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4% ro 5% growth next year, reaching a total of $125 billion. We expect growth in both oonsumer and professional categories, with consumer sales representing 2R of th total and produa sales to professftnal custmrers tbe otber l/3.

ask, particularly as a new year lff"AT lies aheali Wherever I 4-nYU go around the giobe. people approicnes.. Gen6ratiy i leave iore- casting to the economists, relying instead on cornmon sense to lead me in the right direction. I am always mindful good times are never as good as they seem andbad times can be filed with winning qportrnities.

By making the best of bad tines, our L-P tean has in the past three years returned 2737o apprc*iation to shareholders. In the fint nine months of '93 we've ex@eded our prior record breaking full year earnings. rily'e've done it by being resourceful ard keeping foremost in mind what our customen are going to need in the funre.

We were looking to the future when we opened our first OSB plant in 1978 with 130 million feet of capacity. We were willing to take what otbers saw as a big risk. Over the past 15 years, thanks to the acceptance of our custometrs, we've creat€d a whole new industry segment to fiil the void created by a diminishing supply of plywood. This year North American OSB production increased to neady 10 billion feet with L-P accounting for A7o of the total volume. And we're still growing. We've announced expansions of Inner-Seal OSB plants into Venezuela and Ireland where government plantations are plentiful and new industry is encouraged.

Consider next tbe fuore for engineered lunber. Today the market for wide dimension lumber is about 5 billion feet with wood l-joists accounting for about lVo. By 2ffi0

While the overall market will grow, increases will not be even throughout the cormtry. 1994 will be a regional versus a national bousing matet with some states showing strong growth. Texas and Colorado will continue to recovar because of pent-up demand after several years of depressed housing. The Soutb, Northwest and Cdifcnia will p'robabty remain slow and higily competitive due 0o the @noentration of military and aviation indusries and job unerainty in those areas.

Our optimism is centered on the fet tbat constsuction of new hmes and aparturents hit a 3-lf2 yat high in the fall. This is prinarily due to mortgage rates being at tbeir lowest level in the last generation. We arc also seeing onsistent monthly increases in building permit applicatinns, which suggests more construction activity in the months abead. The National Association of Home Builders reoently reported Oat over 60% of its members expect sales increases over the next six mmths.

Not all rehilen will increase or even maintain their existing mrket shtre in the years to aqne. In addition to economic frtons, store expansion by several national md regional home improvement retailers has md will continue to ounrip the projected overall home improvement sales increase. Retailers as well as oontrrcttr<rientod btrsine.sses will need !o find ways to improve their efficiency o withstand the aggressive competition moving inio maftets across the United States.

The number one key to future growth is the develry ment of a stnategic plan that focuses on local business conditions including employment levels, competition, areas of cornpetency, and the needs of the community. Time will be the currency of tbe 1990s and successful retailers must better service the needs of their customer base. This suggests providing a high value equation including a combination of the shopping experierrce, trust and perceived product cosL Those retailers best able to meet these new customer demands will be the winners in the years ahead.

It will be more important than ever that retailers market their store through effective signage, both outside and inside Oe store, making crystal clear statements which communicate the store's position in the market to its customer base. In the end, bigger will not necessarily be better and the retailers who best service their customers' needs will experience higher than average growth and be "the competition" in their markel

Empty buildings are slowly filling. Wrenching changes in corporate America's defense section will allow resources to move to other uses. Transitions while difficult and painful are America's strength - the ability to reorient and change. The risk is policy makers will kill flexibility viaregulatory fiat or bursts of protectionism.

For 1994 a pair of threes would not seem an unreasonable forecast - near 3Vo on both inflation and growth. The interest rate decline is probably history, as they will likely bounce around before short tem rates slowly rise. Modest growth and inflation could be "Geritol" for expansion, allowing it to continue at le:lst through mid-decade.

Excitement in 1994 may well be in the policy arena as efforts to change the medical system continue and tottering progrcss towards additional reductions in global trade barriers hopefully is invigorated.