UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

Quarterly Report ~~Under~~Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

For the Quarterly Period Ended June 30, ~~2019~~2020

Commission File Number 1-7107

LOUISIANA-PACIFIC CORPORATION

(Exact name of registrant as specified in its charter)



~~DELAWARE~~Delaware		93-0609074
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

414 Union Street, Suite 2000, Nashville, TN 37219

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code:(615) 986 - 5600

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, $1 par value	LPX	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer	x	Accelerated filer	o
Non-accelerated filer	o	Smaller reporting company	o
Emerging growth company	o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o☐ No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: ~~123,612,522~~112,306,685 shares of Common Stock, $1 par value, outstanding as of ~~August 5, 2019.~~July 30, 2020. Except as otherwise specified and unless the context otherwise requires, references to "LP", the “Company”, “we”, “us”, and “our” refer to Louisiana-Pacific Corporation and its subsidiaries.

ABOUT FORWARD-LOOKING STATEMENTS

Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (the Exchange Act) provide a “safe harbor” for forward-looking statements to encourage companies to provide prospective information about their businesses and other matters as long as those statements are identified as forward-looking and are accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those discussed in the statements. This quarterly report on Form 10-Q contains, and other reports and documents filed by us with the Securities and Exchange Commission (SEC) may contain forward-looking statements. These statements are ~~or will be~~ based upon the beliefs and assumptions of, and on information available to, our management.

The following statements are or may constitute forward-looking statements: (1) statements preceded by, followed by or that include words like “may,” “will,” “could,” “should,” “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,” "project," “potential,” ~~“continue”~~“continue,” "likely," or “future” or the negative or other variations thereof and (2) other statements regarding matters that are not historical facts, including without limitation, plans for product development, forecasts of future costs and expenditures, possible outcomes of legal proceedings, capacity expansion, and other growth initiatives and the adequacy of reserves for loss contingencies.

Factors that could cause actual results to differ materially from those expressed or implied by the forward-looking statements include, but are not limited to, the following:

impacts from public health issues (including global pandemics, such as the COVID-19 pandemic and resulting quarantines) on the economy, demand for our products or our operations, including the responses of governmental authorities to contain such public health issues;

changes in governmental fiscal and monetary policies, including tariffs, and levels of employment;

changes in general economic ~~conditions;~~conditions, including impacts from the COVID-19 pandemic;

changes in the cost and availability of capital;

changes in the level of home construction and repair activity;

changes in competitive conditions and prices for our products;

changes in the relationship between supply of and demand for building products;

changes in the financial or business conditions of third-party wholesale distributors and dealers;

changes in the relationship between supply of and demand for raw materials, including wood fiber and resins, used in manufacturing our products;

changes in the cost of and availability of energy, primarily natural gas, electricity, and diesel fuel;

changes in the cost of and availability of transportation;

difficulties in the launch or production ramp-up of newly introduced products;

unplanned interruptions to our manufacturing operations, such as explosions, fires, inclement weather, natural disasters, accidents, equipment failures, labor disruptions, transportation interruptions, supply interruptions, public health issues (including pandemics and quarantines), riots, civil insurrection or social unrest, looting, protests, strikes and street demonstrations;

changes in other significant operating expenses;


•	changes in currency values and exchange rates between the U.S. dollar and other currencies, particularly the Canadian dollar, Brazilian real and Chilean peso;

changes in general and industry-specific environmental laws and regulations;

changes in tax laws, and interpretations thereof;

changes in circumstances giving rise to environmental liabilities or expenditures;

warranty costs exceeding our warranty reserves;

challenge or exploitation of our intellectual property or other proprietary information by others in the industry;

changes in the funding requirements of our defined benefit pension plans;

the resolution of existing and future product-related litigation and other legal proceedings;

the amount and timing of any repurchases of our common stock and the payment of dividends on our common stock, which will depend on market and business conditions and other considerations; and

acts of public authorities, war, civil unrest, natural disasters, fire, floods, earthquakes, inclement weather and other matters beyond our control.

In addition to the foregoing and any risks and uncertainties specifically identified in the text surrounding forward-looking statements, any statements in the reports and other documents filed by us with the SEC that warn of risks or uncertainties associated with future results, events, or circumstances identify important factors that could cause actual results, events, and circumstances to differ materially from those reflected in the forward-looking statements.

ABOUT THIRD-PARTY INFORMATION

In this quarterly report on Form 10-Q, we rely on and refer to information regarding industry data obtained from market research, publicly available information, industry publications, U.S. government sources, and other third parties. Although we believe the information is reliable, we cannot guarantee the accuracy or completeness of the information and have not independently verified it.

PART I - FINANCIAL INFORMATION


~~Item~~ITEM 1.	~~Financial Statements.~~FINANCIAL STATEMENTS

~~CONSOLIDATED BALANCE SHEETS~~Condensed Consolidated Statements of Income

~~LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES~~Dollar amounts in millions, except per share amounts

~~(AMOUNTS IN MILLIONS) (UNAUDITED)~~(Unaudited)

June 30, 2019 December 31, 2018
ASSETS
Current assets:
Cash and cash equivalents $ 348
$ 878
Receivables, net of allowance for doubtful accounts of $2 million at June 30, 2019 and $1 million at December 31, 2018 177
128
Inventories 293
273
Prepaid expenses and other current assets 11
8
Total current assets 828
1,287

Timber and timberlands 55
62
Property, plant and equipment, net 1,038
1,010
Goodwill and other intangible assets 51
26
Operating lease assets 22
—
Investments in and advances to affiliates 9
49
Restricted cash 14
13
Other assets 68
61
Deferred tax asset 4
4
Total assets $ 2,090
$ 2,514
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt $ 3
$ 5
Accounts payable and accrued liabilities 223
233
Income taxes payable 1
21
Current portion of contingency reserves 2
2
Total current liabilities 229
262

Long-term debt, excluding current portion 348
347
Deferred income taxes 75
62
Non-current operating lease liabilities 14
—
Contingency reserves, excluding current portion 8
9
Other long-term liabilities 126
135

Redeemable noncontrolling interest 13
—

Stockholders’ equity:
Common stock, $1 par value, 200,000,000 shares authorized, 141,413,786 shares issued at June 30, 2019 and 153,358,542 shares issued at December 31, 2018 141
153
Additional paid-in capital 374
458
Retained earnings 1,315
1,613
Treasury stock, 17,881,363 shares and 16,525,351 shares, at cost (410 ) (378 )
Accumulated comprehensive loss (143 ) (146 )
Total stockholders’ equity 1,278
1,700
Total liabilities and stockholders’ equity $ 2,090
$ 2,514



	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Net sales	$	548		$	588		$	1,133		$	1,170
Cost of sales	(431		)	(510		)	(908		)	(1,011		)
Gross profit	117			78			225			159
Selling, general, and administrative expenses	(50		)	(58		)	(105		)	(114		)
Loss on impairment	(8		)	—			(15		)	(1		)
Other operating credits and charges, net	(6		)	3			(8		)	1
Income from operations	53			23			97			45
Interest expense	(6		)	(4		)	(12		)	(8		)
Investment income	4			2			3			7
Other non-operating items	(1		)	(2		)	4			9
Income before income taxes	50			19			92			52
Provision for income taxes	(19		)	(3		)	(28		)	(11		)
Net income	$	31		$	16		$	64		$	42
Net loss attributed to noncontrolling interest	2			2			2			2
Net income attributed to LP	$	33		$	17		$	66		$	44

Basic net income per share of common stock:
Net income per share - basic	$	0.29		$	0.14		$	0.59		$	0.34
Diluted net income per share of common stock:
Net income per share - diluted	$	0.29		$	0.14		$	0.58		$	0.34

Average shares of common stock used to compute net income per share:
Basic	112			123			112			127
Diluted	113			124			113			128

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

Condensed Consolidated Statements of Comprehensive Income

Dollar amounts in millions

(Unaudited)



	Three Months Ended June 30,					Six Months Ended June 30,
	2020			2019		2020			2019
Net income	$	31		$	16	$	64		$	42
Other comprehensive income, net of tax
Foreign currency translation adjustments	2			1		(21		)	3
Unrealized gains on securities, net of reversals	(3		)	—		(3		)	(1		)
Amortization of pension and post-retirement prior service costs and net loss	1			1		2			2
Other comprehensive income (loss), net of tax	—			2		(22		)	4
Comprehensive income	31			17		42			46
Comprehensive income associated with noncontrolling interest	2			2		2			2
Comprehensive income attributed to LP	$	33		$	19	$	44		$	48

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

Condensed Consolidated Balance Sheets

Dollar amounts in millions

(Unaudited)



	June 30, 2020			December 31, 2019
ASSETS
Cash and cash equivalents	$	259		$	181
Receivables, net of allowance for doubtful accounts of $2 million and $1 million at June 30, 2020, and December 31, 2019, respectively	175			164
Inventories	240			265
Prepaid expenses and other current assets	15			9
Total current assets	689			619

Timber and timberlands	55			63
Property, plant, and equipment, net	912			965
Operating lease assets	42			44
Goodwill and other intangible assets	48			53
Investments in and advances to affiliates	11			10
Restricted cash	—			14
Other assets	50			67
Total assets	$	1,807		$	1,835
LIABILITIES AND EQUITY
Accounts payable and accrued liabilities	204			242
Income tax payable	13			—
Other current liabilities	2			2
Total current liabilities	219			244

Long-term debt	348			348
Deferred income taxes	71			73
Non-current operating lease liabilities	33			36
Other long-term liabilities	125			133
Total liabilities	796			834

Redeemable noncontrolling interest	11			10

Stockholders’ equity:
Common stock, $1 par value, 200,000,000 shares authorized; 129,665,899 and 112,259,769 shares issued and outstanding, respectively, as of June 30, 2020; and 129,665,899 and 111,945,021 shares issued and outstanding, respectively, as of December 31, 2019	130			130
Additional paid-in capital	446			454
Retained earnings	999			966
Treasury stock, 17,406,130 shares and 17,720,878 shares, at cost as of June 30, 2020, and December 31, 2019, respectively	(400		)	(406		)
Accumulated comprehensive loss	(175		)	(153		)
Total stockholders’ equity	1,000			991
Total liabilities and stockholders’ equity	$	1,807		$	1,835

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

~~CONSOLIDATED STATEMENTS OF INCOME~~Condensed Consolidated Statements of Cash Flows

~~LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES~~Dollar amounts in millions

~~(AMOUNTS IN MILLIONS EXCEPT PER SHARE AMOUNTS) (UNAUDITED)~~

Quarter Ended June 30, Six Months Ended June 30,
2019 2018 2019 2018
Net sales $ 588
$ 811
$ 1,170
$ 1,502
Cost of sales 510
550
1,011
1,065
Gross profit 78
261
159
437

Selling, general and administrative expenses 58
50
114
101
(Gain) loss on sale or impairment of long lived assets, net —
—
1
(1 )
Other operating credits and charges, net (3 ) (5 ) (1 ) (5 )
Income from operations 23
215
45
342
Interest expense, net (2 ) —
(1 ) (1 )
Other non-operating items (2 ) (1 ) 9
(2 )
Income from continuing operations before taxes 19
215
52
339
Provision for income taxes 3
51
11
81
Equity in loss of unconsolidated affiliates —
1
—
1
Income from continuing operations 15
163
42
258
Loss from discontinued operations before taxes —
—
—
(6 )
Benefit for income taxes —
—
—
(1 )
Loss from discontinued operations —
—
—
(4 )
Net income $ 16
$ 163
$ 42
$ 254
Less: Net loss attributed to non-controlling interest (2 ) —
(2 ) —
Net income attributed to Louisiana-Pacific Corporation $ 17
$ 163
$ 44
$ 254

Amounts attributed to Louisiana-Pacific Corporation common shareholders:
Income from continuing operations, net of tax $ 17
$ 163
$ 44
$ 258
Income from discontinued operations, net of tax —
—
—
(4 )
$ 17
$ 163
$ 44
$ 254
Net income per share of common stock:
Income per share continuing operations $ 0.14
$ 1.13
$ 0.34
$ 1.78
Loss per share discontinued operations —
—
—
(0.03 )
Net income per share - basic $ 0.14
$ 1.13
$ 0.34
$ 1.75
Diluted net income per share of common stock:
Income per share continuing operations $ 0.14
$ 1.11
$ 0.34
$ 1.76
Loss per share discontinued operations —
—
—
(0.03 )
Net income per share - diluted $ 0.14
$ 1.11
$ 0.34
$ 1.73

Average shares of common stock used to compute net income per share:
Basic 123.4
144.6
126.9
144.7
Diluted 124.3
146.2
127.9
146.4

~~The accompanying notes are an integral part of these unaudited financial statements.~~

~~CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME~~

~~LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES~~

~~(AMOUNTS IN MILLIONS) (UNAUDITED)~~

(Unaudited)

Quarter Ended June 30, Six Months Ended June 30,
2019 2018 2019 2018
Net income $ 16
$ 163
$ 42
$ 254
Other comprehensive income (loss):
Foreign currency translation adjustments 1
(14 ) 3
(12 )
Unrealized gain (loss) on investments, net of tax —
—
(1 ) —
Defined benefit pension plans:
Change in benefit obligations, translation adjustment —
—
—
—
Amortization of amounts included in net periodic benefit cost:
Actuarial loss, net of tax 1
1
2
2
Prior service cost, net of tax —
—
—
—
Other —
—
—
—
Other comprehensive income (loss) 2
(12 ) 4
(9 )
Comprehensive income 17
150
46
245
Less: comprehensive loss attributed to redeemable non-controlling interest (2 ) —
(2 ) —
Comprehensive income attributed to Louisiana-Pacific Corporation $ 19
$ 150
$ 48
$ 245

~~The accompanying notes are an integral part of these unaudited financial statements.~~

~~CONSOLIDATED STATEMENTS OF CASH FLOWS~~

~~LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES~~

~~(AMOUNTS IN MILLIONS) (UNAUDITED)~~

Quarter Ended June 30, Six Months Ended June 30,
2019 2018 2019 2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 16
$ 163
$ 42
$ 254
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 29
30
60
61
Equity in (income) loss of unconsolidated affiliates, including dividends —
—
(2 ) (1 )
(Gain) loss on sale or impairment of long-lived assets, net —
—
1
(1 )
Other operating credits and charges, net (3 ) —
(1 ) (1 )
Gain on acquisition —
—
(14 ) —
Stock-based compensation related to stock plans 3
3
5
5
Exchange (gain) loss on remeasurement —
—
2
—
Cash settlements of warranties, net of accruals —
(6 ) (1 ) (2 )
Accrual of contingencies, net of cash settlements —
—
—
(2 )
Pension contributions, net of expense 1
(2 ) 2
(1 )
Other adjustments, net (1 ) (1 ) (1 ) 1
Changes in assets and liabilities:
Increase in receivables (6 ) (16 ) (41 ) (45 )
(Increase) decrease in inventories 19
41
(17 ) (13 )
Increase in prepaid expenses (3 ) (4 ) (3 ) (5 )
Increase (decrease) in accounts payable and accrued liabilities (2 ) 19
(17 ) (20 )
Increase (decrease) in income taxes payable and deferred income taxes (1 ) 13
(16 ) 37
Net cash provided by (used in) operating activities 54
237
—
268
CASH FLOWS FROM INVESTING ACTIVITIES:
Property, plant and equipment additions (38 ) (44 ) (81 ) (88 )
Proceeds from sales of assets 1
—
1
1
Cash acquired (used in) acquisition (7 ) (45 ) 33
(45 )
Receipt of proceeds from notes receivable from asset sales —
22
—
22
Other investing activities —
—
(1 ) —
Net cash used in investing activities (45 ) (67 ) (50 ) (110 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of long-term debt (3 ) —
(3 ) —
Payment of cash dividends (17 ) (19 ) (33 ) (38 )
Purchase of stock —
(39 ) (438 ) (39 )
Taxes paid related to net share settlement of equity awards —
(2 ) (4 ) (8 )
Other financing activities (3 ) —
(3 ) 3
Net cash used in financing activities (22 ) (60 ) (481 ) (81 )
EFFECT OF EXCHANGE RATE ON CASH, CASH EQUIVALENTS AND RESTRICTED CASH 1
(5 ) 1
(4 )
Net decrease in cash, cash equivalents and restricted cash (13 ) 105
(530 ) 73
Cash, cash equivalents and restricted cash at beginning of period 375
909
892
941
Cash, cash equivalents and restricted cash at end of period $ 362
$ 1,014
$ 362
$ 1,014

Supplemental cash flow information:
Cash paid for income taxes $ 7
$ 37
$ 28
$ 41
Cash paid for interest, net of cash received $ —
$ (5 ) $ 5
$ 2



	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	31		$	16		$	64		$	42
Adjustments to net income:
Depreciation and amortization	28			29			56			60
Loss on impairment	8			—			15			1
Gain on acquisition	—			—			—			(14		)
Deferred taxes	5			(5		)	1			(11		)
Other adjustments, net	15			—			10			5
Changes in assets and liabilities (net of acquisitions and divestitures):
Receivables	4			(6		)	(27		)	(41		)
Prepaid expenses and other current assets	(4		)	(3		)	(5		)	(3		)
Inventories	38			19			2			(17		)
Accounts payable and accrued liabilities	(6		)	(2		)	(22		)	(17		)
Income taxes payable, net of receivables	10			4			26			(5		)
Net cash provided by operating activities	129			54			120			—
CASH FLOWS FROM INVESTING ACTIVITIES:
Property, plant, and equipment additions	(15		)	(38		)	(39		)	(81		)
Proceeds from business divestiture	14			—			14			—
Redemption of insurance cash surrender value	10			—			10			—
Cash (used) acquired in acquisition	—			(7		)	—			33
Other investing activities	3			—			3			—
Net cash provided by (used in) investing activities	12			(45		)	(12		)	(50		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of long-term debt	(350		)	(3		)	(350		)	(3		)
Borrowing of long-term debt	—			—			350			—
Payment of cash dividends	(17		)	(17		)	(33		)	(33		)
Purchase of stock	—			—			—			(438		)
Other financing activities	(1		)	(3		)	(6		)	(7		)
Net cash used in financing activities	(368		)	(22		)	(39		)	(481		)
EFFECT OF EXCHANGE RATE ON CASH, CASH EQUIVALENTS AND RESTRICTED CASH	(2		)	1			(5		)	1
Net (decrease) increase in cash, cash equivalents and restricted cash	(229		)	(13		)	64			(530		)
Cash, cash equivalents, and restricted cash at beginning of period	488			375			195			892
Cash, cash equivalents, and restricted cash at end of period	$	259		$	362		$	259		$	362

