Good day ladies and gentlemen, and welcome to the fourth quarter 2007 Louisiana-Pacific Corp. earnings conference call. (Operator Instructions) I would now like to turn the call over to our host for today's call, Mr. Curt Stevens, Executive Vice President and Chief Financial Officer. Please proceed.

Thank you, and thank you all for joining us, for LP's earnings call to review our results for the fourth quarter and the full year 2007. With me today are Rick Frost, LP's Chief Executive Officer, Mike Kinney and Becky Barckley, who handle our Investor Relations, along with their other duties. I will start the call with a review of the financial results for the fourth quarter and the full year of 2007, provide a discussion about performance of each of our individual segments, and comment on the balance sheet. I'll then turn it over to Rick, who will discuss our accomplishments and other actions during 2007, and a summary of our thoughts and plans looking into 2008. As we have done in the past, this call is open to the public. We are doing a webcast. This can be accessed through www.lpcorp.com. Additionally, to help with the earnings call, we have provided a presentation with supplemental information. I will reference these slides as I go through my discussion. As a caution, this presentation should be reviewed in conjunction with the publicly available earnings release. Slide two of the presentation, I want to remind participants about the forward-looking statements comment that is included in our earnings release. Please be aware also that during the discussion we may use some non-GAAP financial information which is discussed on slide three of the presentation, and we also have attached an appendix that contains the necessary reconciliation. I'm not going to reread these statements, but I will incorporate with this reference. Now, looking at slide four, presentation of our Q4 2007 results. We are reporting today a net loss for the fourth quarter of $39 million or $0.37 per diluted share. Net sales from continuing operations were $377 million for the quarter. For the…

Well good morning everyone and thank you for your interest in our call, it is kind of a foggy, hazy morning here in Nashville, but remarkably its over 70 degrees outside, which is odd for the first of February. I’m going to take a quick look backwards at some of the positive things that happened in ’07 in an otherwise dismal financial year. I’ll start with safety. I’m proud to share with you that LP had its safest year ever in its history of operation, with a total incident rate of 0.87. During the year we were recognized as one of America's safest companies. We currently stand at number one in our industry and are keeping our people safe, and also proud to announce that our OSB business led all of our other businesses with a total incident rate of 0.83. I think what’s remarkable here is this was accomplished in spite of the very poor construction market and the resulting intermittent running of our plants, particularly in the second half of the year. 2007 was our first full year of company implementation of our Lean Six Sigma technology and application. Our Lean Six Sigma program last year engaged about 800 people in improvement projects during the course of the year with results that did exceed our expectations. We removed about 50 overhead positions through attrition last year and through redeployment and reorganization to continue to work on our competitiveness, and adjust to the market. Our sales force successfully introduced our products to approximately 400 new customers, either builders or people on the channel with a replacement of our products for competitors' products and the additional placing of additional products with current customers and that is in our effort to create a preference for LP products and doing business with…

Thank you Rick, ladies and gentlemen we are ready to take questions.

(Operator Instructions) And our first question will come from the line of George Staphos with Banc of America Securities please proceed.

Hi, everyone, this is Mike (Roxland) in for George since he’s traveling. Q4 was generally a period of de-stocking in the economy. Are there any indications that customers were increasingly willing to hold inventory of OSB and other LP products relative to let’s say 4Q in 2007 overall?

You were breaking up a little bit Mike I think your question was, were customers more willing to hold inventory in Q4 of ’07 than Q4 of ’06?

Yeah, any indications that customers were increasingly willing to hold inventory of OSB and other LP products relative to Q4? Exactly.

No, I don’t believe so. I think that what we saw in our Siding business in Q4 of 2006, customers did aggressively reduce their inventories so the takeaways were very low in Q4 of ’06. But until the market hits bottom and the builders see that there’s going to be an increase, we use the term, it’s not just in time inventory anymore, it’s almost late. And because of the demand capacity relationship in all of our product lines, they really don’t have much of an issue getting products. So, I would answer that, no I don’t believe they’re taking anymore inventory. I think the - as you’ll see the results come out from some of our distribution partners, you’ll note that they’re being hurt in this market environment as well.

With respect to corporate expense, corporate expense was around $19 million in 4Q. Is there any chance that that $19 million can trend lower in 2008 in light of continued difficult market conditions?

