Welcome to the fourth quarter 2009 Louisiana-Pacific Corp. earnings conference call. (Operator Instructions) I would now like to turn the conference over to your host for today, Mr. Curt Stevens, Executive Vice President of Administration and Chief Financial Officer. Please proceed, Sir.

Thank you and thank all of you for joining us on this conference call to discuss LP’s financial results for Q4 and full year 2009. Usually I let Rick give the weather report and I will let him do that for Nashville but we appreciate those who are participating even though the East Coast has the snow problems. As the operator said I am Curt Stevens the CFO. With me is Rick Frost, LP’s CEO as well as Mike Kinney and Becky Barckley, who are our primary investor relation contacts. As we usually do I will begin the discussion with a review of the financial results for both the fourth quarter and the full year. Then I will follow that with comments on the performance of our individual segments and then some selected balance sheet discussion items. Rick will then take over to discuss the general market environment in which we have been operating, give some perspective on our most recent results and some thoughts on the outlook for 2010. As we have done in the past, this call is open to the public and we are doing a webcast. It can be accessed at www.lpcorp.com. Additionally, to help with the discussion we have provided a presentation of the supplemental information that should be reviewed in conjunction with the earnings release. I will reference these slides in my comments. Additionally, we filed an 8-K this morning with some supplemental information, and as you know our form 10-K will be filed around the first of March. I want to remind the participants about the forward-looking statement comment that is included on slide 2 of the presentation. As we all know, for the last three years it was very difficult to forecast the housing environment so our comments need to be taken…

Good morning everyone. It is cold and cloudy. We had flurries early this morning but nothing like what is happening on the East Coast. I want to welcome all of you to our end of the year earnings call. My prepared remarks this morning I am going to spend some time wrapping up and reflecting on 2009, make a few comments relative to Q4 2009 and Q4 2008 and then share with you some observations and perspectives on how I think 2010 will unfold. Let me start by giving you my cut on 2009. I would be less than honest with you if I didn’t admit up front that I am very happy to put 2009 in the books end behind us. It was the most chaotic year I have experienced in my 33 years in the industry and it was a very, very difficult year in which nothing came easy. Going into 2009 we knew that we had a couple of very important things to accomplish in addition to the normal pleasing of customers and the manufacturing and selling of building products. We knew we had to shore up the balance sheet and preserve, conserve and generate cash. As Curt said we began 2009 with about $215 million in total cash of which about $126 million was available cash. That situation coupled with the unprecedented low level of business in building products, the predicted losses we were anticipating and the debt maturity that was coming at us in August of 2010 I think influenced our stock price all the way down to a low last year of about $1.03 early in the year as the S&P had bottomed. We focused our management incentives in the organization on cash preservation and generation exclusive of the refinancing activities and more or…

Thank you Rick. Why don’t we go to the Q&A.

(Operator Instructions) The first question comes from the line of Mark Connelly – Sterne Agee. Mark Connelly – Sterne Agee: I wonder if we can try to find any trends in the housing market in between the carnage here? We hear some homebuilders talking about trying to hit different price points and reconfiguring. Most of them are hesitant to talk about building smaller square footage. As you look at it from your end of things are any of those trends becoming clearer? The second part of the question is are those trends good or bad for your engineered wood business?

My opinion on your first question is I think the homes are going to be built this year are going to be smaller. We heard a lot at the International Builders Show about the builders that were building were searching for price points that would be competitive with foreclosures. I think that indicates to me that at least in this year’s vintage and even in the Journal this morning you saw the four letter word SPEC that nobody likes to use. There is some brave building going on right now and I would bet and it is my belief if you were able to statistically sample the size of those houses they would be lower square footage. Lower square footage will affect all of the businesses obviously. It is not just engineered wood but because it just uses less volume. Mark Connelly – Sterne Agee: When you think about the construction one of the arguments in favor of engineered wood was that it allowed for more reliability, etc. Is that extra benefit going to be paid for in a smaller footprint?

I think it will because the equation is the same. It is just not as much volume going into the house. I think the bigger influence on engineered wood would be trying to understand the number of houses that are going in on slabs versus the ones that have some type of an understructure. That is a larger influence. You would look regionally and predominately in the south where the building is holding up a little bit better right now you have more homes going in on slab. Mark Connelly – Sterne Agee: On Canexel, over the last year or so that product looks like it has done pretty well all things considered. Do you see that product properly positioned for this sort of slower, less expensive housing market or are we going to see brand extension there?

I think it is properly positioned. It probably hasn’t become evident through the numbers because of what is going on but we got ourselves into a bit of a pickle in Q4 around Canexel. We sat down and looked at the housing trends in the summer in Canada and we misread them. We did a serious inventory reduction in that business and then housing came right back with a vengeance right after we reduced those inventories and we got caught on allocation. Through the fourth quarter and the first couple of months of this quarter we actually had to reduce the amount of orders we could take to get straightened out so that we could appropriately service our customer. We do expect to get off allocation and get that straightened out by the second quarter.

