GEORGE STAPHOS, ANALYST, BANC OF AMERICA SECURITIES: --specific to our conference. CEO Rick Frost and Chief Financial Officer Curt Stevens. Before we begin, as you know by now we're required to make a number of conflict of interest and related disclosures in participation with the companies that are participating at this conference and the things that we may discuss. If you'd like to see these important disclosures they're at the back of the room. They're also available on the Web.

Kicking off for the company is Rick Frost, CEO. Having joined LP -- joining LP since 1996 and Rick has been in the industry for over 31 years at a variety of companies. Curt joined the company in 1997 and has been the CFO from that point. So, without further ado, Rick, please take it away. Thanks.

RICK FROST, CEO, LOUISIANA-PACIFIC CORPORATION: Thank you. I brought more slides that I have time, so I'm going to go through my slides relatively quickly with your permission and hopefully leave time for questions. Our slides don't change that much from quarter to quarter. I'll have to look at these as they come up and see what Curt slipped in on me -- in there for me today.

But thank you for your interest in LP. We did have the opportunity this morning and part of the day to have one on ones or actually it was about two on fives all day since 7:30 this morning. And for those of you that came back for your second dose I either complemented or feel that I confused you. So, anyway, it's good to see you and for the faces I don't know, hopefully I'll get to know who you are.

Just some forward looking and precautionary statements. I'll be talking about my opinion of the industry; things that we intend to do which may or may not happen and be careful with that because you can't guarantee that any of the future is going to come out before we live it.

As those of you that don't know or aren't familiar with LP building products, we are one of the leading building products companies in North America, selling into primarily the new residential housing construction market, but also into retail and the do-it-yourself market and also some participation in light commercial and light industrial. In the short term, this is discussed ad nauseam all the time, what's going to happen in the short term. Well, we don't see an immediate recovery. I think our belief is that housing starts, as I said on the call two days ago, probably will be at $1 million or slightly lower this year. My personal belief is next year will be somewhere around $1.1 million to $1.2 million and then as you get farther out in the future, I think the consensus of the future is about perhaps $1.3 million to $1.4 million. Some projections for $1.5 million to $1.55 million. So, we'll have to see how that unfolds.

Longer term we do believe that we are in a good industry. If you look at the long-term demand for housing, the underpinning demographics that support the demand for housing. Our sense is that it should support new housing starts somewhere in the neighborhood of $1.8 million to $1.85 million. This is a basic study that was done by the Harvard Joint Center for Housing Studies and the Brookings Institute and their forecast for the next 20 years.

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Repair and remodeling has been relatively flat. We've all seen the news that Depot is pulling back a little bit. They're actually shutting down 15 stores and slowing down their construction comps from your to your and repair and remodeling are lower than they have been in quite some time. So, the big boxes appear to be slowing down in the economic environment that we're in. And, of course, we'll have to see what happens in the mortgage environment and the availability of credit for people that want to finance homes or take second mortgages on homes.

It does appear that finally although remaining very strong through kind of the first half of this downturn '06 and '07 light commercial and light industrial are starting to slow down and your guess is as good as mine whether we're in a recession or going to have a recession. It kind of feels to me like we're in one, but we'll have to see how that plays out because obviously that's going to affect consumer sentiment and consumer's ability to save or spend their money going forward.

This is a new chart that we've prepared for you or actually an old chart that we tweaked to try to put things into longer-term perspective going back to about 1970, 1974. The dark line across that chart was at the beginning of each 10-year time frame was the projection for the underlying demand for housing. The vertical bars include both new residential housing and manufactured and multifamily and that's actually what happened in each year. And then the farthest to your right are the -- what's actually happened in the first part of this decade based against the forecast. Again, done by Brookings and by Harvard.

And with a consensus of all the forecasts that have come in most recently in terms of what happens over the next five or six years. So, you know, you take this and you look at it and the thing that feels most like to me is 1981, '82. I'm probably one of the people in the room old enough to remember that. I wasn't in the corner office then, but I do remember that two to three years was very tough. We're in this about two year and we haven't yet called a turn. I hope one of you will soon.

