrepresentation, negligence, breach of warranty, and deceptive trade
practices related to alleged improprieties in testing, certification, and
marketing of OSB structural panels.
At the present time, L-P cannot predict the potential financial impact
of the above actions. However, the resolution of the above matters could have
a materially adverse impact on L-P.
Stockholder Actions
L-P and certain of its present and former executive officers were named
as defendants in numerous actions brought on behalf of various purported
classes of purchasers of L-P's common stock. The actions subsequently were
consolidated in the United States District Court for the District of Oregon
under the caption IN RE LOUISIANA PACIFIC CORP. SECURITIES LITIGATION, Civil
Action No. 95-707-JO. Plaintiffs seek to recover damages under the securities
laws for alleged failures to disclose or improper disclosures generally
relating to the various legal proceedings described above and the matters that
are the subject of such proceedings. Motions to Dismiss have been denied and
the Court has conditionally certified the class as requested by the attorneys
appointed to act as lead counsel for the plaintiff class. L-P is defending
the consolidated action vigorously, but is unable to make any prediction as to
the likely outcome or the financial impact of an adverse decision. However,
the resolution of the above matters could have a materially adverse impact on
L-P.
Five individual directors (Messrs. du Pont, Kayser, and Yeager, Ms. Hill
and Mrs. Neff) and three former directors of the registrant have been named as
defendants in ten stockholder derivative actions, which also name the
registrant as a nominal defendant. Eight of these actions were brought in the
Court of Chancery of the State of Delaware in and for New Castle County and
have been consolidated under the caption In re Louisiana-Pacific Corporation
Derivative Litigation, Civil Action No. 14322 (the "Delaware action"). One
action, captioned Silverman, et al. v. Merlo, et al., No. 9505-03630, was
brought in the Circuit Court of the State of Oregon for the County of
Multnomah (the "Oregon action"). The remaining action, captioned Rand v.
Merlo, et al., No. 95-Z-1511, was brought in the United States District Court
for the District of Colorado (the "Colorado action"). The actions seek to
recover damages from the directors on behalf of the corporation because of
alleged mismanagement and breaches of fiduciary duty generally related to the
various legal proceedings described above and the matters that are the subject
of such legal proceedings. The individual directors, former directors, the
registrant, and attorneys representing plaintiffs have entered into a
memorandum of understanding concerning a proposed settlement of the derivative
actions without payment by the directors or former directors or any admission
of liability. The settlement recognizes the recent management changes
effected by the registrant and certain other actions taken and to be taken by
the registrant with respect to quality control. The proposed settlement is
subject to confirmatory discovery by attorneys for plaintiffs and approval by
the courts.
Executive Employment Matter
In January 1996, an action entitled International Paper Company v. Mark
A. Suwyn and Louisiana-Pacific Corporation was instituted in the United States
District Court for the Southern District of New York claiming that Mr. Suwyn's
employment as chief executive officer of L-P violated the terms of a previous
employment agreement with the plaintiff. The complaint seeks an injunction
prohibiting Mr. Suwyn from continuing his employment with L-P for 18 months
and other relief. L-P believes there are meritorious defenses related to this
case and does not believe that there is any material liability related to this
case.
Other
L-P and its subsidiaries are parties 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.
Item 6. Exhibits and Reports on Form 8-K.
(a) The exhibits filed as part of this report or
incorporated by reference herein are listed in the
accompanying exhibit index.
(b) Reports on Form 8-K. No reports on Form 8-K were
filed during the quarter ended March 31, 1996.
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 thereunto duly authorized.
LOUISIANA-PACIFIC CORPORATION
By /s/ WILLIAM L. HEBERT
William L. Hebert
Vice President - Treasurer
and Controller
(Principal Financial Officer)
DATED: May 15, 1996
EXHIBIT INDEX
Exhibit Number Description of Exhibit
10 Settlement Agreement dated October 18, 1995,
between the registrant and attorneys
representing plaintiffs in siding class action
litigation. Incorporated by reference to
Exhibit 10 to the registrant's report on
Form 10-Q for the quarter ended September 30,
1995.
10.A Amendment to Settlement Agreement dated
April 26, 1996, between the registrant and
attorneys representing plaintiffs in siding
class action litigation.
11 Calculation of Net Income Per Share for the
Three Months Ended March 31, 1996.
