Good day Ladies and Gentlemen. And welcome to the Second Quarter 2010 Louisiana-Pacific Corp. Earnings Conference Call. My name is Santali, and I will be your facilitator for today’s call. (Operator Instructions) I would now like to turn the presentation over to your host for today’s call, Mr. Curt Stevens, Executive Vice President of Administration and CFO. Please precede Sir.

Thank you very much. And thank all of you for joining us on this conference call this afternoon. I know it’s a little odd for us to have a Friday afternoon conference call, but we appreciate your indulgence. As the operator said, I am Curt Stevens, the CFO. And with me today is Rick Frost, our CEO, as well as Mike Kinney and Becky Barkley who are primary investor relations contacts. As I usually do, I will begin the discussion with a review of the financial results for the second quarter. I’ll follow that with some comments on the performance of our individual segment and talk a bit about the balance sheet. While I’d like to spend a lot of time talking about Q2 because it was such a good quarter for us, I suspect that what many of you are wondering about is where the market will go next. To that end, after I finish my comments, I’ll turn you over to Rick Frost who will give you his weather update for Nashville, discuss the general market environment in which we’re operating, and his perspective of both the most recent quarter and his thoughts for the rest of this year. As we’ve done in the past, we have opened up the call to the public and are doing a webcast. You may access that at our website www.lpcorp.com. Additionally, to help with the discussion, we have provided a presentation that has supplemental information that should be reviewed in conjunction with the earning’s release. And I will be referencing that document as I go though my comments. This morning we did file an 8K that had supplemental information. And we intend to file our Form 10Q later this afternoon. I want to remind all the participants about the forward-looking statements…

Well, good afternoon, everyone. And thank you for your interest in our LP Building Product Second Quarter Call. True to form, we are having quite a warm and muggy summer in Nashville this year. It’s about 95 out there today. I guess in the name of full disclosure, at the end of business today, I’m headed for the coast of Maine for some vacation and to catch up with my wife. And so really the call is today rather than next Tuesday so that I can have the weekend to do that. So thank you for checking in on a Friday afternoon. I will follow convention in my prepared remarks this afternoon to discuss Q2 results. I want to make some observations about the quarter. And then give you a sense of how Q3 feels to us right now. I’ll begin with our core value of work place safety. We had another excellent quarter operating safely. All of our businesses year to date are operating with TIR of less than one. And as a corporation, we are 0.44 at this time through June. Two-thirds of our plants remain injury free through the first half of this year compared to about half of the plants at this time last year. And we did hit a number of significant milestones during the quarter at various plants. To name two; our Panguipulli Mill in Chile set a new company best at over 1 ¼ million recordable free work hours. And our Wilmington LVL plant reached three years without a reportable incident. The regulatory environment proposes us uncertainty as we are waiting for the EPA to right its Boiler MAC targets, which we expect will be done in the first quarter of 2011. And we are still wondering about what new CO2 regulations might…

Thank you Rick. Santali, can we turn it over to you for Q&A queue please?

Yes, sir. (Operator instructions) And your first question comes from the line of Mark Weintraub of Buckingham Research. Please proceed. Mark Weintraub – Buckingham Research: Thank you. I’m trying to understand in the OSB segment, I guess I would have anticipated there to be more profit gain from volume efficiencies. And I know that you mentioned the Canadian dollar was a bit of a hit. I know, if you could quantify that for us. And then maybe help us understand why there wouldn’t have been more volume efficiencies. And the quick math of why I say that is if you look at your price improvement and you look at your volume, that alone would have gotten you about a $50, $55 million improvement relative to the prior quarter. And that’s all we saw. So we didn’t really see the volume efficiency gains that I would have expected.

Yeah, just to remind you, on the Canadian dollar, every penny is about $1.4 million up or down on an annualized basis. And so if you look at where the Canadian dollar was in 2009 Q2 versus 2010, I think it was about $0.03 different. So that would be roughly a million, million two out of that. Probably the bigger difference, if we look at Q2 ’09 to Q2 ’10 on the raw materials side, we had about, across the corporation, about a $9 million increase in our cost. About $1.5 million of that was the logs, and the rest was in resins and waxes associated with a higher cost of the oil-based raw materials. So fundamentally it’s in those areas, the Canadian dollar and the high raw materials cost. Mark Weintraub – Buckingham Research: Do you happen to have those also for 1Q to 2Q?

