SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarterly Period Ended June 30, 2000
Commission File Number 1-7107
LOUISIANA-PACIFIC CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 93-0609074
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
111 S. W. Fifth Avenue, Portland, Oregon 97204-3699
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (503) 221-0800
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes /X/ No /_/
Indicate the number of shares outstanding of each of the issuer's classes of
common stock: 104,180,191 shares of Common Stock, $1 par value, outstanding as
of July 29, 2000.
ABOUT FORWARD-LOOKING STATEMENTS
Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934 provide a "safe harbor" for all 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 report contains, and
other reports and documents filed by Louisiana-Pacific Corporation ("L-P") with
the Securities and Exchange Commission may contain, forward-looking statements.
These statements are or will be based upon the beliefs and assumptions of, and
on information available to, the management of L-P.
The following statements are or may constitute forward-looking
statements: (1) statements preceded by, followed by or that include the words
"may," "will," "could," "should," "believe," "expect," "anticipate," "intend,"
"plan," "estimate," "potential," "continue" 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 or future costs and expenditures, possible outcomes of legal
proceedings and the adequacy of reserves for loss contingencies. These
forward-looking statements are subject to various risks and uncertainties,
including the following:
- Risks and uncertainties relating to the possible invalidity of the
underlying beliefs and assumptions;
- Possible changes or developments in social, economic, business,
industry, market, legal and regulatory circumstances and
conditions; and
- Actions taken or omitted to be taken by third parties, including
customers, suppliers, business partners, competitors and
legislative, regulatory, judicial and other governmental
authorities and officials.
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 L-P with the Commission
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.
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES
(AMOUNTS IN MILLIONS EXCEPT PER SHARE) (UNAUDITED)
Quarter Ended Six Months Ended
June 30, June 30,
----------------- --------------------
2000 1999 2000 1999
------- ------- -------- ---------
Net sales .................................. $ 778.1 $ 768.5 $1,555.0 $1,368.6
------- ------- -------- ---------
Costs and expenses:
Cost of sales .......................... 566.7 530.9 1,114.4 999.0
Depreciation, amortization and depletion 59.3 45.7 120.6 88.5
Selling and administrative ............. 67.6 54.7 132.0 101.2
Unusual credits and charges, net ....... 38.0 (5.2) 36.4 (5.2)
Interest expense ....................... 18.5 11.1 35.6 20.1
Interest income ........................ (9.7) (9.4) (18.4) (19.2)
------- ------- -------- ---------
Total costs and expenses ........... 740.4 627.8 1,420.6 1,183.8
------- ------- -------- ---------
Income before taxes and minority interest .. 37.7 140.7 134.4 184.2
Provision for income taxes ................. 16.2 55.8 54.7 72.6
Minority interest in net income (loss) of
consolidated subsidiaries ................. 0.5 -- 1.0 (0.5)
------- ------- -------- ---------
Net income ................................. $ 21.0 $ 84.9 $ 78.7 $ 112.1
------- ------- -------- ---------
------- ------- -------- ---------
Net income per share basic and diluted ..... $ 0.20 $ 0.79 $ 0.76 $ 1.05
------- ------- -------- ---------
------- ------- -------- ---------
Average shares outstanding
Basic ................................. 104.0 106.6 104.0 106.4
------- ------- -------- ---------
------- ------- -------- ---------
Diluted ............................... 104.2 106.8 104.2 106.6
------- ------- -------- ---------
------- ------- -------- ---------
Cash dividend per share .................... $ 0.14 $ 0.14 $ 0.28 $ 0.28
------- ------- -------- ---------
------- ------- -------- ---------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE UNAUDITED
FINANCIAL STATEMENTS.
2
CONDENSED CONSOLIDATED BALANCE SHEETS
LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES
(DOLLAR AMOUNTS IN MILLIONS) (UNAUDITED)
June 30, 2000 Dec. 31, 1999
------------- -------------
ASSETS
Cash and cash equivalents................................ $ 118.1 $ 116.0
Accounts receivable, net................................. 233.4 200.7
Inventories.............................................. 310.0 293.4
Prepaid expenses......................................... 19.8 18.5
Income tax receivable.................................... 47.5 --
Deferred income taxes.................................... 69.7 110.8
--------- ----------
Total current assets 798.7 739.4
--------- ----------
Timber and timberlands................................... 600.7 611.1
Property, plant and equipment............................ 2,588.8 2,537.4
Accumulated depreciation................................. (1,258.0) (1,203.4)
--------- ----------
Net property, plant and equipment........................ 1,330.8 1,334.0
--------- ----------
Goodwill, net of amortization............................ 335.1 347.7
Notes receivable from asset sales........................ 403.8 403.8
Other assets............................................. 63.2 52.2
--------- ----------
Total assets $ 3,532.1 $ 3,448.2
--------- ----------
--------- ----------
LIABILITIES AND EQUITY
Current portion of long-term debt........................ $ 46.7 $ 44.9
Accounts payable and accrued liabilities................. 297.4 306.5
Income taxes payable..................................... -- 9.3
Current portion of contingency reserves.................. 75.0 180.0
--------- ----------
Total current liabilities 419.1 540.7
--------- ----------
Long-term debt, excluding current portion:
Limited recourse notes payable....................... 396.5 396.5
Other long-term debt................................. 729.3 618.3
--------- ----------
Total long-term debt, excluding current portion 1,125.8 1,014.8
--------- ----------
Contingency reserves, excluding current portion.......... 109.2 128.8
Deferred income taxes and other.......................... 471.8 443.9
Commitments and contingencies
Stockholders' equity:
Common stock......................................... 117.0 117.0
Additional paid-in capital........................... 444.6 445.4
Retained earnings.................................... 1,126.0 1,076.4
Treasury stock....................................... (238.4) (228.3)
Loans to Employee Stock Ownership Trusts............. (3.5) (6.9)
Accumulated comprehensive loss....................... (39.5) (43.6)
--------- ----------
Total stockholders' equity 1,406.2 1,360.0
--------- ----------
Total liabilities and equity $ 3,532.1 $ 3,488.2
--------- ----------
--------- ----------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE UNAUDITED
FINANCIAL STATEMENTS.