Supplemental cash flow information:
Cash paid for income taxes, net of cash received	$	—		$	7		$	29		$	28
Cash paid for interest, net of cash received	$	2		$	—		$	12		$	5
Unpaid capital expenditures	$	11		$	15		$	11		$	15

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

Condensed Consolidated Statements of Stockholders' Equity

~~CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY~~Dollar and share amounts in millions, except per share amounts

~~LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES~~

~~(AMOUNTS IN MILLIONS EXCEPT PER SHARE AMOUNTS) (UNAUDITED)~~

(Unaudited)

Common Stock Treasury Stock
Additional
Paid-in
Capital

Retained
Earnings

Accumulated
Comprehensive
Loss

Total
Stockholders'
Equity
Shares Amount Shares Amount
Balance, December 31, 2018 153
$ 153
17
$ (378 ) $ 458
$ 1,613
$ (146 ) $ 1,700
Net income

27

27
Dividends paid ($0.135 per share)

(17 )

(17 )
Issuance of shares under stock plans

—
8
(8 )

—
Purchase of stock (12 ) (12 ) 2
(38 ) (80 ) (308 )
(438 )
Compensation expense associated with stock-based compensation

2

2
Taxes paid related to net settlement of stock-based awards

—
(4 )

(4 )
Other comprehensive loss

2
2
Balance, March 31, 2019 141
141
18
(412 ) 373
1,314
(144 ) 1,273
Net income 17
17
Dividends paid ($0.135 per share) (17 ) (17 )
Issuance of shares under stock plans —
2
(1 ) 1
Compensation expense associated with stock-based compensation 2
2
Other comprehensive loss 2
2
Balance, June 30, 2019 141
$ 141
18
$ (410 ) $ 374
$ 1,315
$ (143 ) $ 1,278



	Common Stock			Treasury Stock					Additional Paid-in Capital			Retained Earnings			Accumulated Comprehensive Loss			Total Stockholders' Equity
	Shares	Amount		Shares		Amount			Additional Paid-in Capital			Retained Earnings			Accumulated Comprehensive Loss			Total Stockholders' Equity
Balance, December 31, 2019	130	$	130	18		$	(406	)	$	454		$	966		$	(153	)	$	991
Net income attributed to LP	—	—		—		—			—			33			—			33
Dividends paid ($0.145 per share)	—	—		—		—			—			(16		)	—			(16		)
Issuance of shares under stock plans	—	—		—		8			(8		)	—			—			—
Taxes paid related to net settlement of stock-based awards	—	—		—		(4		)	—			—			—			(4		)
Compensation expense associated with stock-based compensation	—	—		—		—			2			—			—			2
Other comprehensive loss	—	—		—		—			—			—			(22		)	(22		)
Balance, March 31, 2020	130	$	130	18		$	(402	)	$	448		$	983		$	(175	)	$	984
Net income attributed to LP	—	—		—		—			—			33			—			33
Dividends paid ($0.145 per share)	—	—		—		—			—			(17		)	—			(17		)
Issuance of shares under stock plans	—	—		(1	)	2			(1		)	—			—			1
Compensation expense associated with stock-based compensation	—	—		—		—			1			—			—			1
Noncontrolling interest redemption value adjustment	—	—		—		—			(2		)	—			—			(2		)
Other comprehensive loss	—	—		—		—			—			—			—			—
Balance, June 30, 2020	130	$	130	17		$	(400	)	$	446		$	999		$	(175	)	$	1,000

Common Stock Treasury Stock
Additional
Paid-in
Capital

Retained
Earnings

Accumulated
Comprehensive
Loss

Total
Stockholders'
Equity
Shares Amount Shares Amount
Balance, December 31, 2017 153
$ 153
8
$ (178 ) $ 471
$ 1,280
$ (122 ) $ 1,605
Effect of adoption of ASU 2014-09

(4 )

(4 )
Effect of adoption of ASU 2018-02

17
(17 ) —
Net income

91

91
Dividends paid ($0.13 per share)

(19 )

(19 )
Issuance of shares under stock plans

(1 ) 10
(10 )

—
Compensation expense associated with stock-based compensation

2

2
Taxes paid related to net settlement of equity awards

—
(6 )

(6 )
Other comprehensive income

4
4
Balance, March 31, 2018 153
153
8
(173 ) 463
1,364
(135 ) 1,672
Net income 163
163
Dividends paid ($0.13 per share) (19 ) (19 )
Issuance of shares under stock plans —
8
(8 ) —
Purchase of treasury stock 1
(39 ) (39 )
Compensation expense associated with stock-based compensation 3
3
Taxes paid related to net settlement of equity awards —
(2 ) (2 )
Other comprehensive income (12 ) (12 )
Balance, June 30, 2018 153
$ 153
9
$ (206 ) $ 458
$ 1,508
$ (147 ) $ 1,766



	Common Stock					Treasury Stock				Additional Paid-in Capital			Retained Earnings			Accumulated Comprehensive Loss			Total Stockholders' Equity
	Shares		Amount			Shares	Amount			Additional Paid-in Capital			Retained Earnings			Accumulated Comprehensive Loss			Total Stockholders' Equity
Balance, December 31, 2018	153		$	153		16	$	(378	)	$	458		$	1,613		$	(146	)	$	1,700
Net income attributed to LP	—		—			—	—			—			27			—			27
Dividends paid ($0.135 per share)	—		—			—	—			—			(17		)	—			(17		)
Issuance of shares under stock plans	—		—			—	8			(8		)	—			—			—
Taxes paid related to net settlement of stock-based awards	—		—			—	(4		)	—			—			—			(4		)
Purchase of stock	(12	)	(12		)	2	(38		)	(80		)	(308		)	—			(438		)
Compensation expense associated with stock-based compensation	—		—			—	—			2			—			—			2
Other comprehensive loss	—		—			—	—			—			—			2			2
Balance, March 31, 2019	141		$	141		18	$	(412	)	$	373		$	1,314		$	(144	)	$	1,273
Net income attributed to LP	—		—			—	—			—			$	17		—			$	17
Dividends paid ($0.135 per share)	—		—			—	—			—			(17		)	—			(17		)
Issuance of shares under stock plans	—		—			—	2			(1		)	—			—			1
Compensation expense associated with stock-based compensation	—		—			—	—			2			—			—			2
Other comprehensive income	—		—			—	—			—			—			2			2
Balance, June 30, 2019	141		$	141		18	$	(410	)	$	374		$	1,315		$	(143	)	$	1,278

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

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE ~~1 –~~1. NATURE OF OPERATIONS AND BASIS FOR PRESENTATION

Nature of Operations

Louisiana-Pacific Corporation and our subsidiaries are a leading provider of high-performance building solutions serving the new home construction, repair and remodeling, and outdoor structures markets. In addition to our U.S. operations, the Company also maintains manufacturing facilities in Canada, Chile, and Brazil through foreign subsidiaries and joint ventures. The principal customers for our building solutions are retailers, wholesalers, and homebuilding and industrial businesses in North America and South America, with limited sales to Asia, Australia, and Europe. References to "LP," "the Company," "we," "our," and "us" refer to Louisiana-Pacific Corporation and its consolidated subsidiaries as a whole.

Basis for Presentation

The accompanying unaudited ~~consolidated financial statements~~Condensed Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles in the ~~instructions to Form 10-Q~~United States (U.S. GAAP) for interim financial information. Accordingly, they do not include all the information and infootnotes required by U.S. GAAP for complete consolidated financial statements. In the opinion of management, ~~include~~ all adjustments ~~(consisting~~considered necessary for a fair presentation have been included and are of a normal and recurring ~~adjustments) necessary to present fairly,~~nature. These Condensed Consolidated Financial Statements and Notes hereto should be read in ~~all material respects, the consolidated financial position, results of operations and cash flows of us and~~conjunction with our ~~subsidiaries~~Annual Report on Form 10-K for the ~~interim periods presented.~~fiscal year ended December 31, 2019, filed with the SEC on February 13, 2020 (2019 Annual Report on Form 10-K). Results of operations for interim periods are not necessarily indicative of results to be expected for an entire year. ~~These consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended~~ ~~December 31, 2018~~. All dollar amounts are shown in millions except per share.

COVID-19 Impact

In March 2020, the World Health Organization (WHO) characterized the outbreak of COVID-19 as a global pandemic. In response to this declaration and the rapid global spread of COVID-19, national, state, and local governments have taken extraordinary, wide-ranging actions to contain the outbreak and spread of COVID-19, including quarantines, "stay-at-home" orders and similar mandates imposing varying degrees of restrictions on social and commercial activity to promote social distancing. We are continuing to follow national, state, and local guidelines, while also continuing to provide our products to support critical infrastructure needs.

The pandemic and the resulting containment did not materially impact our results for the three and six months ended June 30, 2020. We initially reduced mill operating schedules to balance production and demand but have resumed full operating schedules as of June 30, 2020. However, the duration of the COVID-19 pandemic, the actions to contain the pandemic and mitigate its impacts, and the effects on our operations cannot be reasonably estimated. Therefore, the related financial impact on our business cannot be reasonably estimated.

In March 2020, we borrowed $350 million under our revolving credit facility dated as of June 27, 2019 (the “Credit Facility”) with American AgCredit, PCA, as administrative agent and CoBank, ACB, as a letter of credit issuer, as a precautionary measure, to ensure funds are available to meet our obligations for a substantial period of time in response to the COVID-19 pandemic. On May 1, 2020, we entered into an amendment to our the Credit Facility to provide a total capacity of $550 million and on May 27, 2020, we entered into a second amendment to the Credit Facility (as amended, the “Amended Credit Facility”), which modified certain representations and warranties included in the Credit Facility, related to the impacts of the ongoing COVID-19 pandemic on the Company’s business, operations or financial conditions as more particularly set forth in the second amendment. We repaid the $350 million borrowed under our Amended Credit Facility in June 2020 and there were no outstanding amounts borrowed on this Amended Credit Facility as of June 30, 2020.

~~NOTE 2~~

As of June 30, 2020, we had $259 million of cash and cash equivalents. Additionally, in response to the current business environment as impacted by COVID-19, we continue to take precautionary measures and adjust our operational needs, including a significant reduction in capital spending.

As a result of the economic and business impact of COVID-19, we may be required to revise certain accounting estimates and judgments such as, but not limited to, those related to the valuation of goodwill, intangibles, long-lived assets, accounts receivable, and inventory, which could have a material adverse effect on our financial position and results of operations.

Recently Adopted Accounting Policies

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - ~~LEASES~~

OnCredit Losses (Topic 326). This ASU sets forth a "current expected credit loss" (CECL) model, which requires the measurement of all expected credit losses for financial instruments or other assets (e.g., trade receivables), held at the reporting date based on historical experience, current conditions, and reasonable supportable forecasts. The Company adopted ASU 2016-13 on January 1, ~~2019, we~~2020. This adoption did not have a material impact on the Company’s Condensed Consolidated Financial Statements.

In January 2017, the FASB issued ASU 2017-04, Intangibles—Goodwill and Other (Topic 350). The standard simplifies the accounting for goodwill impairments by eliminating step 2 from the goodwill impairment test. The Company adopted ASU ~~2016-02, "Leases (Topic 842)" (ASC 842), which supersedes~~2017-14 on January 1, 2020. This adoption did not have a material impact on the lease accounting requirements in ASC Topic 840, "Leases". The new standard requires entities to recognize, separately from each other, an asset for its right to use (ROU) the underlying asset equal to the liability for its finance and operating lease obligations. Further, the company is required to present separately the current and non-current portion of the ROU asset and corresponding lease liability.Company’s Condensed Consolidated Financial Statements.

In ~~July~~August 2018, the FASB issued ASU 2018-11, "Leases (Topic 842)" Targeted Improvements, which provides an additional (and optional) transition method whereby the new lease standard is applied at the adoption date and recognized as an adjustment to retained earnings. The amendments have the same effective date and transition requirements as the new lease standard. We have elected to adopt using this optional transition method.

~~We determine if an arrangement is a lease at contract inception. A lease exists when a contract conveys~~2018-13, Fair Value Measurement Disclosure Framework - Changes to the ~~customer the right~~Disclosure Requirements for Fair Value Measurement (Topic 820). The standard amends ASC 820 to ~~control the use of identified property, plant, or equipment for a period of time in exchange for consideration.~~

~~Our lease portfolio consists primarily of real estate, mobile equipment at our manufacturing facilities, railcars~~add and remove disclosure requirements related to ~~transport our products, and a fleet of vehicles.~~

~~As part of our~~fair value measurement. The Company adopted ASU 2018-13 on January 1, 2020. This adoption ~~of ASC 842, we have also elected to apply the following practical expedients as permitted under the new standard:~~

~~Package of practical expedients - we will~~did not reassess whether expiring or existing contracts contain a lease, will not reassess the classification of expired or existing leases, and will not reassess whether lease initial direct costs would qualify for capitalization under the new lease accounting standard.

Lease and non-lease components as lessee - for leases across all asset classes in which we are a lessee, we will not separate non-lease components from lease components and instead will account for each separate lease component and the non-lease components associated with that lease component as a single lease component.

~~Short-term leases - we have elected not to recognize ROU assets and lease liabilities for short-term leases across all asset classes that~~ have a ~~lease term of 12 months or less. We recognize the lease payments associated with our short-term leases as an expense on a straight-line basis over the lease term.~~

~~Key estimates and judgments include how we determined the discount rate used to record the unpaid lease payments at present value and lease term.~~

ASC 842 requires a lessee to discount its unpaid lease payments using the interest rate implicit in the lease or, if that rate cannot be readily determined, its incremental borrowing rate. As most of our leases do not provide an implicit rate, we used our incremental borrowing rate basedmaterial impact on the ~~information available at commencement date in determining the present value of lease payments.~~

The lease term for all of our leases includes the noncancellable period of the lease plus any additional periods covered by either an option to extend (or not to terminate) the lease that we are reasonably certain to exercise, or an option to extend (or not to terminate) the lease controlled by the lessor.Company’s Condensed Consolidated Financial Statements.

~~Quantitative Information~~In August 2018, the FASB issued ASU 2018-15,

Classification June 30, 2019
Consolidated Balance Sheet
Assets:
Operating lease assets Operating lease assets $ 22
Finance lease assets Property, plant, and equipment, net 1
Total lease assets $ 24
Liabilities:
Current
  Operating Accounts payable and accrued liabilities $ 8
  Finance Current portion of long-term debt 1
Noncurrent
  Operating Noncurrent operating lease liabilities 14
  Finance Long-term debt, excluding current portion 1
Total lease liabilities $ 24

Classification Quarter Ended June 30, 2019
Six Months Ended
June 30, 2019
Consolidated Statement of Income
Lease Cost:
Operating lease cost Cost of sales and Selling, general and administrative expenses $ 2
$ 5
Finance lease cost
Amortization of leased assets Cost of sales —
—
Interest on lease liabilities Interest expense, net of capitalized interest —
—
Total lease cost $ 3
$ 5

Maturity of Lease Liabilities Operating Leases Finance Leases Total
2019 $ 5
$ —
$ 5
2020 8
1
9
2021 6
—
6
2022 3
—
3
2023 1
—
1
2024 and thereafter —
—
—
Total lease payments 23
1
25
Less: Interest (1 ) —
(1 )
Present value of lease liabilities $ 22

$ 1

$ 24

Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract (Subtopic 350-40). The standard provides additional guidance on the accounting for costs of implementation activities performed in a cloud computing arrangement that is a service contract. The Company adopted ASU 2018-15 on January 1, 2020, using the prospective transition method. This adoption did not have a material impact on the Company’s Condensed Consolidated Financial Statements.

Accounting Standards Issued But Not Yet Adopted



~~Lease Term and Discount Rate~~	~~June 30, 2019~~
~~Weighted-average remaining lease term (years)~~
~~Operating leases~~	~~3.1~~
~~Finance leases~~	~~3.2~~
~~Weighted-average discount rate~~
~~Operating leases~~	~~3.5~~	%
~~Finance leases~~	~~4.3~~	%

Other Information
Quarter Ended
June 30, 2019
Six Months Ended June 30, 2019
Short-term lease cost $ 1
$ 2
Variable lease cost 7
14
Cash paid for amounts included in the measurement of lease liabilities:
  Operating cash flows from finance leases —
—
  Operating cash flows from operating leases 2
4
  Financing cash flows from finance leases —
—
Right-of-use assets obtained in exchange for new operating lease liabilities —
6
Right-of-use assets obtained in exchange for new financing lease liabilities —
1

In August 2018, the FASB issued ASU 2018-14, Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans, which amends ASC 715 to add, remove, and clarify disclosure requirements related to defined benefit pension and other postretirement plans. The amended guidance modifies the disclosure requirements for employers that sponsor defined benefit pension or other post-retirement plans by removing and adding certain disclosures for these plans. The eliminated disclosures include (a) the amounts in accumulated other comprehensive income expected to be recognized in net periodic benefit costs over the next fiscal year, and (b) the effects of a one percentage point change in assumed health care cost trend rates on the net periodic benefit costs and the benefit obligation for post-retirement health care benefits. Additional disclosures include descriptions of significant gains and losses affecting the benefit obligation for the period. The amended guidance is effective for fiscal years ending after December 15, 2020. Early adoption is permitted. The adoption of this guidance will modify our disclosures but is not expected to have a material effect on our Consolidated Financial Statements.

~~Shown~~

In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes (Topic 740). This ASU simplifies the accounting for income taxes by, among other things, eliminating certain existing exceptions related to the general approach in ASC 740 relating to franchise taxes, reducing complexity in the ~~table below~~interim-period accounting for year-to-date loss limitations and changes in tax laws, and clarifying the accounting for transactions outside of business combination that result in a step-up in the tax basis of goodwill. The transition requirements are ~~future minimum operating lease commitments as of~~primarily prospective, and the effective date is for interim and annual reporting periods beginning after December ~~31, 2018, as disclosed in our 2018 Form 10-K, prior to~~15, 2020, with

early adoption permitted. We are currently evaluating the impact of the new ~~lease standard.~~

Dollar amounts in millions
Year ended December 31,
2019 $ 8
2020 7
2021 5
2022 2
2023 —
2024 and thereafter —
Total $ 22

guidance on our Condensed Consolidated Financial Statements.

NOTE ~~3 -~~2. REVENUE

The following table presents our reportable segment revenues, disaggregated by revenue source. We disaggregate revenue from contracts with customers into major product lines. We have determined that disaggregating revenue into these categories achieves the disclosure objective to depict how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors. During the six months ended June 30, 2020, LP CanExel® prefinished siding was reclassified from Siding to Other, reflecting changes in organizational structure and, accordingly, the information that the chief operating decision maker uses to evaluate performance and allocate resources to our business segments. All prior periods presented have been adjusted for comparability.