I do. It was about, for Q1 of ’10 to Q2 this year was about, it was only about $1 million. So it’s relatively flat Q1 to Q2. Mark Weintraub – Buckingham Research: Then perhaps asking a followup on a slightly different question. Rick, you mentioned that 3Q feels a lot like last year’s 3Q. And if we were to assume that prices were going to be similar, which of course they may or may not be to last year’s, would you expect performance in the OSB segments to be pretty similar to what it was last year? Or are there some other moving parts?

Well, I think the factors we’ll have to take into consideration now is that based upon the takeaways that we’re feeling across all of our product segments, we’re probably going to be taking more downtime in this quarter to get our working capital back to where we want it to be. Mark Weintraub – Buckingham Research: And that was relative to last year’s third quarter, or is that relative to the second quarter that’s upcoming?

That’s relative to where we are right now. We are in a position where based upon the orders that we’re getting right now, I want to bring my working capital down a little bit and get it more in line with what we’re feeling. I didn’t look at what the downtime numbers were in Q3 of last year, so I can’t make that downtime analysis for you. Mark Weintraub – Buckingham Research: Okay. And then lastly, where would you say channel inventories today are for your key products?

Well, we don’t feel that they’re fat. But what I think what is significant right now is that there’s a lot of ready wood right now, so there’s very little pressure on price now because if you want OSB right now, you can get it. Mark Weintraub – Buckingham Research: Thank you.

Your next question comes from the line of Chip Dillon of Credit Suisse. Please proceed. Chip Dillon – Credit Suisse: Yes, thank you. Good afternoon. Just to make sure we had this right, should I assume that of the $700 million in long-term debt that $400, is it $489 million of the – I’m sorry, of the 706, 489, is that the timber notes part of that?

It is. Chip Dillon – Credit Suisse: Okay, so we’ll just take that out is how we get to our net cash.

There’s that analysis in the appendix. And what it shows is the 489, we actually on the receivables side, it’s 544, so there’s actually more money in the receivables side than there is on the payable side. And that’s our investment. We also, and when we filed the Q today, we’ve extended that debt footnote to make it very clear what portion is recourse and non-recourse. Chip Dillon – Credit Suisse: Okay, because I’ve talked to a lot of people who didn’t get that. And what’s interesting, you say the receivable is 544 because on Slide 11, it sort of implied that it’s only 489 I think.

Yeah. What we did there, Chip, is we only wanted to offset the non-recourse portion of the debt. It’s awkward wording. We worked on it a lot. And if you look at the little asterisk, all we took credit for was the debt portion. Chip Dillon – Credit Suisse: Okay.

Does that make sense? Chip Dillon – Credit Suisse: Well, what would be the difference between the 489 and the 544?

It’s about 42 million, it’s about $42 million dollars on the receivable side. Chip Dillon – Credit Suisse: Okay. And maybe a reason you might want to be conservative, is that whenever these things unwind, there may be a tax bill due at that time?

Well, there is, and it’s accounted for under deferred taxes. Chip Dillon – Credit Suisse: Okay, got you. And then, I guess getting back to the first-second quarter progression, I know you said earlier that there was very little net cost change going from first to second. And I would imagine you ran again better volumes in the second quarter, unless we’re just mistaken because you took a lot of downtime in say June. But is there anything else you can point us to as to why we might not have seen better cost improvement. And by the way, I also notice when I look at random links, that price averaged up, well, let’s say a year-over-year $128 on a 3/8ths basis, not 7/16ths. And your pricing was at $108, so maybe you could help us understand why your pricing – and I know that you don’t track exactly North Central random links, but is there anything you can do to help us understand what might have happened there?

Well, there’s three buckets to it, fundamentally. The first bucket is that not everything is sold in North Central. So if you look at it, you actually will have at any given time – I think today you probably have between the Mid-Atlantic and the North Central, there’s probably a $15 per 1,000 price differential today. If you look during the quarter, we started the quarter with very low pricing on the West. It went up pretty significantly, but then it fell further. So any volume that would have gone into the West. So the adjust for that is probably about 1/3 of the difference that you just said is related to what regions we sell our product in and what the random links was in that area. The other thing, the second bucket is there are functional discounts for big purchasers. So that is a piece of it. As the price goes up from a dollar standpoint, that goes up as the functional discounts are a percentage. The third bucket for us is that we do sell our specialty products on a different way than daily trading. We generally provide a monthly pricing. So for textural products, for our top-notch flooring products, we provide a pricing, a flat pricing during a particular month, and then adjust that. And so when you have a rapidly rising market, you don’t capture all that. When you have a falling market, nobody is buying anything. And so you don’t get the advantage of it going down. So those would be the three buckets. Chip Dillon – Credit Suisse: Okay, got you. And I guess the last thing is, as we go into – and maybe you kind of answered this, but given that you had such a, really a three-month period I guess or four months where things really hot and then they just fell apart, how should we think about the third and the fourth quarter. In other words because of what you said about that third bucket, should we maybe not expect – should we be careful not to just look at the price change and assume that is going to be – you’re going to see an income hit that’s equal to that?