3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES
(DOLLAR AMOUNTS IN MILLIONS) (UNAUDITED)
Six Months Ended June 30,
-------------------------
2000 1999
-------- --------
Cash flows from operating activities:
Net income ........................................................ $ 78.7 $ 112.1
Depreciation, amortization and depletion .......................... 120.6 88.5
Cash settlements of contingencies ................................. (123.6) (78.1)
Unusual credits and charges, net .................................. 54.2 (5.2)
Other adjustments ................................................. 12.8 13.8
Decrease (increase) in certain working capital components and
deferred taxes ................................................ (75.1) 80.2
-------- --------
Net cash provided by operating activities ............................. 67.6 211.3
-------- --------
Cash flows from investing activities:
Capital spending .................................................. (98.0) (58.8)
Proceeds from assets sales ........................................ 10.2 19.3
Business asset purchases, including replacement of debt ........... (54.7) (213.0)
Other investing activities, net ................................... .2 (1.6)
-------- --------
Net cash used in investing activities ......................... (142.3) (254.0)
-------- --------
Cash flows from financing activities:
New borrowings, including net increase in revolving borrowings .... 120.0 139.3
Repayment of long-term debt ....................................... (7.7) (46.0)
Cash dividends .................................................... (29.1) (29.7)
Purchase of treasury stock ........................................ (11.2) --
Other financing activities ........................................ 4.8 5.5
-------- --------
Net cash provided by financing activities ..................... 76.8 69.1
-------- --------
Net increase in cash and cash equivalents ............................. 2.1 26.4
Cash and cash equivalents at beginning of period ...................... 116.0 126.5
-------- --------
Cash and cash equivalents at end of period ............................ $ 118.1 $ 152.9
-------- --------
-------- --------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE UNAUDITED
FINANCIAL STATEMENTS.
4
NOTES TO UNAUDITED CONSOLIDATED SUMMARY FINANCIAL STATEMENTS
1. These consolidated summary financial statements should be read in
conjunction with the consolidated financial statements and the notes
thereto included in L-P's Annual Report on Form 10-K for the year ended
December 31, 1999.
These consolidated summary financial statements reflect all adjustments
(consisting only of normal recurring adjustments) which are, in the
opinion of the management of L-P, necessary to present fairly, in all
material respects, the consolidated financial position, results of
operations and cash flows of L-P and its subsidiaries. Certain 1999
amounts have been reclassified to conform to the 2000 presentation.
Results of operations for interim periods are not necessarily
indicative of results to be expected for an entire year.
2. Basic earnings per share are based on the weighted average number of
shares of common stock outstanding during the applicable period.
Diluted earnings per share include the effects of potentially dilutive
common stock equivalents.
Quarter Ended Six Months Ended
June 30, June 30,
------------- ----------------
(Shares in millions) 2000 1999 2000 1999
----- ----- ------ --------
Average shares outstanding used to determine
basic income per common share 104.0 106.6 104.1 106.4
Dilutive effects of stock options granted
and ESPP shares 0.2 0.2 0.1 0.2
----- ----- ----- -----
Average shares outstanding used to determine
fully diluted income per common share 104.2 106.8 104.2 106.6
----- ----- ----- -----
----- ----- ----- -----
3. The preparation of interim financial statements requires the estimation
of L-P's effective income tax rate based on estimated annual amounts of
taxable income and expenses. These estimates are updated quarterly.
4. The Company utilizes interest rate hedge contracts to hedge risks
associated with interest rate movement relating to potential debt
issuances. The Company's current accounting policy is to defer realized
and unrealized gains and losses on the hedge instrument until the
issuance of the related debt, at which time such amounts are amortized
to interest expense over the life of the debt issuance.
Due to the delay in the anticipated issuance of debt, the Company
recognized $6 million in mark to market adjustments in the second
quarter of 2000.
At June 30, 2000, notional amounts under contract were $200 million.
The risk of loss to the Company in the event of nonperformance by any
counterparty under derivative financial instrument agreements is not
significant.
5. The preparation of interim financial statements requires the estimation
of L-P's year-end inventory quantities and costs for purposes of
determining last in, first out (LIFO) inventory adjustments. These
estimates are revised quarterly and the estimated incremental change in
the LIFO inventory reserve is expensed over the remainder of the year.
5
6. Components of comprehensive income for the periods include:
Quarter Ended Six Months Ended
June 30, June 30,
---------------- -----------------
(Dollars in millions) 2000 1999 2000 1999
------- ------- ------- --------
Net income $ 21.0 $ 84.9 $ 78.7 $ 112.1
Currency translation adjustment (3.3) 2.7 (8.2) 0.8
Pension minimum liability adjustment 12.2 -- 12.2 --
Other 0.1 (0.1) 0.1 0.2
------- ------- ------- -------
Total comprehensive income $ 30.2 $ 87.5 $ 82.8 $ 113.1
------- ------- ------- -------
------- ------- ------- -------
7. In June 1998, the Financial Accounting Standards Board adopted
Statement of Financial Accounting Standards No. 133, "Accounting for
Derivative Instruments and Hedging Activities" (SFAS 133). The new
statement will require recognition of all financial instruments as
either assets or liabilities on the balance sheet at fair value;
changes to fair value will impact earnings either as gains or losses.
SFAS 133, as amended by SFAS 137, will be effective for L-P beginning
January 1, 2001. Based upon a preliminary review, L-P does not believe
that the adoption of this standard will have a material impact on its
financial statements.
8. In December 1999, Securities and Exchange Commission issued Staff
Accounting Bulletin (SAB) 101 "Revenue Recognition in Financial
Statements." The new statement will require a change in the recognition
of revenue. SAB 101, as amended by SAB101A and SAB101B will be
effective for L-P beginning in the fourth quarter of 2000. Based upon a
preliminary review, L-P does not believe that the adoption of this
standard will have a material impact on its financial statements.
9. The selected segment data set forth in Item 2 "Management's Discussion
and Analysis and Results of Operations" is incorporated herein by
reference.