As noted in the segment reporting information in Note 18 below, our reportable segments are Siding, Oriented Strand Board (OSB), Engineered Wood Products (EWP), and South America.



Three Months Ended June 30, 2020
By product type and family:	Siding		OSB		EWP		South America		Other		Inter-segment		Total
Value-add
SmartSide^® strand siding	$	207	$	—	$	—	$	5	$	—	$	—	$	212
SmartSide^® fiber siding	11		—		—		—		—		—		11
CanExel^® siding	—		—		—		—		3		—		3
OSB - Structural Solutions	—		95		1		32		—		—		128
LVL	—		—		30		—		—		—		30
LSL	—		—		9		—		—		—		9
I-Joist	—		—		32		—		—		—		32
	218		95		72		37		3		—		425
Commodity
OSB - commodity	—		108		—		—		—		—		108
Plywood	—		—		3		—		—		—		3
	—		108		3		—		—		—		111
Other
Other products	2		1		4		1		4		—		12
	$	220	$	204	$	79	$	38	$	7	$	—	$	548



Six Months Ended June 30, 2020
By product type and family:	Siding		OSB		EWP		South America		Other		Inter-segment		Total
Value-add
SmartSide^® strand siding	$	398	$	—	$	—	$	8	$	—	$	—	$	406
SmartSide^® fiber siding	30		—		—		—		—		—		30
CanExel^® siding	—		—		—		—		14		—		14
OSB - Structural Solutions	—		198		2		64		—		—		264
LVL	—		—		66		—		—		—		66
LSL	—		—		21		—		—		—		21
I-Joist	—		—		69		—		—		—		69
	428		198		158		72		14		—		870
Commodity
OSB - commodity	—		221		—		—		—		—		221
Plywood	—		—		9		—		—		—		9
	—		221		9		—		—		—		230
Other
Other products	4		5		11		2		11		—		33
	$	432	$	424	$	178	$	74	$	25	$	—	$	1,133



Three Months Ended June 30, 2019
By product type and family:	Siding		OSB		EWP		South America		Other		Inter-segment			Total
Value-add
SmartSide^® strand siding	$	200	$	—	$	—	$	4	$	—	$	—		$	204
SmartSide^® fiber siding	25		—		—		—		—		—			25
CanExel^® siding	—		—		—		—		7		—			7
OSB - Structural Solutions	—		100		2		35		—		—			138
LVL	—		—		40		—		—		—			40
LSL	—		—		14		—		—		—			14
I-Joist	—		—		38		—		—		—			38
	225		100		95		39		7		—			466
Commodity
OSB - commodity	5		97		1		—		—		(3		)	100
Plywood	—		—		6		—		—		—			6
	5		97		7		—		—		(3		)	107

Other
Other products	1		1		5		1		7		—			15
	$	231	$	199	$	107	$	40	$	14	$	(3	)	$	588



Six Months Ended June 30, 2019
By product type and family:	Siding		OSB		EWP		South America		Other		Inter-segment			Total
Value-add
SmartSide^® strand siding	$	387	$	—	$	—	$	10	$	—	$	—		$	397
SmartSide^® fiber siding	51		—		—		—		—		—			51
CanExel^® siding	—		—		—		—		24		—			24
OSB - Structural Solutions	—		199		4		73		—		—			276
LVL	—		—		71		—		—		—			71
LSL	—		—		28		—		—		(1		)	28
I-Joist	—		—		64		—		—		—			64
	438		199		167		83		24		(1		)	910
Commodity
OSB - commodity	8		204		3		—		—		(3		)	212
Plywood	—		—		12		—		—		—			12
	8		204		15		—		—		(3		)	225

Other
Other products	5		4		15		2		11		—			35
	$	450	$	407	$	197	$	85	$	35	$	(4	)	$	1,170

Revenue is recognized when obligations under the terms of a contract (purchase orders) with our customers are satisfied; generally, this occurs with the transfer of control of our products. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods. ~~Shipping~~The shipping cost incurred by us to deliver products to our customers ~~are~~is recorded in cost of sales. The expected costs associated with our warranties continue to be recognized as an expense when the products are sold. We recognize revenue as of a point in time.

~~The following tables disaggregate~~

Our businesses routinely incur customer program costs to obtain favorable product placement, to promote sales of products and to maintain competitive pricing. Customer program costs and incentives, including rebates and promotion and volume allowances, are accounted for as deductions from net sales at the time the program is initiated. These reductions of revenue are recorded at the time of sale or the implementation of the program based on management’s best estimates. Estimates are based on historical and projected experience for each type of program or customer. Volume allowances are accrued based on management’s estimates of customer volume achievement and other factors incorporated into customer agreements, such as new product purchases, store sell-through, and merchandising support. Management adjusts accruals when circumstances indicate (typically as a result of a change in volume expectations).

We ship some of our products to customers' distribution centers on a consignment basis. We retain title to our products stored at the distribution centers. As our products are removed from the distribution centers by retailers and shipped to retailers’ stores, title passes from us to the retailers. At that time, we invoice the retailers and recognize revenue ~~by product line and product type by segment~~ for these consignment transactions. We do not offer a right of return for products shipped to the ~~quarter and six months ended June 30, 2019 and 2018:~~

Quarter Ended June 30, 2019
By Product family: Siding OSB EWP South America Other Inter-segment Total
SmartSide^® Strand siding
$ 200
$ —
$ —
$ 4
$ —
$ —
$ 204
SmartSide^® Fiber siding
25
—
—
—
—
—
25
CanExel^® siding
7
—
—
—
—
—
7
OSB - commodity 5
97
1
—
—
(2 ) 101
OSB - value-add —
100
2
35
—
—
138
LVL —
—
40
—
—
—
40
LSL —
—
14
—
—
—
14
I-joist —
—
38
—
—
—
38
Plywood —
—
6
—
—
—
6
Other 2
1
5
1
5
—
16
$ 238
$ 199
$ 107
$ 40
$ 5
$ (2 ) $ 588
By Product type:
Commodity $ 5
$ 97
$ 7
$ —
$ —
$ (2 ) $ 107
Value-add 231
100
95
39
—
—
465
Other 2
1
5
1
5
—
16
$ 238
$ 199
$ 107
$ 40
$ 5
$ (2 ) $ 588

Six Months Ended June 30, 2019
By Product family: Siding OSB EWP South America Other Inter-segment Total
SmartSide^® Strand siding
$ 387
$ —
$ —
$ 10
$ —
$ —
$ 397
SmartSide^® Fiber siding
51
—
—
—
—
—
51
CanExel^® siding
24
—
—
—
—
—
24
OSB - commodity 8
204
3
—
—
(3 ) 212
OSB - value-add —
199
4
73
—
—
276
LVL —
—
71
—
—
—
71
LSL —
—
28
—
—
(1 ) 28
I-joist —
—
64
—
—
—
64
Plywood —
—
12
—
—
—
12
Other 5
5
15
2
10
—
35
$ 474
$ 407
$ 197
$ 85
$ 10
$ (4 ) $ 1,170
By Product type:
Commodity $ 8
$ 204
$ 15
$ —
$ —
$ (3 ) $ 225
Value-add 461
199
167
83
—
—
910
Other 5
5
15
2
10
(1 ) 35
$ 474
$ 407
$ 197
$ 85
$ 10
$ (4 ) $ 1,170
retailers’ stores from the distribution centers.

Quarter Ended June 30, 2018
By Product family: Siding OSB EWP South America Other Inter-segment Total
SmartSide^® Strand siding
$ 194
$ —
$ —
$ 7
$ —
$ —
$ 200
SmartSide^® Fiber siding
28
—
—
—
—
—
28
CanExel^® siding
13
—
—
—
—
—
13
OSB - commodity 12
231
5
—
—
—
249
OSB - value-add 12
155
4
37
—
—
208
LVL —
—
40
—
—
—
40
LSL —
—
17
—
—
—
17
I-joist —
—
32
—
—
—
32
Plywood —
—
8
—
—
—
8
Other 3
1
7
1
3
—
15
$ 262
$ 387
$ 113
$ 45
$ 3
$ —
$ 811
By Product type:
Commodity $ 12
$ 231
$ 13
$ —
$ —
$ —
$ 257
Value-add 246
155
93
44
—
—
538
Other 3
1
7
1
3
—
15
$ 262
$ 387
$ 113
$ 45
$ 3
$ —
$ 811
NOTE 3. EARNINGS PER SHARE

Basic earnings per share is based upon the weighted-average number of shares of common stock outstanding. Diluted earnings per share is based upon the weighted-average number of shares of common stock outstanding, plus all potentially dilutive securities that were assumed to be converted into common shares at the beginning of the period under the treasury stock method. This method requires that the effect of potentially dilutive common stock equivalents (stock options, stock-settled appreciation rights (SSARs), restricted stock units, and performance stock units) be excluded from the calculation of diluted earnings per share for the periods in which losses are reported because the effect is anti-dilutive.

Six Months Ended June 30, 2018
By Product family: Siding OSB EWP South America Other Inter-segment Total
SmartSide^® Strand siding
$ 359
$ —
$ —
$ 14
$ —
$ —
$ 372
SmartSide^® Fiber siding
54
—
—
—
—
—
54
CanExel^® siding
26
—
—
—
—
—
26
OSB - commodity 21
413
8
—
—
—
442
OSB - value-add 22
284
8
72
—
—
386
LVL —
—
77
—
—
—
77
LSL —
—
31
—
—
—
31
I-joist —
—
64
—
—
—
64
Plywood —
—
16
—
—
—
16
Other 7
4
16
2
6
—
36
$ 489
$ 701
$ 219
$ 88
$ 6
$ —
$ 1,502
By Product type:
Commodity $ 21
$ 413
$ 24
$ —
$ —
$ —
$ 457
Value-add 460
284
179
86
—
—
1,009
Other 7
4
16
2
6
—
36
$ 489
$ 701
$ 219
$ 88
$ 6
$ —
$ 1,502

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



	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Net income attributed to LP
Weighted average common shares outstanding - basic	112		123		112		127
Dilutive effect of employee stock plans	1		1		1		1
Shares used for diluted earnings per share	113		124		113		128
Earnings per share:
Basic earnings	$	0.29	$	0.14	$	0.59	$	0.34
Diluted earnings	$	0.29	$	0.14	$	0.58	$	0.34

~~NOTE 4 - STOCK-BASED COMPENSATION~~

We have a Management Incentive Plan (MIP) that is administered by the Compensation Committee of the Board of Directors. The Compensation Committee authorizes the grants of restricted stock (shares or units), performance share awards payable in stock based upon the attainment of specified performance goals and stock-settled stock appreciation rights (SSARs).We also maintain an employee stock purchase plan which allows eligible employees to purchase shares of LP’s common stock at a discount. As of June 30, 2019, 2.5 million shares were available for grant under the 2013 Omnibus Plan and 1.9 million shares were available under the 2019 Employee Stock Purchase Plan.

Quarter Ended Six Months Ended
June 30, June 30,

2019 2018 2019 2018
Total stock-based compensation expense (cost of sales, selling, general and administrative and other operating credits and charges, net) $ 2
$ 3
$ 5
$ 5
Income tax provision related to stock-based compensation $ —
$ (1 ) (1 ) (3 )
Impact on cash flow due to taxes paid related to net share settlement of equity awards $ —
$ 2
4
8

~~At June 30, 2019, $19 million of compensation cost related to unvested performance shares, restricted stock and SSARs attributable to future service had not yet been recognized.~~

During the first six months of 2019, we granted 195,452 performance units at an average grant date fair value of $25.19 per share and 392,704 restricted stock units at an average grant date fair value of $24.21 per share.

NOTE ~~5 –~~4. FAIR VALUE MEASUREMENTS

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. We are required to classify these financial assets and liabilities into two groups: (i) recurring—measured on a periodic basis and (ii) non-recurring—measured on an as-needed basis.

During the three and six months ended June 30, 2020, we sold our auction rate securities (ARS) and recognized a $3 million gain on available for sale securities, which is included in investment income in the Condensed Consolidated Statements of Income. Available for sale securities were $5 million as of December 31, 2019.

Trading securities consist of rabbi trust financial assets, which are recorded in other assets in our Condensed Consolidated Balance Sheets. The assets of the rabbi trust are invested in mutual funds and are reported at fair value based on active market quotations, which represent Level 1 inputs. The assets of the rabbi trust were $4 million at June 30, 2020, and December 31, 2019.

We estimated our 4.875% Senior Notes due in 2024 (2024 Senior Notes) to have a fair value of $356 million atas of June 30, ~~2019 and $338 million at December 31, 2018~~2020, based upon market quotations. Our 2024 Senior Notes and other long-term debt were categorized as Level 1 in the U.S. GAAP fair value hierarchy. Fair values were based on trading activity among the Company’s lenders and the average bid and ask price as determined using published rates.

There were no outstanding amounts borrowed under our Amended Credit Facility as of June 30, 2020.

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

~~NOTE 6 – EARNINGS PER SHARE~~

~~Basic earnings per share are based upon~~ During the weighted-average number of shares of common stock outstanding. Diluted earnings per share are based upon the weighted-average number of shares of common stock outstanding, plus all potentially dilutive securities that were assumed to be converted into common shares at the beginning of the period under the treasury stock method. Our potentially dilutive securities consist of stock options, SSARs, restricted stock or units and performance share awards.

Quarter Ended Six Months Ended
June 30, June 30,
2019 2018 2019 2018
Denominator for basic earnings per share:
Weighted average common shares outstanding - basic 123.4
144.6
126.9
144.7
Effect of dilutive securities:
Dilutive effect of employee stock plans 0.9
1.6
1.0
1.7
Denominator for diluted earnings per share:
Weighted average shares outstanding - diluted 124.3
146.2
127.9
146.4

~~For the quarter~~three and six months ended June 30, 2020, and 2019, ~~and 2018, there~~no adjustments were ~~no SSARs that were considered not in-the-money for purposes~~recognized associated with the fair value of ~~our earnings per share calculation.~~these assets.

NOTE ~~7 - SHARE REPURCHASE PROGRAM~~5. RECEIVABLES

During the quarter ended March 31, 2019, we announced that our Board of Directors authorized an additional $600 million share repurchase program, including an accelerated share repurchase (ASR) program, which was initiated in February 2019. In connection with the ASR program, we entered into an agreement with Goldman, Sachs & Co. (GS) to repurchase $400 million of our common stock. Under the ASR, we received approximately 12 million shares of our common stock during the quarter ended March 31, 2019.

At the final settlement of the ASR program, which is expected to occur prior to the end of the third quarter of 2019, GS may be required to deliver additional shares of common stock to us or, under certain circumstances, we may be required to deliver shares of our common stock or may elect to make a cash payment to GS, with the number of shares to be delivered or the amount of such payment based on the difference between the volume-weighted average price, less a discount, of our common stock during the term of the agreement and the initial $400 million paid.

~~NOTE 8 – RECEIVABLES~~

Receivables ~~consist~~consisted of the following:


	June 30, 2019			December 31, 2018			June 30, 2020			December 31, 2019
Trade receivables	$	139		$	87		$	134		$	111
Income tax receivable	24			16			22			35
Other receivables	16			25			21			19
Allowance for doubtful accounts	(2		)	(1		)	(2		)	(1		)
Total	$	177		$	128		$	175		$	164

Trade receivables are primarily generated by sales of our products to our wholesale and retail customers. Other receivables atas of June 30, ~~2019~~2020, and December 31, ~~2018~~2019, primarily consist of sales tax receivables, vendor rebates, a receivable associated with an affiliate, and other miscellaneous receivables.

NOTE ~~9 –~~6. INVENTORIES

Inventories are valued at the lower of cost or net realizable value. Inventory cost includes materials, labor, and operating overhead. The major types of inventories are as follows (work in process is not ~~material)~~material and is included in Semi-finished inventory below):


	June 30, 2019		December 31, 2018		June 30, 2020		December 31, 2019
Logs	$	47	$	57	$	44	$	47
Other raw materials	30		25		32		32
Semi-finished inventory	21		23		20		26
Finished products	195		168		144		160
Total	$	293	$	273	$	240	$	265

NOTE ~~10 - ACQUISITIONS~~7. DIVESTITURES

In February 2020, the Company entered into a joint agreement with Maibec, Inc. (Maibec) to sell LP’s East River facility located in Nova Scotia, Canada, as well as the assets and brand rights for CanExel®, the fiber-based prefinished siding product manufactured at that facility. In June 2020, we completed the sale to Maibec for a total purchase price of $16 million, $14 million of which was paid in cash at closing and $2 million of which is payable under a promissory note due in three equal annual installments beginning in June 2021. The current portion is included in prepaid and other current assets and the long-term portion is included in other assets within the Condensed Consolidated Balance Sheet. We recognized a gain on sale of $2 million for the three month period ended June 30, 2020, within other operating credits and charges, net in the Condensed Consolidated Statements of Income.

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

The Condensed Consolidated Statements of Income for the three and six months ended June 30, 2020, include net sales of $3 million and $14 million, respectively, related to the divested East River facility and assets and brand rights for CanExel®. The Condensed Consolidated Statements of Income for three and six months ended June 30, 2019, include net sales of $7 million and $24 million, respectively, related to the East River facility.

NOTE 8. GOODWILL AND OTHER INTANGIBLES

Goodwill and indefinite-lived intangible assets are not amortized and are subject to assessment for impairment by applying a fair value based test on an annual basis or more frequently if circumstances indicate a potential impairment. The Company’s annual assessment date is October 1.

During the three months ended June 30, 2020, we performed an interim evaluation of impairment on the goodwill associated with our off-site construction operation Entekra Holdings, LLC (Entekra) due in part to the impacts of the COVID-19 pandemic on this reporting unit. As a result, we recognized a non-cash impairment charge of $5 million for the three and six month periods ended June 30, 2020, within loss on impairment in the Condensed Consolidated Statements of Income. We applied a discounted cash flow model in which cash flows are projected using internal forecasts over future periods, plus a terminal value, and were discounted to present value using a risk-adjusted rate of return. The cash flow forecasts included estimates of growth rates based on our current views of the long-term outlook of the reporting unit and may materially differ from actual results. The discount rate assumptions were based on an assessment of the risk inherent in the future cash flows of each reporting unit using industry, peer group, and company-specific information.