Well, as I said in my remarks we brought corporate – the unallocated corporate expenses down by 15% and for the overall SG&A was down 5%. Now, it's a mix because as Rick said we are investing in our sales and marketing efforts, but we’re reducing our head counts and our staff as much as we can in the non-marketing and sales related areas.

Okay, is there any – is the expectation, that corporate expense will trend lower, I guess is the head count reduction going to more than offset the increase in spending in sales and marketing efforts?

Well - Again what we don’t do, is we don’t provide forward-looking comments on our results but if you do look back again we’re 5% down on overall SG&A, we’re down 15% in the unallocated.

Got you. Just to reiterate with respect to the Action Rate Securities, you mentioned you had to reclassify based on a new SEC ruling?

It’s not a new ruling, it was an interpretation in guidance, so, yes, we responded to that by reclassifying those as long-term.

You’ve reclassified about 150 million from short-term to long-term that’s really why you had an increase in long-term investments?

That’s Correct. That was the reclassification.

Last question. Brazil, can you explain your reasons for the investment? Is there one takeaway that you feel comfortable with that, despite continued issues in North America OSB markets you won’t need the cash being deployed in Brazil in later periods? Is that one of your reasons for making the investment in Brazil?

That is correct. It makes a lot of sense to us and while we’re up here trading body blows in North America there is a large number of people in South America that have needs for housing. That was a reason for our initial venture down in Chile, which was a great pilot program for us. When we went to Chile, about 2% of the homes built in Chile were built the way that we build up here. Today that number is approaching 30% due to our efforts at training people down there to build the way we do up here which happens to be safer, of higher quality, it's faster and less expensive, and so we looked at Brazil, which is a country that has approximately 240 million people, a government that is reaching some sense of maturity and stability, and what you see there is when that happens in a country, one of the first social needs that would have to be addressed by a government are subsidized housing. So we are hopeful that we can go to Brazil, which is ten times larger than Chile in terms of potential opportunity, and have the same type of success. So, it made sense to us, when we came upon this opportunity, to invest in Brazil and try to be successful in the building products business in a market that is just emerging.

Thank you very much.

And our next question will come from the line of Gail Glazerman with UBS, please proceed.

Hi thank you. I appreciate the comment on the market outlook in 2008. I was wondering if you might give some color to your views beyond that, in terms of what would drive a recovery in OSB and if that’s something you can see happening in 2009. If there’s any sort of number that you keep in your mind. If there is any color that you can give?

Yeah, you broke up a little bit, but I think I heard what you said. Most of the pundits right now are saying that ‘10 is going to be a good year and so everybody is trying to figure out when, meaning sometime in ‘09, this thing should turn. RISI right now is the most optimistic of the forecasters and they actually have a substantial improvement scheduled for ‘09 and I think their forecast is up in the 1.6 level. I'm not quite that optimistic. I think that ‘08, I have some people that are currently in a meeting in Washington, DC right now and they're saying that the consensus of that group, if there is such a thing, is somewhere between 0.9 and 1.1 for 2008. We had originally put our plan together for a little bit over 1-1. I think the confusing factor right now and the major concern is whether indeed we go into recession, whether we are in recession already and don’t know it and what's the depth of that. So that’s the thing that makes you not too sure what 2008 is going to bring. But if I had to guess I think we’re probably at that one all level this year.

Let me think of something more current, are you surprised by how weak pricing has been at the start of the year relative to average costs in the industry?

I guess at this point it's hard to be surprised.

Ok, switching gears a little bit, can you talk a little bit more of the mix shift that you saw in siding, is that something you can expect to continue moving forward?

I’m not sure I understand the question, the shift in siding?

The mix, I think you were referencing a mix shift which impacted the price levels in siding?

Well, you have to put that in context. If we sell more trim for instance we get a higher sales price on trim than we do on our panel siding. It is really is a mix between new construction and what’s going into the home centers. You’ll see that 2-4% kind of change in sale price depending on who’s purchasing the product during the quarter. I don’t see that as - in siding we set our price and we go to the market with it and it doesn’t change very often. The last price increase we had was in August, we are with this new loss of the siding line that Rick talked about. We are repositioning some of those products in the market as we speak so we’ll see a little bit of movement in the various sales prices through that repositioning, but it shouldn’t be significant overall.