10. The description of certain legal and environmental matters involving
L-P set forth in Part II of this report under the caption "Legal
Proceedings" is incorporated herein by reference.
6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS AND RESULTS OF OPERATIONS.
Net income for the second quarter of 2000 was $21.0 million, or $0.20
per diluted share, on sales of $778.1 million, compared to second quarter 1999
net income of $84.9 million, or $0.79 per diluted share, on sales of $768.5
million. Excluding unusual items totaling $38.0 million ($22.8 million after
tax, or $0.21 per diluted share), income for the second quarter of 2000 was
$43.7 million, or $0.42 per diluted share, compared to second quarter 1999
income excluding unusual items of $81.7 million, or $0.76 per diluted share.
Net income for the first six months of 2000 was $78.7 million, or $0.76
per diluted share, on sales of $1.56 billion, compared to net income for the
first six months of 1999 of $112.1 million, or $1.05 per diluted share, on sales
of $1.37 billion. Excluding unusual items, income for the first six months of
2000 was $100.5 million, or $0.96 per diluted share, compared to income for the
first six months of 1999 of $108.9 million, or $1.02 per diluted share.
Reduced demand for building products and the slowing housing markets
factored negatively into second quarter earnings. This softening demand resulted
in reduced market prices for structural panels (oriented strand board (OSB),
plywood and lumber). These decreased market conditions were partially offset by
the inclusion of the operations of Le Group Forex Inc. (Forex), which were
acquired in September 1999 and certain assets of Evans Forest Products Ltd.
(Evans), which were acquired in November 1999.
L-P operates in five segments: structural products; exterior products;
industrial panel products; other products; and pulp. Structural products is the
most significant segment, accounting for more than 60% of sales during the first
six months of both 2000 and 1999. L-P's results of operations are discussed
separately for each segment below. Production volumes and industry product price
trends are presented below in the tables captioned "Summary of Production
Volumes" and "Industry Product Price Trends."
SELECTED SEGMENT DATA
Quarter Ended June 30, Six Months Ended June 30,
--------------------------- -----------------------------
2000 1999 % 2000 1999 %
-------- -------- ------- -------- -------- -------
(Dollar amounts in millions)
Sales:
Structural products ............. $ 469.1 $ 473.8 (1.0%) $ 963.4 $ 849.9 13.4%
Exterior products ............... 91.1 79.1 15.2 155.9 116.9 33.4
Industrial panel products ....... 68.7 73.1 (6.0) 141.4 126.9 11.4
Other products .................. 110.3 114.6 (3.8) 215.2 225.1 (4.4)
Pulp ............................ 38.9 27.9 39.4 79.1 49.8 58.8
-------- -------- -------- --------
Total sales ................. $ 778.1 $ 768.5 1.2 $1,555.0 $1,368.6 13.6
-------- -------- -------- --------
-------- -------- -------- --------
Operating profit (loss):
Structural products ............. $ 88.4 $ 150.3 (41.2) $ 202.4 $ 224.8 (10.0)
Exterior products ............... 13.9 16.3 (14.7) 22.0 24.0 (8.3)
Industrial panel products ....... 3.3 4.7 (29.8) 5.9 5.8 1.7
Other products .................. (0.9) (4.1) (78.0) (0.1) (12.7) (99.2)
Pulp ............................ 5.9 (4.9) 220.4 10.3 (10.8) 195.4
Unusual credits and charges, net .... (38.0) 5.2 (830.8) (36.4) 5.2 (800.0)
General corporate and other expense,
net ............................. (26.1) (25.4) (2.8) (52.5) (51.2) (2.5)
Interest income (expense), net ...... (8.8) (1.7) (417.6) (17.2) (.9) 1,811.1
-------- -------- -------- --------
Income before taxes and minority
interest ........................ $ 37.7 $ 140.4 (73.1) $ 134.4 $ 184.2 (27.0)
-------- -------- -------- --------
-------- -------- -------- --------
7
STRUCTURAL PRODUCTS
The structural products segment includes OSB, plywood, lumber and
engineered wood products (EWP). The decline in sales for the second quarter
of 2000 compared to the second quarter of 1999 was primarily due to lower
OSB, plywood and lumber prices, which were partially offset by higher sales
volumes resulting from the acquisitions of Forex and Evans.
In the second quarter of 2000, sales volumes increased by 9% over the
second quarter of 1999 while sales prices decreased by 14%. Log costs increased
approximately 1% in the second quarter of 2000 as compared to the second quarter
of 1999. Additionally, during the second quarter of 2000, several mills operated
under reduced production schedules due to reduced market demand. These items all
contributed to the lower operating performance of structural products.
For the six months ended June 2000, sales volumes increased by 5% over
the same period in 1999 while sales prices decreased 1%. For the first six
months of 2000, log costs increased 2% as compared to the same period in the
prior year.
EXTERIOR PRODUCTS
The exterior product segment includes siding, both wood composite
and vinyl, specialty OSB products and related products such as soffit, facia
and trim. Sales volumes of these products increased 30% in the second quarter
of 2000 compared to the second quarter of 1999 primarily due to the
conversion of a commodity OSB mill into a specialty OSB mill. Sales prices
declined by 6%, primarily as a result of price decreases for OSB specialty
products. Additionally, this segment was negatively affected by a significant
increase in resin costs associated with the vinyl operations.
Sales volumes for the six months ended June 30, 2000 increased by
60% as compared to the same period in 1999 and sales prices remained
relatively flat. Sales and operating income were also positively impacted by
the acquisition of ABT in late February 1999.
INDUSTRIAL PANEL PRODUCTS
The industrial panels segment includes particleboard, medium density
fiberboard (MDF) and hardboard. Sales prices increased 8% for the second quarter
2000 as compared to the second quarter of 1999 while sales volumes declined 14%.
The decline in sales volumes resulted from a temporary shutdown of one of the
MDF plants due to weaker customer demand. For the first six months of 2000,
sales prices increased 7% over the same period in the prior year with volumes
increasing 38%. The addition of the ABT products is the primary reason for the
increase in sales and profits in this segment for the six month period.
