UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2022

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

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 incorporation or organization)	(IRS Employer Identification No.)

1610 West End Avenue, Suite 200, Nashville, TN 37203

(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	☐
Emerging growth company	☐

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 ☐   No  ý

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 73,872,044 shares of common stock, $1 par value, outstanding as of August 8, 2022.

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.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (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 we file with, or furnish to, the Securities and Exchange Commission (SEC) may contain forward-looking statements. These statements are 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,” “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, which may be amplified by the invasion of Ukraine by Russia, the sanctions (including their duration), and other measures being imposed in response to this conflict, as well as any escalation or expansion of economic disruption or the conflict’s current scope:

•impacts from public health issues (including global pandemics, such as the ongoing COVID-19 pandemic) on the economy, demand for our products or our operations, including the actions and recommendations 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, including impacts from the ongoing COVID-19 pandemic;

•changes in the cost and availability of capital;

•changes in the level of home construction and repair and remodel 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 the supply of and demand for raw materials, including wood fiber and resins, used in manufacturing our products;

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

•changes in the cost and availability of transportation;

•impact of manufacturing our products internationally;

•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 shortages or 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, and compliance with, general and industry-specific laws and regulations, including environmental and health and safety laws and regulations, the U.S. Foreign Corrupt Practices Act and anti-bribery laws, laws related to our international business operations, and changes in building codes and standards;

•changes in tax laws and interpretations thereof;

•changes in circumstances giving rise to environmental liabilities or expenditures;

•warranty costs exceeding our warranty reserves;

•challenges to or exploitation of our intellectual property or other proprietary information by others in the industry;

2

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

•the resolution of existing and future product-related litigation, environmental proceedings and remediation efforts, and other legal or environmental proceedings or matters;

•the effect of covenants and events of default contained in our debt instruments;

•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;

•cybersecurity events affecting our information technology systems or those of our third-party providers and the related costs and impact of any disruption on our business; 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.

The forward-looking statements that we make or that are made by others on our behalf are based on our knowledge of our business and operating environment and assumptions that we believe to be or will believe to be reasonable when such forward-looking statements are or will be made. As a consequence of the factors described above, the other risks, uncertainties, and factors we disclose below and in the reports and other documents filed by us with the SEC, other risks not known to us at this time, changes in facts, assumptions not being realized or other circumstances, our actual results may differ materially from those discussed in or implied or contemplated by our forward-looking statements. Consequently, this cautionary statement qualifies all forward-looking statements we make or that are made on our behalf, including those made herein and incorporated by reference herein. We cannot assure that the results or developments expected or anticipated by us will be realized or, even if substantially realized, that those results or developments will result in the expected consequences for us or affect us, our business, our operations, or our operating results in the manner or to the extent we expect. We caution readers not to place undue reliance on such forward-looking statements, which speak only as of their dates. We undertake no obligation to revise or update any of the forward-looking statements to reflect subsequent events or circumstances except to the extent required by applicable law.

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.

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PART I - FINANCIAL INFORMATION

ITEM 1.FINANCIAL STATEMENTS

Condensed Consolidated Statements of Income

Dollar amounts in millions, except per share amounts

(Unaudited)

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Net sales	$	1,130	$	1,168	$	2,297	$	2,062
Cost of sales	(611)		(483)		(1,158)		(910)
Gross profit	518		684		1,139		1,152
Selling, general, and administrative expenses	(67)		(53)		(129)		(97)
Other operating credits and charges, net	11		3		10		3
Income from operations	462		634		1,019		1,058
Interest expense	(3)		(4)		(6)		(9)
Investment income	2		—		3		1
Other non-operating items	2		(3)		(8)		(11)
Income before income taxes	463		629		1,007		1,040
Provision for income taxes	(116)		(144)		(240)		(239)
Equity in unconsolidated affiliate	1		1		2		2
Income from continuing operations	348		486		769		802
Income from discontinued operations, net of income taxes	37		11		99		14
Net income	$	385	$	497	$	868	$	817
Net loss attributed to noncontrolling interest	—		—		1		1
Net income attributed to LP	$	384	$	498	$	868	$	818
Net income attributed to LP per share of common stock:
Income per share continuing operations - basic	$	4.30	$	4.82	$	9.25	$	7.76
Income per share discontinued operations - basic	0.46		0.11		1.18		0.14
Net income per share - basic	$	4.76	$	4.93	$	10.43	$	7.90
Income per share continuing operations - diluted	$	4.28	$	4.79	$	9.19	$	7.71
Income per share discontinued operations - diluted	0.45		0.11		1.18		0.14
Net income per share - diluted	$	4.73	$	4.90	$	10.36	$	7.85
Average shares of common stock used to compute net income per share:
Basic	81		101		83		103
Diluted	81		102		84		104