Changes in goodwill and other intangible assets as of June 30, 2020, are provided in the following table:



	Timber licenses¹			Goodwill			Developed Technology		Trademark
Beginning balance December 31, 2019	$	38		$	30		$	20	$	3
Acquisition	—			—			—		—
Impairment charge				(5		)
Amortization	(2		)	—			—		—
Ending balance June 30, 2020	$	36		$	25		$	20	$	3

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

NOTE 9. REDEEMABLE NONCONTROLLING INTEREST

Redeemable noncontrolling interest ~~are interests~~is interest in subsidiaries that ~~are~~is redeemable outside of our control either for cash or other assets. These interests are classified as mezzanine equity and measured at the greater of estimated redemption value or carrying value at the end of each reporting ~~period or the historical cost basis of the~~period. Net loss attributed to noncontrolling interest ~~adjusted for cumulative earnings allocations. The resulting increases or decreases~~is recorded in the ~~estimated~~Condensed Consolidated Statements of Income. Any adjustments to the redemption ~~amount~~value of redeemable ~~preferred~~ noncontrolling interest are ~~affected by corresponding charges~~recognized in either net income or through ~~income. Any adjustments recognized~~accumulated paid-in capital, depending on the nature of the underlying security (preferred or common units).

The components of redeemable ~~common~~ noncontrolling interest are ~~affected by corresponding charges to accumulated paid in capital.~~as follows:

During the second quarter of 2018, we invested $45 million in Entekra Holdings, LLC (Entekra), a start-up design, engineering and manufacturing company that provides off-site framing for both residential and commercial construction. This investment was recorded as an equity investment based upon the joint control of Entekra’s operations. We own 81.8% of the A units and 55% of the B units of Entekra. Our portion of the earnings and losses of Entekra was included in our Consolidated Statement of Income as income (loss) from unconsolidated affiliate.

During the first quarter of 2019, we obtained a controlling interest in Entekra. Entekra's results of operations have been fully consolidated for periods after December 31, 2018 and we established a redeemable noncontrolling interest related to the minority holders. Due to the pre-existing ownership interest in Entekra, this acquisition was accounted for as a step acquisition in accordance with ASC 805, "Business Combinations". We recognized a gain of $14 million recorded within other non-operating items on our Consolidated Statements of Income in connection with this transaction to record our ownership interest in Entekra at fair value on the acquisition date based upon an appraisal.

Including our previously owned interest, we acquired net assets of $56 million, consisting of $41 million in current assets, $6 million in fixed assets, $25 million of goodwill and other intangible assets less $1 million in current liabilities and $15 million in non-controlling interest. Certain information about Entekra (e.g., pro forma financial information and allocation of purchase price) is not presented because such information is not material to our results of operations and financial position.

Quarter Ended Six Months Ended
June 30, June 30,
2019 2018 2019 2018
Beginning balance $ 14
$ —
$ —
$ —
Purchase of redeemable common and preferred stock —
—
15
—
Net loss attributable to redeemable non-controlling interest (2 ) —
(2 ) —
Adjustment to redemption value —
—
—
—
Ending balance $ 13
$ —
$ 13
$ —

As of June 30, 2019, Entekra has entered into a long-term lease associated with their manufacturing facility which is currently under construction. In accordance with ASC 842, Entekra does not yet control the underlying asset. When Entekra obtains control, we anticipate that we will increase our ROU assets by $18 million and the related lease liability by a comparable amount.

~~Prefinished Staining Product Incorporated (PSPI)~~

During the second quarter of 2019, we acquired certain assets and liabilities of Prefinished Staining Product Incorporated (PSPI), a prefinished siding company located in Green Bay, Wisconsin. The purchase resulted in us recording intangible assets of $4 million. Our assessment of fair value and the purchase price allocation related to this acquisition is final. Certain information about PSPI (e.g., pro forma financial information and allocation of purchase price) is not presented because such information is not material to our results of operations and financial position.

~~NOTE 11 - GOODWILL AND OTHER INTANGIBLES~~

~~Changes in goodwill and other intangible assets for the six months ended June 30, 2019 is provided in the following table:~~

Dollar amounts in millions 2019
Timber and timberlands Goodwill Developed Technology Other Assets Total
Beginning balance December 31, $ 41
$ 16
$ 10
$ —
$ 67
Acquisitions (Note 10) —
14
12
3
29
Amortization (1 ) —
(1 ) —
(2 )
Total goodwill and other intangibles $ 39
$ 30
$ 21
$ 3
$ 93



Dollar amounts in millions
Beginning balance December 31, 2019	$	10
Purchase of redeemable common and preferred stock	—
Adjustment to redemption value (through accumulated paid in capital)	2
Net loss attributable to noncontrolling interest	(1		)
Impairment charge attributed to noncontrolling interest	(1		)
Ending balance June 30, 2020	11

NOTE ~~12 –~~10. LONG TERM DEBT

The following table summarizes our outstanding debt:



	June 30, 2020			December 31, 2019
2024 Senior Notes	$	350		$	350
Amended Credit Facility	—			—
Financing leases	1			1
Unamortized debt costs	(3		)	(3		)
Total	348			348
Less: current portion	—			—
Long-term portion	$	348		$	348

The Amended Credit Facility which provides for revolving credit facilities in the aggregate principal amount of up to $550 million, with a $60 million sub-limit for letters of credit. The initial $350 million revolving facility provided pursuant to the Credit Facility (Revolving A Loan) terminates, and all loans made thereunder become due on June 27, 2024. The incremental $200 million revolving facility provided pursuant to the Amended Credit Facility in May 2020 (Revolving B Loan) terminates, and all loans made thereunder become due on May 1, 2023. Certain of LP’s existing and future wholly-owned domestic subsidiaries may guaranty our obligations under the Amended Credit Facility and, subject to certain limited exceptions, provide security through a lien on substantially all the personal property of these subsidiaries. In March 2020, we borrowed $350 million under the Amended Credit Facility and repaid the entire amount in June 2020.

Revolving borrowings under the Amended Credit Facility accrue interest, at our option, at either a “base rate” plus a margin of 0.875% to 2.000% for Revolving A Loans and 1.125% to 2.250% for Revolving B Loans or LIBOR plus a margin of 1.875% to 3.000% for Revolving A Loans and 2.125% to 3.250% for Revolving B Loans. The Amended Credit Facility also includes an unused commitment fee, due quarterly, ranging from 0.3% to 0.6% for both Revolving A Loans and Revolving B Loans. The applicable margins and fees within these ranges are based on our ratio of consolidated EBITDA to cash interest charges. The “base rate” is the highest of (i) the Federal funds rate plus 0.5%, (ii) the U.S. prime rate, and (iii) one-month LIBOR plus 1.0%.

The Amended Credit Facility contains various restrictive covenants and customary events of default, the occurrence of which could result in the acceleration of our obligation to repay the indebtedness outstanding thereunder. The Amended Credit Facility also contains financial covenants that require us and our consolidated subsidiaries to have, as of the end of each quarter, (i) a capitalization ratio (i.e., funded debt less unrestricted cash to total capitalization) of no more than 57.5% and (ii) a minimum consolidated net worth of at least $475 million plus 70% of consolidated net income after December 31, 2019, without a deduction for net losses.

On May 27, 2020, we entered into the second amendment to the Credit Facility, which modified certain provisions to disregard, for purposes of the Company’s representations and warranties included in the Amended Credit Facility, the impacts of the ongoing COVID-19 pandemic on the Company’s business, operations or financial conditions that were disclosed to lenders or otherwise publicly available in the Company’s filings with the Securities and Exchange Commission prior to the First Amendment Effective Date (as defined in the Amended Credit Facility).

In September 2016, we issued $350 million aggregate principal amount of the 2024 Senior Notes, which mature on September 15, 2024. We may, at our option on one or more occasions, redeem all or any portion of these notes at the redemption prices set forth in the indenture governing the 2024 Senior Notes, plus accrued and unpaid interest, if any, to, but not including, the date of redemption. The indenture governing the 2024 Senior Notes contains certain covenants that, among other things, limit our ability to grant liens to secure indebtedness, engage in sale and leaseback transactions and merge or consolidate or sell all or substantially all our assets. If we are subject to a "change of control," as defined in the indenture, we are required to offer to repurchase the 2024 Senior Notes at a purchase price equal to 101% of the principal amount thereof plus accrued and unpaid interest, if any, thereon to, but not including, the date of purchase. The indenture governing the 2024 Senior Notes contains customary events of default, including failure to make required payments on the 2024 Senior Notes, failure to comply with certain agreements or covenants contained in the indenture, failure to pay or acceleration of certain other indebtedness and certain events of bankruptcy and insolvency. An event

of default in the indenture allows either the indenture trustee or the holders of at least 25% in aggregate principal amount of the then-outstanding 2024 Senior Notes to accelerate, or in certain cases, automatically causes the acceleration of, the amounts due under the 2024 Senior Notes.

On March 17, 2020, LP entered into a letter of credit facility agreement (Letter of Credit Facility) with Bank of America, N.A., which provides for the funding of letters of credit up to an aggregate outstanding amount of $20 million, which may be secured by certain cash collateral of LP. The Letter of Credit Facility includes an unused commitment fee, due quarterly, ranging from 0.50% to 1.875% of the daily available amount to be drawn on each letter of credit issued under the Letter of Credit Facility. The Letter of Credit Facility is subject to similar affirmative, negative, and financial covenants as those set forth in the Amended Credit Facility, including capitalization ratio and minimum net worth covenants.

As of June 30, 2020, we were in compliance with all financial covenants under the Amended Credit Facility.

NOTE 11. INCOME TAXES

For interim periods, ~~accounting standards require that~~we recognize income tax expense ~~be determined~~ by applying the estimated annual effective income tax rate to year-to-date results unless this method does not result in a reliable estimate of year-to-date income tax expense. Each period, the income tax accrual is adjusted to the latest estimate, and the difference from the previously accrued year-to-date balance is adjusted to the current quarter. Changes in profitability estimates in various jurisdictions will impact our quarterly effective income tax rates.

~~For~~The tax provision for income taxes for the first six months of ~~2019, our income~~2020 reflected an estimated annual tax ~~expense on continuing operations reflects a~~ rate of ~~20% as~~26%, compared towith 24% ~~in the comparable period of 2018. For~~for the first six months of 2019. The effective tax rate, including discrete items, for the three and six months ended June 30, 2020 were 37% and 30%, respectively, compared to 16% and 20% for the comparable periods in 2019. The 2020 increase in the total effective tax rate was primarily due to the effect of discrete items discussed below.

We recognized a discrete tax expense of $5 million during the six months ended June 30, 2020 related to the surrender of a corporate-owned life insurance contract and a sale of ARS. In addition, a net discrete tax benefit of $2 million and $3 million was recognized in the six months ended June 30, 2020 and 2019, respectively, principally related to excess tax benefits from stock-based compensation.

On March 27, 2020, the ~~primary differences between~~Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was enacted into law and provided for changes to the U.S. ~~statutory rate~~tax code that impact businesses. As of ~~21% and the effective rate~~June 30, 2020, we have made a reasonable estimate of ~~20% relates to increases in tax deductions related to stock-based compensation and~~ the effects ~~of foreign~~on our U.S. current and ~~state~~deferred tax rates. For the first six months of 2018, the primary differences between the U.S. statutory rate of 21% and the effective rate of 24% relates to state income tax, discretionary pension payments, foreign tax rates and tax deductions related to stock-based compensation.balances.

NOTE ~~13 - OTHER OPERATING CREDITS~~12. COMMITMENTS AND ~~CHARGES~~CONTINGENCIES

~~During~~We maintain reserves for various contingent liabilities as follows:



	June 30, 2020			December 31, 2019
Environmental reserves	$	9		$	10
Other reserves	—			—
Total contingencies	9			10
Current portion (included in other current liabilities)	(2		)	(2		)
Long-term portion (included in other long-term liabilities)	$	7		$	8

Estimates of our loss contingencies are based on various assumptions and judgments. Due to the ~~second quarter of 2019, we reduced our product related warranty reserves by $4 million~~numerous uncertainties and ~~recorded a gain of $1 million in insurance recoveries~~variables associated with ~~property damage~~these assumptions and judgments, both the precision and reliability of the resulting estimates of the related contingencies are subject to substantial uncertainties. We regularly monitor our estimated exposure to contingencies and, as additional information becomes known, may change our estimates significantly. While no estimate of the range of any such change can be made at this time, the amount that we may ultimately pay in

connection with these matters could materially exceed, in either the near term or the longer term, the amounts accrued to date. Our estimates of our loss contingencies do not reflect potential future recoveries from ~~prior years. Additionally, we recorded~~insurance carriers except to the extent that recovery may, from time to time, be deemed probable as a charge of $1 million related to severance associated with certain reorganizations within the corporate office and $1 million related to severance and other charges associated with our recently announced planned curtailmentresult of an ~~OSB mill in British Columbia, Canada.~~insurer’s agreement to payment terms.

During the first quarter of 2019, we recorded a charge of $2 million on severance and other charges related to certain reorganizations within the corporate offices and property damage sustained by our Wilmington facility during a hurricane occurring in the fall of 2018.

During the second quarter of 2018, we recorded a gain of $8 million related to the settlement of previously-paid environmental costs or the liability for future environmental costs to be paid by a third party associated with a non-operating site. Additionally, we recorded a charge of $4 million in severance and other charges related to certain reorganizations within the corporate offices, including the costs associated with the retirement of our previous chief financial officer.

~~NOTE 14 – LEGAL AND ENVIRONMENTAL MATTERS~~

~~Certain environmental matters and legal proceedings are discussed below.~~

Environmental Matters

We maintain a reserve for undiscounted estimated environmental loss contingencies. This reserve is primarily for estimated future costs of remediation of hazardous or toxic substances at numerous sites currently or previously owned by the Company. Our estimates of our environmental loss contingencies are based on various assumptions and judgments, the specific nature of which varies ~~in light of~~considering the particular facts and circumstances surrounding each environmental loss contingency. These estimates typically reflect assumptions and judgments as to the probable nature, magnitude and timing of the required investigation, remediation and/or monitoring activities and the probable cost of these activities, and in some cases reflect assumptions and judgments as to the obligation or willingness and ability of third parties to bear a proportionate or allocated share of the cost of these activities. Due to the numerous uncertainties and variables associated with these assumptions and judgments, and the effects of changes in governmental regulation and environmental technologies, both the precision and reliability of the resulting estimates of the related contingencies are subject to substantial uncertainties. We regularly monitor our estimated exposure to environmental loss contingencies and, as additional information becomes known, may change our estimates significantly. However, no estimate of the range of any such change can be made at this time.

~~Recorded in Other assets is $1 million related to a receivable for reimbursements of environmental costs associated with a non-operating site as of June 30, 2019.~~

We and our subsidiaries are parties to other legal proceedings. Based on the information currently available, management believes the resolution of such proceedings will not have a material adverse effect on our financial position, results of operations, cash flows, or liquidity.

NOTE ~~15 – SELECTED SEGMENT DATA~~13. IMPAIRMENT OF LONG-LIVED ASSETS

We operate in four segments: Siding, North America Oriented Strand Board (OSB), Engineered Wood Products (EWP) and South America. Our business units have been aggregated into these four segments based uponreview the similarity of economic characteristics, customers and distribution methods. Our results of operations attributed to LP are summarized below for each of these segments separately as well as for the “other” category which comprises other products that are not individually significant. Segment information was prepared in accordance with the same accounting principles as those described in Note 1 of the Notes to the financial statements included in our Annual Report on Form 10-K for the year ended ~~December 31, 2018. During the first quarter of 2019, certain timber operations where reclassified from other to EWP and we have reclassifed a significant portion~~carrying values of our ~~unallocated expenses to the business segments effective during the first quarter of 2019. All prior periods presented have been adjusted for comparability.~~

Quarter Ended Six Months Ended
June 30, June 30,
2019 2018 2019 2018
Net sales
Siding $ 238
$ 262
$ 474
$ 489
OSB 199
387
407
701
EWP 107
113
197
219
South America 40
45
85
88
Other 5
3
10
6
Intersegment sales (2 ) —
(4 ) —
$ 588
$ 811
$ 1,170
$ 1,502
Operating profit (loss):
Siding 37
$ 53
$ 70
$ 89
OSB (18 ) 149
(25 ) 238
EWP 6
6
9
6
South America 7
10
15
19
Other (2 ) (2 ) (5 ) (4 )
Other operating credits and charges, net 3
5
1
5
Gain (loss) on sale or impairment of long-lived assets, net —
—
(1 ) 1
General corporate and other expenses, net (8 ) (6 ) (16 ) (12 )
Interest expense, net (2 ) —
(1 ) (1 )
Other non-operating items (2 ) (1 ) 9
(2 )
Income from continuing operations before taxes 21
214
54
339
Provision for income taxes 3
51
11
81
Income from continuing operations attributed to LP $ 17
$ 163
$ 44
$ 258

~~NOTE 16 – POTENTIAL IMPAIRMENTS~~

~~We continue to review asset groupings and investments~~long-lived assets for potential ~~impairments. Management currently believes~~impairments and believe we have adequate support for the carrying value of ~~each of these assets based upon the anticipated cash flows~~our long-lived assets. If demand and pricing for our products continue at levels significantly below cycle average demand and pricing, or should we decide to invest capital in alternative projects, or should changes occur related to our wood supply for our mills, it is possible that ~~result from our estimates of~~ future ~~demand, pricing and production costs assuming certain levels of planned capital expenditures.~~impairment charges will be required. As of June 30, ~~2019, there were no indications~~2020, we believe the current impacts of the COVID-19 pandemic did not warrant an impairment ~~for~~of our long-lived assets. However, future changes in the ~~asset grouping that included~~long-term effects of the COVID-19 pandemic on the demand and pricing of our ~~indefinitely~~products may result in future impairment charges, including curtailed ~~facilities and supports the conclusion that no impairment is necessary for those~~ facilities.

We also review from time to time ~~possible~~potential dispositions of various assets, ~~in light of~~considering current and anticipated economic and industry conditions, our strategic plan, and other relevant factors. Because a determination to dispose of particular assets can require management to make assumptions regarding the transaction structure of the disposition and to estimate the net sales proceeds, which may be less than previous estimates of undiscounted future net cash flows, we may be required to record impairment charges in connection with decisions to dispose of assets.

During the three and six months ended June 30, 2020, we recorded $4 million and $9 million, respectively, in pre-tax impairment charges related to our fiber producing assets at a Siding facility. These impairment charges reflect the announced, accelerated conversion of this facility from fiber production to pre-finishing in February 2020.