OTHER PRODUCTS
The other products segment includes wood chips, cellulose insulation,
Ireland operations, Alaska operations, moldings and other products. In the
second quarter of 2000, sales for this segment decreased about 5% compared to
the second quarter of 1999, primarily due to the sale of the assets of
Associated Chemists Inc. in December 1999 and certain assets associated with the
Alaskan operations in October 1999, which were partially offset by the increased
sales of ABT molding products. Additionally, during the second quarter of 1999,
L-P recognized a write down on inventories of a previously sold subsidiary of
$3.0 million. The same factors contributed to the decline in sales and operating
results in the first six months of 2000 compared to the same period in 1999.
PULP
Pulp segment operations for the second quarter of 2000 improved
significantly from the second quarter of 1999, with sales volumes declining 4%
and sales prices increasing 61%. Although the increase in sales prices were
partially offset by increases in raw material and production costs, significant
improvement in operating profit was
8
realized. For the six month period ended June 30, 2000, sales volumes decreased
2% and sales prices increased 63% over the comparable period in 1999.
UNUSUAL CREDITS AND CHARGES, NET
Information regarding unusual credits and charges recorded in the
quarter and six months ended June 30, 2000 is set forth in the following table.
Quarter Ended Six Months Ended
June 30, June 30,
------------------ -------------------
(Dollars in millions) 2000 1999 2000 1999
-------- ------- ------- -------
Impairment charges:
Polymer plant $ -- $ -- $ (3.5) $ --
Oroville MDF plant (4.1) -- (4.1) --
Samoa pulp mill (40.0) -- (40.0) --
Gain on sale of assets -- 5.2 -- 5.2
Recovery on insurance settlement 12.6 -- 17.7 --
Mark to market adjustment on interest rate
hedges (6.5) -- (6.5) --
-------- ------- ------- -------
Total unusual credits and charges, net $ (38.0) $ 5.2 $ (36.4) $ 5.2
-------- ------- ------- -------
-------- ------- ------- -------
GENERAL CORPORATE AND OTHER EXPENSE
General corporate expense for the second quarter of 2000 and for the
six month period ended June 30, 2000 were consistent with the same periods in
the prior year.
INTEREST INCOME (EXPENSE)
Interest expense increased significantly in the second quarter of 2000
and the six month period ended June 30, 2000 as compared to the same periods in
the prior year as a result of borrowings to finance the acquisitions of ABT,
Forex and Evans.
LEGAL AND ENVIRONMENTAL MATTERS
For a discussion of legal and environmental matters involving L-P and
the potential impact thereof on L-P's financial position, results of operations
and cash flows, see Item 1, Legal Proceedings, in Part II of this report.
OSB SIDING LITIGATION UPDATE
The following discussion updates, and should be read in conjunction
with, the discussion of L-P's OSB siding litigation set forth in Item 7 of L-P's
annual report on Form 10-K for the year ended December 31, 1999, Management's
Discussion and Analysis of Financial Condition and Results of Operations, under
the subheading "Legal Matters."
Through the first six months of 2000, claimants continued to file
claims under both the National Settlement and the Florida Settlement; however,
the rate of claim filings has decreased. In the second quarter of 2000, L-P paid
approximately $112 million from the second settlement fund to approximately
57,000 claimants in satisfaction of approximately $313 million in claims. See
"OSB Siding Matters" in Item 1, Legal Proceedings, in Part II of this report.
9
As of June 30, 2000, (i) approximately 288,000 requests had been
received for claim forms for the National Settlement and the Florida Settlement,
compared to 273,000 at December 31, 1999 and 280,000 at March 31, 2000, and (ii)
approximately 184,000 completed claim forms for the National Settlement and the
Florida Settlement had been received, compared to 172,000 at December 31, 1999
and approximately 179,000 at March 31, 2000. The average payment amount for
settled claims as of December 31, 1999, March 31, 2000 and June 30, 2000 was
approximately $5,100, $5,100 and $3,700, respectively. Excluding claims
satisfied pursuant to the second settlement fund, the average payment amount for
settled claims as of June 30, 2000 was $5,100. The total number of completed
claim forms pending (not settled) as of June 30, 2000 was approximately 17,000
(approximately 67,000 at December 31, 1999 and approximately 72,000 at March 31,
2000) with approximately 135,000 claims settled (approximately 76,000 at each of
December 31, 1999 and March 31, 2000) and approximately 32,000 claims dismissed
(approximately 29,000 at December 31, 1999 and approximately 31,000 at March 31,
2000). Dismissal of claims is typically the result of claims for product not
produced by L-P or claims that lack sufficient information or documentation
after repeated efforts to correct those deficiencies.
FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operations was $67.6 million in the first six
months of 2000 compared to $211.3 million in the same period in 1999. The
decrease in cash provided by operations resulted primarily from lower net income
and increased payments related to contingencies.
Net cash used in investing activities was $142.3 million in the
first six months of 2000 compared to $254.0 million in the comparable period
of 1999. L-P used $54.7 million of funds to acquire the assets of Sawyer
Lumber Company and the assets of Hoff Companies Inc. in May 2000 and $213
million of funds to acquire ABT in February 1999. Capital expenditures for
property, plant, equipment and timber increased in the first six months of
2000 compared to the same period in 1999, primarily due to acquisitions of
equipment to improve the utilization of current mills. L-P estimates that
during 2000 it will make total capital expenditures of approximately $180
million to, among other things, begin construction on an OSB mill, continue
construction of a veneer mill and complete construction of a composite
decking plant.
In the six month period ended June 30, 2000, L-P borrowed $120 million,
primarily to finance the acquisitions of the assets of the Sawyer Lumber Company
and Hoff Companies, Inc. and payments from the second settlement fund described
above. In the same period of 1999, L-P borrowed $139 million, primarily to
finance the acquisition of ABT.