Ok, and finally just a last question. Are there any developments in the antitrust litigation or any kind of milestones that we should be looking out for?

In the….

The antitrust, the OSB antitrust.

The OSB antitrust?

I think someone was referencing some sort of trial coming up, I don’t know if that affects you.

Well, where we are involved in the litigation, we have submitted our motion for summary judgment and the other side has the chance to respond to that and we have a chance to respond to them. And then hopefully the judge will rule and make a decision. He has pushed back the trial to the end of the second quarter. That was originally scheduled for March or April. They have pushed that back which leads us to believe he will take a complete look at the submissions from the various parties and make his decision.

Ok thank you.

And our next question will come from the line of Mark Connelly with Credit Suisse. Please proceed. Unidentified Analyst – Credit Suisse: Good morning this is actually (Hamsada Amizari). Just a couple of questions. I'm curious to see what percentage of industry capacity do you think that needs to come off line today that needs to get the market back into balance and secondly, how important do you think diversification is in your OSB product mix in weathering this downturn. Do you think LP needs to shift the mix further away from commodity panel in the long-run or short-run?

Well let me take the second one. We think diversification of our OSB product line is very important and if you look at what we have done, we have converted four mills to our siding products, we have taken two North American mills and moved them to Chile and we have announced that we have another mill that has been curtailed and that we will be moving to South America as well to diversify at least from a regional perspective. In our OSB business, we are trying to get our mix up to a pretty significant part of the mix LP value added product, whether it's our Radiant Barrier TechShield product, its our value added flooring products, we’re making (Air Stop) we’re making rim boards that goes into OSB. We’re also working on some new products that will have application in the industrial markets. As far your first question on what's it going to take from an industry prospective? I think what we do is we manage our mills based on what demands we have from our customers. To get any broader prospective on that, you really need to talk to others in the industry or to your brother in the financial analyst community. Unidentified Analyst – Credit Suisse: Right, but just order of magnitude, in your opinion, do you think its 10%, 20%, 17%. Or are you not willing to make a comment on that?

I think that would be in our best interest not to comment on that. Unidentified Analyst – Credit Suisse: Ok, last question. Is there an opportunity to grow share in this downturn in Engineered Wood, relative to ordinary lumber, or do you think it gets tougher as markets get softer?

We have a strong effort to try to grow share across all of our value at it products ones. We started that effort in the December ’06 and we think we have grown share across each one of our product lines. We are keeping track of that in the ways that we can. Number one, by convergence of new customers to our product and the further penetration with existing customers. So we can keep track of that in terms of either new business or potential new business when the market comes back. The difficulty is, as I said once before, it’s a bit of a problem working on your boat to make it more buoyant while sitting on a (inaudible) flap. So, we’re having a major, how much our volume in dollars went down, compared to how much the overall market is down. With that as one of our litmus tests we have convinced ourselves that we have made progress in each one of our products lines in the terms of capturing share. As an example, new housing was down for the year somewhere between 20-25% and our Engineered Wood Product line was down 16%. Unidentified Analyst – Credit Suisse: Ok, thank you very much.

And our next question will come from the line of Peter Ruschmeier with Lehman Brothers. Please proceed. Peter Ruschmeier – Lehman Brothers: Thanks and good morning. Maybe a quick question if I could for Curt. I was hoping you could help us to reconcile the - if you look at your cash equivalents and your short investments the delta between 3Q and 4Q is down $257 million and I was trying to reconcile that against your cash burn which you were marginally negative in cash from ops, $115 million in CapEx, a little bit of buy back but I was trying to reconcile that large sequential decline?

The biggest piece of that Pete is the 150 that went from short-term to long-term on the ARS that I talked about. Peter Ruschmeier – Lehman Brothers: Okay.

If you look down to long-term investments from the end of last year, we had about $40 million on 12/31/06 and $203 million on 12/31/07. Peter Ruschmeier – Lehman Brothers: Okay, Alright. Good.