NOTE ~~17 –~~14. PRODUCT ~~WARRANTY~~WARRANTIES

We ~~provide~~offer warranties on the sale of most of our products and record an accrual for estimated future claims. Such accruals are based upon historical experience and management’s estimate of the level of future claims. The activity in warranty reserves for the ~~quarter~~three and six months ended June 30, 2020, and 2019, ~~and~~ ~~2018~~ ~~are~~is summarized in the following table:


	Quarter Ended						Six Months Ended
	June 30,						June 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018			2020			2019			2020			2019
Beginning balance	$	13		$	29		$	14		$	25		$	8		$	13		$	8		$	14
Accrued to expense	1			—			1			1			—			1			1			1
Reduced to other operating credits and charges	(4		)	—			(4		)	—			—			(4		)	—			(4		)
Accrued to discontinued operations	—			—			—			5
Foreign currency translation	—			(1		)	—			—
Payments made	—			(6		)	(1		)	(7		)	—			—			(1		)	(1		)
Total warranty reserves	9			23			9			23			8			9			8			9
Current portion of warranty reserves	(2		)	(4		)	(2		)	(4		)
Long-term portion of warranty reserves	$	7		$	19		$	7		$	19
Current portion of warranty reserves (included in other current liabilities)													(2		)	(2		)	(2		)	(2		)
Long-term portion of warranty reserves (included in other long-term liabilities)													$	6		$	7		$	6		$	7

We continue to monitor warranty and other claims associated with these products and believe as of June 30, ~~2019~~2020, that the ~~reserves~~warranty reserve balances associated with these matters are ~~adequate.~~adequate to cover future warranty payments. However, it is possible that additional changes may be required in the future.

The current portion of the warranty reserve is included in the caption “Accounts payable and accrued liabilities” and the long-term portion is included in Other long-term liabilities on our Consolidated Balance Sheets.

~~NOTE 18 - DISCONTINUED OPERATIONS~~

LP has adopted and implemented plans to sell selected businesses and assets in order to improve its operating results. For all periods presented, these operations include residual losses of mills divested in past years and associated warranty and other liabilities associated with these operations.

Included in the operating losses of discontinued operations for the six months ended June 30, 2018 was an increase in warranty reserves associated with our discontinued composite decking products of $5 million.

NOTE ~~19 –~~15. DEFINED BENEFIT PENSION PLANS

The following table ~~sets forth the~~summarizes our net periodic pension cost for our defined benefit pension and postretirement plans during the three and six months ended June 30, ~~2019~~2020, and ~~2018~~:2019:


	Quarter Ended						Six Months Ended
	June 30,						June 30,						Three Months Ended June 30,						Six Months Ended June 30,
	2019			2018			2019			2018			2020			2019			2020			2019
Service cost	$	1		$	1		$	2		$	2		$	1		$	1		$	1		$	2
Other components of net periodic pension cost¹:
Interest cost	3			3			6			6			3			3			5			6
Expected return on plan assets	(4		)	(3		)	(7		)	(7		)	(4		)	(4		)	(7		)	(7		)
Amortization of prior service cost	—			—			—			—			—			—			—			—
Amortization of net loss	1			2			2			3			1			1			3			2
Net periodic pension cost	$	2		$	2		$	3		$	5		$	1		$	2		$	2		$	3

Net periodic pension cost included in cost of sales	1			1			1			1
Net periodic pension cost included in selling, general and administrative	—			1			1			1
Net periodic pension costs included in other non-operating items	1			1			1			2

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

For the six months ended June 30, 2019, $1 million of net periodic pension cost was included in Cost of sales and $1 million included in Selling, general and administrative expenses. For the six months ended June 30, 2018, $1 million of net periodic pension cost was included in Cost of sales and $1 million included in Selling, general and administrative expenses.

~~During the six months ended~~ ~~June 30, 2019, we made~~ ~~$4 million~~ ~~in pension contributions to our defined benefit pension plans. We expect to contribute about $1 million to our defined benefit pension plans in the remaining months of 2019.~~

NOTE ~~20 -~~16. ACCUMULATED COMPREHENSIVE INCOME (LOSS)

Other comprehensive income activity, net of tax, is provided in the following table for the ~~quarter~~three and six months ended June 30, ~~2019~~2020, and ~~2018:~~2019:

Pension Adjustments
Foreign currency translation adjustments Actuarial losses Prior service costs Unrealized gain (loss) on investments Other Total
Balance at March 31, 2019 $ (55 ) $ (87 ) $ (4 ) $ 4
$ (1 ) $ (144 )
Other comprehensive income (loss) before reclassifications 1
—
—
—
—
1
Income taxes —
—
—
—
—
—
Net other comprehensive income (loss) before reclassifications 1
—
—
—
—
1
Amounts reclassified from accumulated comprehensive income (loss) —
1
—
—
—
1
Income taxes —
—
—
—
—
—
Net amounts reclassified from cumulative other comprehensive income (loss) —
1
—
—
—
1
Total other comprehensive income (loss) 1
1
—
—
—
2
Balance at June 30, 2019 $ (54 ) $ (87 ) $ (4 ) $ 4
$ (1 ) $ (143 )



	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Pension¹
Balance at beginning of period	$	(88	)	$	(91	)	$	(89	)	$	(93	)
Amounts reclassified from accumulated other comprehensive loss to income ²	1			1			2			2
Total other comprehensive income	1			1			2			2
Balance at end of period	(87		)	(91		)	(87		)	(91		)
Translation Adjustments
Balance at beginning of period	(90		)	(55		)	(67		)	(57		)
Translation adjustments	2			1			(21		)	3
Balance at end of period	(88		)	(54		)	(88		)	(54		)
Other
Balance at beginning of period	3			3			3			3
Other comprehensive loss before reclassifications	—			—			—			(1		)
Unrealized gains on securities, net of reversals	(3		)	—			(3		)	—
Total other comprehensive loss	(3		)	—			(3		)	(1		)
Balance at end of period	—			3			—			3
Accumulated other comprehensive loss, end of period	$	(175	)	$	(143	)	$	(175	)	$	(143	)

¹Amounts are presented net of tax

²Amounts of actuarial loss and prior service cost are components of net periodic benefit cost.

NOTE 17. OTHER OPERATING AND NON-OPERATING INCOME

Other operating credit and charges, net

During the three months ended June 30, 2020, we recognized charges of $10 million related to the discontinuance of our fiber product (primarily related to fiber inventory adjustments to net realizable values). We recognized severance and other charges of $2 million and $4 million for the three and six months ended June 30, 2020, respectively, related to certain reorganizations and product-line discontinuance. Additionally, we recognized $4 million of Canadian wage subsidies during the three and six months ended June 30, 2020.

During the three months ended June 30, 2019, we reduced our product-related warranty reserves by $4 million and recorded a gain of $1 million in insurance recoveries associated with property damage from prior years. Additionally, we recorded a charge of $1 million and $3 million for the three and six months ended June 30, 2019, respectively, related to severance associated with certain reorganizations within the corporate office and severance and other charges associated with planned curtailments.

Non-operating income

Non-operating income is comprised of the following components:



	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2020			2019			2020			2019
Interest expense	$	(6	)	$	(5	)	$	(11	)	$	(9	)
Amortization of debt charges	—			(1		)	(1		)	(1		)
Capitalized interest, net of reversals	—			1			—			2
Interest expense	(6		)	(4		)	(12		)	(8		)

Interest income	1			2			1			6
Gain on sale of auction rate securities	3			—			3			—
SERP market adjustments	—			—			(1		)	1
Investment income	4			2			3			7

Net periodic pension cost, excluding service cost	—			(1		)	(1		)	(1		)
Gain on acquisition of controlling interest	—			—			—			14
Foreign currency gain (loss)	(1		)	(1		)	5			(4		)
Other non-operating items	$	(1	)	$	(2	)	$	4		$	9

Pension Adjustments
Foreign currency translation adjustments Actuarial losses Prior service costs Unrealized gain (loss) on investments Other Total
Balance at December 31, 2018 $ (57 ) $ (88 ) $ (5 ) $ 4
$ (1 ) $ (146 )
Other comprehensive income (loss) before reclassifications 3
—
—
(1 ) —
2
Income taxes —
—
—
—
—
—
Net other comprehensive income (loss) before reclassifications 3
—
—
(1 ) —
2
Amounts reclassified from accumulated comprehensive income (loss) —
2
—
—
—
3
Income taxes —
(1 ) —
—
—
(1 )
Net amounts reclassified from cumulative other comprehensive income (loss) —
2
—
—
—
2
Total other comprehensive income (loss) 3
2
—
(1 ) —
4
Balance at June 30, 2019 $ (54 ) $ (87 ) $ (4 ) $ 4
$ (1 ) $ (143 )
NOTE 18. SELECTED SEGMENT DATA

We operate in four segments: Siding, OSB, EWP, and South America. Our business units have been aggregated into these four segments based upon the similarity of economic characteristics, customers, and distribution methods. Our results of operations are summarized below for each of these segments separately as well as for the “other” category, which comprises other products that are not individually significant. Our LP CanExel® prefinished siding was reclassified from Siding to Other during the six months ended June 30, 2020, reflecting changes in organizational structure and, accordingly, the information that the chief operating decision maker uses to evaluate performances and allocate resources to the segments. All prior periods presented have been adjusted for comparability.

Pension Adjustments
Foreign currency translation adjustments Actuarial losses Prior service costs Unrealized gain (loss) on investments Other Total
Balance at March 31, 2018 $ (37 ) $ (96 ) $ (5 ) $ 4
$ (2 ) $ (135 )
Other comprehensive income (loss) before reclassifications (14 ) —
—
—
—
(14 )
Income taxes —
—
—
—
—
—
Net other comprehensive income (loss) before reclassifications (14 ) —
—
—
—
(14 )
Amounts reclassified from accumulated other comprehensive income (loss) —
2
—
—
—
2
Income taxes —
—
—
—
—
—
Net amounts reclassified from cumulative other comprehensive income (loss) —
1
—
—
—
1
Total other comprehensive income (loss) (14 ) 1
—
—
—
(12 )
Balance at June 30, 2018 $ (51 ) $ (94 ) $ (5 ) $ 4
$ (1 ) $ (147 )

We evaluate the performance of our business segments based on net sales and Adjusted EBITDA. Accordingly, our chief operating decision maker evaluates performance and allocates resources based primarily on net sales and Adjusted EBITDA for our business segments. Adjusted EBITDA is a non-GAAP financial measure and is defined as income attributed to LP before interest expense, net, provision for income taxes, depreciation and amortization, and excludes stock-based compensation expense, impairment of long-lived assets, other operating credits and charges, net, and other non-operating items.

Information about our product segments is as follows:



	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2020			2019			2020			2019
Net sales
Siding	$	220		$	231		$	432		$	450
OSB	204			199			424			407
EWP	79			107			178			197
South America	38			40			74			85
Other	7			14			25			35
Intersegment sales	—			(3		)	—			(4		)
Total sales	$	548		$	588		$	1,133		$	1,170
PROFIT BY SEGMENT
Net income	$	31		$	16		$	64		$	42
Add (deduct):
Net loss attributed to noncontrolling interest	2			2			2			2
Income attributed to LP	33			17			66			44
Provision for income taxes	19			3			28			11
Depreciation and amortization	28			29			56			60
Stock-based compensation expense	1			3			3			5
Loss on impairment attributed to LP	7			—			14			1
Other operating credits and charges, net	(4		)	(3		)	(2		)	(1		)
Product-line discontinuance charges	10			—			10			—
Interest expense	6			4			12			8
Investment income	(4		)	(2		)	(3		)	(7		)
Other non-operating items	1			2			(4		)	(9		)
Adjusted EBITDA	$	97		$	53		$	180		$	111

Siding	51			45			93			84
OSB	46			(3		)	81			5
EWP	3			10			12			17
South America	11			9			18			19
Other	(5		)	(1		)	(8		)	—
Corporate	(9		)	(7		)	(16		)	(14		)
Adjusted EBITDA	97			53			180			111

Pension Adjustments
Foreign currency translation adjustments Actuarial losses Prior service costs Unrealized gain (loss) on investments Other Total
Balance at December 31, 2017 $ (40 ) $ (80 ) $ (5 ) $ 4
$ (2 ) $ (122 )
Effect of adoption of ASU 2018-02
(17 )
1

(17 )
Other comprehensive income (loss) before reclassifications (12 ) —
—
—
—
(11 )
Income taxes —
—
—
—
—
—
Net other comprehensive income (loss) before reclassifications (12 ) —
—
—
—
(11 )
Amounts reclassified from accumulated other comprehensive income (loss) —
3
—
—
—
3
Income taxes —
(1 ) —
—
—
(1 )
Net amounts reclassified from cumulative other comprehensive income (loss) —
2
—
—
—
3
Total other comprehensive income (loss) (12 ) 3
—
—
—
(9 )
Balance at June 30, 2018 $ (51 ) $ (94 ) $ (5 ) $ 4
$ (1 ) $ (147 )

The amounts reclassified from accumulated other comprehensive income (loss) are included in the computation of net periodic pension cost; see Note 19 for additional details. The net periodic pension cost is included in Cost of sales, Selling, general and administrative expenses and Other non-operating items in the Consolidated Statements of Income.

~~NOTE 21 - NON-OPERATING INCOME (EXPENSE)~~

~~Components of non-operating income and expense are as follows:~~

Quarter Ended June 30, Six Months Ended June 30,
Dollar amounts in millions 2019 2018 2019 2018
Interest income $ 2
$ 5
$ 6
$ 8
SERP market adjustments —
—
1
—
Interest expense (5 ) (5 ) (9 ) (10 )
Amortization of debt charges (1 ) —
(1 ) —
Capitalized interest 1
1
2
2
Interest expense, net (2 ) —
(1 ) (1 )

Net periodic pension cost, excluding service cost (1 ) (1 ) (1 ) (2 )
Gain on acquisition of controlling interest —
—
14
—
Foreign currency gain (loss) (1 ) 1
(4 ) —
Other non-operating items (2 ) (1 ) 9
(2 )

Total non-operating expense $ (4 ) $ —
$ 8
$ (3 )


~~Item 2.~~	~~Management's Discussion and Analysis of Financial Condition and Results of Operations~~

~~GENERAL~~ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our Condensed Consolidated Financial Statements and related Notes and other financial information appearing elsewhere in this quarterly report on Form 10-Q. The following discussion includes statements that are forward-looking statements that are based on the beliefs of our management, as well as assumptions made by, and information currently available to our management.

Recent Developments

In March 2020, the WHO characterized the outbreak of COVID-19 as a global pandemic. In response to this declaration and the rapid global spread of COVID-19, national, state, and local governments have taken extraordinary, wide-ranging actions to contain the outbreak and spread of COVID-19, including quarantines, "stay-at-home" orders and similar mandates imposing varying degrees of restrictions on social and commercial activity to promote social distancing. Although many of the restrictions have eased across the country, the pandemic has yet to show substantial signs of decline in the United States. Some areas are re-imposing closures and other restrictions due to increasing rates of COVID-19 cases. There are no reliable estimates of how long the pandemic will last, how many people are likely to be affected by it or the duration or types of restrictions that will be imposed. For that reason, we are unable to predict the long-term impact of the pandemic on our business at this time.

The pandemic and actions taken in response thereto did not materially impact our results for the three and six months ended June 30, 2020. However, the COVID-19 pandemic and actions taken in response thereto are continuing to have a significant adverse effect on many sectors of the economy and overall financial conditions in the United States. We are continuing to follow national, state, and local guidelines, while also continuing to provide our products to support critical infrastructure needs. We initially reduced mill operating schedules to balance production and demand but have resumed full operating schedules as of June 30, 2020. The duration of the COVID-19 pandemic, the actions to contain the pandemic and mitigate its impacts, and the effects on our operations cannot be reasonably estimated. Therefore, the related financial impact cannot be reasonably estimated at this time.

General

We are a leading provider of ~~high-performing~~high-performance building ~~solutions. We design, manufacture and market a broad range of products for~~solutions serving the new home construction, repair and remodeling, and outdoor structures markets. We also market and sell our products ~~in light~~to primarily retail home centers, wholesalers, distributors, and homebuilding and industrial ~~and commercial construction and we have a modest export business.~~businesses. Our manufacturing facilities are primarily located in the U.S. and Canada, and we also operate two facilities in Chile and one facility in Brazil.

To serve these markets, we operate in four segments: ~~Siding; North America Oriented Strand Board (OSB); Engineered Wood Products (EWP);~~Siding, OSB, EWP, and South America.

Demand for our Building Products

Demand for our products correlates ~~to a significant degree to the level of~~positively with new home construction and repair and remodeling activity in North America, which historically ~~has~~have been characterized by significant cyclicality. The COVID-19 pandemic had a significant adverse impact on the new home construction and a favorable impact on repair and remodel activity during the second quarter of 2020.

The U.S. Department of Census reported on July 17, 2020, that ~~U.S.~~actual single housing starts were 6%23%, 15%, and 2% lower ~~for the second quarter of 2019~~in April, May and ~~5% lower for the first six months of 2019~~June 2020, respectively, as compared to the same periods in 2019. Repair and remodeling activity is difficult to reasonably measure, but many indications, including the substantial increase in LP’s retail sales, suggest that it grew significantly in the second quarter of ~~2018.~~2020.

While we expect demand for new home construction and repair and remodel activity to continue to be impacted by the COVID-19 pandemic, the results of operations, cash flows, financial position, and the related financial impacts cannot be reasonably estimated at this time.

Supply and Demand for OSB

OSB is sold as a commodity for which sales prices fluctuate daily based on market factors over which we have little or no control. We cannot predict whether the prices of our OSB products will remain at current levels or increase or decrease in the future. ~~OSB prices (NC 7/16"), as reported by Random Lengths, were 56% lower for the second quarter and 49% lower for the first six months of~~ ~~2019~~ ~~as compared to the same periods in 2018.~~

For additional factors affecting our results, refer to the ~~Management~~Overview within our Management's Discussion and Analysis of Financial Condition and Results of Operations ~~overview~~ contained in our 2019 Annual Report on Form 10-K, ~~for the year ended~~ ~~December 31, 2018~~ and to “About Forward-Looking Statements” and “Risk Factors” in this ~~report.~~quarterly report on Form 10-Q.

~~EXECUTIVE SUMMARY~~Critical Accounting Policies and Significant Estimates

We recorded a 27% decrease in sales to $588 million for the quarter ended June 30, 2019 from $811 million reported for the quarter ended June 30, 2018. We recorded income from operations of $23 million for the quarter ended June 30, 2019 compared to $215 million for the quarter ended June 30, 2018. We recorded net income attributed to LP of $17 million ($0.14 per diluted share) for the quarter ended June 30, 2019 compared to $163 million ($1.11 per diluted share) for the quarter ended June 30, 2018. We reported a decrease of $189 million in Adjusted EBITDA from continuing operations for the second quarter of 2019 as compared to the second quarter of 2018. Declines in OSB pricing in all North American operations had a negative impact on our operating results of $166 million for the quarter ended June 30, 2019 as compared to the quarter ended June 30, 2018.