And then the big question is how fast does the recovery come back? If you look historically, recoveries have been relatively fast, but history gives you some insights, but doesn't necessarily repeat itself because we have new things in play right now. Anyway, that gives you an indication. Our belief is that we overbuild somewhere around 800,000 homes during the good times and that has to be absorbed. Then we have to fight our way through the mortgage crisis or whatever you want to call it. And then consumer sentiment has to change where people feel like, number one, they're not going to lose their job. Number two, that the house that they want to buy isn't going to be $10,000 cheaper next month. And they have to feel that interest rates may turn and become more expensive and therefore the time to act is now.

These are the most recent set of forecasts. Some people were bold and went out five years. Others just took a guess at what we think this year is going to be and what next year is going to be. Hopefully, you can read the small print of the authors of those forecasts there. There is pretty good congruency in the people that took a longer term look at it. Some of them are a little lower, but it start somewhere around that between 1.35 and 1.55 level by 2010.

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This slide is our market channel strategy. It's how we go to market. We basically go to market in two areas. We go through distribution and we go through retell. If you look at the bottom, what we do in retail is we fill the retail chain either going through LP reloads or our customer's staging points and then what we try to do is we try to help them sell out of the box. So, we contribute in marketing. We take [aisle captain C] in the areas where our products are sold and we've had pretty good luck in retail. Actually, retail was up for us last year even in this environment.

The way we go to market and the largest way that we go to market in terms of most of our products is through distribution. We sell to distributors and we sell to pro dealers. We also are putting attention in to taking with our sales force, our boots on the ground. We're going directly to the home builders; big home builders and smaller regional and local home builders and trying to introduce them, make the sale to them not on a pricing standpoint, but an introduction of LP products. Then through the distributor and the pro dealer we'll go to the large home builders together.

To the smaller home builders, what we're trying to do is change distribution behavior. We go introduce the product to them and then we have them go back into distribution and ask for our product to be carried by that distributor. The other thing that's relatively new here, I think it was on the last time I showed this chart about four or five months ago, is we are putting some time over here on the right in what we call influencing. We're working on the influencers. And we've added some resources to our Corporation to pay special attention to the code specifiers, to the people that actually make decisions for buying the product with large builders or in municipalities or in neighborhoods and getting them exposed to our products so that they can be built in to specifications. And we think that the time to do that is good right now because those people aren't nearly as busy. They don't have much to do, so they have more time to listen.

These are our product categories in terms of how we report. Of course, OSB commodity business. We have a big TechShield program. We have a flooring -- sub flooring line and then we sell Web stock and Rim Board. Engineered wood products, laminated veneer lumber, I-Joist and now most recently laminated strand lumber. Our siding business is basically composed of two technologies. One is an OSB technology. We call that Smart Side and then we had what we called a hard board business and now we refer to that as a fine fiber technology because we've also branded that Smart Side as well. With the addition of zinc borate into that product which gives it greater durability and has allowed us to improve the warranty on that product.

And then in our other category we have a single mill quite profitable molding business which sells basically into retail. We have our Chilean, South American operation, which now consists of two mills and hopefully if Curt gets his job done in the next week or so we will have bought a 75% interest in the Masisa OSB mill in Brazil with the intention to own 100% of that by 2011. We also are a 50% joint owner of U.S. GreenFiber, which is the largest cellulosic installation company in North America and that is about the way that we report.

The way that we present ourselves to the industry and this is a bit of a change. As we looked at our customers and did our marketing research, the people that we sell to think of building products in three ways. They think of it in terms of roofs. They think of it in terms of floors. And they think of it in terms of walls. So, this is the way that we present ourself at product shows and now in the marketplace with distribution and the customers.

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This is our geographic footprint. Good distribution across North America from east to west or west to east, which in times of increasing freight rates is an important thing to have a good footprint across the country.