L-P expects to be able to meet its cash requirements through cash from
operations, existing cash balances, existing credit facilities and access to the
capital markets. Cash and cash equivalents totaled $118.1 million at June 30,
2000 compared to $116 million at December 31, 1999. L-P has a $300 million
revolving credit facility under which $120 million was outstanding at June 30,
2000. This facility is available until 2002. L-P also has a $50 million
(Canadian) revolving credit facility under which no borrowings were outstanding
at June 30, 2000. This facility is available until March 2001. Additionally, L-P
has approximately $34 million available under a $250 million credit facility
established in connection with acquisitions made in 1999. Borrowings in an
amount equal to approximately $240 million currently mature in September 2000.
L-P has registered under the Securities Act the offer and sale of up to $750
million of debt securities, which may be offered from time to time in one or
more series. The amount, price, other terms of any such offering will be
determined on the basis of market conditions and other factors existing at the
time of such offering. The proceeds from the sale of any such securities are
anticipated to be used by L-P to refinance a portion of its existing
indebtedness and for general corporate purposes.
Changes in L-P's balance sheet from December 31, 1999 to June 30, 2000,
include decreases of $32.7 million in accounts receivable and $16.6 million in
inventories. These decreases are a result of seasonal fluctuations in
operations.
Contingency reserves, which represent an estimate of future cash needs
for various contingencies (primarily payments for siding litigation
settlements), totaled $184.2 million at June 30, 2000, of which $75 million is
estimated to be payable within one year. As with all accounting estimates, there
is inherent uncertainty concerning the reliability and precision of these
estimates. The amounts ultimately paid in resolving these
10
contingencies could exceed the current reserves by a material amount.
Litigation-related payments totaled $123.6 million for the first six months of
2000.
STOCK REPURCHASE PLAN
As of June 30, 2000, L-P had reacquired approximately 7.9 million
shares for $125 million under an authorization to reacquire up to 20 million
shares from time to time in the open market. L-P reacquired 850,000 shares for
$11.2 million in the first six months of 2000. L-P had approximately 104 million
shares outstanding at quarter end.
ASSETS HELD FOR SALE
L-P is seeking to sell its Chetwynd, British Columbia pulp mill, which
is presently managed by an unrelated party pursuant to a management agreement
having a term of 24 months that expires in April 2001. L-P currently believes it
has adequate support for the carrying value of the affected assets based upon
the assumption that L-P will continue to operate the facility. However, should
L-P decide to proceed with a sale of the assets, it is possible that L-P will be
required to record an impairment charge.
During the second quarter of 2000, L-P recorded a $40 million charge to
unusual items for a reduction in the carrying value of its Samoa, California
pulp mill in anticipation of the sale of this mill. L-P currently believes it
has adequate support for the remaining carrying value of the affected assets if
L-P continued to operate the facility, however management has determined that
the intent is to sell the mill, and therefore the carrying values were reduced
to reflect the estimated net realizable value.
11
Louisiana-Pacific Corporation and Subsidiaries
Summary of Production Volumes
Quarter Ended June 30, Six Months Ended June 30,
---------------------- -------------------------
2000 1999 2000 1999
------- -------- -------- -------
Oriented strand board, million square feet 3/8" basis ... 1,270 1,068 2,626 2,122
Softwood plywood, million square feet 3/8" basis ........ 268 211 528 447
Lumber, million board feet .............................. 276 269 515 529
Wood-based siding, million square feet 3/8" basis ....... 179 179 361 306
Industrial panel products (particleboard, medium density
fiberboard and hardboard), million square feet 3/4" basis 164 175 318 335
Engineered I-Joist, million lineal feet ................. 24 21 44 45
Laminated veneer lumber (LVL), thousand cubic feet ...... 2,150 1,800 4,327 3,500
Pulp, thousand short tons ............................... 99 90 188 185
Industry Product Trends
The amounts shown below are dollars per 1,000 square feet or, in the case of
lumber, 1,000 board feet.
OSB Plywood Lumber Particleboard
----------------- ----------------- ---------------- -----------------
N. Central Southern Pine Inland
7/16" Basis 1/2" Basis Framing Lumber Industrial
24/16 Span Rating Cdx 3-Ply Composite Prices 3/4" Basis
----------------- ----------------- ---------------- -----------------
Annual Average
1993 $ 236 $ 282 $ 394 $ 258
1994 265 302 405 295
1995 245 303 337 290
1996 184 258 398 276
1997 142 265 417 262
1998 205 284 349 259
1999 260 326 401 273
1999 2nd Qtr. Avg. 289 343 423 270
2000 1st Qtr. Avg. 261 247 384 291
2000 2nd Qtr. Avg. 237 274 337 299
Source: RANDOM LENGTHS
12
PART II -OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
Certain environmental matters and legal proceedings involving L-P are
discussed below.
ENVIRONMENTAL MATTERS
In March 1995, L-P's subsidiary Ketchikan Pulp Company ("KPC") entered
into agreements with the federal government to resolve violations of the Clean
Water Act and the Clean Air Act that occurred at KPC's former pulp mill during
the late 1980s and early 1990s. These agreements were subsequently approved by
the U.S. District Court for the District of Alaska. Although KPC sold the mill
site and related facilities in 1999, it remains obligated under these agreements
to undertake certain projects relating to the investigation and remediation of
Ward Cove, a body of water adjacent to the mill site. KPC is currently in the
process of finalizing a consent decree with the federal government to complete
cleanup activities at the mill site and Ward Cove. This consent decree is
expected to supersede the earlier agreements. Total costs for the investigation
and cleanup of Ward Cove are estimated to cost approximately $6.7 million (of
which approximately $2.0 million had been spent at June 30, 2000).
In connection with the clean-up of KPC's former log transfer
facilities, the United States Forest Service (the "USFS") has asserted that KPC
is obligated to adhere to more stringent clean-up standards than those imposed
by the Alaska Department of Environmental Conservation. The USFS has also
asserted that previously closed-out facilities may need to be re-evaluated. L-P
disputes the authority of the USFS to require KPC to adhere to the more
stringent standards, or to re-evaluate closed-out facilities. Adherence to the
more stringent standards and/or re-evaluation of closed-out facilities, if
ultimately required, could substantially increase the cost of the clean-up.
