UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934

For Quarterly Period Ended June 30, 2008
Commission File Number 1-7107

LOUISIANA-PACIFIC CORPORATION

(Exact name of registrant as specified in its charter)

DELAWARE
(State or other jurisdiction of
incorporation or organization)

93-0609074
(IRS Employer Identification No.)

414 Union Street, Nashville, TN 37219

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (615) 986-5600

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer x	Accelerated filer o	Non-accelerated filer o	Smaller reporting company o
		(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 103,293,100 shares of Common Stock, $1 par value, outstanding as of August 1, 2008.

Except as otherwise specified and unless the context otherwise requires, references to “LP”, the “Company”, “we”, “us”, and “our” refer to Louisiana-Pacific Corporation and its subsidiaries.

ABOUT FORWARD-LOOKING STATEMENTS

Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 provide a “safe harbor” for forward-looking statements to encourage companies to provide prospective information about their businesses and other matters as long as those statements are identified as forward-looking and are accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those discussed in the statements. This report contains, and other reports and documents filed by us with the Securities and Exchange Commission may contain, forward-looking statements. These statements are or will be based upon the beliefs and assumptions of, and on information available to, our management.

The following statements are or may constitute forward-looking statements: (1) statements preceded by, followed by or that include words like “may,” “will,” “could,” “should,” “believe,” “expect,” “anticipate,” “intend,” “plan,” “estimate,” “potential,” “continue” or “future” or the negative or other variations thereof and (2) other statements regarding matters that are not historical facts, including without limitation, plans for product development, forecasts of future costs and expenditures, possible outcomes of legal proceedings, completion of anticipated asset sales and the adequacy of reserves for loss contingencies.

Factors that could cause actual results to differ materially from those expressed or implied by the forward-looking statements include, but are not limited to the following:

·	changes in general economic conditions;

·	changes in the cost and availability of capital;

·	changes in the level of home construction activity;

·	changes in competitive conditions and prices for our products;

·	changes in the relationship between supply of and demand for building products, including the effects of industry-wide increases in manufacturing capacity;

·	changes in the relationship between supply of and demand for raw materials, including wood fiber and resins, used in manufacturing our products;

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

·	changes in other significant operating expenses;

·	changes in exchange rates between the U.S. dollar and other currencies, particularly the Canadian dollar, EURO, Brazilian real and the Chilean peso;

·	prolonged illiquidity in the market for auction-rate securities held by us for investment;

·	changes in general and industry-specific environmental laws and regulations;

·	changes in tax laws, and interpretations thereof;

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

·	the resolution of existing and future product-related litigation and other legal proceedings; and

·	acts of God or public authorities, war, civil unrest, fire, floods, earthquakes and other matters beyond our control.

In addition to the foregoing and any risks and uncertainties specifically identified in the text surrounding forward-looking statements, any statements in the reports and other documents filed by us with the Commission that warn of risks or uncertainties associated with future results, events or circumstances identify important factors that could cause actual results, events and circumstances to differ materially from those reflected in the forward-looking statements.

ABOUT THIRD PARTY INFORMATION

In this report, we rely on and refer to information regarding industry data obtained from market research, publicly available information, industry publications, U.S. government sources and other third parties. Although we believe the information is reliable, we cannot guarantee the accuracy or completeness of the information and have not independently verified it.

Item 1. Financial Statements.

CONSOLIDATED STATEMENTS OF INCOME
LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES
(AMOUNTS IN MILLIONS EXCEPT PER SHARE AMOUNTS) (UNAUDITED)

	Quarter Ended June 30,						Six Months Ended June 30,
	2008			2007			2008			2007

Net sales	$	387.0		$	461.2		$	736.4		$	855.8
Operating costs and expenses:
Cost of sales	375.0			437.6			747.8			829.3
Depreciation, amortization and cost of timber harvested	26.8			27.4			53.4			55.9
Selling and administrative	39.1			38.3			79.2			78.5
(Gain) loss on sale or impairment of long-lived assets	0.1			(0.3		)	(0.3		)	5.2
Other operating credits and charges, net	70.1			(19.2		)	66.1			(19.2		)
Total operating costs and expenses	511.1			483.8			946.2			949.7

Loss from operations	(124.1		)	(22.6		)	(209.8		)	(93.9		)

Non-operating income (expense):
Foreign currency exchange gain (loss)	(5.1		)	(12.7		)	4.3			(15.5		)
Other than temporary investment impairment	(1.7		)	—			(2.5		)	—
Interest expense, net of capitalized interest	(12.7		)	(9.7		)	(23.9		)	(20.0		)
Investment income	10.6			23.4			23.4			43.8
Total non-operating income (expense)	(8.9		)	1.0			1.3			8.3

Loss before taxes and equity in earnings of unconsolidated affiliates	(133.0		)	(21.6		)	(208.5		)	(85.6		)
Benefit for income taxes	(56.8		)	(10.9		)	(92.7		)	(42.2		)
Equity in loss of unconsolidated affiliates	3.2			4.9			9.5			8.2

Loss from continuing operations	(79.4		)	(15.6		)	(125.3		)	(51.6		)

Discontinued operations:
Loss from discontinued operations before income taxes	(2.3		)	(12.6		)	(3.1		)	(14.8		)
Income tax benefit	(0.9		)	(4.9		)	(1.2		)	(5.8		)
Loss from discontinued operations	(1.4		)	(7.7		)	(1.9		)	(9.0		)

Net loss	$	(80.8	)	$	(23.3	)	$	(127.2	)	$	(60.6	)

Net loss per share of common stock (basic):
Loss from continuing operations	$	(0.77	)	$	(0.15	)	$	(1.22	)	$	(0.50	)
Loss from discontinued operations	(0.02		)	(0.07		)	(0.02		)	(0.08		)
Net loss per share - basic	$	(0.79	)	$	(0.22	)	$	(1.24	)	$	(0.58	)

Net loss per share of common stock (diluted):
Loss from continuing operations	$	(0.77	)	$	(0.15	)	$	(1.22	)	$	(0.50	)
Loss from discontinued operations	(0.02		)	(0.07		)	(0.02		)	(0.08		)
Net loss per share - diluted	$	(0.79	)	$	(0.22	)	$	(1.24	)	$	(0.58	)

Cash dividends per share	$	0.15		$	0.15		$	0.30		$	0.30

Average shares of stock outstanding - basic	102.9			104.2			102.9			104.1
Average shares of stock outstanding - diluted	102.9			104.2			102.9			104.1

The accompanying notes are an integral part of these unaudited financial statements.