Directionally, it’s going to be, it’s going to go the direction. If random goes up, we’re going to get an advantage there. If it goes down, we’re not, we’re going to get hurt. But I wouldn’t expect it to be a whole lot different. I think in an environment where it’s gradually changing, we’re going to get more of it than when it rapidly changes one way or the other. When it rapidly goes up, we’re going to lag because of the pluck pricing we have on our specialty products. In a falling market, there’s no demand and so you don’t get it. Chip Dillon – Credit Suisse: Yeah, okay, all right. And then when you, just last question is on – if you could just update us. I know you’ve kept CapEx quite low, what do you have? Is there any change there? And then any help, again on those discreet items when we compute our tax rate for the full year?

Well for the full year, if we’re near breakeven you’re going to have a funny rate, so taxes are going to be – it really isn’t going to be a meaningful part of that. Right? Chip Dillon – Credit Suisse: Uh-huh.

For the capital, the 25 million that we gave you late last year is still the number that we’re targeting to be under. Obviously, when the market has taken a turn the other direction recently, there are some projects that we’ll likely delay. But that certainly won’t be any more than that 25 million. Chip Dillon – Credit Suisse: I’ve got to ask you this. Given the run up we had, I know it didn’t last that long, were you surprised that you didn’t see, and to my knowledge I don’t think you did see, any – not only did you not see restarts of all the plants shut down, but I don’t recall seeing really many adding shifts even. Any comment as to why you don’t think we saw that happen?

Well, I’ll answer that from the perspective of our organization. Through that whole thing and I think consistent with consistent with the communicating that we have done, we ended up adding two shifts through that process. We added a shift, a permanent shift onto our Peace Valley Mill, which is our joint-venture mill, and had that on for about eight weeks. And then we added a temporary shift in Carthage, Texas, and had that on for about eight weeks. Both of those shifts we have now taken off based upon what’s happened. That was all that we thought we could get on. Our expectation, as we looked at that, was that it wouldn’t last very long. I think that was probably everybody’s, and your expectations as well. You even wrote an article that you thought it was more a supply-induced thing than a huge spike in demand. That’s the way we’re looking at it. So we were very slow to put additional productive capacity on, Chip.

I think what we had said consistently is that for us to put another mill online, we have to see real sustained long-term demand. That is isn’t going to be a pricing decision, it has to be a demand decision. And we just aren’t in a position to see that demand right now. Chip Dillon – Credit Suisse: I understand. Thank you.

Your next question comes from the line of Mark Connelly of CLSA. Please proceed. Mark Connelly – CLSA: Thanks. Just two questions. First, how should we think about wood costs in Q3? Is the weather affects completely behind you? And second, a bigger question. When we look at engineered wood, what does it take to turn that business profitable? It certainly had a lot of volatility, but it almost seems like OSB drives the bus there. And that there might be something just structurally wrong with the business. You had a big pickup in volume. You had good prices. Still, it doesn’t make money. And I understand. I mean, the OSB prices go up, but I mean should be in that business if you’re a slave to OSB prices?

Our biggest drag in engineered wood right now, Mark, is the fact that we built this LSL mill. And it’s running at 40% of its capacity.

14%.

Excuse me, 14% of its capacity at this point. So most of our losses are in one place. We know where they are. And the way that we have to deal with that is to continue to make market penetration with that product. And it’s a slow go in this demand environment. It’s tough to get people to change products right now. So in general, our biggest bogie that we’ve got to deal with in engineered wood is not the price of web stock in the I-joists. It’s the fact that we have to continue to penetrate the LSL product into the homebuilding sector; find more and more uses for that. Mark Connelly – CLSA: And what is the prospect for that in a slow housing market? I mean –

The prospect for that is slow in a slow housing market. I think right now we’re twice what we were last year. And I think that we have to have that kind of continued improvement for the next couple of years. We do think that in an environment where overall in the engineered wood products business if we can get back to 900,000 housing starts, that we have a profitable engineered wood products business. Mark Connelly – CLSA: Okay, that’s helpful. And on the wood costs, your overall wood costs.