27 Financial Data Schedule.
EXHIBIT 10.A
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON
IN RE: Civil No. 95-879-JO-LEAD
LOUISIANA-PACIFIC INNER-SEAL(R) AMENDMENT TO SETTLEMENT
SIDING LITIGATION AGREEMENT
THIS AMENDMENT TO SETTLEMENT AGREEMENT ("Amendment") is
dated this 26th day of April, 1996 by and among (i) the Plaintiffs in the
above litigation, for themselves and on behalf of the Settlement Class as that
term is defined in the October 18, 1995 Settlement Agreement ("Plaintiffs");
(ii) Defendant Louisiana-Pacific Corporation ("L-P"); and (iii) Defendant
Harry Merlo ("Merlo"), collectively, the "Parties."
BACKGROUND
The Parties entered into a Settlement Agreement on October 18, 1995 and
subsequent thereto, the Settlement Agreement received preliminary approval on
October 18, 1995. Since execution of the Settlement Agreement, Plaintiffs and
L-P have negotiated certain issues and clarifications. The purpose of this
Amendment is to incorporate all such changes and clarifications into the
Settlement Agreement.
AGREEMENT
Subject to court approval as required by the Federal Rules of Civil
Procedure, it is hereby stipulated and agreed by the Parties that the
Settlement Agreement be amended as follows:
1. Definitions
1.1 All definitions herein shall have the same meaning and
definition as set forth in the Settlement Agreement except as specifically
stated herein.
1.2 The term "Settlement Class" was not intended to
include, nor does it include, builders and developers who previously owned but
no longer own structures with Exterior Inner-Seal Siding.
1.3 The definition of the term "Settled Claim" is revised
by adding the following: "A 'Settled Claim' does not include any claim for
consequential damages to other structural components caused by the failure or
repair of Exterior Inner Seal(TM) Siding or to claims made against L-P after
the expiration of the term of the Settlement Agreement under the express terms
of the L-P 25-year Limited Warranty issued with the product."
2. Cost of Repair
Plaintiffs and L-P hired R.S. Means, an independent construction
estimating firm, to determine the cost of repair and replacement throughout
the country ("Replacement Costs") which include replacement product, labor,
materials, installation and painting. Over 300 locations were estimated and
identified by zip code. The R.S. Means calculation of Replacement Costs shall
be used by the Claims Administrator to calculate compensation for damaged
siding in connection with administration of the Settlement Agreement.
The R.S. Means' Replacement Costs do not include the cost of securing a
permit, because local permitting requirements vary widely from location to
location. However, if a permit is actually required from the local
governmental entity to perform the work, the cost of the permit will be
reimbursed from the Settlement Fund upon submission of a receipt therefore to
the Claims Administrator.
3. Inspection Protocol
Since the Settlement Agreement was executed, Plaintiffs and L-P have
implemented the terms of the Agreement in a Protocol and Manual for use in
connection with determining damaged siding. The Protocol is attached hereto
as Exhibit A and the Manual is attached hereto as Exhibit B (A final
"photo-ready" version of the Training Manual will be prepared, mutually
approved by plaintiffs and L-P and used to train independent inspectors).
With respect to definitions and procedures contained in the Protocol,
Plaintiffs and L-P agree to the following changes:
a. Moisture Content
Paragraph 5(B)(b) of the Protocol is changed to read: "Moisture content
in excess of 25%."
b. Partial Walls
Paragraph 2 of the Protocol is changed to read as follows:
a. The damaged lap siding (not panel) on a particular wall
(i.e., one side of the structure consisting of all parallel
faces) is greater than 65% of the entire wall; and the
damage is dispersed over the entire surface of the wall such
that if a 9 panel grid were superimposed over the entire
wall damage would appear in a minimum of 5 of the panels (in
this regard, the Independent Adjuster will have available to
him representative grids for different styles of structures
on which to indicate the location of the damage to the
siding) provided that 2 of the panels are in the top 3
panels.
b. The partial walls percentages can be satisfied through
cumulative inspections. For example, if on its first
inspection, a wall of a home is found to contain 50% damaged
L-P siding, the claimant will be paid the Replacement Cost
of that product. If the house is inspected at a later date
and found to have at least an additional 15% damaged L-P
siding on the same wall on which 50% of damaged siding
occurred previously, the claimant will be paid the
Replacement Cost for that additional damaged siding and, if
the aggregate damage found in the initial and subsequent
inspections is dispersed over the entire wall such there is
damage in at least two of the top three panels of the grid,
the claimant will be compensated for replacement of all
damaged siding on the wall that was not previously replaced
upon submission of satisfactory evidence of having repaired
the entire wall of the structure.
c. The training manual may be modified in light of training
or field experience by agreement of the parties.
c. Fungal Degradation and Decay
Decay is the decomposition of wood material by fungi. However, not all
fungi cause decay. Mold fungi must be distinguished from decay fungi. Molds
are surface fungi, often feeding off the paint finish and air-deposit soil and
must not be considered as damage. Decay fungi, by contrast, digests wood cell
walls and, when found, indicates damage. Mold producing fungi generally
appear as powdery or fuzzy surface growth, usually giving a black
discoloration. Algae are another type of surface growth that will not damage
the substrate. Algae typically will be green in color. These growths present
an aesthetic distraction, but do not result in decay and do not indicate
damage.