OSB - we think that we have about 24% of the OSB market or about 14% to 15% of the entire structural panel market. We have a very broad commodity business and are building as fast as we can what we call value-added products in OSB. And we think that we have a great -- as I said, a geographic footprint which allows us to have a good delivered cost, which is actually your most important thing in terms of your margin.

Large capacity. We have 12 mills. Right now we have about 5.2 billion square feet and then we are 50% owner in Peace Valley, which is a joint venture mill in British Columbia which adds another -- we have the sales and marketing rights for that. We put that in the marketplace. That's another 800 million feet. And then we've most recently started up a brand new OSB mill down in Alabama which will, when it gets going, have about 700 million feet of capacity.

This is the way we think the ownership or the share splits out in the market as of last year. Those are all the players. You can read those yourself.

And this is actually what's happened in the OSB business back since 1995. Again, coupled with RISI's projections looking forward in terms of the continued growth of OSB in North America. And what you see there is you see some inflection points where the gradual increasing slope of OSB penetrating further into the structural panel market has its greatest point of slope or its highest slope during times of adverse market conditions. The blue on the top is plywood. The orange on the bottom is OSB and from '08 on our RISI's projections in terms of continued penetration.

This breaks that down a little bit and helps you understand what assumptions that they're making for that continued penetration of OSB into the structural panel market. The chart on your upper left is what is today in terms of penetration by percent and the chart on your lower right is what RISI forecasts 2012 to look like. The greatest areas of continued growth will be further penetration in the new residential market, further penetration in nonresidential market and further penetration in the R&R market. So, those are the greatest areas of growth that they see going forward for continued penetration.

Engineered wood products is another one of our business segments. We're the number three player in the industry in terms of share. We're the largest solid sawn I-Joist producer. We have Laminated Strand Lumber mill just recently completed and we now are able to sell that product with a stamp to our customers. There's a lot of excitement around that new product. So, you can see the capacities in LVL, in I-Joist and now the potential of LSL going forward.

LSL is aimed at the solid sawn lumber market that we think is vulnerable to being replaced by engineered wood products. Before the construction of our mill and the introduction of our product, our warehouser, our truss joist had the only penetration in that market. So, we think that 70% of that 12 billion feet of solid sawn of lumber is in some way vulnerable to an engineered wood products. The advantage of LSL is that it uses a relatively low cost raw material and it makes a board that drags a premium price and so because of the cost basis it's a good substitution.

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The potential for LSL is if we can drive it into higher strength categories beyond what we have justified our expenditure up to this point then it becomes a revolutionary product because it becomes a product that you can make at a much cheaper price. It is actually a substitute for LVL.

Applications. LSL would be used over doors, beams and headers would be used for tall wall studs. Of course you see the LVL going across for long span widths. You see the I-Joist -- wooden I-Joist in the flooring systems. So, that's where we're aiming this product.

SmartSide, which is our siding business. We have four different product collections there. Basically, we have an OSB substrate siding, which is an engineered wood product and then we have recently figured out how to add zinc borate, which is a material which allows -- does not allow for fungal decay in the product and we've introduced that into our fine fiber line. We were able to enhance the warranty and so we're selling all of our siding product, except Canexel, which is a particular product that we make in Nova Scotia. We sell a lot of that in Canada and some of that in the continent in Europe. Large capacity. We're the only -- about the only major player in this space.

You can see that in siding altogether in terms of total dollars, engineered wood is a small segment, but we have about 75% of that space.

Other building products. South America. We built a mill back there and I think we finished it in about '91. We sold that mill out. We've completed the construction of our second mill. These were mills that used to reside in the continental United States. We shut them down and we packed them up and we've moved them down South and we are building a market down there, not for the product to be made down there and shipped up here, but for it to be consumed into the housing market down there. When we went to Chile about five years ago about 2% of the housing construction was done the way we build up here; stick build housing. Today, it's about 29%.

So, why are we investing in Brazil? Brazil is 10 times bigger than Chile. They've got about 220 million people in Brazil and so we think that if we can take the model that we've developed in Chile and actually start converting building practices in Brazil that South America is very fertile ground for us. We also have a sales office recently established in Lima, Peru.