L-P is involved in a number of other environmental proceedings and
activities, and may be wholly or partially responsible for known or unknown
contamination existing at a number of other sites at which it has conducted
operations or disposed of wastes. Based on the information currently available,
management believes that any fines, penalties or other costs or losses resulting
from these matters will not have a material adverse effect on the financial
position, results of operations, cash flows or liquidity of L-P.
COLORADO CRIMINAL PROCEEDINGS
In June 1995, a federal grand jury returned an indictment in the U.S.
District Court for the District of Colorado against L-P in connection with
alleged environmental violations, as well as alleged fraud in connection with
the submission of unrepresentative OSB product samples to an industry product
certification agency, by L-P's Montrose (Olathe), Colorado OSB plant. Pursuant
to a guilty plea to certain criminal violations entered in May 1998, (i) L-P
paid penalties of $37 million (of which $12 million was paid in 1998 and the
balance was paid in the second quarter of 1999), and was sentenced to five years
of probation and (ii) all remaining charges against L-P were dismissed. The
terms of L-P's probation require, among other things, that L-P not violate any
federal, state or local law.
In December 1995, L-P received a notice of suspension from the EPA
stating that, because of the criminal proceedings pending against L-P in
Colorado, the Montrose facility would be prohibited from purchasing timber
directly from the USFS. In April 1998, L-P signed a Settlement and Compliance
Agreement with the EPA. This agreement formally lifted the 1995 suspension
imposed on the Montrose facility. The agreement has a term of five years and
obligates L-P to (i) develop and implement certain corporate policies and
programs, including a policy of cooperation with the EPA, an employee disclosure
program and a policy of nonretaliation against employees, (ii) conduct its
business to the best of its ability in accordance with federal laws and
regulations and local and state environmental laws, (iii) report significant
violations of law to the EPA, and (iv) conduct at least two audits of its
compliance with the agreement.
13
OSB SIDING MATTERS
In 1994 and 1995, L-P was named as a defendant in numerous class action
and nonclass action proceedings brought on behalf of various persons or
purported classes of persons (including nationwide classes in the United States
and Canada) who own or purchased or used OSB siding manufactured by L-P. In
general, the plaintiffs in these actions alleged unfair business practices,
breach of warranty, misrepresentation, conspiracy to defraud and other theories
related to alleged defects, deterioration or failure of OSB siding products.
In June 1996, the U.S. District Court for the District of Oregon
approved a settlement between L-P and a nationwide class composed of all persons
who own, have owned, or acquire property on which L-P's OSB siding was installed
prior to January 1, 1996, excluding persons who timely opted out of the
settlement and persons who are members of the settlement class in the Florida
litigation described below. Under the settlement agreement, an eligible claimant
whose claim is filed prior to January 1, 2003 (or earlier in certain cases) and
is approved by an independent claims administrator is entitled to receive from
the settlement fund established under the agreement a payment equal to the
replacement cost (determined by a third-party construction cost estimator and
currently estimated to be in the range of $2.20 to $6.40 per square foot
depending on the type of product and geographic location) of damaged siding,
reduced by a specific adjustment (of up to 65%) based on the age of the siding.
Class members who previously submitted or resolved claims under any other
warranty or claims program of L-P may be entitled to receive the difference
between the amount payable under the settlement agreement and the amount
previously paid. The extent of damage to OSB siding at each claimant's property
is determined by an independent adjuster in accordance with a specified
protocol. Settlement payments are not subject to adjustment for improper
maintenance or installation.
A claimant who is dissatisfied with the amount to be paid under the
settlement may elect to pursue claims against L-P in a binding arbitration
seeking compensatory damages without regard to the amount of payment calculated
under the settlement protocol. A claimant who elects to pursue an arbitration
claim must prove his entitlement to damages under any available legal theory,
and L-P may assert any available defense, including defenses that otherwise had
been waived under the settlement agreement.
The settlement requires L-P to contribute $275 million to the
settlement fund. Approximately $272 million of that obligation had been
satisfied at June 30, 2000 through cash payments of approximately $261 million
on a discounted basis. L-P's remaining mandatory contributions to the settlement
fund are due in June 2001 (approximately $2 million) and June 2002
(approximately $2 million). In addition to its mandatory contributions, at June
30, 2000, L-P had paid, on a discounted basis, approximately $97 million of its
two $50 million funding options, at a cost to L-P of approximately $66 million.
L-P was entitled to pay its mandatory and optional contributions to the
settlement fund on a discounted basis as a result of early payments pursuant to
the early payment program.
In the second quarter of 2000, L-P paid approximately $112 million from
the second settlement fund in satisfaction of approximately $313 million in
claims. Claimants who accepted payment from the second settlement fund may not
file additional claims under the settlement. Claimants who elected not to
participate in the second settlement fund remain bound by the terms of the
original settlement.
At June 30, 2000, the estimated amount of approved but unpaid claims
under the settlement agreement exceeded the sum of the then-current balance of
the settlement fund and L-P's remaining mandatory contributions to the
settlement fund by approximately $79 million. Approximately 3,000 new claims
were filed during the second quarter of 2000.
Based upon the payments that L-P has made and committed to make, the
settlement will continue in effect until at least August 2003. Within 60 days
after June 7, 2003, the Claims Administrator shall notify L-P of the dollar
value of all remaining unfunded and approved claims. L-P shall then have 60 days
to notify the Claims Administrator whether L-P elects to fund all such remaining
claims. If L-P elects to fund those claims, then L-P will pay by the end of the
next 12-month period (2004) the greater of: (i) 50% of the aggregate sum of
those claims (with the remaining 50% to be paid by 12 months thereafter in
2005); or (ii) 100% of the aggregate sum of those claims, up to a maximum of $50
million (with all remaining claims paid 12 months thereafter in 2005). If L-P
elects not to
14
pay the unpaid claims pursuant to the settlement, the settlement will terminate
with respect to such unpaid claims and all unpaid claimants will be free to
pursue their individual remedies from and after the date of L-P's election.