Decay fungi, by contrast, usually are not visible until they develop
fruiting bodies, unless the wall is opened. Some of these fruiting bodies can
be quite large and obvious to view, but those of other fungal species may
remain small and rather inconspicuous.
Refer to the photos below to identify decay fungi affecting the wood
substrate.
d. Tools/Inspection
1) Moisture Meter
Independent inspectors shall use a moisture meter, e.g., the J-2000
manufactured by Delmhorst Instrument Co., Towaco, NJ. The meter must be able
to clearly display the moisture reading; and, if technically feasible, be
calibrated for L-P siding. The moisture meter must be operated in accordance
with the manufacturer's instructions; must not be used on siding with a wet
surface unless it has insulated pins; and temperature correction tables must
be used where appropriate.
In order to avoid unnecessary damage to the siding, the moisture meter
test should only be performed if the inspector previously has found checking
or excessive edge swell on the board being inspected.
2) Edge Check Probe
The edge check probe shall be a special tool machined according to the
specifications of the Protocol and approved by LP and Class Counsel. The
following instructions should be incorporated into the training manual: "The
edge checking is excessive if the probe can be inserted using only the
pressure of the thumb and forefinger grip, without any prying."
3) Buckling
In order to measure buckling, the inspector shall use a straight edge
that is 32" long, with 1" thick spacer blocks adjustable between 16" to 32".
In operating the straight edge, the inspector will need to determine the
spacing of the vertical framing in the wall. The inspector will then adjust
the 1/4" spacer blocks to that spacing. Place straight edge against the wall
horizontally, with spacers placed over framing members. The amount of
buckling is unacceptable if the spacer blocks cannot both be in contact with
the wall at the same time, if buckling is outward. If buckling is inward, the
gap between the straight edge and the wall should be no greater than 1/2".
4. Regional Allocation
The Plaintiffs and L-P have determined that regional allocation is not
in the best interests of the class. Accordingly, claims shall be processed in
the order received without reference to the square footage of Exterior
Inner-Seal(TM) Siding sold within the region.
5. Clarification of Release
Attached as Exhibit C is a copy of the March 15, 1996, letter setting
forth the clarification of the Plaintiffs' and L-P's intent regarding the
scope of the release insofar as the release relates to individuals and
companies involved in the distribution, installation, construction and first
time sale of structures with Exterior Inner-Seal(TM) Siding.
6. Clarification of Release/L-P 25-Year Limited Warranty
The release in the Settlement Agreement is amended to exclude claims
filed against L-P after the expiration of the Settlement Agreement by
consumers under the terms of the L-P 25-year Limited Warranty. At the
termination of the Settlement Agreement, L-P's 25-year Limited Warranty shall
be in effect for the balance of its term when measured from the date of
original installation of the claimant's siding.
7. Claims for Unreimbursed Repair
Paragraph 5.7c. of the Settlement Agreement provides recovery for Class
Members who previously have performed repairs at their own expense and without
reimbursement from L-P, provided they establish entitlement to such recovery
by evidence in accordance with the terms of the Settlement Agreement. Such
evidence shall include a receipt or a declaration from a contractor or other
persons performing the repair and shall include, if possible, photographs
evidencing the damage to the siding and repair that was undertaken.
8. Emergency Unreimbursed Repairs
Claims for Unreimbursed Repairs (including repairs effectuated between
November 17, 1995 and the date of Final Approval) may also be filed by
Eligible Claimants who make emergency repairs to damaged Exterior Inner-Seal
Siding in order to avoid imminent damage to other property of the claimant
that will result if such repairs are not promptly made (including damage to
the interior wall cavity of the house, its stud works and sheathing).