That is a switch. Peter Ruschmeier – Lehman Brothers: Okay. More of a fundamental question on OSB pricing. The price spreads we’re seeing today with plywood being very wide, I’m curious if you’re seeing evidence of share gains in your end markets. I’m not sure how you’d measure that. But if you look at your various end markets with these wider spreads, are you seeing the benefit of gaining share from plywood directly?

If you look at, RISI just had their new data that came out in January. And they do show a share gain in new home construction now. They show a share gain, but overall numbers are down. But if you think about it, new home construction as Rick said was down 28% to30%, somewhere in that range. If you look at the APA numbers, OSB consumption, or production was only down 11% for the year. So that would imply we’re gaining share. Remember the plywood guys benefited greatly by no imports of foreign plywood coming into the country. They had the benefit of essentially, curtailments based on that. There wasn’t as much plywood coming in from offshore. Peter Ruschmeier – Lehman Brothers: Is it fair that you, you’ve gained a significant share in that builder market and probably the most amount of low hanging fruit, I would think, would be in the do-it-yourself or other consumers who may not be as educated on OSB. I mean, are you attacking that market at all in terms of getting that share gain?

We are, and that’s why we started to talk about the new products that we’re trying to develop in that. If you think about plywood, the markets that have been strong have been industrial, light commercial, and that’s where they have a big, big market share. We are beginning to think about products that would fit that. As an example, we have recently developed a flooring product for the RE industry, and that’s directly going after plywood, that’s had that market. So we’re beginning to do that now. You know what’s happened in the past, these markets are kind of niche markets and they need new products, and a strong housing environment, that’s where the low-hanging fruit is for the OSB. In a weak housing environment you look for other alternatives. The other one is export. We exported a lot more products in 2007 and we’re hoping to export more in 2008. I would guess that’s the strategy all our competitors have as well. Peter Ruschmeier – Lehman Brothers: Okay. And where are the biggest export opportunities from your perspective in terms of geography?

I think it’s both east and west, although Europe slowed a little bit in Q4 but was strong over the summer. But there’s still demand going east, typically not for construction but for other structural panel uses like packaging and some other alternatives. Peter Ruschmeier – Lehman Brothers: Okay. Shifting gears if I could to Clarke County. I was curious if you could share your thoughts on the ramp-up. I think originally, it was going to be some time in fourth quarter, then late fourth quarter. Now it looks like March. And I would think that that’s going to be a very low cost facility, and I’m just curious, are there technical issues there, or why wouldn’t you look to ramp that as quickly as possible and potentially take higher cost facilities down?

What we have done is, as you said, it is a low cost facility once fully operating. The comment that I would leave with you is that a new facility is not a low cost facility in the first year it runs. It’s a higher cost facility, because you have the fixed costs associated with the people and the mill, and you’re not running at your full capacity or at you optimal operating levels. So we’re trying to take a reasonable approach to that. My guess is in 2007, we’ll run that. What we’ll actually produce in that mill will be less than 50% of its ultimate capacity. So that’s kind of a matching what demand is in the market and also bringing it up without spending a lot of overtime and other costs associated with the start-up. Peter Ruschmeier – Lehman Brothers: Okay, just lastly and I’ll turn it over. Any comment on your expectation in the OSB business of cost inflation per unit when you net the various cost increases; transportation costs, resins, against what you’re doing on Brownfield, in Clark County, any expectation for what that cost picture looks like?

You look by element. Oil, I’ve seen numbers anywhere from $77 to $105 a barrel. That will certainly affect resin. I did talk to our resin supplier, one of our major resin suppliers. I had dinner with him last night. They’re anticipating pretty flat resin pricing for the year. So I don’t think that’s going to be a huge increase, unless we do get a spike in the derivatives being oil and natural gas. If you look at the wood side, the pulp business is still pretty strong. I’d hoped for it to weaken. We’d have a little bit more ability to get some price relief. But it doesn’t look like that’s going to happen. On the Canadian currency, we’re budgeting parity. I know that the range is somewhere between $0.96 and a $1.02 depending on who you look at. But we’re going to budget at parity. That does put all Canadian operations at a disadvantage, all of our Canadian operations at a disadvantage. So on average it’ll be a little bit higher than it was in 07 but it’s not going to be significantly different. On the wage and benefits side, I think the industries are looking at somewhere in the 3% to 4% range for wages, and then health care, somewhere in the 5% to 8%. That goes your major input.

