GUARANTEES AND INDEMNIFICATIONS

LP is a party to contracts in which LP agrees to indemnify third parties for certain liabilities that arise out of or relate to the subject matter of the contract. In some cases, this indemnity extends to liabilities arising out of the negligence of the indemnified parties, but usually excludes any liabilities caused by gross negligence or willful misconduct of the indemnified parties. LP cannot estimate the potential amount of future payments under these agreements until events arise that would trigger the liability. See Note 21 of the Notes to the financial statements included in LP’s Annual Report on Form 10-K for the year ended December 31, 2012 for further discussion of LP’s guarantees and indemnifications.

In connection with LP's joint venture with Casella Waste Systems, U.S. Greenfiber, both LP and Cassella Waste Systems guaranteed a portion of U.S. Greenfiber's bank debt. During the first quarter of 2013, U.S. Greenfiber defaulted on such loan. The lender subsequently called such loan. During the first quarter of 2013, LP and Casella made payments of $0.2 million in connections with this default. LP has recorded a current liability of $2.1 million (equal to one-half of such loan outstanding as of March 31, 2013) included in the caption "Accounts payable and accrued liabilities" and increased its investment in U.S. Greenfiber for the same amount.

LP provides warranties on the sale of most of its products and records an accrual for estimated future claims. Such accruals are based upon historical experience and management’s estimate of the level of future claims. The activity in warranty reserves for the first three months of 2013 and 2012 are summarized in the following table:



	Quarter Ended March 31,
Dollar amounts in millions	2013			2012
Beginning balance	$	21.4		$	30.3
Accrued to expense	0.3			0.3
Payments made	(2.3		)	(2.7		)
Total warranty reserves	19.4			27.9
Current portion of warranty reserves	(12.0		)	(12.0		)
Long-term portion of warranty reserves	$	7.4		$	15.9

The current portion of the warranty reserve is included in the caption “Accounts payable and accrued liabilities” and the long-term portion is included in the caption “Other long-term liabilities” on LP’s Condensed Consolidated Balance Sheets.