We recorded a 22% decrease in sales to $1.2 billion for the six months ended June 30, 2019 from $1.5 billion reported for the six months ended June 30, 2018. We recorded income from operations of $45 million for the six months ended June 30, 2019 compared to $342 million for the six months ended June 30, 2018. We recorded net income attributed to LP of $44 million ($0.34 per diluted share) for the six months ended June 30, 2019 compared to $254 million ($1.73 per diluted share) for the six months ended June 30, 2018. We reported a decrease of $290 million in Adjusted EBITDA from continuing operations for the six months ended June 30, 2019 as compared to the first six months of 2018. Declines in OSB pricing in all North American operations had a negative impact on our operating results of $264 million for the six months ended June 30, 2019 as compared to the six months ended June 30, 2018.

~~These changes are discussed further in "Our Operating Results" below.~~

~~CRITICAL ACCOUNTING POLICIES AND SIGNIFICANT ESTIMATES~~

~~Presented in~~ Note 1 of the Notes to the ~~financial statements~~Consolidated Financial Statements included in our 2019 Annual Report on Form 10-K ~~for the year ended~~ ~~December 31, 2018~~ is a discussion of our significant accounting policies and significant accounting

estimates and judgments. Throughout the preparation of the financial statements, we employ significant judgments in the application of accounting principles and methods. These judgments are primarily related to the assumptions used to arrive at various estimates. ~~For 2019, these~~

While there have been no changes in the application of principles, methods, and assumptions used to determine our significant estimates, we may be required to revise certain accounting estimates and judgments ~~include:~~

~~Long-lived Assets~~

Long-lived assets (including amortizable identifiable intangible assets) or asset group held for use is tested for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. When such events occur, we comparerelated to the ~~sum~~economic and business impact of the ~~undiscounted cash flows expected~~COVID-19 pandemic, such as, but not limited to, ~~result from the use and eventual disposition of the asset or asset group~~those related to the ~~carrying amount~~valuation of goodwill, intangibles, long-lived assets, accounts receivable, and inventory, which could have a ~~long-lived asset or asset group. The cash flows are based~~material adverse effect on our best estimate of future cash flows derived from the most recent business projections. If this comparison indicates that there is an impairment, the amount of the impairment is calculated based on fair value. Fair value is estimated primarily using discounted expected future cash flows on a market-participant basis.

~~Defined Benefit Plans~~

~~We have a number of pension plans in the U.S.~~financial position and ~~Canada, covering many of the Company’s employees. Benefit accruals under our defined benefit pension plan in the U.S. were frozen as of January 1, 2010.~~

We account for the consequences of our sponsorship of these plans based upon assumptions that are used to calculate the related assets, liabilities and expenses recorded in our financial statements. Net actuarial gains and losses occur when actual experience differs from any of the assumptions used to value defined benefit plans or when assumptions change as they may each year. The primary factors contributing to actuarial gains and losses are changes in the discount rate used to value obligations as of the measurement date and the differences between expected and actual returns on pension plan assets. This accounting method results in the potential for volatile and difficult to forecast gains and losses.

We record amounts relating to these defined benefit plans based on various actuarial assumptions, including discount rates, assumed rates of return, compensation increases and life expectancy. We review our actuarial assumptions on an annual basis and make modifications to the assumptions based on current economic conditions and trends. We believe that the assumptions utilized in recording our obligations under our plans are reasonable based on our experience and on advice from our independent actuaries; however, differences in actual experience or changes in the assumptions may materially affect our financial condition or results of operations.

A 50 basis point change in our discount rate assumption would lead to an increase or decrease in our pension liability of approximately $15 million. A 50 basis point change in the long-term rate of return on plan assets used in accounting for our pension plans would have a $1 million impact on pension expenseNon-GAAP Financial Measures and a 50 basis point change in the discount rate would have a $0 million impact on pension expense. It is not possible to forecast or predict whether there will be actuarial gains and losses in future periods, and if required, the magnitude of any such adjustment. These gains and losses are driven by differences in actual experience or changes in the assumptions that are beyond our control, such as changes in interest rates and the actual return on pension plan assets.Other Key Performance Indicators

~~Income Taxes~~

We establish deferred tax liabilities or assets for temporary differences between financial and tax reporting bases and subsequently adjust them to reflect changes in tax rates expected to be in effect when the temporary differences reverse. We record a valuation allowance reducing deferred tax assets when it is more likely than not that such assets will not be realized.

We record liabilities for uncertain income tax positions based on a two-step process. The first step is recognition, where we evaluate whether an individual tax position has a likelihood of greater than 50% of being sustained upon examination based on the technical merits of the position, including resolution of any related appeals or litigation processes. For tax positions that are currently estimated to have a less than 50% likelihood of being sustained, no tax

benefit is recorded. For tax positions that have met the recognition threshold in the first step, we perform the second step of measuring the benefit (expense) to be recorded. The actual benefits (expense) ultimately realized may differ from our estimates. In future periods, changes in facts, circumstances, and new information may require us to change the recognition and measurement estimates with regard to individual tax positions. Changes in recognition and measurement estimates are recorded in the consolidated statement of income and consolidated balance sheet in the period in which such changes occur. As of June 30, 2019 and December 31, 2018, we had liabilities for unrecognized tax benefits (including interest) pertaining to uncertain tax positions totaling $38 million and $41 million.

~~Customer Program Costs~~

Customer programs and incentives are a common practice in our businesses. Our businesses incur customer program costs to obtain favorable product placement, to promote sales of products and to maintain competitive pricing. Customer program costs and incentives, including rebates and promotion and volume allowances, are accounted for in either sales or the category selling and administrative expenses at the time the program is initiated and/or the revenue is recognized. The costs are predominantly recognized in sales and include, but are not limited to, volume allowances and rebates, promotional allowances, and cooperative advertising programs. These costs are recorded at the later of the time of sale or the implementation of the program based on management’s best estimates. Estimates are based on historical and projected experience for each type of program or customer. Volume allowances are accrued based on management’s estimates of customer volume achievement and other factors incorporated into customer agreements, such as new products, store sell-through, merchandising support and customer training. Management periodically reviews accruals for these rebates and allowances, and adjusts accruals when circumstances indicate (typically as a result of a change in volume expectations). As of June 30, 2019 and December 31, 2018, we had $22 million and $30 million accrued as customer rebates.

~~Inventory valuation~~

We record inventories at the lower of cost or estimated net realizable value. Inventory cost includes an overhead component that can be affected by levels of production and actual costs incurred. We evaluate the need to record adjustments for impairment of inventory at least quarterly. If in our judgment persuasive evidence exists that the net realizable value of inventory is lower than its cost, the inventory value is written-down to its estimated net realizable value. Significant judgments regarding future events and market conditions must be made when estimating net realizable value.

~~NON-GAAP FINANCIAL MEASURES~~

In evaluating our business, we utilize ~~several~~ non-GAAP financial ~~measures. A non-GAAP~~measures that fall within the meaning of SEC Regulation G and Regulation S-K Item 10(e), which we believe provide users of the financial ~~measure is generally~~information with additional meaningful comparison to prior reported results. Non-GAAP financial measures do not have standardized definitions and are not defined by the SEC as one that purports to measure historical or future financial performance, financial position or cash flows, but excludes or includes amounts that would not be so excluded or included under applicable GAAP guidance.U.S. GAAP. In this quarterly report on Form 10-Q, we disclose ~~segment earnings (loss) from continuing operations~~income attributed to LP before interest expense, provision for income taxes, depreciation and amortization, and exclude stock-based compensation expense, ~~(gain)~~ loss on ~~sales or~~ impairment ~~of long-lived assets,~~attributed to LP, product-line discontinuance charges, other operating credits and charges, net, loss on early debt extinguishment, investment income, and other non-operating items as Adjusted EBITDA ~~from continuing operations~~ (Adjusted EBITDA) which is a non-GAAP financial measure. We have included Adjusted EBITDA in this report because we view it as an important supplemental measure of our performance and believe that it is frequently used by interested persons in the evaluation of companies that have different financing and capital structures and/or tax rates. We also disclose ~~Adjusted~~ income ~~from continuing operations~~attributed to LP, which excludes ~~(gain)~~ loss on ~~sale or~~ impairment ~~of long-lived assets, gain on acquisition,~~attributed to LP product-line discontinuance charges, interest outside of normal operations, other operating credits and charges, net, ~~early debt extinguishment~~gain (loss) on acquisition, other non-operating credits and charges, net, and adjusts for a normalized tax ~~rate. Neither~~rate (Adjusted Income). We also disclose Adjusted ~~EBITDA nor~~Diluted EPS, calculated as Adjusted ~~income from continuing operations is a substitute for the GAAP measure of net income or for any other GAAP measures of operating performance.~~

~~We have included Adjusted EBITDA in this report because we use it as important supplemental measures of our performance and believe that it is frequently used~~Income divided by securities analysts, investors and other interested persons in the evaluation of companies in our industry, some of which present Adjusted EBITDA when reporting their results. We use Adjusted EBITDA to evaluate our performance as compared to other companies in our industry that have different financing and capital structures. It should be noted that companies calculate Adjusted EBITDA differently and, therefore, our Adjusted EBITDA measures may not be comparable to Adjusted EBITDA reported by other

companies. Our Adjusted EBITDA measures have material limitations as performance measures because they exclude interest expense, income tax (benefit) expense and depreciation and amortization which are necessary to operate our business or which we otherwise incur or experience in connection with the operation of our business.

diluted shares outstanding. We believe that Adjusted ~~income from continuing operations, which excludes (gain) loss on sale or impairment of long-lived assets, interest outside of normal operations,~~Diluted EPS and ~~other operating credits and charges, net, adjusted for a normalized tax rate is a~~Adjusted Income are useful ~~measure~~measures for evaluating our ability to generate earnings and that providing this measure ~~will~~should allow ~~investors~~interested persons to more readily compare the earnings for past and future periods.

Neither Adjusted EBITDA, Adjusted Income, nor Adjusted Diluted EPS is a substitute for the U.S. GAAP measure of net income or for any other U.S. GAAP measures of operating performance. It should be noted that other companies may present similarly-titled measures differently and therefore, as presented by us, these measures may not be comparable to similarly-titled measures reported by other companies. ~~In addition,~~ Adjusted ~~income from continuing operations has~~EBITDA, Adjusted Income, and Adjusted Diluted EPS have material limitations as a performance ~~measure~~measures because ~~it excludes~~they exclude items that are actually incurred or experienced in connection with the operations of our business.

Quarter Ended June 30, Six Months Ended June 30,
2019 2018 2019 2018
Net income $ 16
$ 163
$ 42
$ 254
Add (deduct):

Loss from noncontrolling interest 2
—
2
—
Loss from discontinued operations —
—
—
4
Income from continuing operations attributable to LP 17
163
44
258
Provision for income taxes 3
51
11
81
Depreciation and amortization 29
30
60
61
Stock-based compensation 3
2
5
4
Loss on sale or impairment of long-lived assets, net —
—
1
(1 )
Other operating credits and charges, net (3 ) (5 ) (1 ) (5 )
Interest expense, net 2
—
1
1
Non-operating items 2
1
(9 ) 2
Adjusted EBITDA $ 53
$ 242
$ 111
$ 401

Siding $ 46
$ 63
$ 88
$ 108
OSB (3 ) 163
5
268
EWP 10
11
17
16
South America 9
12
19
23
Other (2 ) (2 ) (5 ) (4 )
Corporate (7 ) (5 ) (14 ) (10 )
Adjusted EBITDA $ 53
$ 242
$ 111
$ 401
We have elected to change our definition of Adjusted EBITDA and Adjusted Income to exclude product-line discontinuance charges incurred during the second quarter of 2020. Product-line discontinuance charges consist of inventory and other asset impairment and exit charges related to products no longer offered. We consider product-line discontinuance charges to be outside the performance of our ongoing core business operations and believe that presenting

Adjusted EBITDA and Adjusted Income excluding product-line discontinuance charges provides increased transparency as to the operating costs of our current business performance. We did not revise prior years’ Adjusted EBITDA or Adjusted Income amounts because there were no significant costs similar in nature to these items.

The following table presents significant items by operating segment and reconciles Net income to Adjusted EBITDA:



	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2020			2019			2020			2019
Net income	$	31		$	16		$	64		$	42
Add (deduct):
Net loss attributed to noncontrolling interest	2			2			2			2
Income attributed to LP	33			17			66			44
Provision for income taxes	19			3			28			11
Depreciation and amortization	28			29			56			60
Stock-based compensation expense	1			3			3			5
Loss on impairment attributed to LP	7			—			14			1
Other operating credits and charges, net	(4		)	(3		)	(2		)	(1		)
Product-line discontinuance charges	10			—			10			—
Interest expense	6			4			12			8
Investment income	(4		)	(2		)	(3		)	(7		)
Other non-operating items	1			2			(4		)	(9		)
Adjusted EBITDA	$	97		$	53		$	180		$	111

Siding	$	51		$	45		$	93		$	84
OSB	46			(3		)	81			5
EWP	3			10			12			17
South America	11			9			18			19
Other	(5		)	(1		)	(8		)	—
Corporate	(9		)	(7		)	(16		)	(14		)
Adjusted EBITDA	$	97		$	53		$	180		$	111

The following table provides the reconciliation of ~~net~~Net income to Adjusted ~~income from continuing operations:~~Income:


													Three Months Ended						Six Months Ended
	Quarter Ended June 30,						Six Months Ended June 30,						June 30,						June 30,
	2019			2018			2019			2018			2020			2019			2020			2019
Net income	$	16		$	163		$	42		$	254		$	31		$	16		$	64		$	42
Add (deduct):
Loss from noncontrolling interest	2			—			2			—
Loss from discontinued operations	—			—			—			4
(Gain) loss on sale or impairment of long-lived assets, net	—			—			1			(1		)
Net loss attributed to noncontrolling interest													2			2			2			2
Income attributed to LP													33			17			66			44
Loss on impairment attributed to LP													7			—			14			1
Other operating credits and charges, net	(3		)	(5		)	(1		)	(5		)	(4		)	(3		)	(2		)	(1		)
Product-line discontinuance													10			—			10			—
Gain on acquisition of controlling interest	—			—			(14		)	—			—			—			—			(14		)
Reported tax provision	3			51			11			81			19			3			28			11
Adjusted income from continuing operations before tax	18			210			40			333
Adjusted income before tax													65			17			116			40
Normalized tax provision at 25%	4			52			9.9			83			(16		)	(5		)	(29		)	(10		)
Adjusted income from continuing operations	$	13		$	157		$	30		$	250
Adjusted Income													$	49		$	12		$	87		$	30
Diluted shares outstanding	124.3			146.2			127.9			146.4			113			124			113			128
Adjusted income from continuing operations per diluted share	$	0.11		$	1.08		$	0.23		$	1.71
Adjusted Diluted EPS													$	0.43		$	0.11		$	0.77		$	0.23

In addition, management monitors certain key performance indicators to evaluate our business performance, which include our Overall Equipment Effectiveness (OEE) and our performance relative to housing starts, as provided by reports from the U.S. Department of Census. These key performance indicators are further described on page 38 of this quarterly report on Form 10-Q and are incorporated herein by reference.

~~OUR OPERATING RESULTS~~Results of Operations

Our results of operations are separately discussed below for each of our segments, ~~are discussed below,~~ as ~~are results of operations~~well as for the “other” category, which comprises other products that are not individually significant. See Note 1518 of the Notes to the ~~consolidated financial statements~~Condensed Consolidated Financial Statements included in ~~item~~Item 1 of this quarterly report on Form 10-Q for further information regarding our segments.

The Siding segment consists of LP SmartSide® Trim & Siding and LP Outdoor Building Solutions® innovative products for premium outdoor buildings. Our LP CanExel® prefinished siding ~~segment manufactures and markets wood-based siding and related accessories and OSB products.~~was reclassified from Siding to Other during the six months ended June 30, 2020. All prior periods presented have been adjusted for comparability.

Segment sales, ~~operating income~~Adjusted EBITDA, and Adjusted EBITDA margin for this segment were as follows:

Quarter Ended June 30, Six Months Ended June 30,
2019 2018 Change 2019 2018 Change
Net sales $ 238
$ 262
(9 )% $ 474
$ 489
(3 )%
Operating income 37
$ 53
(31 )% 70
89
(22 )%
Adjusted EBITDA 46
63
(27 )% 88
108
(18 )%
Adjusted EBITDA margin 19 % 24 %

19 % 22 %

~~Sales in this segment by product line were as follows:~~

Quarter Ended June 30, Six Months Ended June 30,
2019 2018 Change 2019 2018 Change
SmartSide^® strand siding
$ 200
$ 194
3 % $ 387
$ 359
8 %
SmartSide^® fiber siding
25
28
(11 )% 51
54
(6 )%
CanExel siding 7
13
(46 )% 24
26
(11 )%
OSB - commodity 5
12
(61 )% 8
21
(63 )%
OSB - value-add —
12
(100 )% —
22
(100 )%
Other 2
3
(17 )% 5
7
(25 )%
Total $ 238
$ 262
(9 )% $ 474
$ 489
(3 )%



	Three Months Ended June 30,								Six Months Ended June 30,
	2020			2019			Change		2020			2019			Change
Net sales	$	220		$	231		(5	)%	$	432		$	450		(4	)%
Adjusted EBITDA	51			45			13	%	93			84			11	%
Adjusted EBITDA margin	23		%	19		%			22		%	19		%

~~Percent changes in average gross sales prices and unit shipments for the quarter and six months ended June 30, 2019 compared to the quarter and six months ended June 30, 2018 are as follows:~~

Quarter Ended June 30,
2019 versus 2018 Six Months Ended June 30,
2019 versus 2018

Average
Selling Price

Unit
Shipments

Average Net
Selling Price

Unit
Shipments
SmartSide^® strand siding
2 % — % 4 % 4 %
SmartSide^® fiber siding
3 % (12 )% 5 % (8 )%
CanExel siding (1 )% (46 )% 1 % (12 )%
OSB (54 )% (59 )% (51 )% (63 )%

For the quarter ended June 30, 2019 compared to the corresponding period in 2018, sales volumes were flat in our SmartSide strand product line with an increase for the six month period ended June 30, 2019 due to increased market penetration in key markets and introduction of new products. Sales prices in our SmartSide strand product line for the quarter and six months ended June 30, 2019 as compared to the corresponding periods in 2018 were higher due to price increases which were implemented in the first quarter of 2019 and 2018.