CONDENSED CONSOLIDATED BALANCE SHEETS
LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES
(AMOUNTS IN MILLIONS) (UNAUDITED)

	June 30, 2008			December 31, 2007
ASSETS
Cash and cash equivalents	$	169.4		$	352.1
Short-term investments	163.4			180.1
Receivables, net	264.2			243.1
Inventories	206.8			212.1
Prepaid expenses and other current assets	9.6			7.6
Deferred income taxes	17.8			0.5
Current portion of notes receivable from asset sales	20.0			74.4
Current assets of discontinued operations	3.5			6.0
Total current assets	854.7			1,075.9

Timber and timberlands	59.2			64.1
Property, plant and equipment	2,368.3			2,257.7
Accumulated depreciation	(1,228.0		)	(1,180.9		)
Net property, plant and equipment	1,140.3			1,076.8

Goodwill, net of amortization	277.8			273.5
Notes receivable from asset sales	258.6			258.6
Restricted cash	73.2			61.2
Long-term investments	105.8			152.9
Investments in and advances to affiliates	193.4			198.2
Other assets	58.0			63.1
Long-term assets of discontinued operations	5.0			5.0
Total assets	$	3,026.0		$	3,229.3

LIABILITIES AND EQUITY
Current portion of long-term debt	$	123.6		$	127.6
Short-term notes payable	33.4			45.2
Accounts payable and accrued liabilities	195.8			222.1
Current portion of limited recourse notes payable	20.0			73.5
Current portion of deferred tax liabilities	4.4			4.4
Current portion of contingency reserves	67.8			15.8
Total current liabilities	445.0			488.6

Long-term debt, excluding current portion:
Limited recourse notes payable	253.3			253.3
Other long-term debt	244.5			232.5
Total long-term debt, excluding current portion	497.8			485.8

Deferred income taxes	308.2			340.0
Other long-term liabilities	84.2			79.6
Contingency reserves, excluding current portion	21.9			15.8
Minority interest	18.6			—
Commitments and contingencies
Stockholders’ equity:
Common stock	116.9			116.9
Additional paid-in capital	438.1			439.0
Retained earnings	1,471.9			1,630.1
Treasury stock	(297.3		)	(302.0		)
Accumulated comprehensive loss	(79.3		)	(64.5		)
Total stockholders’ equity	1,650.3			1,819.5
Total liabilities and equity	$	3,026.0		$	3,229.3

The accompanying notes are an integral part of these unaudited financial statements.

CONSOLIDATED STATEMENTS OF CASH FLOWS

LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES
(AMOUNTS IN MILLIONS)

(UNAUDITED)

	Six Months Ended June 30,
	2008			2007

CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(127.2	)	$	(60.6	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation, amortization and cost of timber harvested	53.4			57.7
Loss from unconsolidated affiliates	9.5			8.2
(Gain) loss on sale or impairment of long-lived assets	(0.3		)	14.2
Stock-based compensation expense related to stock plans	4.9			3.3
Other operating credits and charges, net	72.2			—
Exchange (gain) loss on remeasurement	(9.1		)	19.1
Cash settlement of contingencies	(9.6		)	(6.9		)
Pension (payments) expense, net	6.2			(2.1		)
Other than temporary impairment on investments	2.5			—
Other adjustments, net	1.6			(6.1		)
Increase in receivables	(23.5		)	(20.2		)
(Increase) decrease in inventories	11.0			(0.7		)
Increase in prepaid expenses	(1.6		)	(1.9		)
Decrease in accounts payable and accrued liabilities	(6.7		)	(14.4		)
(Decrease) increase in deferred income taxes	(38.4		)	0.5
Net cash used in operating activities	(55.1		)	(9.9		)

CASH FLOWS FROM INVESTING ACTIVITIES:
Property, plant, and equipment additions	(75.9		)	(132.3		)
Purchase of a business	(44.6		)	—
Investments in and advances to joint ventures	(4.2		)	(4.9		)
Receipt of proceeds from notes receivable	54.4			—
Cash paid for purchase of investments	(172.9		)	(1,538.1		)
Proceeds from sales of investments	209.3			1,669.4
Decrease in restricted cash under letters of credit and credit facility requirements	(12.0		)	(10.8		)
Other investing activities	1.1			2.0
Net cash used in investing activities	(44.8		)	(14.7		)

CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings of long-term debt	12.0			13.0
Repayment of debt	(53.6		)	(0.2		)
Net borrowings (repayments) under revolving credit agreements	(11.8		)	29.6
Sale of common stock under equity plans	—			2.7
Payment of cash dividends	(31.0		)	(31.4		)
Net cash provided by (used in) financing activities	(84.4		)	13.7

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS	1.6			0.9

Net decrease in cash and cash equivalents	(182.7		)	(10.0		)
Cash and cash equivalents at beginning of period	352.1			265.7

Cash and cash equivalents at end of period	$	169.4		$	255.7

The accompanying notes are an integral part of these unaudited financial statements.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES
(AMOUNTS IN MILLIONS) (UNAUDITED)

									Additional						Accumulated			Total
	Common Stock			Treasury Stock					Paid-in			Retained			Comprehensive			Stockholders’
	Shares	Amount		Shares		Amount			Capital			Earnings			Loss			Equity

Balance, December 31, 2007	116.9	$	116.9	13.8		$	(302.0	)	$	439.0		$	1,630.1		$	(64.5	)	$	1,819.5
Net loss	—	—		—		—			—			(127.2		)	—			(127.2		)
Issuance of shares for employee stock plans and other purposes and other transactions	—	—		(0.2	)	4.7			(2.0		)	—			—			2.7
Amortization of restricted stock grants	—	—		—		—			1.1			—			—			1.1
Purchase of shares for treasury	—	—		—		—			—			—			—			—
Cash dividends	—	—		—		—			—			(31.0		)	—			(31.0		)
Other comprehensive loss	—	—		—		—			—			—			(14.8		)	(14.8		)
Balance, June 30, 2008	116.9	$	116.9	13.6		$	(297.3	)	$	438.1		$	1,471.9		$	(79.3	)	$	1,650.3