Yeah, the wood costs, we are anticipating flat costs in Q3. No change from Q2. From a supply standpoint, I think the risk is going to be in Canada due to fires, if they shut down the forest. BC has already been shut down once. Mark Connelly – CLSA: So you’re – it’s sort of a flat-to-up outlook.

Well, I think it’s going to be flat. I think the risk is on supply that you may have log shortages. Mark Connelly – CLSA: Sure, okay.

Yeah, it’s not a cost issue because those are under our control. Mark Connelly – CLSA: Sure, understood. Appreciate it. Thank you.

Good bye Mark.

Your next question comes from the line of Steve Chercover of D.A. Davidson. Please proceed. Steve Chercover – D.A. Davidson: Morning guys.

Hey, Steve. Steve Chercover – D.A. Davidson: My questions were kind of similar to the other ones. But given what looks like kind of an asymmetric exposure to rising prices and falling prices, do you consider going to market differently? Because it seems like you don’t get the benefit of the upside, but you get all of the downside.

We have those discussions every single day. You’re exactly right. If you think about the specialty products though, they’re going into building almost immediately. And they’re going right directly to the job site. And what the builder wants is he wants certainty on his raw materials. And that’s why we price it that way. We continue to evolve that. And we’ve had various pricing schemes over the years. But you’re exactly right. It’s not the same benefit to us on the downside because there’s no demand on the downside. Price is going down. Nobody’s buying anything. That’s why it’s going down. Steve Chercover – D.A. Davidson: But I didn’t look at it carefully, but it seems like one of your biggest competitors in OSB, the [inaudible] in Toronto.

Does it start with an N? Steve Chercover – D.A. Davidson: It looks like they beat with, they beat expectations. So I was assuming that somehow they had managed to crystallize a longer order file and prices were going up, and therefore didn’t get that full downside. Do they do something different, or were they lucky?

I don’t know what they do, but I will tell you that I look at the release. And they do provide a fair amount of detail. And Jeff Waggoner and I went through that. And if you take the volume that we produced at Hayward and add it to the volume Jeff produced in his segment, it’s almost exactly equivalent in North America to Norboard. And if you take the earnings, they’re right on top of each other. Absolutely on top of each other. Steve Chercover – D.A. Davidson: Okay, I’ll have to dig a little bit better. So the earning were the same. The margins are the same?

Exactly. Steve Chercover – D.A. Davidson: Going into Q2, but okay. I guess that stands to reason. We thought it was a flat cost curve anyhow. All right, well, let’s hope for some incremental demands.

That’s exactly right. Steve Chercover – D.A. Davidson: Thanks guys. Have a good holiday, Rick.

Thank you.

Your next question comes from the line of Peter Ruschmeier of Barclays Capital. Please proceed. Peter Ruschmeier – Barclays Capital: Thank you, and good afternoon. Curt, I wanted to come back to you on your point about the rolling 12-month figure for siding. Could you remind us what you were quoting there? It was up 33%.

What I was trying to get at is if you look at the, either the EBITDA or the profit, the operating profit in siding, if you take Q2 of ’09 at $7 million, included in that was the $2 million loss for OSB. So siding was actually $9 million profit. In Q2 of ‘10, there was 4 million in profit on that OSB, so it was 18. So we went really from – we doubled the profit in siding. This looks like we tripled it. Does that make sense, Pete? Peter Ruschmeier – Barclays Capital: Right.

That was my point is that this improvement was partially in OSB and partially in siding. Peter Ruschmeier – Barclays Capital: Okay, understood. But how does the strong demand you’re seeing in siding square with the housing market being weak?

The siding for 2009, and I haven’t done it for the first six months, but for 2009 over 2/3 of the siding went to repair model and non new-home construction. It’s a very, very heavy repair model. We’ve done very well in the shed market. We’ve done very well in replacement trim and soffit. And then we’ve done reasonably well from a penetration standpoint in new-home construction. If you look at a – what we look at is we look at siding per start that’s not going to sheds and not going to retail. And we do that on a 12-month rolling. We look at the last 12 months. How much siding per start did we sell? And then we look at the prior 12 months. We’re up 30%. So we’re continuing to make penetration in new housing, plus 2/3 of the sales went to non new-res applications. Peter Ruschmeier – Barclays Capital: Okay. Looking at the third quarter, I know the crystal ball is a little bit fuzzy, but based on the demand levels you’re seeing, what kind of guidance, if any, can you offer on your big businesses, whether it’s siding or OSB on a sequential basis? Any order of magnitude as to what you’re expecting? Clearly demand’s come off, but any order of magnitude you can help us with?