For the quarter and six months ended June 30, 2019 compared to the corresponding periods in 2018, sales volumes declined in our SmartSide fiber product line due to our decision to raise prices which slowed demand. Sales prices in our SmartSide fiber product line for the quarter and six month period ended June 30, 2019 as compared to the corresponding periods in 2018 were higher due to a price increase implemented in 2018.

For CanExel, sales volumes decreased in the second quarter and first six months of 2019 as compared to the corresponding period in 2018 due to decreased demand in Canada as customers re-balance their inventories. Sales prices changed for the second quarter and first six months of 2019 as compared to the corresponding periods in 2018 due to changes in our product mix and the fluctuations in the U.S. to Canadian dollar as a majority of these sales are denominated in Canadian dollars.

For our OSB produced in the siding segment for the quarter ended June 30, 2019 compared to the corresponding period in 2018, sales prices changed as discussed in the OSB segment below. Sales volumes were lower for the quarter and six months ended June 30, 2019 compared to the corresponding periods in 2018 due to the conversion of our Dawson Creek OSB mill to siding which occurred during the later portion of 2018. We estimate Adjusted EBITDA from continuing operations associated with OSB produced and sold in the siding segment for the quarter and six months ended June 30, 2019 was negative $1 million in both periods as compared to the comparable periods in 2018 of positive $10 million and positive $15 million.

Overall, the decline in the siding segment for the second quarter of 2019 compared to the same period of 2018 was due to expenses associated with the Dawson Creek conversion project ($6 million for the quarter ended June 30, 2019 and $15 million for the six months ended June 30, 2019), lower OSB sales prices and volume and increases in sales and marketing expenses which were partially offset by higher pricing on our SmartSide strand products.

~~Our OSB segment manufactures and distributes OSB structural panel products in North America and certain export markets.~~

~~Segment sales, operating income and Adjusted EBITDA for this segment were as follows:~~

Quarter Ended June 30, Six Months Ended June 30,
2019 2018 Change 2019 2018 Change
Net sales $ 199
$ 387
(49 )% $ 407
$ 701
(42 )%
Operating income (18 ) 149
(112 )% (25 ) 238
(111 )%
Adjusted EBITDA (3 ) 163
(102 )% 5
268
(98 )%
Adjusted EBITDA Margin (2 )% 42 % 1 % 38 %

~~Sales in this segment by product line were as follows:~~

~~Percent changes in average gross sales prices and unit shipments for the six months ended~~ ~~June 30, 2019~~ ~~compared to the six months ended~~ ~~June 30, 2018~~ ~~are as follows:~~

Quarter Ended June 30,
2019 versus 2018 Six Months Ended June 30,
2019 versus 2018

Average
Selling Price

Unit
Shipments

Average Net
Selling Price

Unit
Shipments
OSB - commodity (49 )% (17 )% (43 )% (12 )%
OSB - value-add (38 )% 5 % (32 )% 3 %

For the quarter and six months ended June 30, 2019, OSB prices decreased compared to the corresponding periods in 2018 likely due to the overall demand compared to the supply available in the market. Sales volumes for the quarter and six months ended ended June 30, 2019 are higher in value-add and lower in commodity compared to the corresponding periods of 2018.The decrease in selling price negatively impacted operating results and Adjusted EBITDA by $159 million for the quarter and by $253 million for the six months ended June 30, 2019 as compared to the same periods in 2018.

Overall the decline in our OSB segment results for the quarter ended June 30, 2019 as compared to the same period in 2018 was due to decreased sales prices and volume, offset by improved operating efficiencies.

Our EWP segment manufactures and distributes laminated veneer lumber (LVL), I-Joists, laminated strand lumber (LSL) and other related products. This segment also includes the sale of I-Joist and LVL products produced by our joint venture with Resolute Forest Products and LVL sold under a contract manufacturing relationship. Included in this segment is a plywood mill, which primarily produces plywood as a by-product from the LVL production process. OSB is also produced by our LSL facility.

~~Segment sales, operating results and Adjusted EBITDA for this segment were as follows:~~

Quarter Ended June 30, Six Months Ended June 30,
2019 2018 Change 2019 2018 Change
Net sales 107
113
(6 )% 197
219
(10 )%
Operating income 6
6
3 % 9
6
38 %
Adjusted EBITDA 10
11
(10 )% 17
16
2 %
Adjusted EBITDA margin 9 % 10 %

8 % 7 %

Sales in this segment by product line were as follows:

Quarter Ended June 30, Six Months Ended June 30,
2019 2018 Change 2019 2018 Change
LVL $ 40
$ 40
— % $ 71
$ 77
(8 )%
LSL 14
17
(17 )% 28
31
(10 )%
I-Joist 38
32
19 % 64
64
1 %
OSB - commodity 1
5
(77 )% 3
8
(64 )%
OSB - value-add 2
4
(39 )% 4
8
(44 )%
Plywood 6
8
(30 )% 12
16
(21 )%
Other 5
7
(23 )% 15
16
(9 )%
Total $ 107
$ 113
(5 )% $ 197
$ 219
(10 )%



	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		Change		2020		2019		Change
SmartSide^® strand siding	$	207	$	200	4	%	$	398	$	387	3	%
SmartSide^® fiber siding	11		25		(56	)%	30		51		(41	)%
Other	2		6		(67	)%	4		13		(69	)%
Total	$	220	$	231	(5	)%	$	432	$	450	(4	)%

Percent changes in average ~~gross~~ sales prices and unit shipments for the ~~quarter ended~~ ~~June 30, 2019~~ ~~compared to the quarter ended~~ ~~June 30, 2018~~ ~~are as follows:~~

Quarter Ended June 30,
2019 versus 2018 Six Months Ended June 30,
2019 versus 2018

Average
Selling Price

Unit
Shipments

Average Net
Selling Price

Unit
Shipments
LVL — % — % 3 % (10 )%
LSL 5 % (20 )% 7 % (15 )%
I-Joist (1 )% 21 % 2 % (2 )%
OSB (25 )% (50 )% (22 )% (41 )%
Plywood (30 )% (3 )% (19 )% (2 )%

~~For the quarter~~three and six months ended June 30, ~~2019~~2020, compared to the ~~same periods in 2018, sales volumes decreased due to market weakness. Average selling prices increased due to price increases implemented across all product lines, except plywood~~three and OSB. The decrease in selling prices for OSB and plywood negatively impacted operating results and Adjusted EBITDA from continuing operations by $1 million for OSB and $2 million for plywood for the quarter and by $2 million and $3 million for the six months ended June 30, 2019, were as ~~compared to~~follows:



	Three Months Ended June 30, 2020 versus 2019				Six Months Ended June 30, 2020 versus 2019
	Average Net Selling Price		Unit Shipments		Average Net Selling Price		Unit Shipments
SmartSide^® strand siding	1	%	3	%	—	%	3	%
SmartSide^® fiber siding	—	%	(55	)%	1	%	(42	)%

Net sales for the ~~same periods in 2018. For the quarter~~three and six months ended June 30, ~~2019~~2020 decreased by $11 million (or five percent) and by $18 million (or four percent), respectively, compared to the ~~same~~corresponding periods in 2019, primarily due to decreases in sales of SmartSide~~2018, results~~fiber, partially offset by SmartSide strand volume increases of ~~operations improved~~three percent in both periods.

Adjusted EBITDA increased year over year by $6 million and $9 million, respectively, for the three and six months ended June 30, 2020, primarily due to the increased SmartSide strand revenue, increased production at the Dawson Creek facility after the prior year conversion to SmartSide strand, and sourcing and operational efficiency savings, partially offset by a decrease in SmartSide fiber sales.

The OSB segment manufactures and distributes OSB structural panel products including LP OSB, and Structural Solutions products such as LP TechShield® Radiant Barrier, LP TopNotch® Sub-Flooring, LP Legacy® Premium Sub-Flooring, LP WeatherLogic® Air & Water Barrier, and LP FlameBlock® Fire-Rated Sheathing.

Segment sales, Adjusted EBITDA, and Adjusted EBITDA Margin for this segment were as follows:

Sales in this segment by product line were as follows:



	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		Change		2020		2019		Change
OSB - commodity	$	108	$	97	11	%	$	221	$	204	8	%
OSB - Structural Solutions	95		100		(5	)%	198		199		(1	)%
Other	1		1		—	%	5		4		25	%
Total	$	204	$	199	3	%	$	424	$	407	4	%

Percent changes in average sales prices and unit shipments for the three and six months ended June 30, 2020, compared to the three and six months ended June 30, 2019, were as follows:



	Three Months Ended June 30, 2020 versus 2019				Six Months Ended June 30, 2020 versus 2019
	Average Net Selling Price		Unit Shipments		Average Net Selling Price		Unit Shipments
OSB - commodity	27	%	(13	)%	20	%	(11	)%
OSB - Structural Solutions	18	%	(19	)%	11	%	(9	)%

Net sales increased by $5 million (or three percent) and by $17 million (or four percent) for the three and six months ended June 30, 2020, respectively, compared to the corresponding periods in 2019. OSB prices increased over the prior year by $37 million and $56 million for the three- and six-month periods, partially offset by 16% and 10% lower volumes, respectively. Structural Solutions volumes, as a percentage of total OSB segment volume, were 41% and 42% for the three and six months ended June 30, 2020, respectively, compared to 43% and 42% in the comparable periods of 2019.

Adjusted EBITDA increased over the prior year by $49 million and $76 million for the three and six months ended June 30, 2020, respectively, primarily due to increased prices, lower raw material costs, and cost containment efforts.

The EWP segment consists of LP SolidStart® I-Joist (IJ), Laminated Veneer Lumber (LVL), Laminated Strand Lumber (LSL), and other related products. This segment also includes the sales of I-Joist and LVL products produced by the joint venture and sales of plywood produced as a by-product of the LVL production process.

Segment sales, Adjusted EBITDA, and Adjusted EBITDA margin for this segment were as follows:



	Three Months Ended June 30,								Six Months Ended June 30,
	2020			2019			Change		2020			2019			Change
Net sales	$	79		$	107		(26	)%	$	178		$	197		(10	)%
Adjusted EBITDA	3			10			(70	)%	12			17			(29	)%
Adjusted EBITDA margin	4		%	9		%			7		%	9		%

Sales in this segment by product line were as follows:



	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		Change		2020		2019		Change
I-Joist	$	32	$	38	(15	)%	$	69	$	64	8	%
LVL	30		40		(26	)%	66		71		(7	)%
LSL	9		14		(38	)%	21		28		(25	)%
Other, including OSB, plywood and related products	8		15		(45	)%	22		34		(35	)%
Total	$	79	$	107	(26	)%	$	178	$	197	(10	)%

Percent changes in average sales prices ~~partially offset~~and unit shipments for the three and six months ended June 30, 2020, compared to the three and six months ended June 30, 2019, were as follows:



	Three Months Ended June 30, 2020 versus 2019				Six Months Ended June 30, 2020 versus 2019
	Average Net Selling Price		Unit Shipments		Average Net Selling Price		Unit Shipments
I-Joist	(7	)%	(9	)%	(4	)%	12	%
LVL	(4	)%	(22	)%	(1	)%	(5	)%
LSL	(2	)%	(34	)%	1	%	(24	)%

Net sales decreased by ~~higher manufacturing costs due~~$28 million (or 26%) and by $19 million (or ten percent) and Adjusted EBITDA decreased by $7 million and $5 million for the three and six months ended June 30, 2020, respectively, compared to ~~lower volumes and lower OSB and plywood pricing.~~the corresponding periods in 2019.

Our South America segment manufactures and distributes OSB structural panel and siding products in South America and ~~selected~~certain export markets. This segment has manufacturing operations in two countries, Chile and Brazil, and operates sales offices in Chile, Brazil, Peru, ~~Colombia~~Columbia, and Argentina.

Segment sales, ~~operating income~~Adjusted EBITDA, and Adjusted EBITDA margin for this segment were as follows:

Sales in this segment by product line were as follows:

Percent changes in average ~~gross~~ sales prices and unit shipments for the ~~quarter~~three and six months ended June 30, 2020, compared to the three and six months ended June 30, 2019, ~~compared to the quarter ended June 30, 2018 are~~were as follows:

~~OSB~~Foreign currency changes lowered net sales ~~volumes increased~~and Adjusted EBITDA by $8 million and $1 million, respectively, for the ~~quarter and~~three months ended June 30, 2020, compared to 2019. For the six months ended June 30, ~~2019 as~~2020, foreign currency changes lowered net sales and Adjusted EBITDA by $14 million and $1 million, respectively, compared to 2019. Excluding foreign currency changes, net sales in both the ~~corresponding~~three- and six-month periods ~~in 2018~~increased due to ~~increased demand across South America due to improved economic conditions. Sales prices for~~higher OSB and ~~siding decreased for the quarter ended June 30, 2019 as compared to the corresponding period in 2018 due to increased imports at a~~Siding volumes (local and export), partially offset by lower ~~price, which created downward pricing pressure and the impact of the change of foreign currency rates on local sales~~export prices.

For the quarter and six months ended June 30, 2019, compared to the same periods in 2018, results of operations are lower due to reduced sales prices and increased operating costs associated with start up of the third mill in Chile.

Our ~~other~~Other products segment includes ~~our off-site framing operation,~~LP CanExel® prefinished siding, Entekra, remaining timber and timberlands, and other minor products, services, and closed operations, which are not classified as discontinued operations. During the six months ended June 30, 2020, our LP CanExel® prefinished siding was reclassified from Siding to Other, reflecting changes in the organizational structure of the business.

Other net sales ~~operating losses~~were $7 million and $25 million for the three and six months ended June 30, 2020, respectively, as compared to $14 million and $35 million for the corresponding periods in 2019. Adjusted EBITDA was $(5) million and $(8) million for ~~this category were~~the three and six months ended June 30, 2020, respectively, as ~~follows:~~

Quarter Ended June 30, Six Months Ended June 30,
2019 2018 Change 2019 2018 Change
Net sales $ 5
$ 3
69 % $ 10
$ 6
63 %
Operating losses (2 ) (2 ) 10 % (5 ) (4 ) (23 )%
Adjusted EBITDA (2 ) (2 ) (6 )% (5 ) (4 ) (21 )%

~~NON-OPERATING INCOME AND EXPENSE~~

~~Components of non-operating income~~compared to $(1) million and ~~expense are as follows:~~

~~For~~We recorded an estimated tax provision of $19 million and $28 million in the ~~first~~three and six months ended June 30, 2020, respectively. We recorded an estimated tax provision of ~~2019, our income tax expense on continuing operations reflects a rate of 20% as compared to 24%~~$3 million and $11 million in the ~~comparable period of 2018. For the first~~three and six months ofended June 30, 2019, the primary differences between the U.S. statutory rate of 21% and the effective rate of 20% relates to increases in tax deductions related to stock-based compensation and the effects of foreign and state tax rates. For the first six months of 2018, the primary differences between the U.S. statutory rate of 21% and the effective rate of 24% relates to state income tax, discretionary pension payments, foreign tax rates and tax deductions related to stock-based compensation.

respectively. Each quarter the income tax accrual is adjusted to the latest estimate, and the difference from the previously accrued year-to-date balance is recorded in the current quarter. For 2020, the primary differences between the U.S. statutory rate of 21% and the effective rate relate to state income tax, foreign tax rates, tax credits, stock-based compensation, the sale of our ARS and the redemption of our company-owned life insurance cash surrender value. For 2019, the primary differences between the U.S. statutory rate of 21% the effective rate related to state income tax, foreign tax rates, tax credits, and stock-based compensation.

On March 27, 2020, the CARES Act was enacted into law and provides for changes to the U.S. tax code that impact businesses. As of June 30, 2020, we have made a reasonable estimate of the effects on our U.S. current and deferred tax balances.

~~LEGAL AND ENVIRONMENTAL MATTERS~~Legal and Environmental Matters

For a discussion of legal and environmental matters involving us and the potential impact thereof on our financial position, results of operations and cash flows, see Items 3, 7 and 8 in our 2019 Annual Report on Form 10-K ~~for the year ended~~ ~~December 31, 2018~~and Note ~~14 to~~12 of the Notes to the ~~financial statements contained herein.~~Condensed Consolidated Financial Statements included in Item 1 of this quarterly report on Form 10-Q.

~~LIQUIDITY AND CAPITAL RESOURCES~~Liquidity and Capital Resources

Our principal sources of liquidity are existing cash and investment balances, cash generated by our operations, and our ability to borrow under such credit facilities as we may have in effect from time to time. We may also, from time to time, issue and sell equity, debt or hybrid securities, or engage in other capital market transactions.

Our principal uses of liquidity are paying the costs and expenses associated with our operations, servicing outstanding indebtedness, paying dividends, and making capital expenditures. We may also, from time to time, prepay or repurchase outstanding indebtedness or shares or acquire assets or businesses that are complementary to our operations. Any such repurchases may be commenced, suspended, discontinued or resumed, and the method or methods of ~~effecting~~affecting any such repurchases may be changed at any time, or from time to time, without prior notice.

OPERATING ACTIVITIES

During the ~~first~~ ~~six~~three months ofended June 30, 2020, and 2019, ~~we used $0~~cash provided by operations was $129 million ~~in operating activities~~and $54 million, respectively. During the six months ended June 30, 2020, cash provided by operations was $120 million compared to ~~$268 million~~breakeven for the comparable period in 2019. The improvement in cash provided ~~during the first~~ ~~six~~ ~~months of 2018. This change~~by operations was primarily related to ~~declines~~an increase in ~~operating results (lower~~ OSB ~~pricing) offset by~~pricing, favorable working capital changes (primarily reductions in ~~working capital changes.~~inventory balances), and reductions in income tax payments.

INVESTING ACTIVITIES

During the ~~first~~ ~~six~~three months ofended June 30, 2020, and 2019, cash provided by investing activities was $12 million and cash used in investing activities was $45 million, respectively. During the six months ended June 30, 2020, and 2019, cash used in investing activities ~~was approximately~~were $12 million and $50 ~~million.~~million, respectively.

Capital expenditures for the three months ended June 30, 2020, and 2019, were $15 million and $38 million, respectively. Capital expenditures in the ~~first~~ six months ofend June 30, 2020, and 2019, were $39 million and $81 million, respectively, primarily related to the expansion of our siding business and growth and maintenance capital. As a result of the outbreak of the COVID-19 pandemic, we reduced capital expenditure plans by 50% to approximately $70 million for the year 2020. We expect to fund our capital expenditures through cash on hand and cash generated from operations.

During the three and six months ended June 30, 2020, we received $14 million in cash related to the divestiture of our East River facility and assets and brand rights of CanExel®, $10 million related to the cash surrender value of the company-owned life insurance policy, and $3 million related to the sale of our ARS.