My add would be that the, as I look at this year, our biggest variable on costing is going to be taking the mills up and down. Based upon the market, how much we’re able to run, that will be our largest impact on costs this year is the inefficiencies created by starting and stopping. Peter Ruschmeier – Lehman Brothers: Okay. That’s very helpful. Thanks.

And our next question will come from the line of Chip Dillon with Citi. Please proceed.

Yes. Good morning.

Good morning Chip.

Hi. I’ve noticed there was a slight difference, not to be too picky, between the press release, that said, without unusual items you lost $0.29 and on the slide it says $0.28. Could you tell us what that Penny difference was, or why there is a Penny difference?

You know I suggest that you need to call Mike or Becky, because I couldn’t tell you what that it is. It’s probably rounding.

Okay. Alright. So I’ll do that. When we look at the, that 150 that you’re reclassifying. I think you’re referred to it, I think as an ARS. Was it ARS as in Sam of ARF, and what does that stand for?

It stands for Auction Rate Securities.

And who are primarily your - I mean these are obviously investments you’ve bought. Are these obligations of a sieve or obligations of a specific issue? Or could you tell us a little more about that please?

You know in the queue we did talk about what’s in there from, kind of, the instrument. Generally what these are is they hold individual securities, and they’re packaged. So the trustee has access to the individual securities that are underneath the package.

And you are getting interest paid?

We’re getting interest paid on time. None of them have been downgraded. You know S&P just downgraded 56% of their portfolio and none of them were holdings that we had.

Gotcha!

I think the important point is that a lot of these very exotic instruments that come under a lot of attack were issues in the '06 and '07 time frame. Virtually all of ours are 2004, 2005 that have been rolling.

And then when you look at your net interest expense in the – you mentioned you had $6 million capitalized in the fourth quarter. I think you said $19 million in capitalized interest for the year. What would that be in '08? I know it’s going to come way down. Would it be zero or a couple million?

I think you can count on a pretty low number. It’s going to be insignificant. Maybe $1 million to $2 million.

Okay. And then, and then as you look at your, you consider the illiquidity, I guess or less liquidity with the ARSs and, where cash flow as they are where they are right now, how important is the dividend on a scale of, in the scheme of things, in other words, when would you get kind of queasy about continuing to pay that?

We just had a board meeting last week and we assume that supporting the dividend is something that we want to do. And so I think until we get pressed to a position where we don’t think we can cover that along with everything else we got going on, I think paying the dividends to our shareholders is a good idea.

Okay. Thank you very much.

And our next question will come from the line of Christopher Chun of Deutsche Bank. Please proceed.

Yeah, thanks. Good morning. Just following up on the questions about the Alabama mill. I was just wondering if that mill will in fact cause your capacity to increase by the amount that it will run, or whether you’re planning to take down lower cost, or, higher cost capacity elsewhere.

Let me restate that perhaps in a shorter version that what Curt had. We’re going to bring that mill up this year and wring it out at about half speed. I anticipate making somewhere around 300 million feet down there. If you will remember we shut the Silsbee mill down last year. In my mind it was to make room for that wood and then I would anticipate, based upon what I understand the world to be right now, which is, we don’t know exactly how this is going to play out. But I would anticipate running that thing full board next year, because it will be a low cost facility by that time, and if it causes casualties within our own system because the market is not there for takeaways, then it may cause casualties.

And can you tell us a little bit about your philosophy in terms of the trade off between taking market downtime and just sort of shutting permanently or at least indefinitely idling specific mills.

Well we’re running our mills to meet our customer orders, and when we don’t have customer orders that we can see, then we don’t allow or we’re not going to allow our inventories to build. So I think the key to this year, as we’ve said inside our operations, is operational flexibility. It’s a very difficult year shaping up for our mills and their run schedules. And we’re going to force ourselves to be a flexible as possible and as nimble in going up and down based upon the business that we see coming at us, and our major concern in the up and down schedule is in holding on to the very valuable people that are skilled labor.

Right. But on the other hand you mentioned that there are certain cost inefficiencies of starting and stopping mills. So I was just wondering if you …

We sell our product regionally. So you have to look at your demand by where you’re sourcing your product to. And so it’s not as simple as just saying I’m going to take all my downtime in one place.