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

4

Condensed Consolidated Statements of Comprehensive Income

Dollar amounts in millions

(Unaudited) 

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Net income	$	385	$	497	$	868	$	817
Other comprehensive income, net of tax
Foreign currency translation adjustments	(32)		7		(9)		—
Changes in defined benefit pension plans	1		1		2		2
Other comprehensive income (loss), net of tax	(31)		8		(7)		2
Comprehensive income	354		505		861		819
Comprehensive loss associated with noncontrolling interest	—		—		1		1
Comprehensive income attributed to LP	$	354	$	506	$	862	$	819

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

5

Condensed Consolidated Balance Sheets

Dollar amounts in millions

(Unaudited)

	June 30, 2022		December 31, 2021
ASSETS
Cash and cash equivalents	$	503	$	358
Receivables, net of allowance for doubtful accounts of $1 million as of June 30, 2022, and December 31, 2021	219		169
Inventories	309		278
Prepaid expenses and other current assets	28		17
Current assets held for sale	148		68
Total current assets	1,208		890
Timber and timberlands	40		42
Property, plant, and equipment, net	1,166		1,039
Operating lease assets	46		50
Goodwill and other intangible assets	37		39
Investments in and advances to affiliates	7		7
Restricted cash	13		13
Other assets	25		25
Deferred tax asset	4		2
Long-term assets held for sale	—		87
Total assets	$	2,547	$	2,194
LIABILITIES AND EQUITY
Accounts payable and accrued liabilities	$	315	$	305
Income tax payable	80		13
Current liabilities held for sale	69		34
Total current liabilities	464		351
Long-term debt	346		346
Deferred income taxes	114		86
Non-current operating lease liabilities	44		44
Contingency reserves, excluding current portion	26		24
Other long-term liabilities	64		63
Long-term liabilities held for sale	—		42
Total liabilities	1,059		955
Redeemable noncontrolling interest	3		4
Stockholders’ equity:
Common stock, $1 par value, 200,000,000 shares authorized; 93,546,332 and 77,241,859 shares issued and outstanding, respectively, as of June 30, 2022; and 102,415,883 and 85,636,154 shares issued and outstanding, respectively, as of December 31, 2021	94		102
Additional paid-in capital	457		458
Retained earnings	1,505		1,239
Treasury stock, 16,304,473 shares and 16,779,729 shares, at cost as of June 30, 2022, and December 31, 2021, respectively	(390)		(390)
Accumulated comprehensive loss	(181)		(174)
Total stockholders’ equity	1,484		1,235
Total liabilities and stockholders’ equity	$	2,547	$	2,194

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

6

Condensed Consolidated Statements of Cash Flows

Dollar amounts in millions

(Unaudited)

	Six Months Ended June 30,
	2022		2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	868	$	817
Adjustments to net income:
Depreciation and amortization	65		58
Gain on sale of joint ventures	(39)		—
Deferred taxes	27		7
Loss on early debt extinguishment	—		11
Other adjustments, net	12		10
Changes in assets and liabilities (net of acquisitions and divestitures):
Receivables	(66)		(124)
Prepaid expenses and other current assets	(11)		(6)
Inventories	(43)		(53)
Accounts payable and accrued liabilities	31		37
Income taxes payable, net of receivables	65		16
Net cash provided by operating activities	908		772
CASH FLOWS FROM INVESTING ACTIVITIES:
Property, plant, and equipment additions	(196)		(65)
Proceeds from business divestiture	59		—
Other investing activities	2		3
Net cash used in investing activities	(135)		(63)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowing of long-term debt	—		350
Repayment of long-term debt, including redemption premium	—		(359)
Payment of cash dividends	(37)		(33)
Purchase of stock	(575)		(588)
Other financing activities	(15)		(12)
Net cash used in financing activities	(626)		(642)
EFFECT OF EXCHANGE RATE ON CASH, CASH EQUIVALENTS, AND RESTRICTED CASH	(2)		—
Net increase in cash, cash equivalents, and restricted cash	145		68
Cash, cash equivalents, and restricted cash at beginning of period	371		535
Cash, cash equivalents, and restricted cash at end of period	$	516	$	603
Supplemental cash flow information:
Cash paid for income taxes, net of cash received	$	171	$	221
Cash paid for interest, net of cash received	$	7	$	9
Unpaid capital expenditures	$	43	$	26

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

7

Condensed Consolidated Statements of Stockholders' Equity

Dollar and share amounts in millions, except per share amounts

(Unaudited)