The only thing I would add to that is Canexel is largely a Canadian and an export product. It isn’t in the U.S. market at all.

The next question comes from the line of Chip Dillon – Credit Suisse. Chip Dillon – Credit Suisse: I kind of missed a couple of things. How much of the ARS have you sold already and what was the face amount?

The face amount was $55 million and we tendered those at 21.5. The important thing there is we retained, as you know we filed suit against the issuing banks there and we retained all of our legal rights to pursue full recovery. Chip Dillon – Credit Suisse: So that means you have about 107 left?

Actually a little bit less than that. Probably right at 96. Chip Dillon – Credit Suisse: You are currently carrying that at next to nothing on the books, right?

I would have to look but I think it is around 27. 26? That is based on the quotation that we have gotten from the issuing banks backed up by the work that we have done on the valuation side. Chip Dillon – Credit Suisse: So if we look at the cash that we see ahead, you mentioned there is some $45 million tax refund you are going to get in the first half. Did you say first quarter or first half?

I said the first half. I would like to get it in the first quarter but I am hedging my bets. Chip Dillon – Credit Suisse: They will use the excuse they are shut down for three days in Washington or more. When you look at the asset sales you have stuck them up into current assets. That obviously means there is an elevated level of confidence. Refresh our memories, are these ARS assets or are these physical mill assets?

They are the physical mills. We moved the Saint Michel to Selma and the [inaudible]. Chip Dillon – Credit Suisse: These will be sold really to people that would do other things than make OSB I would imagine?

That’s correct. Chip Dillon – Credit Suisse: Did you say the two mills you shut permanently, Athens and Silsbee, had 725 million feet together?

Million feet. Rated capacity. Chip Dillon – Credit Suisse: 725?

Yes. Chip Dillon – Credit Suisse: What is the capacity of Chambord and Clark County?

Chambord is about 550 and Clark County is between 700-720. Chip Dillon – Credit Suisse: So like you said in the K last year. Could you just talk a bit about what you see in 2010 in terms of your CapEx? Let’s just talk about CapEx and the tax rate.

CapEx the guidance we have given is less than $25 million. I will let Curt talk about the tax rate.

The tax rate going forward we would anticipate would be at the statutory offset by a little bit of tax playing strategy but it is not going to be markedly different. Chip Dillon – Credit Suisse: When you look at OSB prices today at least if you look at North Central the price is up at 210 on random links. Let’s say it stayed there you would be a little over 200 for the quarter and that is $30 up from the fourth. Is there anything we should think about in your mix that would encourage us to either assume that is a good benchmark to use as we go from fourth to first or should we make other adjustments?

I am looking at the mid week trends I just pulled off this morning. I convert these back to 3/8. You are looking at the 7/16 number and we convert back to 3/8 because that is what we keep score on in our cost side. North Central this morning printed at 185. Western Canada printed at 191. Eastern Canada 172. Southwest 184, Southeast 174 and so that is the blended average. North Central as we always are trying to explain how our average sales price is calculated you have to take a blend of these regions based on where our production is. I can tell you that in the last two weeks the most significant thing for us is that Western Canada started to move which is good influence on our Peace Valley mill and also when we start back Dawson and Swan that will help us. Use about 87% just as a round number to get you close to that 7/16 number to get you to the 3/8. Chip Dillon – Credit Suisse: It looks like that number you gave us would suggest it went up another $6 from last week.

Yes.

The next question comes from the line of Steve Chercover – D.A. Davidson. Steve Chercover – D.A. Davidson: Did you gain share in 2009? It appears with prices flat your revenues were down less than the housing stat you referred to.

I think we gained share in siding. We gained a little bit of share in engineered wood. We gained a lot of share in specialty OSB and we gave up some share in commodity sheeting. Steve Chercover – D.A. Davidson: Are you currently building log decks at Swan Valley and Dawson Creek?

We are bringing logs in there as we speak. Steve Chercover – D.A. Davidson: Obviously with spring break you have to do it now if you intend to run them. Could you elaborate a bit on the off balance sheet joint ventures? I think you said they are going to come back into the mother ship?