The accompanying notes are an integral part of these unaudited financial statements.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

LOUISIANA-PACIFIC CORPORATION AND SUBSIDIARIES
(AMOUNTS IN MILLIONS) (UNAUDITED)

	Quarter Ended June 30,						Six Months Ended June 30,
	2008			2007			2008			2007

Net loss	$	(80.8	)	$	(23.3	)	$	(127.2	)	$	(60.6	)

Other comprehensive income (loss), net of tax
Foreign currency translation adjustments	(8.0		)	(1.6		)	(0.8		)	(2.0		)
Unrealized gain (loss) on derivative instruments	0.3			—			0.4			(0.1		)
Unrealized loss on marketable securities	(7.6		)	—			(15.7		)	—
Defined benefit pension plans:
Amortization of prior service cost	0.2			0.2			0.4			0.4
Amortization of net loss	0.4			0.9			0.9			1.8
Other comprehensive income (loss), net of tax	(14.7		)	(0.5		)	(14.8		)	0.1

Comprehensive loss, net of tax	$	(95.5	)	$	(23.8	)	$	(142.0	)	$	(60.5	)

The accompanying notes are an integral part of these unaudited financial statements.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 – BASIS FOR PRESENTATION

The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and, in the opinion of management, include all adjustments (consisting of normal recurring adjustments, except for other operating credits and charges, net referred to in Note 11) necessary to present fairly, in all material respects, the consolidated financial position, results of operations and cash flows of LP and its subsidiaries for the interim periods presented. Results of operations for interim periods are not necessarily indicative of results to be expected for an entire year. For those consolidated subsidiaries in which LP’s ownership interest is less than 100%, the outside shareholders’ interests are shown as minority interest. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in LP’s Annual Report on Form 10-K for the year ended December 31, 2007.

NOTE 2 – STOCK-BASED COMPENSATION

For the quarters ended June 30, 2008 and 2007, the total compensation expense related to LP’s stock-based compensation plans was $2.7 million and $1.7 million. For the six month periods ended June 30, 2008 and 2007, the total compensation expense related to all of LP’s stock-based compensation plans was $4.9 million and $3.3 million. At June 30, 2008, 2,633,029 shares were available under the current stock award plans for stock-based awards. For the six month period ended June 30, 2008, the fair value of the options granted was estimated using the Black-Scholes option-pricing model with the following weighted-average assumptions: a risk free interest rate of 2.97%; an expected volatility factor for the market price of the Company’s common stock of 30.2% (based upon historical volatility over the expected life of the options); a dividend yield of 3.9%; and an expected life of 5 years (based upon historical experience of the options). For the six month period ended June 30, 2007, the fair value of the options granted was estimated using the Black-Scholes option-pricing model with the following weighted-average assumptions: a risk free interest rate of 4.82%; an expected volatility factor for the market price of the Company’s common stock of 29.7% (based upon historical volatility over the expected life of the options); a dividend yield of 2.6%; and an expected life of 4 years (based upon historical experience of the options). The weighted-average fair value of options and stock settled stock appreciation rights (SSARs) granted during the six month periods ended June 30, 2008 and June 30, 2007 was $2.85 and $5.54.

NOTE 3 - INVESTMENTS

Short-term and long-term investments held by LP are debt securities designated as available for sale and are reported at fair market value using the specific identification method. The following table summarizes unrealized gains and losses related to these investments as of June 30, 2008 and December 31, 2007:

			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
Dollar amounts in millions	Cost		Gains		Losses		Value
June 30, 2008

U.S. treasury and government agency securities	$	55.1	$	—	$	—	$	55.1
Commercial paper	48.0		—		—		48.0
Corporate obligations	95.0		0.1		0.5		94.6
Auction rate securities	128.4		—		56.9		71.5
Total marketable securities	$	326.5	$	0.1	$	57.4	$	269.2

December 31, 2007

U.S. treasury and government agency securities	$	25.0	$	—	$	—	$	25.0
Commercial paper	66.1		0.1		—		66.2
Corporate obligations	142.7		—		0.4		142.3
Auction rate securities	130.9		—		31.4		99.5
Total marketable securities	$	364.7	$	0.1	$	31.8	$	333.0

As of June 30, 2008, LP had $71.5 million ($151.8 million, par value) of principle invested in auction rate securities (ARS). The ARS held by LP are securities with long-term nominal maturities for which the interest rates are reset through a dutch auction each month. These auctions historically have provided a liquid market for these securities. LP’s investments in ARS represent interests in collateralized debt obligations supported by pools of residential and commercial mortgages, credit linked notes and bank trust preferred notes.

Consistent with the company’s investment policy guidelines, the ARS investments held by the company all had AAA or equivalent credit ratings (except for one corporate ARS rated AA) at the time of purchase. With the liquidity issues experienced in global credit and capital markets, the ARS held by LP at June 30, 2008 have experienced multiple failed auctions as the amount of securities submitted for sale has exceeded the amount of purchase orders. As of June 30, 2008 and July 29, 2008, all securities still maintained the original credit ratings from Moodys Investment Services and Standard and Poors from date of purchase and continue to pay interest according to their stated terms. On July 24, 2008, Fitch Ratings did downgrade three of our securities from AAA to A. Based upon published reports, this downgrade was based upon Fitch’s updating its rating criteria as well as their opinion of the deterioration in the average portfolio quality.

The estimated market value of the company’s ARS holdings at June 30, 2008 was $71.5 million, which reflects a $80.3 million adjustment to the par value of $151.8 million. Based upon LP’s evaluation of the structure of LP’s ARS holdings and current market estimates of fair value from issuing banks, LP has recorded an unrealized pre-tax loss of $56.9 million ($34.9 million after-tax) as a temporary decline in value that has been recorded in other comprehensive income as a reduction in shareholders’ equity. Of this amount, LP recognized $12.8 million ($7.8 million after-tax) in the second quarter of 2008 and $25.5 million ($15.6 million after-tax) in the first six months of 2008. LP also recorded an other-than-temporary impairment of $1.7 million ($1.0 million after-tax) in the second quarter of 2008 and $2.5 million ($1.5 million after-tax) in the first six months of 2008 that was recorded as non-operating income (expense).