Okay, and then just a quick clarification question for Curt. Curt I thought you mentioned that the Canadian Dollar impact, was it $15 million?

$15 million.

Right. Was that just in OSB quarter-to-quarter, or for the whole company?

It was OSB. And you know we are targeting to sell more product in Canada. So that was a net on the sales side in Canada. And our other businesses, our siding business sells predominantly in Canada. So it’s not as big an issue for East River Mill, and then we did have an impact in our EWP business.

Okay. So that’s for the, so the 15 is just for the OSB or for the whole company?

Right.

I’m sorry. For the OSB or for the entire company?

The 15 is for OSB.

Okay. And about, and that’s 4Q '07 relative to 4Q '06?

No, that was for the full year, 2006 to 2007.

Okay. Can you give us an approximation of what the number would look like if we looked at the entire company?

You know it’s probably another million or $2 million in EWP. It’s not all that significant.

Okay. Thanks for your help guys.

And we have time for one last question and that question will come from the line of Bob Trout with Goldman Sachs. Please proceed. Robert Trout – Goldman Sachs: Good morning guys. On the operating rates for the quarter, would you be able to give us an approximation of what they were in OSB, fourth quarter?

You know what I’d refer you to Bob is RISI comes out with that and so does the APA. Robert Trout – Goldman Sachs: Okay.

I think the APA number was in the mid 70’s. Robert Trout – Goldman Sachs: Mid 70’s, and you think you pretty closely mirror that? And you think you’re pretty close to that you said?

Last quarter, we took, as I think I said was 455 days including the 2 mills that were down for the entire quarter, so that’s mill days down based upon our system. Robert Trout – Goldman Sachs: Okay, and I know it might be tough to answer, you don’t really give guidance on this but you expect that on average in 2008 operating rates will be kind of similar for the industry?

Well, that’s hard to guess at this point in time, I think that this quarter is starting off slower than what we experienced last year. We have a tentative plan, and again this is a flexibility issue, to have about 150 mill days down this year exclusive of numbers we’ve included in the past of St. Michel and Silsbee, as I answer questions about that going forward, I will not include Silsbee and St. Michel. So as it looks right now we anticipate probably, based upon the orders that we have about 150 days scheduled, of milled days down scheduled for OSB in Q1. Robert Trout – Goldman Sachs: Okay, and then just a clarification on the housing question, are you…

On what question, excuse me? Robert Trout – Goldman Sachs: On housing, are you still, I think you mentioned that your original plan for 2008 was that you were budgeting for around $1.1 million, is that still the case?

Well my budget’s done, now I’m reacting to the real world, and we’re not at that rate at this point. December looked like it was about 1.0, everything thrown in. January feels worse; I don’t have any numbers yet for January. I think one of the things that you could look at is permits. Permits continue to decline, which tells us this thing isn’t going to turn any time real soon. Robert Trout – Goldman Sachs: And then just in terms of what you’re hearing from your customers, I know you said that the RISI forecast, they think 2009 will be a good year at 1.6 million starts or something like that. What, are you hearing anything from your customers that suggests that that’s way too high?

Well, I don’t know that, RISI is the most optimistic if you put up all six or eight of the forecasts out there on a chart. There’s everything between 1.2 and 1.6 for next year. We do go to the builders show in about two weeks from today, or from tomorrow, is that next week? Next week, and we will have a much better indication of what the composite is from talking to all the people that show up there. I think people are looking about 1.0 right now, and everybody’s waiting to see if we have a recession or are in a recession. That’s the magic question right now. Robert Trout – Goldman Sachs: Right, last question on that topic. One of your competitors mentioned last week that in order to get back to a normalized price level for OSB, they think that we need to be in about a 1.5 million unit kind of housing start environment, do you agree with that?

I wouldn’t care to comment on what my competitors say, thank you. Robert Trout – Goldman Sachs: Okay.

That concludes our question and answer session. I would now like to turn the call back over to Mr. Curt Stevens for a closing remark.

Well thank you all for attending, thank you for your questions, I know that we didn’t satisfy all the questions, and Mike and Becky are available and so they're ready to answer questions and give you a little more color on the results. Again thank you for your participation.