We sold Timber land in California in two different transactions where we delayed paying the taxes by having a tax structure with a receivable and a payable that really self-liquidate but allowed us to treat it on an installment tax basis for purposes of filing our returns. Those were on balance sheet because the rules at that time had required us to put them on balance sheet. When we sold the Southern Timberland the rules had changed and we were required to have that as an off balance sheet transaction. So that was the sale of the Louisiana and Texas timber lands where there was a 15-year deferral on the payment of those taxes. The structure we used there again was a notes receivable/notes payable with LP’s investment being about 10% of that. That is the $44 million we have on our balance sheet at this time. The notes themselves are backstopped with a letter of credit which is backstopped by cash. So there is not any risk associated with it. But it has been fully disclosed in our financial statements the change in the rule we now need to gross the balance sheet back up, put the full amount of the note receivable on the books and the full amount of the note payable. Steve Chercover – D.A. Davidson: This is the same 123 that we have seen for years that has been widdled down?

Those were the California transactions. Those are the ones that are on the balance sheet and have been since 1999. Steve Chercover – D.A. Davidson: So this would show up similar to that?

It would be very similar to that. It would be basically because I don’t think there is recourse in any of these. Steve Chercover – D.A. Davidson: But at the end of the day we will basically have an offsetting asset and liability?

You will have an asset $44 million higher than the liability. That is the investment that LP has.

I want to add a bit more color on the share answer I gave you. I will go back to a comment I made a few quarters ago which is how difficult is it to measure improving the buoyancy of your boat if it is sitting on a clam flat. The way we try to measure share in this environment is that we take a four quarter rolling average of our volume that is going into the marketplace that we sell and then we are dividing that by the housing start number which is about the only way we can figure out whether we are gaining share or not. Does that help you? The housing start number is going down but if we look at our volume and do a consistent division then if that percentage is going up for us then that is helpful. We exclude big box from that.

The next question comes from the line of Peter Ruschmeier – Barclays Capital. Peter Ruschmeier – Barclays Capital: You mentioned your employee headcount is now down below 4,000 and I was curious if you could elaborate on what that means for the company in terms of runability? When you bring mills back up does that mean you are going to utilize these employees? Do you have to hire people back? Can you comment on what this means to the organization?

They way we are configured now we have basically taken shifts out of some of these mills. Once we get to needing to run another shift then we will have to bring employees back. We are operating more efficiently in an inefficient mode right now if you will the way we have reconfigured but there will be a point at which say right now if you just take Peace Valley up in Western Canada it is running at three shifts. If we want to get that mill back up to full capacity we would have to add a fourth shift so that means bringing people on that are currently not employed but it would hopefully be the same trained people and that would be a shorter period of time. Peter Ruschmeier – Barclays Capital: So maybe a different way to think about it is perhaps your employee base is a little more variable than it has been in the past?

No, these are actual numbers of people that work. These are not laid off people. We just drifted down another 700 folks last year with the reductions we made at our current capacity. If we add shifts obviously we would bring on wads of people as you add shifts. Peter Ruschmeier – Barclays Capital: Back on the assets held for sale what is the collective balance of that in terms of all the different sites?

About a $65 million carry value. Peter Ruschmeier – Barclays Capital: Remind us, have you sold all the planes and hangars?

The planes have been sold but the hangar has not. We are still holding that. Peter Ruschmeier – Barclays Capital: But that is still held for sale as well?

It is still being actively marketed and we are seeing at least the fractional folks in leasing coming back. I don’t think anybody is buying planes for their corporation but we are seeing that business come back. There is a logical buyer for that when their business reaches a certain level. Peter Ruschmeier – Barclays Capital: I was curious if you could share your thoughts on your procurement strategy in the current environment you are in which is perhaps temporary challenges with wet weather. As we look out longer term and we are hearing more about utilities taking more aggressive stance and looking for sources of fiber can you comment on whether you are looking to more aggressively bid for longer contracts and I was surprised to hear you say, or I think you said, that the procurement costs for full-year 2010 would be relatively flat to 2009?

That is our guess right now other than we think they will be accelerated in Q1 which might bleed into Q2 in the south.

That is just wood.

We are waiting to see what to make of all of this renewable energy, the [BCAP] rules came out, the early rules came out last week. We are waiting to see how that sugars out. There is no money being paid out right now. We are not making any strategic moves or determinations until we actually see how that plays out. There are plusses and minuses I think in general. The government is sticking its nose into subsidizing wood for other purposes is not a good idea. It is very hard to build markets based upon subsidy. So we are playing the wood angle at least strategically from two ends. One, if we are preparing for [BCAP] if it actually becomes a reality and at the same time we are lobbying against the government getting in and subsidizing renewable wood energy. Peter Ruschmeier – Barclays Capital: So as we think about the variance in our models from 4Q into 1Q clearly you have this nice lift on pricing mitigated somewhat by the higher fiber costs. I think you mentioned the energy costs are running up. I am not sure if there is anything specific as to why electricity is running up but can you help us with the other cost items in terms of wax, resin and some of the other things we should be thinking about that might be a mitigating factor to the run up in price?