The "what if" is just -- most of the OSB or structural panel is right now in the world consumed in North America, but most of the people in the world are elsewhere. And so there is a lot of opportunity, we think, internationally as one goes about that reasonably judiciously and prudently.

Looking ahead, I can't tell you that I can see a recovery this year. I can't tell you that I see a significant recovery next year. I think consensus is that things start to get a little bit better in '10. Very challenging for us or for anyone in building products right now on an earnings basis. We will have continued focus on our cost reductions and just hibernating certain programs that don't seem to make sense to be doing right now. We have to weather the storm and we believe that we will. We will be one of the people that comes out of this and our whole strategy has been and is and we're staying true to the mission to be able to take greater advantage on the rebound of the housing market and we have additional capacity in front of each business to be able to do that. And while we were in this period of tough times we're actually hitting the market very hard in what we call our "war for share" and going out and trying to sign up more home builders and more distributors to carry our product.

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Now, the immediate gain from that right now is reasonably small because activity is low, but when these people start their activity again they'll start with LP products in their houses. That said, I'd like to take the remaining 10 minutes and 40 seconds to answer your questions.

GEORGE STAPHOS: Thanks, Rick. Questions from the floor to start? Rick, maybe I'll tee it up. In terms of -- you mentioned the war for share and your expectation is -- I'm paraphrasing here, builders who are be paid attention to now by you will remember you -- remember LPX when we come out the other side. Is that what past experience shows say in the early '80's and in past down turns?

RICK FROST: Well, for us we don't have a lot of past experience. We now have more boots on the ground than we've ever had because one of my missions when I was able to become the leader of LP was I thought we were a pretty good manufacturer, but we weren't much of a sales and marketing organization. And so our war cry coming in, in '04, was we have to become more market centric. We have to become easier to do business with.

And that's all the feedback that I got coming into the job was LP is just too darn hard to do business with. If you want to buy more than one product, you've got to talk to 50 people. So, we needed to put one LP before the customer. We needed greater integration between the businesses to offer a family of products and create things like a flooring system where you sell your I-Joists, which is in one of our business segments, and you put your sub flooring made in the OSB business in another one and we didn't have that capability.

So, what we're doing now is we're going out and learning in terms of how do you get more LP product and exposure to the actual builder? He's making the decision. And so we had, actually, great success. Just one anecdotal piece. In the first quarter of this year, we went out and signed up over 400 either new builders or new distributors to carry one more product than what they're buying. Now, with the activity level being so low it's not enough to offset the recession that we're in, in terms of building products and new houses, but as their activity picks back up those people will build more houses and will have accepted that product into their building scheme. The value of going to the -- now what we're doing going to the smaller builder is in the building products industry there's a huge amount of what we call channel conflict where everybody that sells has a distributor and they want it exclusive and the distributor doesn't want to carry more than one or two product lines. And so sometimes you run into roadblocks with distribution and can't get your product in there.

It's amazing what happens and how receptive the distributor is when the builder who is a favored customer of the distributor comes in and says, "Look, I want LP products." So, what we don't do is we don't encroach on the pricing. We leave that to the channel, but what we do is we sell the builder on the product. And when they sign these up, these aren't all just future. These are the -- says, "I want this product." I'm going to start using this product now, but it's at a much lower level than it will be when housing rebounds. Did that answer your question?

GEORGE STAPHOS: Largely. I guess, ultimately the evidence will be in the -- again, when we come out of this. You obviously think you have the best product in the market, but at the end of the day these are all commodities so it will be interesting to see.

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RICK FROST: Well, OSB sheathing is a commodity. I would argue vigorously with you that value added OSB products like TechShield, products like sub flooring, product like Rim Board. Those aren't commodities. I would - siding is obviously not a commodity. The volume goes up and down, but if you look at the pricing it's very flat over time and the margin continues to get better.