We paid $7 million to acquire a prefinishing company during the three months ended June 30, 2019. During the six months ended June 30, 2019, we acquired $40 million of cash in connection with our acquisition of a controlling interest in Entekra and the resulting consolidation of ~~Entekra was $33 million net of other acquisitions. Included in “Accounts payable” is $15 million related to capital expenditures that had not yet been paid as of June 30, 2019.~~Entekra's financial results.

~~During the first~~ ~~six~~ ~~months of 2018, cash used in investing activities was approximately $110 million. Capital expenditures in the first~~ ~~six~~ ~~months of 2018 were $88 million. Included in “Accounts payable” was $17 million related to capital expenditures that had not yet been paid as of~~ ~~June 30, 2018~~.

~~Capital expenditures in~~ ~~2019~~ ~~are expected to be approximately $160 million to $170 million related to expansions in our siding business, growth and maintenance projects and our South American expansion.~~

FINANCING ACTIVITIES

During the ~~first~~ three and six months ~~of 2019,~~ended June 30, 2020, cash used in financing activities was ~~$481~~$368 million. and $39 million, respectively. In March 2020, we borrowed $350 million under our Amended Credit Facility as a precautionary measure due to the COVID-19 pandemic, and we repaid the outstanding balance in June 2020. We ~~used $3~~also paid $1 million ~~to pay long-term debt,~~of financing costs associated with our Amended Credit Facility during the three and six months ended June 30, 2020. During the three and six months ended June 30, 2020, we paid cash dividends of $17 million and $33 million, ~~to pay cash dividends, $438 million to repurchase stock though our share repurchase program and $4~~respectively. Additionally, we used $5 million to repurchase stock from employees in connection with income tax withholding requirements associated with our employee stock-based compensation plans.

During the ~~first~~three and six months ~~of 2018,~~ended June 30, 2019, cash used in financing activities was ~~$81 million.~~$22 million and $481 million, respectively. We used ~~$38~~$438 million to ~~pay a~~repurchase stock though our share repurchase program during the six months ended June 30, 2019. We paid cash ~~dividend~~dividends of $17 million and $8$33 million during the three and six months ended June 30, 2019, respectively. The remaining financing activities relate to repayment of long-term debt and the repurchase of stock from employees in connection with income tax withholding requirements associated with our employee stock-based compensation plans. ~~Additionally, during~~

CREDIT FACILITY AND LETTER OF CREDIT FACILITY

The Amended Credit Facility provides for revolving credit facilities in the ~~first six months~~aggregate principal amount of ~~2018,~~up to $550 million, with a $60 million sub-limit for letters of credit. The Revolving A Loan terminates, and all loans thereunder become due, on June 27, 2024. The Revolving B Loan terminates, and all loans made thereunder become due, on May 1, 2023. As of June 30, 2020, we ~~received~~had no amounts outstanding under the Amended Credit Facility.

The Amended Credit Facility contains a ~~grant from the Investments in Forest Industry Transformation program in Canada for $3 million in connection with~~various restrictive covenants and customary events of default. The Amended Credit Facility also contains financial covenants that requires us and our ~~conversion~~consolidated subsidiaries to have, as of the ~~Dawson Creek OSB mill.~~end of each quarter, (i) a capitalization ratio (i.e., funded debt less unrestricted cash to total capitalization) of no more than 57.5% and (ii) a net worth of at least $475 million plus 70% of consolidated net income after December 31, 2019, without deduction for net losses. As of June 30, 2020, we were in compliance with all financial covenants under the Amended Credit Facility. The Amended Credit Facility contains customary events of default, the occurrence of which could result in the acceleration of our obligation to repay the indebtedness outstanding thereunder. On May 27, 2020, LP entered into the Second Amendment, which modified certain provisions to disregard, for purposes of the Company’s representations and warranties included in the Amended Credit Facility, the impacts of the ongoing COVID-19 pandemic on the Company’s business, operations or financial conditions that were disclosed to lenders or otherwise publicly available in the Company’s filings with the Securities and Exchange Commission prior to the First Amendment Effective Date (as defined in the Amended Credit Facility).

On March 17, 2020, LP entered into the Letter of Credit Facility with Bank of America, N.A., which provides for the funding of letters of credit up to an aggregate outstanding amount of $20 million, which may be secured by certain cash collateral of LP. The Letter of Credit Facility includes an unused commitment fee, due quarterly, ranging from 0.50% to 1.875% of the daily available amount to be drawn on each letter of credit issued under the Letter of Credit Facility. The Letter of Credit Facility is subject to similar affirmative, negative and financial covenants as those set forth in the Amended Credit Facility, including capitalization ratio and minimum net worth covenants.

OTHER LIQUIDITY MATTERS

Off-Balance Sheet Arrangements

As of June 30, 2020, we had standby letters of credit of $12 million outstanding related to collateral for environmental impact on owned properties, deposit for forestry license, and insurance collateral, including workers' compensation.

~~POTENTIAL IMPAIRMENTS~~Potential Impairments

We ~~continue to~~ review ~~asset groupings~~our mill and ~~investments~~investment assets for potential ~~impairments. Management currently believes~~impairments at least annually and believe we have adequate support for the carrying value of ~~each~~our assets as of June 30, 2020. We recognized a non-cash impairment charge of $5

million during the three and six months ended June 30, 2020 related to goodwill assigned to the Entekra reporting unit in part to the impacts of the COVID-19 pandemic on this reporting unit.

If demand and pricing for our products continue at levels significantly below cycle average demand and pricing, or should we decide to invest capital in alternative projects, or should changes occur related to our wood supply for these ~~assets based upon the anticipated cash flows~~locations, it is possible that ~~result from our estimates of~~ future ~~demand, pricing and production costs assuming certain levels of planned capital expenditures.~~impairment charges will be required. As of June 30, ~~2019, there were no indications~~2020, we believe the current impacts of the COVID-19 pandemic did not warrant impairments of our long-lived assets. The long-term effects of the COVID-19 pandemic on the demand and pricing of our products may result in future impairment ~~for the asset grouping that included our indefinitely curtailed facilities and supports the conclusion that no impairment is necessary for those facilities.~~charges.

We also review from time to time possible dispositions of various assets, ~~in light of~~considering current and anticipated economic and industry conditions, our strategic plan, and other relevant factors. Because a determination to dispose of particular assets can require management to make assumptions regarding the transaction structure of the disposition and to estimate the net sales proceeds, which may be less than previous estimates of undiscounted future net cash flows, we may be required to record impairment charges in connection with decisions to dispose of assets.

Our international operations have exposure to foreign currency rate risks, primarily due to fluctuations in the Canadian dollar, Brazilian real and the Chilean peso. Although we have in the past entered into foreign exchange contracts associated with certain of our indebtedness and may continue to enter into foreign exchange contracts associated with major equipment purchases to manage a portion of the foreign currency rate risk, we historically have not entered into material currency rate hedges with respect to our exposure from operations, although we may do so in the future.

Some of our products are sold as commodities, and therefore sales prices fluctuate daily based on market factors over which we have little or no control. The most significant commodity product we sell is OSB. Based upon an assumed North America annual production capacity in the OSB segment of ~~4.9~~3.7 billion square feet (3/8" basis) or ~~4.2~~3.2 billion square feet (7/16" basis), a $1 change in the annual average price per thousand square feet on a 7/16" basis would change annual pre-tax profits by approximately $4$3 million.

We are exposed to market risk associated with changes in interest rates on our variable rate long-term debt. As of June 30, 2020, we had no outstanding amounts borrowed under our Amended Credit Facility. We do not currently have any derivative or hedging arrangements, or other known exposures, to changes in interest rates.

We historically have not entered into material commodity futures and swaps, although we may do so in the future.

Evaluation of Disclosure Controls and Procedures

As of June 30, ~~2019~~,2020, our Chief Executive Officer and Chief Financial Officer have carried out, with the participation of the Company's Disclosure Practices Committee and the Company's management, an evaluation of the effectiveness of our disclosure controls and procedures, as defined in Rule 13a-15(e) promulgated under the ~~Securities~~ Exchange ~~Act of 1934 (the Act).~~Act. Based upon this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of June 30, 2020, LP’s disclosure controls and procedures are effective to provide reasonable assurance that material information required to be disclosed by us in reports we file under the Act is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms and that information required to be disclosed by us in the reports we file or submit under the Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.were effective.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended June 30, ~~2019~~2020, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

KEY ~~STATISTICS~~PERFORMANCE INDICATORS

We consider the following items to be key performance indicators because LP’s management uses these metrics to evaluate our business and trends, measure our performance, and make strategic decisions and believes that the key performance indicators presented provide additional perspective and insights when analyzing the core operating performance of LP. These key performance indicators should not be considered superior to, as a substitute for or as an alternative to, and should be considered in conjunction with, the GAAP financial measures presented herein. These measures may not be comparable to similarly-titled performance indicators used by other companies.



	Classification	June 30, 2019
Consolidated Balance Sheet
Assets:
Operating lease assets	Operating lease assets	$	22
Finance lease assets	Property, plant, and equipment, net	1
Total lease assets		$	24
Liabilities:
Current
Operating	Accounts payable and accrued liabilities	$	8
Finance	Current portion of long-term debt	1
Noncurrent
Operating	Noncurrent operating lease liabilities	14
Finance	Long-term debt, excluding current portion	1
Total lease liabilities		$	24



	Classification	Quarter Ended June 30, 2019		Six Months Ended June 30, 2019
Consolidated Statement of Income
Lease Cost:
Operating lease cost	Cost of sales and Selling, general and administrative expenses	$	2	$	5
Finance lease cost
Amortization of leased assets	Cost of sales	—		—
Interest on lease liabilities	Interest expense, net of capitalized interest	—		—
Total lease cost		$	3	$	5



Maturity of Lease Liabilities	Operating Leases			Finance Leases		Total
2019	$	5		$	—	$	5
2020	8			1		9
2021	6			—		6
2022	3			—		3
2023	1			—		1
2024 and thereafter	—			—		—
Total lease payments	23			1		25
Less: Interest	(1		)	—		(1		)
Present value of lease liabilities	$	22		$	1	$	24



Other Information	Quarter Ended June 30, 2019		Six Months Ended June 30, 2019
Short-term lease cost	$	1	$	2
Variable lease cost	7		14
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from finance leases	—		—
Operating cash flows from operating leases	2		4
Financing cash flows from finance leases	—		—
Right-of-use assets obtained in exchange for new operating lease liabilities	—		6
Right-of-use assets obtained in exchange for new financing lease liabilities	—		1



Dollar amounts in millions
Year ended December 31,
2019	$	8
2020	7
2021	5
2022	2
2023	—
2024 and thereafter	—
Total	$	22



Quarter Ended June 30, 2019
By Product family:	Siding		OSB		EWP		South America		Other		Inter-segment			Total
SmartSide^® Strand siding	$	200	$	—	$	—	$	4	$	—	$	—		$	204
SmartSide^® Fiber siding	25		—		—		—		—		—			25
CanExel^® siding	7		—		—		—		—		—			7
OSB - commodity	5		97		1		—		—		(2		)	101
OSB - value-add	—		100		2		35		—		—			138
LVL	—		—		40		—		—		—			40
LSL	—		—		14		—		—		—			14
I-joist	—		—		38		—		—		—			38
Plywood	—		—		6		—		—		—			6
Other	2		1		5		1		5		—			16
	$	238	$	199	$	107	$	40	$	5	$	(2	)	$	588
By Product type:
Commodity	$	5	$	97	$	7	$	—	$	—	$	(2	)	$	107
Value-add	231		100		95		39		—		—			465
Other	2		1		5		1		5		—			16
	$	238	$	199	$	107	$	40	$	5	$	(2	)	$	588



Quarter Ended June 30, 2018
By Product family:	Siding		OSB		EWP		South America		Other		Inter-segment		Total
SmartSide^® Strand siding	$	194	$	—	$	—	$	7	$	—	$	—	$	200
SmartSide^® Fiber siding	28		—		—		—		—		—		28
CanExel^® siding	13		—		—		—		—		—		13
OSB - commodity	12		231		5		—		—		—		249
OSB - value-add	12		155		4		37		—		—		208
LVL	—		—		40		—		—		—		40
LSL	—		—		17		—		—		—		17
I-joist	—		—		32		—		—		—		32
Plywood	—		—		8		—		—		—		8
Other	3		1		7		1		3		—		15
	$	262	$	387	$	113	$	45	$	3	$	—	$	811
By Product type:
Commodity	$	12	$	231	$	13	$	—	$	—	$	—	$	257
Value-add	246		155		93		44		—		—		538
Other	3		1		7		1		3		—		15
	$	262	$	387	$	113	$	45	$	3	$	—	$	811



Six Months Ended June 30, 2018
By Product family:	Siding		OSB		EWP		South America		Other		Inter-segment		Total
SmartSide^® Strand siding	$	359	$	—	$	—	$	14	$	—	$	—	$	372
SmartSide^® Fiber siding	54		—		—		—		—		—		54
CanExel^® siding	26		—		—		—		—		—		26
OSB - commodity	21		413		8		—		—		—		442
OSB - value-add	22		284		8		72		—		—		386
LVL	—		—		77		—		—		—		77
LSL	—		—		31		—		—		—		31
I-joist	—		—		64		—		—		—		64
Plywood	—		—		16		—		—		—		16
Other	7		4		16		2		6		—		36
	$	489	$	701	$	219	$	88	$	6	$	—	$	1,502
By Product type:
Commodity	$	21	$	413	$	24	$	—	$	—	$	—	$	457
Value-add	460		284		179		86		—		—		1,009
Other	7		4		16		2		6		—		36
	$	489	$	701	$	219	$	88	$	6	$	—	$	1,502



				Pension Adjustments
	Foreign currency translation adjustments			Actuarial losses			Prior service costs			Unrealized gain (loss) on investments		Other			Total
Balance at March 31, 2019	$	(55	)	$	(87	)	$	(4	)	$	4	$	(1	)	$	(144	)
Other comprehensive income (loss) before reclassifications	1			—			—			—		—			1
Income taxes	—			—			—			—		—			—
Net other comprehensive income (loss) before reclassifications	1			—			—			—		—			1
Amounts reclassified from accumulated comprehensive income (loss)	—			1			—			—		—			1
Income taxes	—			—			—			—		—			—
Net amounts reclassified from cumulative other comprehensive income (loss)	—			1			—			—		—			1
Total other comprehensive income (loss)	1			1			—			—		—			2
Balance at June 30, 2019	$	(54	)	$	(87	)	$	(4	)	$	4	$	(1	)	$	(143	)



	Quarter Ended June 30, 2019 versus 2018				Six Months Ended June 30, 2019 versus 2018
	Average Selling Price		Unit Shipments		Average Net Selling Price		Unit Shipments
SmartSide^® strand siding	2	%	—	%	4	%	4	%
SmartSide^® fiber siding	3	%	(12	)%	5	%	(8	)%
CanExel siding	(1	)%	(46	)%	1	%	(12	)%
OSB	(54	)%	(59	)%	(51	)%	(63	)%


~~Item~~ITEM 3.	~~Quantitative and Qualitative Disclosures about Market Risk~~QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK



	Three Months Ended June 30, 2020				Three Months Ended June 30, 2019
Sales Volume	Siding	OSB	EWP	Total	Siding	OSB	EWP	Total
SmartSide® strand siding (MMSF)	319	—	—	319	309	—	—	309
SmartSide® fiber siding (MMSF)	22	—	—	22	51	—	—	51
OSB - commodity (MMSF)	—	480	—	480	26	549	7	582
OSB - Structural Solutions (MMSF)	—	339	—	339	1	420	5	427
LVL (MCF)	—	—	1,534	1,534	—	—	1,968	1,968
LSL (MCF)	—	—	573	573	—	—	869	869
I-Joist (MMLF)	—	—	24	24	—	—	26	26



	OSB Western Canada 7/16" Basis	OSB Southwest 7/16" Basis	OSB N. Central 7/16" Basis
Average
2018 1st Qtr. Avg.	$356	$346	$367
2018 2nd Qtr. Avg.	$408	$435	$423
2019 1st Qtr. Avg.	$161	$194	$213
2019 2nd Qtr. Avg.	$149	$174	$187



Period	Total Number of Shares Repurchased	Average Price Paid Per Share	Total Number of Shares Purchased as part of Publicly Announced Purchase Plan or Program	Maximum Dollar Value of Shares That May Yet be Purchased under the Plans or Programs
April 1, 2019 - April 30, 2019	—	—	—	$	280
May 1, 2019 - May 31, 2019	—	—	—	$	280
June 1, 2019 - June 30, 2019	—	—	—	$	280
	—	—	—




10.1	Second Amendment to Amended and Restated Credit Agreement, dated ~~June~~May 27, ~~2019,~~2020, among ~~Louisiana-Pacific Corporation,~~the Company, as borrower, ~~certain subsidiaries of the borrower from time to time party thereto, as guarantors,~~ American AgCredit PCA, as administrative agent, ~~and sole lead arranger,~~ CoBank, ACB, as ~~L/C Issuer,~~letter of credit issuer and lenders and voting participants party ~~thereto. Incorporated~~thereto, incorporated herein by reference to ~~Exhibit 10.1 on LP~~the Company’s Current Report on Form 8-K, filed on ~~June 27, 2019.~~May 29, 2020.

10.2	Amended and Restated Security Agreement, dated June 27, 2019, among Louisiana-Pacific Corporation and American AgCredit, PCA. Incorporated herein by reference to Form 8K filed on June 27, 2019. Incorporated herein by reference to Exhibit 10.1 on LP ~~Current Report on Form 8-K filed on June 27, 2019.~~Non-Employee Directors Compensation Plan

31.1	Certification of Chief Executive Officer Pursuant to Rule 13a-14(a). under the Securities Exchange Act of 1934.

31.2	Certification of Chief Financial Officer Pursuant to Rule 13a-14(a). under the Securities Exchange Act of 1934.

32.1	Certifications pursuant to § 906 of the Sarbanes-Oxley Act of 2002.

101.INS	XBRL Instance Document - The instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document.*

101.SCH	XBRL Taxonomy Extension Schema Document.*

101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.*

101.LAB	XBRL Taxonomy Extension Label Linkbase Document.*

101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.*

101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.*



		LOUISIANA-PACIFIC CORPORATION

Date:	August 6, ~~2019~~2020	BY:	/S/ W. BRADLEY SOUTHERN
			W. Bradley Southern
			Chief Executive Officer

Date:	August 6, ~~2019~~2020	BY:	/S/ ALAN J.M. HAUGHIE
			Alan J.M. Haughie
			Executive Vice President and
			Chief Financial Officer