Eligible Claimants may file a Claim for Unreimbursed Repairs (Settlement
Agreement, Exhibit "D") covering such emergency repairs upon compliance with
the following:
a. The Eligible Claimant must first call the Claims
Administrator and request an Emergency Inspection before
completing repairs. If an inspection cannot be completed
within ten (10) days, the Eligible Claimant may proceed with
the emergency repair and, subject to the further
requirements of subsections (b) and (c) below, may file a
claim for such unreimbursed repairs.
b. A claim for Emergency Unreimbursed Repairs must be supported
by the following evidence:
(1) Photographic or video evidence of the pre-repair
siding on the structure, including all damaged areas;
(2) That repair or replacement for which reimbursement is
sought was limited to Damaged Exterior Inner-Seal
Siding that was replaced on an emergency basis in
order to avoid imminent damage to other property of
the claimant; and
(3) The Eligible Claimant must retain for verifying
inspection any replaced siding for a period of thirty
(30) days following filing of the Claim for
Unreimbursed Repairs.
c. Claims for Emergency Unreimbursed Repairs must be made to
the Claims Administrator within one year of the date of the
repair.
9. Arbitration
Arbitration with L-P shall be available to Class Members if they are
dissatisfied with the amount offered after inspection under the Protocol, as
follows:
a. If a claimant is not satisfied with the payment offered
after inspection under the Protocol, the claimant can elect to go to
arbitration as to the amount of compensatory damages to be awarded.
b. The election to arbitrate must be made within 30 days of
notification of amount offered to be paid under the Protocol.
c. The claimant must pay an arbitration fee of $300 for each
arbitration; L-P must pay any additional arbitration fees.
d. In any arbitration, the claimant and L-P shall each bear
their own attorneys fees.
e. If the arbitrator finds that damage to L-P Siding claimed by
a class member, is caused in whole or in part, by improper installation, the
arbitrator shall determine the percentage of the damage attributable thereto
(the "Installation Damage"). Thereafter, the claimant may pursue a claim
against its contractor/builder for such Installation Damage to the extent the
arbitration award was diminished by a finding of such Installation Damage; and
the release of the contractor/builder set forth in the Settlement Agreement,
as clarified in paragraph_5 of this Amendment, may not be asserted as a
defense in any such action. The decision of the arbitrator shall not be
admissible in any subsequent action between a claimant and a
contractor/builder The contractor/builder shall retain all claims and defenses
at any proceeding between the claimant and the contractor/builder.
Except as provided herein, the release of the contractor/builder shall
remain in full force and effect as to all other claims and as to the recovery
of any amount in excess of the Installation Damage. To the extent allowed by
law, the applicable statutes of limitation on any claim to recover
Installation Damage shall be tolled from the effective date of the Settlement
Agreement to the date of the arbitration award.
f. The result of the arbitration shall be binding, with no
right to appeal.
g. With respect to any such arbitration, the claimant may
assert any claims he may have for compensatory damages against L-P under any
legal theory available to him and L-P may assert any legal or factual defenses
it has to such claims, including any defenses waived under the Settlement
Agreement.
h. Arbitration fees will not be paid out of the Settlement
Fund; however, the arbitration award, if any, will be paid out of the
Settlement Fund, but only up to the amount offered under the Protocol--the
remainder, if any, will be paid separately by L-P outside of the Settlement
Fund.
i. There will be no discovery in arbitration, other than
inspection of premises and production of maintenance records.
j. Any such arbitration will be held at the arbitrator's office
or other mutually agreeable suitable location in claimant's jurisdiction.
k. The details of arbitration process will be determined by L-P
and Plaintiffs with the assistance of a Special Master to be appointed by the
Court, with the goal being to maximize fairness and efficiency, and minimize
cost. The Special Master's fees shall be paid 50% by L-P and 50% by Class
Counsel.
10. Payment of Costs of Claims Administrator Settlement Fund Trustee
and Adjusters
In addition to its obligation to fund the Settlement Fund in accordance
with paragraph 14 of the Settlement Agreement, L-P shall pay directly all
costs incurred in connection with the retention and operation of the Claims
Administrator and the Independent Adjusters. Notwithstanding such payment,
the activities of the Claims Administrator and the Independent Adjusters will
remain the joint responsibility of L-P and Class Counsel; any disputes between
L-P and Plaintiffs respecting the activities of the Claims Administrator
Settlement Trustee or the Independent Adjusters shall be submitted for
resolution to a Special Master appointed by the Court.
11. Binding Effect
Except for the specific modifications and clarifications as set forth
herein, as between Plaintiffs and L-P all other terms and conditions of the
Settlement Agreement shall remain in full force and effect without
modification. There are no other modifications or clarifications to the
Settlement Agreement as between Plaintiffs and L-P not set forth in this
Amendment and as to all other terms and conditions, the terms and conditions
of the Settlement Agreement shall control.