If you look at the full year 2009 versus 2008 and we apply the pricing between those two years to the volumes we produced in 2009 it was overall about a $50 million savings over 2008. Of that the wood was about 1/3 of it. Energy was a piece of that but the biggest piece was in the resin. As we look into 2010 as Rick said we expect wood to be relatively flat. I think there is probably a little bit more on the higher cost side than lower. But relatively flat. We expect resins to be up principally because oil is up and very volatile and it is not just oil it is the derivatives being [phenol benzene] primarily for the resins. Then energy the increase is almost all electricity and that is these local jurisdictions raising electricity rates on a regular basis. So I would guess we are going to give back about 25-30% of what we had for savings last year. Peter Ruschmeier – Barclays Capital: Of the $50 million.

Yes.

It has been pretty difficult for us to plan. We obviously finished our plan in December for this year and when we got to the second week of January oil had gone up to $82 so our procurement people scrambled around and gave us a bunch of new forecasts and then it back at $73 today. This is a moving target we will be chasing all year long.

The next question comes from the line of Chip Dillon – Credit Suisse. Chip Dillon – Credit Suisse: I just wanted to make sure, could you review for us the Houlton, Maine plant? I noticed there was a line in there saying you weren’t running it I think as much and that might help reduce the loss. What are your plans for that facility, the LSL business as you go out and you look at the next housing cycle?

As you know engineered wood is our most closely tied business to new residential starts. Currently in engineered wood in general all of the levers we have in terms of controlling the losses are around controlling the costs at the mills. Houlton LSL is the major bleeder until we can get more volume. I think last year we sold about 600,000 cubes of A-grade product. That mill has a capacity to produce about 7 million cubes. So we are operating at a gross inefficiency. As the math we have done in general in engineered wood, we think that we need about one million starts to get profitable in engineered wood and about a million starts and continued product penetration in LSL. Does that answer your question? Chip Dillon – Credit Suisse: Yes. When you look at, let’s say this is finally the beginning which we would all love to see and you are making money in the second quarter and I guess the math on the tax loss carry forward you were taking ahead will be obviously influenced by the ability to carry it back and you are getting the $45 million but how much money cumulatively would you have to make, and I know it is hard to put an exact number on it because of Canada and the U.S., but could you make $400-500 million in the U.S. before you would be paying significant cash taxes? How should we think about that in the next cycle?

I don’t think it is that much because remember in 2008 we had the goodwill write off which not deductible. I think a good proxy for that is to look at the balance sheet and you will see what we have in the deferred tax assets and deferred tax liabilities. From a net standpoint we believe we have more deferred tax liabilities than we do deferred tax assets which means we intend to use that. Part of that will be the gain we will record on the timber sales, the installment notes I talked about, there is I think $113 million coming through this year and we will have a gain in it. If we have a loss this year part of that would be offset by that gain. It will be awhile before we pay cash taxes but I don’t think it is the magnitude that you mentioned. I would be guessing and my tax guys would be all over me so I probably shouldn’t guess. Chip Dillon – Credit Suisse: He’s not listening.

He probably is.

The next question comes from the line of Analyst for Richard Skidmore – Goldman Sachs. Analyst for Richard Skidmore – Goldman Sachs: I would like to get your perspective in the move up in OSB prices here in the first part of the year. Do you see that more supply versus demand driven? A follow-on to that can you talk to how you are seeing your demand trend across the key products in the first part of the year relative to the fourth quarter?

I was thinking about the answer to your first question and you will have to repeat the second one. I think where we are right now is it is a supply driven issue and what I mentioned in my prepared remarks this year the channels of distribution are relatively empty and so a sale in the marketplace becomes an order back to manufacturing. If you take our particular example say where we purposefully in November made the plan anticipating a very lean first quarter to take Dawson and Swan down they are down. So that is wood that is not in the marketplace that could have been in the marketplace had we not made that. I think it is more supply driven than demand driven at this point in time. Whether we have a spring bump or not I don’t know. Analyst for Richard Skidmore – Goldman Sachs: My second question was on the demand front across your key products and how you have seen that change in the first quarter relative to the fourth quarter. Have you seen anything beyond the normal seasonal changes?

No we are off to a pretty good start in our orders in siding particularly. Engineered wood is just a little bit better and we are basically constrained, I think if we didn’t have the log problems in the south we could probably sell a little bit more wood and OSB but we just don’t have the logs.

This concludes the question and answer session for today’s conference. I would now like to turn the call back over to Mr. Curtis Stevens for closing remarks.

Thank you very much. I appreciate all of you joining us on the call today. As always Becky and Mike are available for follow-up questions. With that, operator if you could give the call back number and thanks for joining us.

Ladies and gentlemen to access the replay the toll free number is 888-286-8010 with an access code of 99312648. That also concludes today’s conference. Thank you for your participation. You may now disconnect. Have a great day.