LP reviews its marketable securities routinely for other-than-temporary impairment. The primary factors LP used to determine if an impairment charge must be recorded because a decline in value of the security is other than temporary include whether (i) the fair value of the investment is significantly below its cost basis, (ii) the financial condition of the issuer of the security (including its credit rating), (iii) the length of time that the cost of the security has exceeded its fair value and (iv) LP’s intent and ability to retain the investment for a period of time sufficient to allow for any anticipated recovery in market value. At June 30, 2008, LP has the ability and intent to hold these investments until a recovery of fair value, which may be maturity, and does not consider these investments to be other-than-temporarily impaired.

NOTE 4 – FAIR VALUE MEASUREMENTS

Effective January 1, 2008, LP adopted Statement of Financial Accounting Standards (SFAS) No. 157, “Fair Value Measurements” (SFAS 157), for financial assets and liabilities and any other assets and liabilities carried at fair value. This pronouncement defines fair value (FV), provides guidance on how to measure FV under generally accepted accounting principles, and expands FV measurement disclosures. LP’s adoption of SFAS 157 did not have a material impact on its consolidated financial position and results of operations.

SFAS 157 defines FV as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. SFAS 157 also establishes a FV hierarchy, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Under this standard, LP is required to classify these financial assets and liabilities into two groups: recurring – measured on a periodic basis and non-recurring – measured on an as needed basis.

SFAS 157 describes three levels of inputs that may be used to measure fair value:

Level 1	Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
Level 2	Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in inactive markets; or valuations based on models where the significant inputs are observable or can be corroborated by observable market data.
Level 3	Valuations based on models where significant inputs are not observable. Unobservable inputs are used when little or no market data is available and reflect the Company’s own assumptions about the assumptions market participants would use.

Assets measured at fair value on a recurring basis are summarized in the following table.

Dollar amounts in millions	June 30, 2008		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)

Available for sale securities	$	460.3	$	58.8	$	330.0	$	71.5

Trading securities	17.9		2.1		—		15.8

Derivatives	1.2		—		1.2		—

Total	$	479.4	$	60.9	$	331.2	$	87.3

Available for sale securities measured at fair value are recorded in cash and cash equivalents, short-term investments, long-term investments and restricted cash on LP’s condensed consolidated balance sheets. Included in available for sale securities are money market funds, U.S. government agency securities, commercial paper, corporate debt obligations and auction rate securities.

Money market funds are valued at quoted market price from broker or dealer quotations or transparent pricing sources at the reporting date, which represent Level 1 inputs. Government agency securities, commercial paper and corporate obligations are determined by evaluations based on observable market information from broker or dealer quotations, which represent Level 2 inputs.

Due to the lack of observable market quotes on LP’s auction rate securities (ARS) portfolio, LP evaluates the structure of its ARS holdings and current market estimates of fair value, including fair value estimates from issuing banks that rely exclusively on Level 3 inputs. These inputs include those that are based on expected cash flow streams and collateral values, including assessments of counterparty credit quality, default risk underlying the

security, discount rates and overall capital market liquidity. The valuation of LP’s ARS investment portfolio is subject to uncertainties that are difficult to predict. Factors that may impact LP’s valuation include changes to credit ratings of the securities as well as to the underlying assets supporting those securities, rates of default of the underlying assets, underlying collateral value, discount rates, counterparty risk and ongoing strength and quality of market credit and liquidity.

Trading securities consist of rabbi trust and grantor trust financial assets which are recorded in other assets in LP’s condensed consolidated balance sheets. The rabbi trust holds the assets of the Louisiana-Pacific Corporation 2004 Executive Deferred Compensation Plan (EDC), a non-qualified deferred compensation plan which allows certain management employees to defer receipt of a portion of their compensation and contribute such amounts to one or more investment funds. The assets of the rabbi trust are invested in mutual funds and are reported at fair value based on active market quotes, which represent Level 1 inputs.

The grantor trust provides funds for benefits payable under LP’s Supplemental Executive Retirement Plan (SERP), an unfunded, non-qualified defined benefit plan that provides supplemental retirement benefits to key executives. The assets of the grantor trust, which are the cash surrender value of corporate-owned life insurance, are invested in index funds which are reported at fair value based on the underlying share prices provided by the third party insurance carrier, which represents Level 3 inputs.

Derivatives are valued using quoted forward foreign exchange prices or quoted commodity index prices, depending upon the derivative, at the reported date, which represents Level 2 inputs.

The following table summarizes assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the period.

Dollar amounts in millions	Available for sale securities			Trading securities			Total

Balance at January 1, 2008	$	99.5		$	17.1		$	116.6
Total realized/unrealized losses
Included in other-than-temporary investment impairment	(2.5		)	—			(2.5		)
Included in investment income	—			(1.3		)	(1.3		)
Included in other comprehensive loss	(25.5		)	—			(25.5		)
Balance at June 30, 2008	$	71.5		$	15.8		$	87.3

The amount of total losses for the period included in net loss attributable to the fair value of changes in assets still held at the reporting date	$	(2.5	)	$	(1.3	)	$	(3.8	)

NOTE 5 – EARNINGS PER SHARE

Basic net income per share is computed using the weighted-average number of common shares outstanding during the period. Diluted net income per share is computed using the weighted-average number of common shares and dilutive potential common shares outstanding during the period. Dilutive potential common shares primarily consist of employee stock options, stock settled stock appreciation rights (SSARs), restricted stock units and restricted common stock.

SFAS No. 128, “Earnings per Share,” requires that employee equity share options, non-vested shares and similar equity instruments granted by the Company be treated as potential common shares outstanding in computing diluted earnings per share. Diluted shares outstanding include the dilutive effect of in-the-money options, which is calculated based on the average share price for each fiscal period using the treasury stock method. Under the treasury stock method, the amount the employee must pay for exercising stock options, the amount of compensation cost for future service that the Company has not yet recognized, and the amount of tax benefits that would be recorded in additional paid-in capital when the award becomes deductible are assumed to be used to repurchase shares.