Engineered wood is a confused product. At higher demand capacity ratios, engineered wood acts like a specialty product and it's because it's a very technical product usually supported by premium software. So, there's a huge investment that people make in the software when they design the houses. At very low demand capacity ratios, then it tends to take on the pricing aspects of a commodity and so that's been my observation over the last 11 years dealing with engineered wood.

GEORGE STAPHOS: Thanks, Rick. Next question.

UNIDENTIFIED AUDIENCE MEMBER: Rick, following up on your comment about international opportunities being attractive and also your comments about what happened in Chile when you went in there with OSB. I have seen in the last year several proposals for major OSB mills to be built in Russia. And if you ask, "Well, is there an OSB market in Russia?" The answer is no. If you ask the people who are making these proposals, "Do you know anything about how to make OSB?" The answer is no. So, I guess my question is would you envision looking at going into Russia with your OSB expertise?

RICK FROST: I'll be reasonably non-PC here, but no. Not now. I don't trust them. I don't think that the infrastructure is there. I have no confidence in investing in Russia right now. Obviously, what Russia's point of view is, is they put this 80% tax on any tree that's going to get exported out of there beginning in 2010. I think the tax is 20% this year, if I remember. So, what they're trying to do is say if you want my fiber, you've got to come build your plant in my country. There's other places that I'd rather go than Russia right now because I don't trust the stability and the sociopolitical environment at this point in time. So, if other people want to spend their money in Russia they can and power to them, but we have chosen our direction for right now, which is South America which we have more confidence in because we have experience there.

And if you think about it being positioned on both sides of the [common]. Now, we have the opportunity to export and Chile particularly has very favorable trade agreements with a lot of the countries that we don't here in the U.S. So, quite a bit of our product now from Chile is going to Korea and, of course, it's finding its way into China. So, that will be our first opportunity and than from Masisa we think there's an opportunity from that coast to go the other direction into the Mediterranean and into Africa.

GEORGE STAPHOS: Next question.

UNIDENTIFIED AUDIENCE MEMBER: Could you talk about your balance sheet and liquidity and how you plan to manage that over let's say the next six or eight quarters; opportunities one direction or another.

RICK FROST: I'll give you a shot and then I'll let my wizard on my left fill in anything that I forget to tell you. As we said on our call, we have -- we know pretty much what we're going to spend this year and some of that is finishing up the projects of our major capital expansion, the timing of which has not been exactly great, but we're going to have it when we need it. We are going to make two small acquisitions this year probably. We've already talked about the Masisa acquisition and hopefully Curt will get that done next week. We do have an opportunity for another JV that we think makes sense to add to our business. And then we're going to pull our horns on our capital.

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So, we're getting very conservative in terms of what we spend from this point forward until we can see an end of this. So, capital obviously is our biggest lever. It's been our biggest drain, but we don't look at capital as a drain. We look at it as investment in the future. But we're cutting that down to maintenance level until we can see the end of this. So, I think the guidance that we talked about on the call a couple days ago was this year we'd probably finish up spending about $200 million and then drop down to maintenance levels, which will be 40 or below, I would think, for the next two years or until this thing starts to turn around which give us more confidence that we don't need that conservative approach to our balance sheet.

One of the things that allows us to be on mission through this whole time to finish up the capital program that we've had was that we did save the money on purpose so that we could put some continuity to all this and get through it. My experience in this business is that you start and you stop. I was wondering if there's a way -- which is very inefficient. You have all your engineers for two years and then you fire them all and then you start all over. You take a year and a half to get started. And what we were trying to do is break the cycle.

We said can you make a strategic plan and implement it before the pricing of you major product, which is cyclical, goes to heck and then you throw all your plans out the window and you don't get any traction and you don't get any momentum. And what we've been able to do and some people think it's a good idea and some don't. The world is full of opinions and that's the great thing is you learn from everybody else's. We have actually been able, so far, to break the cycle, which is to complete what we started to do and still have the strength to weather this storm.