	Common Stock			Treasury Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Comprehensive Loss		Total Stockholders' Equity
	Shares	Amount		Shares	Amount
Balance, December 31, 2021	102	$	102	17	$	(390)	$	458	$	1,239	$	(174)	$	1,235
Net income attributed to LP	—	—		—	—		—		484		—		484
Dividends paid ($0.22 per share)	—	—		—	—		—		(19)		—		(19)
Issuance of shares under stock plans	—	—		(1)	14		(14)		—		—		—
Taxes paid related to net settlement of stock-based awards	—	—		—	(15)		—		—		—		(15)
Purchase of stock	(2)	(2)		—	—		—		(102)		—		(104)
Compensation expense associated with stock-based compensation	—	—		—	—		7		—		—		7
Other comprehensive income	—	—		—	—		—		—		24		24
Balance, March 31, 2022	101	$	101	16	$	(391)	$	451	$	1,601	$	(149)	$	1,613
Net income attributed to LP	—	—		—	—		—		384		—		384
Dividends paid ($0.22 per share)	—	—		—	—		—		(18)		—		(18)
Issuance of shares under stock plans	—	—		—	2		—		—		—		2
Taxes paid related to net settlement of stock-based awards	—	—		—	(1)		—		—		—		(1)
Purchase of stock	(7)	(7)		—	—		—		(463)		—		(471)
Compensation expense associated with stock-based compensation	—	—		—	—		7		—		—		7
Other comprehensive loss	—	—		—	—		—		—		(31)		(31)
Balance, June 30, 2022	94	$	94	16	$	(390)	$	457	$	1,505	$	(181)	$	1,484

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

8

	Common Stock			Treasury Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Comprehensive Loss		Total Stockholders' Equity
	Shares	Amount		Shares	Amount
Balance, December 31, 2020	124	$	124	17	$	(397)	$	452	$	1,206	$	(151)	$	1,234
Net income attributed to LP	—	—		—	—		—		320		—		320
Dividends paid ($0.16 per share)	—	—		—	—		—		(17)		—		(17)
Issuance of shares under stock plans	—	—		—	11		(11)		—		—		—
Taxes paid related to net settlement of stock-based awards	—	—		—	(6)		—		—		—		(6)
Purchase of stock	(2)	(2)		—	—		—		(120)		—		(122)
Compensation expense associated with stock-based compensation	—	—		—	—		1		—		—		1
Other comprehensive loss	—	—		—	—		—		—		(6)		(6)
Balance, March 31, 2021	121	$	121	17	$	(393)	$	443	$	1,390	$	(157)	$	1,404
Net income attributed to LP	—	—		—	—		—		498		—		498
Dividends paid ($0.16 per share)	—	—		—	—		—		(16)		—		(16)
Issuance of shares under stock plans	—	—		—	2		(1)		—		—		1
Purchase of stock	(7)	(7)		—	—		—		(458)		—		(465)
Compensation expense associated with stock-based compensation	—	—		—	—		4		—		—		4
Other comprehensive income	—	—		—	—		—		—		8		8
Balance, June 30, 2021	114	$	114	17	$	(390)	$	446	$	1,413	$	(149)	$	1,433

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

9

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 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 that meet the demands of builders, remodelers, and homeowners worldwide. Serving the new home construction, repair and remodeling, and outdoor structures markets, we have leveraged our expertise to become an industry leader known for innovation, quality, and reliability. The Company operates 22 plants in our continuing operations across the U.S., Canada, Chile, and Brazil through foreign subsidiaries, and it operates facilities through 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.

In June 2022, LP and one of its wholly-owned subsidiaries entered into an asset purchase agreement with Pacific Woodtech Corporation, a Washington corporation, and Pacific Woodtech Canada Holdings Limited, a British Columbia limited company (collectively, the Purchaser). Pursuant to the terms and conditions of the asset purchase agreement, LP agreed to sell to the Purchaser the assets related to its Engineered Wood Products (EWP) segment in exchange for the Purchaser’s payment to the Company of $210 million in cash, subject to certain purchase price adjustments, and the Purchaser’s assumption of certain liabilities of the EWP segment. On August 1, 2022, the Company completed the sale of the EWP assets to the Purchaser. Upon closing, the Company entered into a transition services agreement with the Purchaser, pursuant to which the Company agreed to support the various activities of the EWP segment for a period not to exceed eight months.

As of June 30, 2022, we have classified the related assets and liabilities associated with the EWP segment as held for sale in our Condensed Consolidated Balance Sheets. The results of our EWP segment have been presented as discontinued operations in our Condensed Consolidated Statements of Income for all periods presented. See Note 7 –Discontinued Operations for additional information.

Basis for Presentation

The accompanying unaudited Condensed Consolidated Financial Statements have been prepared in accordance with generally accepted accounting principles in the United States (U.S. GAAP) for interim financial information. Accordingly, they do not include all the information and footnotes required by U.S. GAAP for complete consolidated financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included and are of a normal and recurring nature. These Condensed Consolidated Financial Statements and related Notes should be read in conjunction with our annual report on Form 10-K for the fiscal year ended December 31, 2021, filed with the SEC on February 22, 2022 (2021 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.