Dollar and share amounts in millions, except per	Quarter Ended June 30,						Six Months Ended June 30,
share amounts	2008			2007			2008			2007
Numerator:
Income attributed to common shares:
Loss from continuing operations	$	(79.4	)	$	(15.6	)	$	(125.3	)	$	(51.6	)
Loss from discontinued operations	(1.4		)	(7.7		)	(1.9		)	(9.0		)
Net loss	$	(80.8	)	$	(23.3	)	$	(127.2	)	$	(60.6	)

Denominator:
Basic - weighted average common shares outstanding	102.9			104.2			102.9			104.1
Dilutive effect of stock plans	—			—			—			—
Diluted shares outstanding	102.9			104.2			102.9			104.1

Basic earnings per share:
Loss from continuing operations	$	(0.77	)	$	(0.15	)	$	(1.22	)	$	(0.50	)
Loss from discontinued operations	(0.02		)	(0.07		)	(0.02		)	(0.08		)
Net loss per share	$	(0.79	)	$	(0.22	)	$	(1.24	)	$	(0.58	)

Diluted earnings per share:
Loss from continuing operations	$	(0.77	)	$	(0.15	)	$	(1.22	)	$	(0.50	)
Loss from discontinued operations	(0.02		)	(0.07		)	(0.02		)	(0.08		)
Net loss per share	$	(0.79	)	$	(0.22	)	$	(1.24	)	$	(0.58	)

Stock options and SSARs to purchase approximately 4.8 million shares and 3.2 million shares for the quarter and six months ended June 30, 2008 and June 30, 2007 were considered anti-dilutive for purposes of LP’s earnings per share calculation due to LP’s net loss position in continuing operations.

NOTE 6 – RECEIVABLES

Receivables consist of the following:

Dollar amounts in millions	June 30, 2008			December 31, 2007

Trade receivables	$	76.6		$	56.5
Income tax receivables	169.4			157.2
Interest receivables	3.5			5.2
Other recievables	15.8			25.2
Allowance for doubtful accounts	(1.1		)	(1.0		)
Total	$	264.2		$	243.1

Other receivables at June 30, 2008 and December 31, 2007 consists primarily consist of short-term notes receivable, settlements, Canadian sales tax receivables and other items.

NOTE 7 – INVENTORIES

Inventories are valued at the lower of cost or market. Inventory cost includes materials, labor and operating overhead. The LIFO (last-in, first-out) method is used for certain log inventories with remaining inventories valued at FIFO (first-in, first-out) or average cost. The major types of inventories are as follows (work in process is not material):

Dollar amounts in millions	June 30, 2008			December 31, 2007

Logs	$	35.6		$	47.4
Other raw materials	31.4			27.5
Finished products	135.5			132.3
Supplies	7.5			8.1
LIFO reserve	(3.2		)	(3.2		)
Total	$	206.8		$	212.1

Inventory included in current assets of discontinued operations
Logs	$	—		$	—
Other raw materials	0.2			0.2
Finished products	3.2			5.7
Supplies	0.1			0.1
Total	$	3.5		$	6.0

NOTE 8 – BUSINESSES HELD FOR SALE AND DIVESTITURES

At June 30, 2008 and 2007, LP’s discontinued operations included its decking operations and residual charges from previously discontinued operations.

Sales and losses for these businesses are as follows:

	Quarter Ended June 30,						Six Months Ended June 30,
Dollar amounts in millions	2008			2007			2008			2007

Sales	$	(0.8	)	$	11.7		$	0.2		$	23.2

Loss from discontinued operations, net of tax	$	(1.4	)	$	(7.7	)	$	(1.9	)	$	(9.0	)

In the second quarter of 2007, LP recorded a loss of $9.5 million associated with impairment charges on assets held for sale to reduce the carrying value of these assets to their estimated sales price, which approximates the estimated fair market value of such assets, net of related selling expenses.

In the second quarter of 2008, LP recorded an increase of $2 million in its reserves for certain warranty obligations associated with LP’s decking products based upon a significant increase in warranty claims in the current period. This increase in reserves is charged against sales.

The assets of the discontinued operations included in the accompanying condensed consolidated balance sheets as of June 30, 2008 and December 31, 2007 are as follows:

Dollar amounts in millions	June 30, 2008			December 31, 2007

Inventories	$	3.5		$	6.0

Property, plant and equipment	11.9			11.9
Accumulated depreciation	(6.9		)	(6.9		)
Net, property, plant and equipment	5.0			5.0

Total assets of discontinued operations	$	8.5		$	11.0

NOTE 9 – BUSINESS ACQUIRED

In May 2008, LP completed the initial phase of its purchase of a 75% ownership interest in Masisa OSB Industria e Comercio S.A., which operates OSB assets located in Ponta Grossa, Brazil. The purchase is being made through LP Brasil Participacoes Ltda., a limited liability company, and a wholly-owned subsidiary of Louisiana-Pacific South America S.A., a wholly-owned subsidiary of LP. The minority ownership is subject to a put and call option that are exercisable three years after the date of initial closing of the acquisition and is being accounted for as mandatory redeemable minority interest and will be accreted over the life of the put and call to the estimated price which is the greater of $18.5 million plus interest or a multiple of earnings before interest and taxes (subject to certain adjustments). The purchase price was approximately $55.5 million, of which $44.6 million was paid in cash at the time of initial closing and the remaining $11 million (subject to closing date adjustments) will be paid at the final close. As of June 30, 2008, the purchase price was allocated to tangible assets acquired based on their book value as of the acquisition date with the remaining value allocated to goodwill. LP is obtaining an appraisal of the tangible and intangible assets and expects this allocation to be revised in the third quarter of 2008. Final close is anticipated in the third quarter of 2008.

The following table summarizes the estimated fair values of the assets and liabilities acquired as of the acquisition date.

Dollars in millions

Assets acquired:
Property, plant and equipment	$	70.0
Minority interest	(18.5		)
	51.5
Goodwill	4.0
Purchase price	$	55.5

NOTE 10 – INCOME TAXES

Accounting standards require that income tax expense for interim periods be determined by applying the estimated annual effective income tax rate, by income component, to year-to-date income or loss at the end of each quarter, then adding or subtracting the impact of any changes in reserve requirements or statutory tax rate changes, if any. Each quarter the income tax accrual is adjusted to the latest estimate and the difference from the previously accrued year-to-date balance is adjusted to the current quarter.