12. First Opt-Out Period
The First Opt-Out Period shall be extended to May 27, 1996.
13. Right to Withdraw
If the total number of Settlement Class members who elect to opt out of
the Settlement Class during the period April 26, 1996 to May 27, 1996 is, in
L-P's opinion, excessive, L-P shall have the independent right to withdraw
from the Settlement Agreement by giving written notice thereof to Class
Counsel no later than close of business, June 7, 1996, PDT.
14. Counterparts
This Amendment to Settlement Agreement may be executed in any number of
counterparts, all of which when taken together shall constitute one agreement
binding on all parties hereto, notwithstanding that all parties are not
signatories to the same counterpart.
DATED this 26th day of April, 1996.
Louisiana-Pacific Corporation
By: /S/ STEPHEN GRANT
Stephen Grant
Its: Senior Vice-President
By: /S/ MICHAEL H. SIMON
Michael H. Simon
Perkins Coie
1211 S.W. Fifth Avenue, Suite 1500
Portland, Oregon 97204
Robert Schick
Vinson & Elkins L.L.P.
2300 First City Tower
1001 Fannin Street
Houston, TX 77002-6760
Counsel for Louisiana-Pacific
Corporation
Harry A. Merlo
By: /S/ WILLIAM F. MARTSON, JR.
William F. Martson, Jr.
Tonkon, Torp, Galen, Marmaduke & Booth
1600 Pioneer Tower
888 Southwest Fifth Avenue
Portland, OR 97204-2099
Counsel for Harry A. Merlo
CLASS COUNSEL
By /S/ STEVE W. BERMAN
Steve W. Berman
HAGENS & BERMAN
1301 Fifth Avenue, Suite 2929
Seattle, WA 98101
(206) 623-7292
/S/ WILLIAM H. GARVIN, III
William H. Garvin, III
FONVIELLE & HINKLE
3375-A Capital Circle N.E.
Tallahassee, FL 32308
(904) 422-7773
/S/ MICHAEL F. RAM
Michael F. Ram
Jonathan D. Selbin
LIEFF, CABRASER, HEIMANN & BERNSTEIN
Embarcadero Center West
275 Battery Street, 30th Floor
San Francisco, CA 94111-3339
(415) 956-1000
/S/ BENNET A. McCONAUGHY
Bennet McConaughy
Paul L. Ahern, Jr.
FOSTER PEPPER & SHEFELMAN
1111 Third Avenue, Suite 3400
Seattle, WA 98101
(206) 447-4400
/S/ CHRISTOPHER I. BRAIN
Christopher I. Brain
TOUSLEY BRAIN
5600 Key Tower
Seattle, WA 98101
(206) 682-5600
EXHIBIT 11
Louisiana-Pacific Corporation and Subsidiaries
Calculation of Net Income Per Share
For the Three Months Ended March 31, 1996
Number of shares
-----------------------------------
Including Excluding
Common Stock Common Stock
Equivalents Equivalents (1)
------------ ---------------
Weighted average number of shares
of common stock outstanding 116,937,022 116,937,022
Weighted average number of shares
sold to ESOTs subsequent to
January 1, 1994, not allocated
to participants' accounts (2) (1,325,103) (1,325,103)
Weighted average number of shares
of treasury stock held during
the period (8,416,175) (8,416,175)
Common stock equivalents:
Application of the "treasury
stock" method to stock option
and purchase plans 180,350 ---
----------- -----------
Weighted average number of shares
of common stock and common stock
equivalents 107,376,094 107,195,744
=========== ===========
Rounded to 107,380,000 107,200,000
=========== ===========
Net income (loss) $(3,600,000) $(3,600,000)
=========== ===========
Net income (loss) per share $ (.03) $ (.03)
=========== ===========
________________
(1) Accounting Principles Board Opinion No. 15, "Earnings Per Share", allows
companies to disregard dilution of less than three percent in the
computation of earnings per share. Therefore, shares used in computing
earnings per share for financial reporting purposes is 108,470,000
shares.
(2) American Institute of Certified Public Accountants Statement of Position
No. 93-6, "Employers' Accounting for Employee Stock Ownership Plans"
requires that shares held by L-P's ESOTs which were acquired by the ESOTs
on or after January 1, 1994, which are not allocated to participant's
accounts, are not considered outstanding for purposes of computing
earnings per share. Shares held by the ESOTs which were acquired by the
ESOTs prior to January 1, 1994, continue to be considered outstanding
(whether or not allocated to participant's accounts) for purposes of
computing earnings per share.
5