If L-P makes all contributions to the original settlement fund required
under the settlement agreement, including all additional optional contributions
as specified above, class members will be deemed to have released L-P from all
claims for damaged OSB siding, except for claims arising under their existing
25-year limited warranty after termination of the settlement agreement. The
settlement agreement does not cover consequential damages resulting from damage
to OSB Inner-Seal siding or damage to utility grade OSB siding (sold without any
express warranty), either of which could create additional claims. In addition
to payments to the settlement fund, L-P was required to pay fees of class
counsel in the amount of $26.25 million, as well as expenses of administering
the settlement fund and inspecting properties for damage and certain other
costs.
A settlement of a related class action in Florida was approved by the
Circuit Court for Lake County, Florida, on October 4, 1995. Under the
settlement, L-P has established a claims procedure pursuant to which members of
the settlement class may report problems with L-P's OSB siding and have their
properties inspected by an independent adjuster, who will measure the amount of
damage and also determine the extent to which improper design, construction,
installation, finishing, painting, and maintenance may have contributed to any
damage. The maximum payment for damaged siding is $3.40 per square foot for lap
siding and $2.82 per square foot for panel siding, subject to reduction by up to
75 percent for damage resulting from improper design, construction,
installation, finishing, painting, or maintenance, and also subject to reduction
for age of siding more than three years old. L-P has agreed that the deduction
from the payment to a member of the Florida class will be not greater than the
deduction computed for a similar claimant under the national settlement
agreement described above. Class members will be entitled to make claims until
October 4, 2000.
ABT HARDBOARD SIDING MATTERS
ABT, ABTco, Inc., a wholly owned subsidiary of ABT ("ABTco" and,
together with ABT, the "ABT Entities"), Abitibi-Price Corporation ("Abitibi"), a
predecessor of ABT, and certain affiliates of Abitibi (the "Abitibi Affiliates"
and, together with Abitibi, the "Abitibi Entities") have been named as
defendants in a conditionally certified class action filed in the Circuit Court
of Choctaw County, Alabama, on December 21, 1995 and in six other putative class
action proceedings filed in the following courts on the following dates: the
Court of Common Pleas of Allegheny County, Pennsylvania on August 8, 1995; the
Superior Court of Forsyth County, North Carolina on December 27, 1996; the
Superior Court of Onslow County, North Carolina on January 21, 1997; the Court
of Common Pleas of Berkeley County, South Carolina on September 25, 1997; the
Circuit Court of Bay County, Florida on March 11, 1998; and the Superior Court
of Dekalb County, Georgia on September 25, 1998. ABT and Abitibi have also been
named as defendants in a putative class action proceeding filed in the Circuit
Court of Jasper County, Texas on October 5, 1999. These actions were brought on
behalf of various persons or purported classes of persons (including nationwide
classes) who own or have purchased or installed hardboard siding manufactured or
sold by the defendants. In general, the plaintiffs in these actions have claimed
unfair business practices, breach of warranty, fraud, misrepresentation,
negligence, and other theories related to alleged defects, deterioration, or
other failure of such hardboard siding, and seek unspecified compensatory,
punitive, and other damages (including consequential damage to the structures on
which the siding was installed), attorneys' fees and other relief. In addition,
Abitibi has been named in certain other actions, which may result in liability
to ABT under the allocation agreement between ABT and Abitibi described below.
L-P, the ABT Entities and the Abitibi Entities have also been named as
defendants in a putative class action proceeding filed in the Circuit Court of
Jackson County, Missouri on April 22, 1999, and L-P, the ABT Entities and
Abitibi have been named as defendants in a putative class action proceeding
filed in the District Court of Johnson County, Kansas on July 14, 1999. These
actions were brought on behalf of purported classes of persons in Missouri and
Kansas, respectively, who own or have purchased hardboard siding manufactured by
the defendants. In general, the plaintiffs in these proceedings have claimed
breaches of warranty, fraud, misrepresentation, negligence, strict liability and
other theories related to alleged defects, deterioration or other failure of
such hardboard siding, and seek unspecified compensatory, punitive and other
damages (including consequential damage to the structures on which the siding
was installed), attorneys' fees and other relief.
15
On May 8, 2000, the Circuit Court of Choctaw County, Alabama, under the
caption FOSTER, ET AL. V. ABTCO, INC., ABT BUILDING PRODUCTS CORPORATION,
ABITIBI-PRICE, INC. AND ABITIBI-PRICE CORPORATION (No. CV95-151-M),
preliminarily approved a settlement agreement among the defendants and attorneys
representing a nationwide class composed of all persons who own or formerly
owned homes or, subject to limited exceptions, other buildings or structures on
which hardboard siding manufactured by the defendants was installed between May
15, 1975 and May 15, 2000, excluding persons who timely opt out of the
settlement and certain other persons. Subject to final court approval, the
settlement will, if fully implemented, result in resolution of all claims that
have been asserted by class members in the various proceedings described above.
Under the settlement agreement, class members who have previously made a
warranty claim or have already repaired or replaced their siding will have until
May 15, 2001 to file a claim; class members whose siding was installed between
May 15, 1975 and May 15, 1976 will have at least nine months following the date
on which the settlement becomes final and nonappealable to file their claims;
and all other class members will have twenty-five years after their siding was
installed to file a claim.
Under the settlement agreement, the defendants will be entitled to
elect to make an offer of settlement to an eligible claimant based on the
information set forth in the claim submitted by such claimant, and such claimant
will be entitled to accept or reject the offer. If an eligible claimant declines
the offer, or if no offer is made, such claimant will be entitled to a payment
based on an independent inspection. Such payments will be based on a specified
amount (ranging from $2.65 to $6.21, depending upon location) per square foot of
covered siding that has experienced specified types of damage, subject to
reduction based on the age of the damaged siding and any failure to paint the
damaged siding within stated intervals (except in the case of damaged siding
installed on mobile homes, as to which a uniform 50% reduction will apply in all
circumstances). If applicable, payments under the settlement will also be
subject to reduction to reflect any warranty payments or certain other payments
previously recovered by a claimant on account of the damaged siding. Under the
settlement agreement, L-P will be required to pay fees of class counsel in the
amount of $7 million, as well as expenses of administering the settlement and
certain other costs.
The settlement agreement is subject to final approval by the court
following a fairness hearing presently expected to be held in September of 2000.