	Quarter Ended June 30,						Six Months Ended June 30,
Dollars in millions	2008			2007			2008			2007
Continuing operations	$	(136.2	)	$	(26.5	)	$	(218.0	)	$	(93.8	)
Discontinued operations	(2.3		)	(12.6		)	(3.1		)	(14.8		)
	(138.5		)	(39.1		)	(221.1		)	(108.6		)
Total tax benefit	(57.7		)	(15.8		)	(93.9		)	(48.0		)
Net loss	$	(80.8	)	$	(23.3	)	$	(127.2	)	$	(60.6	)

For the six months ended June 30, 2008, the primary differences between the U.S. statutory rate of 35% and the effective rate applicable to LP’s continuing operations relate to the Company’s foreign debt structure and state income taxes. For the six months ended June 30, 2007, the primary differences between the U.S. statutory rate of 35% and the effective rate applicable to LP’s continuing operations relate to the Company’s foreign debt structure, state income taxes and the favorable resolution of an outstanding state tax contingency.

The components and associated estimated effective income tax rates applied to the quarter and six month periods ended June 30, 2008 and 2007 are as follows:

	Quarter Ended June 30,
	2008					2007
Dollars in millions	Tax Benefit			Tax Rate		Tax Benefit			Tax Rate
Continuing operations	$	(56.8	)	42	%	$	(10.9	)	41	%
Discontinued operations	(0.9		)	39	%	(4.9		)	39	%
	$	(57.7	)	42	%	$	(15.8	)	40	%

	Six Months Ended June 30,
	2008					2007
	Tax Benefit			Tax Rate		Tax Benefit			Tax Rate
Continuing operations	$	(92.7	)	43	%	$	(42.2	)	45	%
Discontinued operations	(1.2		)	39	%	(5.8		)	39	%
	$	(93.9	)	42	%	$	(48.0	)	44	%

LP and its domestic subsidiaries are subject to U.S. federal income tax as well as income taxes of multiple state jurisdictions. LP’s foreign subsidiaries are subject to income tax in Canada, Brazil and Chile. Federal income tax examinations for the years through 2004 have been effectively settled and audits for 2005 and 2006 began in the fourth quarter of 2007. LP is subject to state and local income tax examinations for the tax years 2000 through 2006. Canadian returns have been audited through 1999 and Revenue Canada commenced an examination of the years 2002 through 2004 in the second quarter of 2007.

NOTE 11 – OTHER OPERATING CREDITS AND CHARGES, NET

The major components of “Other operating credits and charges, net” in the Consolidated Statements of Income for the quarter and six months periods ended June 30, 2008 and 2007 are reflected in the table below and are described in the paragraphs following the table:

	Quarter Ended June 30,					Six Months Ended June 30,
Dollar amounts in millions	2008			2007		2008			2007

Timber recovery	$	—		$	1.5	$	—		$	1.5
Anti-trust litigation settlement	(48.0		)	—		(48.0		)	—
Gain on insurance recovery	—			—		5.8			—
Insurance settlement	8.7			17.7		9.4			17.7
Loss on facility explosion	(5.3		)	—		(5.3		)	—
Additions to product related contigency reserves	(24.3		)	—		(26.8		)	—
Construction related legal reserves	(1.2		)	—		(1.2		)	—
	$	(70.1	)	$	19.2	$	(66.1	)	$	19.2

In the first quarter of 2008, LP recorded a net gain of $4.0 million associated with product related warranty reserves and insurance settlements associated with LP’s hardboard class action suit and other associated hardboard siding liabilities.

In the second quarter of 2008, LP recorded a loss of $24.3 million associated with product related contingency reserves in connection with LP’s settlement of a hardboard class action suit and a resultant gain of $8.7 million associated with expected reimbursed insurance settlements associated with these reserves; a loss of $48 million associated with LP’s settlement of a product related anti-trust litigation matter; a loss of $5.3 million associated with a facility explosion and a loss of $1.2 million associated with a contractor default on a construction project.

In the second quarter of 2007, LP recorded a gain of $17.7 million associated with a gain from a favorable verdict on a legal suit associated with our insurance on hardboard siding and a gain of $1.5 million associated with a settlement with the Canadian government on the reduction of certain of LP’s timber licenses in British Columbia.

NOTE 12 – GAINS (LOSSES) ON SALE OR IMPAIRMENT OF LONG-LIVED ASSETS

The major components on “Gain (loss) on sale or impairment of long-lived assets” in the Consolidated Statements of Income for the quarter and six month period ended June 30, 2008 and 2007 are reflected in the following table:

	Quarter Ended June 30,					Six Months Ended June 30,
Dollar amounts in millions	2008			2007		2008		2007

Gain (loss) on sale of long-lived assets	$	(0.1	)	$	0.3	$	0.3	$	(0.2	)
Impairment charges on long-term assets	—			—		—		(5.0		)
	$	(0.1	)	$	0.3	$	0.3	$	(5.2	)

In the first quarter of 2007, LP recorded an impairment charge of $5.0 million on a sawmill located in Quebec that is held for sale to reduce the carrying value of this equipment to its estimated sales price, net of related selling expenses.

NOTE 13 - INVESTMENTS IN AND ADVANCES TO AFFILIATES

LP has investments in affiliates that are either accounted for under the equity method or the cost method based upon the specific terms of the agreement as well as advances to affiliates. The significant components of these investments and advances are as follows:

Dollar amounts in millions	June 30, 2008		December 31, 2007

Investments accounted for under the equity method	$	148.9	$	153.7
Investments accounted for under the cost method	44.5		44.5
Total	$	193.4	$	198.2

At June 30, 2008, LP’s significant equity method investees and its ownership interest and principal business activity in each investee, were as follows:

	Ownership %

U.S. GreenFiber	50	%	Established to manufacture and sell cellulose insulation products

AbitibiBowater – LP	50	%	Established to construct and operate I-Joist facilities in Eastern Canada

Canfor – LP	50	%	Established to construct and operate an OSB facility in British Columbia, Canada

These investments do not meet the Regulation S-X significance test requiring the inclusion of the separate investee financial statements or summarized financial information.