In light of a lot of Mickey's that are showing up that were not predicted. I mean we could all be standing here a year ago, and were, and no one would have ever said anything about a credit crisis and a banking crunch. We had plans that the down cycle, the next down cycle that when times were good we were all talking about, "Yeah, but it can't last. When is it going to go gunny bag?" Gunny bag was 1.5 million starts. We sat here a year ago and made a plan and said the worst case is 1.35. Today we're at 0.9.

Auction rate securities. It used to be called, what, cash and cash equivalents. Well, we found out the cash equivalents may not be cash equivalent in the short term. We had $150 million in that category which had to be moved from short-term thinking its liquid over to long-term. We don't think we're going to lose the value, but it changes what you've got to do.

So, we're moving now being glad that we were able to complete a reinvestment in ourself to put the growth plan in place for the next rebound, but moving now to a very conservative posture knowing that to stay on mission we have to have a strong balance sheet. When you run out of money, you have to do things that aren't necessarily good for long-term and so we don't plan on doing that.

UNIDENTIFIED AUDIENCE MEMBER: In the next recovery, do you expect that hidden capacity that you've put in, obviously its lower cost, that you're EBITDA per MSF will be that much higher or do you think the last peak was over accentuated because of the fact that we're overbuilding and you end up basically at the same [point]?

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RICK FROST: I don't want to question exactly, but I got to tell you. I don't expect to see $450 OSB prices again. That wasn't what any of our investment premises were made on. That was an aberration. It was the perfect storm. Remember how we used to describe it as the perfect storm where the industry had been through a down cycle. It had done what it had to do to match supply and demand and then the world just took off in June of 2003 and we chased demand for a long period of time, which drove things way over what cycle average would be. Does that answer you question? Curt, did I say anything wrong?

CURT STEVENS, SVP AND CFO, LOUISIANA-PACIFIC CORPORATION: No.

RICK FROST: By the way, I like the slides you made today.

GEORGE STAPHOS: We have time for one more question in the back if you can wait for the mic.

RICK FROST: I can't see you. The light is too strong.

UNIDENTIFIED AUDIENCE MEMBER: Certainly tough times out there as you mentioned. I guess, you look at some of your mid-tier, lower-tier competitors. There's some guys who are frankly kind of reaching the end of the road. Some of them have some pretty decent assets as well as a mix of some bad assets, I guess. How do you think about it? I guess, have you seen some of these guys in desperation coming to market needing to sell assets really just to make it over the next half year? Do you think about the potential to purchase assets? I guess if you do, what's the right timing and how do you think about financing them?

RICK FROST: Well, as I said, I got my horns pulled in a little bit on being too loose with the cash right now until I can see the end of this thing. The second consideration would be where is it? With the parity of the Canadian dollar with the U.S. dollar, I can't see continued investment under this scenario because it's too expensive to produce these products and then freight them to market. So, it would kind of depend where they come up, if they're good, if they fit in, if it's something that's better than something that we've got. Those might be considerations and, of course, as Curt always says, it's got to be the right price.

I'm not worried about buying somebody else's stuff right now. I've got to make a choice. If I'm going to be wrong, I want to be wrong on missing an opportunity versus getting a balance sheet that can't allow us to accomplish the mission that we set out four years ago to do. So, we'll look and if something is just compelling, like to us, Masisa in Brazil was compelling in terms of the opportunity, then there's ways you can get that done without just spending your cash. We'll have to see.

I don't try to speculate a lot on what the individual situation is. You guys can look at that probably almost better than we can. Obviously, the opportunity gets floated in front of us and we -- we looked at a lot of stuff over the last four years and really actually didn't buy a whole lot because we had tried to be very disciplined in terms of not getting caught up in the art of the deal and actually looking at what we thought it was going to be worth to us. That served us well. It was on purpose and it has allowed us to execute the internal growth that we've been after plus pick up some stuff.

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GEORGE STAPHOS: Rick, Curt, thank you very much.

RICK FROST: Thank you for inviting us.

GEORGE STAPHOS: Please join me in thanking LPX.

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