Potential members of the settlement class may elect to opt out of the settlement
class by making a written request no later than July 31, 2000. The defendants
have the right to withdraw from the settlement if there are excessive elections
to opt out.
The foregoing description of the settlement agreement does not purport
to be complete, and is qualified in its entirety by reference to the full text
thereof, which is filed as Exhibit 10.1 to L-P's Quarterly Report on Form 10-Q
for the quarter ended March 31, 2000 and incorporated herein by reference.
ABT and Abitibi have agreed to an allocation of liability with respect
to claims relating to (1) siding sold by the ABT Entities after October 22, 1992
("ABT Board") and (2) siding sold by the Abitibi Entities on or before, or held
as finished goods inventory by the Abitibi Entities on, October 22, 1992
("Abitibi Board"). In general, ABT and Abitibi have agreed that all amounts paid
in settlement or judgment (other than any punitive damages assessed individually
against either the ABT Entities or the Abitibi Entities) following the
completion of any claims process resolving any class action claim (including
consolidated cases involving more than 125 homes owned by named plaintiffs)
shall be paid (a) 100% by ABT insofar as they relate to ABT Board, (b) 65% by
Abitibi and 35% by ABT insofar as they relate to Abitibi Board, and (c) 50% by
ABT and 50% by Abitibi insofar as they cannot be allocated to ABT Board or
Abitibi Board. In general, amounts paid in connection with class action claims
for joint local counsel and other joint expenses, and for plaintiffs' attorneys'
fees and expenses, are to be allocated in a similar manner, except that joint
costs of defending and disposing of class action claims incurred prior to the
final determination of what portion of claims relate to ABT Board and what
portion relate to Abitibi Board are to be paid 50% by ABT and 50% by Abitibi
(subject to adjustment in certain circumstances). ABT and Abitibi have also
agreed to certain allocations (generally on a 50/50 basis) of amounts paid for
settlements, judgments and associated fees and expenses in respect of non-class
action claims relating to Abitibi Board. ABT is solely responsible for such
amounts in respect of claims relating to ABT Board.
Based on the information currently available, management believes that
the resolution of the foregoing ABT hardboard siding matters will not have a
material adverse effect on the financial position, results of operations, cash
flows or liquidity of L-P.
16
FIBREFORM WOOD PRODUCTS, INC. PROCEEDINGS
L-P has been named as a defendant in an action filed by FibreForm Wood
Products, Inc. ("FibreForm") in the Superior Court of Los Angeles County,
California on July 13, 1999. The action was subsequently removed by L-P and the
other named defendants to the United States District Court for the Central
District of California. FibreForm has alleged, in connection with failed
negotiations between FibreForm and L-P regarding a possible joint venture, that
L-P and the other defendants engaged in a fraudulent scheme to gain control over
FibreForm's proprietary manufacturing processes under the guise of such
negotiations. FibreForm has alleged causes of action based on fraudulent
misrepresentation, negligent misrepresentation, misappropriation of trade
secrets, unfair competition, breach of contract and breach of a confidentiality
agreement by L-P and the other defendants. FibreForm seeks general, special and
consequential damages of at least $250 million, punitive damages, restitution,
injunctive and other relief and attorneys' fees. L-P filed a counterclaim
against FibreForm for failing to pay amounts due under a promissory note, as
well as for attorneys' fees related to L-P's effort to collect amounts due under
the note.
On June 7, 2000, the United States District Court for the Central
District of California (1) dismissed FibreForm's alleged causes of action based
on fraudulent misrepresentation, negligent misrepresentation and breach of
contract and (2) ordered FibreForm to pay L-P the amount due under the
promissory note, plus reasonable attorneys' fees and costs incurred by L-P in
attempting to collect under the promissory note. FibreForm has appealed the
Court's actions with respect to these matters. The parties have stipulated to
the dismissal with prejudice of FibreForm's other alleged causes of action in
order to expedite FibreForm's appeal.
L-P believes that FibreForm's allegations are without merit and intends
to continue to defend this action vigorously. Based upon the information
currently available, management believes that the resolution of this matter will
not have a material adverse effect on the financial position, results of
operations, cash flows or liquidity of L-P.
OTHER PROCEEDINGS
L-P and its subsidiaries are parties to other legal proceedings. Based
on the information currently available, management believes that the resolution
of such proceedings will not have a material adverse effect on the financial
position, results of operations, cash flows or liquidity of L-P.
CONTINGENCY RESERVES
For information regarding L-P's financial statement reserves for the
estimated costs of the environmental and legal matters referred to above, see
Note 8 of the Notes to financial statements included in Item 8, Financial
Statements and Supplementary Data, in L-P's annual report on Form 10-K for the
year ended December 31, 1999.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) EXHIBITS
3.1 Bylaws of L-P as amended June 26, 2000.
10.1 Louisiana-Pacific 2000 Employee Stock Purchase Plan
(incorporated by reference to Appendix A of L-P's definitive
proxy statement filed with the Securities and Exchange
Commission on March 20, 2000).
10.2 Louisiana-Pacific Corporation 2000 Non-Employee Director
Restricted Stock Plan.
10.3 Louisiana-Pacific Corporation 1992 Non-Employee Director
Stock Option Plan (restated as of May 1, 2000) and related
forms of option agreements.
10.4 Amendment to Credit Facility, dated as of March 9, 2000
between Louisiana Pacific Canada Ltd., as successor to
Louisiana Pacific Acquisition, Inc. and Bank of America, N.A.
27.1 Financial Data Schedule.
17
(b) REPORTS ON FORM 8-K
On April 6, 2000, L-P filed a Current Report on Form 8-K
reporting matters under Item 5 thereof.
18
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
LOUISIANA-PACIFIC CORPORATION
Date: August 1, 2000 By: /s/ Gary C. Wilkerson
----------------------------------
Gary C. Wilkerson
Vice President and General Counsel
Date: August 1, 2000 By: /s/ Curtis M. Stevens
----------------------------------
Curtis M. Stevens
Vice President, Chief Financial
Officer and Treasurer
(Principal Financial Officer)
19