LP sells products and raw materials to the AbitibiBowater-LP entity and purchases products for resale from the AbitibiBowater-LP and Canfor-LP entities. LP eliminates profits on these sales and purchases, to the extent the inventory has not been sold through to third parties, on the basis of its 50% interest. For the quarters ended June 30, 2008 and 2007, LP sold $2.3 million and $4.1 million of products to AbitibiBowater-LP and purchased $12.0 million and $22.0 million of I-joist from AbitibiBowater-LP. LP also purchased $28.7 million and $19.0 million of OSB from Canfor-LP during the quarters ended June 30, 2008 and 2007. For the six months ended June 30, 2008 and 2007, LP sold $3.9 million and $7.3 million of products to AbitibiBowater-LP and purchased $20.5 million and $36.9 million of I-joist from AbitibiBowater-LP. LP also purchased $42.1 million and $36.8 million of OSB from Canfor-LP during the six months ended June 30, 2008 and 2007.

NOTE 14 – LEGAL AND ENVIRONMENTAL MATTERS

Certain environmental matters and legal proceedings are discussed below.

Environmental Matters

LP is involved in a number of environmental proceedings and activities, and it may be wholly or partially responsible for known or unknown contamination existing at a number of other sites at which we have conducted operations or disposed of wastes. Based on the information currently available, LP believes that any fines, penalties or other costs or losses resulting from these matters will not have a material adverse effect on our financial position, results of operations, cash flows or liquidity.

Siding Matters

On October 15, 2002, a jury returned a verdict of $29.6 million against LP in a Minnesota State Court action entitled Lester Building Systems, a division of Butler Manufacturing Company, and Lester’s of Minnesota, Inc., v. Louisiana-

Pacific Corporation and Canton Lumber Company. On December 13, 2002, the United States District Court for the District of Oregon, which maintains jurisdiction over a previously settled nationwide class action suit involving OSB siding manufactured by LP and installed prior to January 1, 1996, permanently enjoined the Minnesota state trial court from entering judgment against LP with respect to $11.2 million of the verdict that related to siding that was subject to the nationwide OSB siding settlement. LP satisfied this verdict, less the enjoined amount, during the second quarter of 2004. Lester’s appealed the District Court’s injunction to the Ninth Circuit Court of Appeals and, on October 24, 2005, the Court of Appeals vacated the District Court’s injunction. As a result of this decision, the injunction was lifted and the state court judgment of $11.2 million was entered on December 22, 2006. We timely filed our notice of appeal to the Minnesota State Court of Appeals. On February 5, 2008, the Minnesota State Court of Appeals reversed the $11.2 million judgment entered against LP on December 22, 2006. Lester’s timely appealed the Minnesota State Court of Appeals’ decision, and the Minnesota State Supreme Court has granted review. Based upon the information currently available, LP believes that any further liability related to this case is remote and, accordingly, has not recorded any accrual with respect to its potential exposure.

Lockhart Wood Treatment Facility

In 2004, LP received a pre-litigation settlement demand letter from a law firm purporting to represent more than 1,400 potential plaintiffs who allegedly experienced various personal injuries and property damages as a result of the alleged release of chemical substances from LP’s wood treatment facility in Lockhart, Alabama during the period from 1953 to 1998. The letter was also addressed to Pactiv Corporation (“Pactiv”), from whom LP acquired the facility in 1983. LP, Pactiv, and the potential plaintiffs agreed to exchange information and enter into non-binding mediation, which failed in December 2005. In the first quarter of 2006, plaintiffs’ attorneys filed 19 separate lawsuits on behalf of 1,429 plaintiffs. Each of these cases was filed in, or removed to, the United States District Court for the Middle District of Alabama, which court has designated a lead case under the caption Melanie Chambers v. Pactiv Corp et al, CV 2:06-CV-00083-LES-CSC. After extensive motion practice and the beginning of discovery, Pactiv and plaintiffs have agreed to a tentative settlement. In addition, LP has agreed to a tentative settlement pursuant to which LP would make a payment of $7.75 million to resolve this matter subject to reaching agreement on the terms of a full and final release of all claims by all plaintiffs. LP accrued the amount of this tentative settlement in the fourth quarter of 2007.

Anti-trust Litigation

LP was named as one of a number of defendants in multiple class action complaints filed on or after February 26, 2006 in the United States District Court for the Eastern District of Pennsylvania. These complaints were dismissed or consolidated into two complaints under one caption: In Re OSB Anti-Trust Litigation, Master File No. 06-CV-00826 (PD). The first complaint is a consolidated amended class action complaint filed on March 31, 2006 on behalf of plaintiffs who directly purchased OSB from the defendants from May 1, 2002 through the date the complaint was filed (the direct purchaser complaint). The second complaint is a consolidated amended class action complaint, filed on June 15, 2006, on behalf of plaintiffs who indirectly purchased OSB from the defendants from May 1, 2002 through the date the complaint was filed (the indirect purchaser complaint).

The plaintiffs in both amended and consolidated complaints described above moved for and received class certification and sought treble damages totaling approximately $4.8 billion alleged to have resulted from a conspiracy among the defendants to fix, raise, maintain and stabilize the prices at which OSB is sold in the United States, in violation of Section 1 of the Sherman Act, 15 U.S.C. §1. The plaintiffs in the indirect purchaser complaint also seek similar remedies under individual state anti-trust and competition laws as well as consumer protection laws. LP believes that the claims asserted were without merit, but after being ordered to settlement conference by the judge in the cases, LP decided that in order to limit the risks and costs associated with a prolonged trial schedule; it would settle the direct and indirect lawsuits. The settlement agreements are subject to court approval which is expected to occur in the fourth quarter of 2008. LP accrued the settlement in the second quarter of 2008.

Other Proceedings

LP is party to other legal proceedings. Based on the information currently available, LP believes that the resolution of such proceedings will not have a material adverse effect on its financial position, results of operations, cash flows or liquidity.

NOTE 15 – GOODWILLGoodwill by operating segment is as follows:

Dollar amounts in millions	OSB		Siding		Other		Total

Balance at January 1, 2008	$	232.5	$	32.4	$	8.6	$	273.5
Purchase of a business	—		—		4.0		4.0
Other					0.3		0.3
Balance at June 30, 2008	$	232.5	$	32.4	$	12.6	$	277.5

In connection with the acquisition described at note 9, LP recorded $4.0 million of goodwill.

