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Fair Value Measurements
 6 Months Ended
Jun. 30, 2011
Fair Value Disclosures [Abstract]  
Fair Value Measurements
FAIR VALUE MEASUREMENTS
LP’s investments that are measured at fair value on a recurring basis and are categorized using the fair value hierarchy. The fair value hierarchy has three levels based on the reliability of the inputs used to determine fair value. Level 1 refers to fair values determined based on quoted prices in active markets for identical assets. Level 2 refers to fair values estimated using significant other observable inputs and Level 3 includes fair values estimated using significant non-observable inputs.


Dollar amounts in millions
June 30, 2011
 
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
$
19.6


 
$
—


 
$
4.4


 
$
15.2


Trading securities
2.8


 
2.8


 
—


 
—


Total
$
22.4


 
$
2.8


 
$
4.4


 
$
15.2


Dollar amounts in millions
December 31, 2010
 
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
$
15.4


 
$
—


 
$
3.8


 
$
11.6


Trading securities
2.6


 
2.6


 
—


 
—


Total
$
18.0


 
$
2.6


 
$
3.8


 
$
11.6






Available for sale securities measured at fair value as of June 30, 2011 and December 31, 2010 are recorded in cash and cash equivalents, long-term investments and restricted cash on LP’s consolidated balance sheets. Included in available for sale securities are auction rate securities (ARS).
Due to the lack of observable market quotations on a portion of LP’s 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. Subsequent to June 30, 2011, LP generated $18.7 million in cash plus accrued interest associated with the sale of these securities with a fair market value as of June 30, 2011 of $18.5 million ($35.9 million, par value). This sale will result in a gain of $14.4 million which LP will recorded in the third quarter of 2011.
Trading securities consist of rabbi trust financial assets which are recorded in other assets in LP’s 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 quotations, which represent Level 1 inputs.
The following table summarizes assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the periods ended June 30, 2010 and June 30, 2011.


Dollar amounts in millions
Available for
sale  securities
Balance at December 31, 2009
$
26.3


Total realized/unrealized gains (losses) included in other comprehensive income
7.8


Balance at June 30, 2010
$
34.1


The amount of total losses for the period included in net loss attributable to the fair value of changes in assets still held at June 30, 2010
$
—


 
 
Balance at December 31, 2010
$
11.6


Total realized/unrealized gains (losses) included in other comprehensive income
3.6


Balance at June 30, 2011
$
15.2


The amount of total losses for the period included in net loss attributable to the fair value of changes in assets still held at June 30, 2011
$
—






Carrying amounts reported on the balance sheet for cash, cash equivalents, receivables and accounts payable approximate fair value due to the short-term maturity of these investments.
During the quarter ended March 31, 2010, LP recorded an impairment charge of $1.1 million to reduce the carrying value of the assets held for sale to the estimated selling price less selling cost. The valuation of these assets was determined using level one inputs under the market approach.
During the quarter ended March 31, 2011, LP recorded an impairment charge of $3.6 million to reduce the carrying value of the assets held for sale to the estimated selling price less selling cost. The valuation of these assets was determined using level one inputs under the market approach. Additionally, LP recorded an impairment charge of $1.9 million on assets no longer used.
During the quarter ended June 30, 2011, LP recorded an impairment charge of $2.5 million on assets no longer used.