You know, we really hesitate to do that. And that’s why we didn’t give you Q2 because we didn’t know what was going to happen. And that was a smart thing to do because it fell off in June. I just don’t know. It doesn’t feel right to me that activity has fallen off as fast as it has. And every day I can pick up a piece of news that looks good for housing. And I can pick up a piece of news that looks bad for housing. Every single day. Peter Ruschmeier – Barclays Capital: Yeah.

And I just, I don’t really have a good feel on where it’s going. Like the home center business. They came out of Q1 very strong, very good comps. I suspect they’re going to say their comps are down. Peter Ruschmeier – Barclays Capital: Yeah.

For Q2, and then they’re – but they’re optimistic for Q3 and 4. Peter Ruschmeier – Barclays Capital: Yeah.

But we’re definitely at a lull in the action here at the end of July Q3. This is pretty quiet out there right now. Peter Ruschmeier – Barclays Capital: Okay, understood. How about shifting gears quickly to Chile. Can you remind us, you say you’re running pretty flat out there. What kind of production volumes are you running there? And can you help us understand? The profitability, it is material? And if the demand is as big as you’re suggesting in terms of the rebuild that’s needed going forward, how do you address that? Do you address that with local capacity? Do you address it with the volume from North America? Can you elaborate on that?

Well, we think we – for capacity down there, we’ve got about round numbers, 250, 260 million square feet between the two small mills. As we look going forward, we think we have the capacity in place down there to meet most of the needs of the rebuilt because that rebuild will occur over a period of years. So the optimism in that is that we will be able to run both of our mills full out, or we expect to for a number of years based upon that additional demand. Now in the short term, obviously there was a spike in demand to react to the short-term catastrophe-related needs. And we were able to bring some volume over from our Brazilian mill. So we think that a little bit from up here as well, but we think that we’ve pretty well got it covered in terms of ongoing demand with those two mills. The bigger question in terms of longer-term future is as we are able to gain more traction in Brazil, that’ s a market that’s ten times bigger than Chile. And if I had to guess, that will be in some point in time a place that we’re going to want to expand our productive capacity.

The only thing I would add to that Pete is by consuming all that product in Chile, we have removed from the Chilean mills the ability to satisfy the other South American markets that we were shipping to. And we shifted that production to Brazil. So Argentina, Columbia, Venezuela, that’s now coming out of Brazil. Peter Ruschmeier – Barclays Capital: Okay. Any update on Brazil in terms of the signposts of trying to get more adoption of wood product demand. Rick, any comments on that?

Well, actually you’ve made an interesting word there, which is something that we’re actually looking at. I think when we originally went to Brazil, we had the same model in our head that we would convert building practices there. And as we’ve looked at what we can do in Brazil, we are trying to adapt our product into building what’s actually going there because we’re running into bigger obstacles around straight conversion of building systems than what we had anticipated. So we are seeing traction there. And that will actually be our strategy going forward as we see it now, is instead of trying to convert to a totally different building system, we are going to look for uses of our OSB into existing building systems. And we think that that’s the best least resistance for us in the short term. Peter Ruschmeier – Barclays Capital: Okay, that’s helpful. Last question and I’ll turn it over. The fiber situation, Peace Valley, as you look out long term, can you comment on your expectations as related to the pine beetles salvage harvest? There’s plenty of fiber now. Do you have concerns going forward about the fiber availability?

We do not. Where we are located in Port Saint John, we’re not really affected by the beetle kill at all, plus that’s not the wood we use. We use Aspen and Poplar. Peter Ruschmeier – Barclays Capital: Okay. Very helpful. Thanks guys.

Thank you.

At this time, there are no further questions in the queue and I would like to turn the call back over for closing.

Well, we appreciate all of you joining us on the call. And we did have a great quarter. We’re hoping that the market’s going to pick up here so we can have a couple more great quarters. I think the important message I want to leave you with is what Rick talked about, is if we do get a little bump in demand, the organization is situated so that we can really take advantage of that and put good solid numbers on the bottom line. So thanks very much. With that, I’ll end the call. Thank you.

Thank you for your participation.