NOTE 16 – SELECTED SEGMENT DATA

LP operates in three segments: Oriented Strand Board (OSB); Siding; and Engineered Wood Products (EWP). LP’s business units have been aggregated into these three segments based upon the similarity of economic characteristics, customers and distribution methods. LP’s results of operations are summarized below for each of these segments separately as well as for the “other” category which comprises other products that are not individually significant. Segment information was prepared in accordance with the same accounting principles as those described in Note 1 of the Notes to the financial statements included in LP’s Annual Report on Form 10-K for the year ended December 31, 2007.

	Quarter Ended June 30,								Six Months Ended June 30,
Dollar amounts in millions	2008			2007			% change		2008			2007			% change

Net sales:
OSB	$	163.5		$	223.3		(27	)	$	318.4		$	412.2		(23	)
Siding	123.6			131.0			(6	)	230.7			235.1			(2	)
Engineered Wood Products	65.3			85.7			(24	)	125.8			165.9			(24	)
Other	36.0			23.9			51		64.7			47.6			36
Less: Intersegment sales	(1.4		)	(2.7		)			(3.2		)	(5.0		)
	$	387.0		$	461.2		(16	)	$	736.4		$	855.8		(14	)

Operating profit (loss):
OSB	$	(34.5	)	$	(44.6	)	23		$	(96.6	)	$	(109.1	)	11
Siding	8.9			17.2			(48	)	9.2			26.6			(65	)
Engineered Wood Products	(9.2		)	3.9			(336	)	(17.3		)	10.3			(268	)
Other	(0.2		)	(2.7		)	93		(2.6		)	(0.6		)	(333	)
Other operating credits and charges, net	(70.1		)	19.2			(465	)	(66.1		)	19.2			(444	)
Gain (loss) on sale or impairment of long-lived assets	(0.1		)	0.3			(133	)	0.3			(5.2		)	106
General corporate and other expenses, net	(22.1		)	(20.8		)	(6	)	(46.2		)	(43.3		)	(7	)
Foreign currency gains (losses)	(5.1		)	(12.7		)	60		4.3			(15.5		)	128
Other than temporary impairment of investments	(1.7		)	—					(2.5		)	—
Investment income	10.6			23.4			(55	)	23.4			43.8			(47	)
Interest expense, net of capitalized interest	(12.7		)	(9.7		)	(31	)	(23.9		)	(20.0		)	(20	)
Loss from operations before taxes	(136.2		)	(26.5		)	(414	)	(218.0		)	(93.8		)	(132	)
Benefit for income taxes	(56.8		)	(10.9		)			(92.7		)	(42.2		)
Loss from continuing operations	$	(79.4	)	$	(15.6	)	(409	)	$	(125.3	)	$	(51.6	)	(143	)

NOTE 17 – POTENTIAL IMPAIRMENTS

LP continues to review certain operations and investments for potential impairments. LP’s management currently believes it has adequate support for the carrying value of each of these operations and investments based upon the anticipated cash flows that result from estimates of future demand, pricing and production costs assuming certain levels of planned capital expenditures. However, should the markets for the relevant products continue to remain at

levels significantly below cycle average pricing or should LP decide to invest capital in alternative projects, it is possible that impairment charges will be required.

LP also reviews from time to time possible dispositions of various assets in light of current and anticipated economic and industry conditions, its strategic plan and other relevant circumstances. Because a determination to dispose of particular assets can require management to make assumptions regarding the transaction structure of the disposition and to estimate the net sales proceeds, which may be less than previous estimates of undiscounted future net cash flows, LP may be required to record impairment charges in connection with decisions to dispose of assets.

As of June 30, 2008, LP was engaged in discussions relating to the possible sale of a non-operating manufacturing complex in Quebec, Canada. Should these discussions result in the sale of this permanently curtailed complex, LP may be required to record an impairment charge with respect to the affected assets.

NOTE 18 – CONTINGENCY RESERVES

LP is involved in various legal proceedings incidental to LP’s business and is subject to a variety of environmental and pollution control laws and regulations in all jurisdictions in which it operates. LP maintains reserves for these various contingencies as follows:

Dollar amounts in millions	June 30, 2008			December 31, 2007

Environmental reserves	$	8.4		$	9.4
Hardboard siding reserves	24.4			12.8
Other reserves	56.9			9.4
Total contingency reserves	89.7			31.6
Current portion of contingency reserves	(67.8		)	(15.8		)
Long-term portion of contingency reserves	$	21.9		$	15.8

Hardboard Siding Reserves

LP has established reserves relating to certain liabilities associated with a settlement agreement relating to a nationwide class action lawsuit involving hardboard siding manufactured or sold by corporations acquired by LP in 1999 and installed prior to May 15, 2000 which was approved by the applicable courts in 2000. This settlement is discussed in greater detail in the Notes to the financial statements included in LP’s Annual Report on Form 10-K for the year ended December 31, 2007. During the second quarter of 2008, LP increased its reserves in connection with this class action settlement as a result of increased claims activity. The additional reserves reflect revised estimates of undiscounted future claim payments and related administrative costs. LP believes that the reserve balance at June 30, 2008 will be adequate to cover future payments to claimants and related administrative costs. However, LP is investigating the circumstances that gave rise to the increase in claims activity in order to better assess its potential future liability associated with such settlement agreement and may be required to further adjust its related reserves in the fourth quarter.

The activity in the portion of LP’s loss contingency reserves relating to hardboard siding contingencies for the first six months of 2008 and 2007 are summarized in the following table.

Dollar amounts in millions	June 30, 2008			June 30, 2007

Beginning balance, December 31,	$	12.8		$	25.3
Accrued to expense	18.2			—
Payments made for claims	(5.9		)	(5.2		)
Payments made for administrative costs	(0.7		)	(1.3		)
Ending balance	$	24.4		$	18.8

NOTE 19 – DEFINED BENEFIT PENSION PLANS

The following table sets forth the net periodic pension cost for LP’s defined benefit pension plans during the quarter and six month period ended June 30, 2008 and 2007. The net periodic pension cost included the following components:

	Quarter Ended June 30,						Six Months Ended June 30,
Dollar amounts in millions	2008			2007			2008			2007

Service cost	$	2.4		$	2.4		$	4.9		$	4.9
Interest cost	4.4			3.9			8.9			7.9
Expected return on plan assets	(5.1		)	(4.8		)	(10.5		)	(9.5		)
Amortization of prior service cost