NOTE 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.

As noted in the segment reporting information in Note 17 below, our reportable segments are Siding, Oriented Strand Board (OSB), and South America (dollar amounts in millions).

10

Three Months Ended June 30, 2022
By product type and family:	Siding		OSB		South America		Other		Inter-segment		Total
Value-add
Siding Solutions	$	356	$	—	$	6	$	—	$	—	$	362
OSB - Structural Solutions	—		384		64		—		(1)		448
	356		384		70		—		(1)		810
Commodity
OSB - commodity	—		287		—		—		—		287
Other
Other products	1		2		—		30		—		33
	$	358	$	673	$	70	$	30	$	(1)	$	1,130

Three Months Ended June 30, 2021
By product type and family:	Siding		OSB		South America		Other		Inter-segment		Total
Value-add
Siding Solutions	$	288	$	—	$	10	$	—	$	—	$	298
OSB - Structural Solutions	—		350		63		—		—		414
	288		350		74		—		—		712
Commodity
OSB - commodity	—		425		—		—		—		425
Other
Other products	3		2		—		26		—		31
	$	291	$	778	$	74	$	26	$	—	$	1,168

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Six Months Ended June 30, 2022
By product type and family:	Siding		OSB		South America		Other		Inter-segment		Total
Value-add
Siding Solutions	$	686	$	—	$	12	$	—	$	—	$	698
OSB - Structural Solutions	—		791		123		—		(2)		913
	686		791		135		—		(2)		1,611
Commodity
OSB - commodity	—		621		—		—		—		621
Other
Other products	3		5		2		55		—		66
	$	689	$	1,417	$	137	$	55	$	(2)	$	2,297

Six Months Ended June 30, 2021
By product type and family:	Siding		OSB		South America		Other		Inter-segment		Total
Value-add
Siding Solutions	$	570	$	—	$	20	$	—	$	—	$	589
OSB - Structural Solutions	—		605		104		—		—		709
	570		605		124		—		—		1,298
Commodity
OSB - commodity	—		707		—		—		—		707
Other
Other products	6		5		3		43		(1)		57
	$	576	$	1,317	$	126	$	43	$	(1)	$	2,062

Revenue is recognized when obligations under the terms of a contract (i.e., purchase orders) with our customers are satisfied; generally, this occurs with the transfer of control of our products at a point in time. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods. The shipping cost incurred by us to deliver products to our customers 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.

Our businesses routinely incur customer program costs to obtain favorable product placement, promote sales of products, and 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 from 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 for these consignment transactions. We do not offer a right of return for products shipped to the retailers’ stores from the distribution centers.

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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.

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

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Income from continuing operations	$	348	$	486	$	769	$	802
Net loss attributed to noncontrolling interest	—		—		1		1
Income from continuing operations attributed to LP	348		486		770		803
Income for discontinued operations, net of income taxes	37		11		99		14
Net income attributed to LP	$	384	$	498	$	868	$	818
Weighted average common shares outstanding - basic	81		101		83		103
Dilutive effect of employee stock plans	—		1		1		1
Shares used for diluted earnings per share	81		102		84		104
Net income attributed to LP per share - basic:
Continuing operations	$	4.30	$	4.82	$	9.25	$	7.76
Discontinued operations	0.46		0.11		1.18		0.14
Net income attributed to LP per share - basic	$	4.76	$	4.93	$	10.43	$	7.90
Net income attributed to LP per share – diluted:
Continuing operations	$	4.28	$	4.79	$	9.19	$	7.71
Discontinued operations	0.45		0.11		1.18		0.14
Net income attributed to LP per share - diluted	$	4.73	$	4.90	$	10.36	$	7.85

NOTE 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.

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.

13

The fair value of the 3.625% Senior Notes due in 2029 (2029 Senior Notes) was estimated to be $279 million and $358 million as of June 30, 2022, and December 31, 2021, respectively, based on market quotations. The 2029 Senior Notes and other long-term debt are categorized as Level 1 in the U.S. GAAP fair value hierarchy. Fair values are 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 (defined below) as of June 30, 2022.

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

NOTE 5. RECEIVABLES

Receivables consisted of the following (dollar amounts in millions):

	June 30, 2022		December 31, 2021
Trade receivables	$	199	$	156
Income tax receivable	4		1
Other receivables	18		13
Allowance for doubtful accounts	(1)		(1)
Total	$	219	$	169

Trade receivables are primarily generated by sales of our products to our wholesale and retail customers. Other receivables as of June 30, 2022, and December 31, 2021, primarily consist of sales tax receivables, vendor rebates, and other miscellaneous receivables.

NOTE 6. INVENTORIES

Inventories are valued at the lower of cost or net realizable value. Inventory cost includes materials, labor, and operating overhead.