Good day and welcome to thisAmerican Woodmark Corporation Conference Call. Today's call is being recorded.The company has asked us to read the following Safe Harborstatement under the Private Securities Litigation Reform Act of 1995. All forward-looking statementsmade by the company involve material risks and uncertainties and are subject tochange based on factors that may be beyond the company's control. Accordingly,the company's future performance and financial results may differ materiallyfrom those expressed or implied at any such forward-looking statements. Such factors include, but are notlimited to those described in the company's filings with the Securities andExchange Commission and the annual report to shareholders. The company does notundertake to publicly update or revise its forward-looking statements even ifexperience or future changes make it clear that any projected results expressedor implied therein will not be realized. At this time, I would like toturn the call over to Vice President and Treasurer, Mr. Glenn Eanes. Please goahead, Sir.

Good morning, ladies andgentlemen and welcome to this American Woodmark conference call to review ourfiscal 2008 second quarter results. Thank you for taking time out of your busyschedule to participate. Participating on the call todayfrom American Woodmark Corporation will be Kent Guichard, our Chief ExecutiveOfficer and President and Jon Wolk, our Chief Financial Officer. Kenthas some opening comments and then he will turn over the call to Jon to reviewthe quarter and outlook on the future. At this time, I would like to turn thecall over to Kent.Kent?

Thank you, Glenn, and goodmorning everybody, and again, I would like to add my welcome to all of you whohave taken out to call into for our second fiscal quarter conference call. In aminute I will turn the call over to Jon for our normal review of the quarter,followed by a question-and-answer period. But this morning, as supposed to whatwe usually do before Jon runs through the details of the quarter, I would liketo take a few minutes to, just an overall context to, the current state ofaffairs. For those who have listened in onour last several calls, during the last few quarters we've shared with you ourexperience in the market and most notably, our experience to get to that depththe industry was bouncing along the bottom. We were not experiencing much of anup tick but we were also not experiencing a significant additionaldeterioration in activity from the level we saw really, in the spring andthrough the early and mid summer. As events have continued tounfold during the last few months, it now appears that we were experiencing afalse bottom. Every week seems to bring another revelation regarding thefallout from subprime and other credit issues. Many of the major builders havesignificantly curtailed or even ceased in some markets all building activity.We have seen a relatively rapid rise in existing home liftings on the marketand a reduction in the turnover which is in some markets, the month’s supply ofexisting houses for resale is 14 to 16 months. So, we are really seeing that go upsignificantly and that's resulted in potential buyers of new homes exercisingthe contingency, if they have one, to get out of their new home contract. And,if they don't, they even walk away from deposits because they can't get outtheir equity in their existing home, which has caused another…

Thanks Kent. As you all know, this morningwe released the results of our second quarter fiscal year 2008 that endedOctober 31, 2007. In case you've not had the chance to read the release, hereare few highlights. Net sales for the quarter were$160.3 million, down 24% below the prior year second quarter. Net income forthe quarter was $1.2 million, down 87% below the prior year's second quarternet income of $9.2 million. Diluted earnings per share of $0.08 for the quarterwere 86% lower than the $0.57 we earned in the prior year's second quarter. For the six months ended October31st, net sales were $326.3 million, down 25% versus the prior year's first sixmonths. Net income was $6.3 million, down 72% versus the prior year's first sixmonths and diluted earnings per share of $0.42 were 70% lower than the $1.40 weearned in the prior year's first six months. As we've previously discussed, inFebruary of this year, we completed the transition that had commenced inOctober of 2005, at a certain low margin products, including the in-stockcabinet business at Lowe's. As in the recent calls, I willcontinue to provide a separate breakout of the transition impact, as our prioryear comparative numbers will continue to include sales relating to theseproducts for the next two quarters. Regarding our second quarter salesperformance, our previous sales guidance anticipated that our sales of coreproducts for the fiscal year would be 8% to 12% below core sales levelsachieved in the prior year, with sales declining more in the first half andless in the second half of the year. Our actual core product sales declined by17% and 18% in the second quarter and first half of fiscal year 2008respectively, a slightly greater decline than we had expected. Total sales were 24% lower thanin the second quarter of fiscal 2007, as the impact…

Thank you. The question-and-answersession will be conducted electronically. (Operator Instructions). And we willgo first to Mark Herbek with Cleveland Research.

Good morning, guys.

Good morning.

Good morning, Mark.

You didn't revise or remodelexpectations versus 90 days ago. There is something you are seeing andeverything your end market that gives you confidence. Remodel is going toimprove sequentially as we go forward or is this simply a function of easiercomparisons?

The majority of it is going to bethe easy comparisons. If you go back, the market for us really started to goJanuary, February of last year and so, we are going to come up here after theholidays with much lower comps. And Jon mentioned, basically flat on the newconstruction side. It's the same thing over there, it's basically you got lowercomps. What we are seeing on the remodelside is that there is still activity over there. It's certainly not robust,there is activity. It is from our experience, a highly promotional dependent.So, when the retailers run promotional activity, advertising promotionalactivity, we get a reasonable amount of activity. But as soon as thosepromotional dollars stop, it drops pretty quickly.

Are you seeing anything differentout of the home centers, in regards to 2008, when it comes to promotions orprograms asking for additional support?

Well, I think there are twoquestions there. One, are we seeing anything different? New rule won't speakfor them. I'll tell you that we are involved with them. I won't talk about howthey are running their business. I'll talk about how we will run our businesswith them. And that is that, first and foremost, we are just going to continuewith kind of a normal calendar year, always tweak around with and experimentwith what is attractive to the consumer and what isn't unattractive to theconsumer. But we continue to work with them to be able to do that. So, thatactivity will kind of continue, I would say. They maybe high or maybe more butit will continue pretty much along the same lines. We are supporting them. Jonmentioned that part of our SG&A increase was more promotional dollars andwe are certainly supporting our customer in doing that and trying to maintainlevels of business and gain share. And some of the sales out there are littlemore expensive to drive through than they were, say, a year or two years ago.But we still think that it's supportable in terms of the margin structure, aseverybody that's delivering the value to the end consumer. The other thing I would say isthat we continue to work with most of our large retail customers in terms ofnext generation programs. So, it will be on the quality side, the service sidewhether they would be the layout of the stores and the departments in terms ofhow it's presented to the end consumer. There is a lot of work going on rightnow and a lot of retailers, especially big box retailers, to how to get closerin some cases, in some markets to a dealer type environment where you can get abetter connection with the end consumer and create more of a bond, level oftrust, which is needed to closing sale. So, we continue also to work with themon those long-term initiatives.

And then, last question. Just inregards to momentum throughout the quarter, working capital would suggest maybedemand was a little bit softer in the quarter. Can you talk a little bit abouthow the quarter progressed? And then, maybe what you are seeing at this pointin November?

Yeah, I'll talk in general terms.Normally, when we first started the quarter, we got into late summer and eventhe early fall, we saw a normal uptake in activity that you would expect withthe footprint. Now, it would be from a lower base obviously but when we firststarted to get into the fall selling season, we would consider to be arelatively normal footprint. When we got into the fall selling season, it isnot a peak like the traditional footprint would suggest, but nor did it last aslong as the traditional footprint would suggest. So, in general, I guess, I hopethat answers your question as that started out pretty much on the righttrajectory, didn't get as high and didn't last as long as we would expect itfrom the historical footprint, even considering that we started at a lowerlevel.

Thanks guys.

Okay.

Thank you. Next we'll go to PeterLisnic with Robert Baird

Good morning, it's actually John Haushalter turningon for Pete. The total kind of the balance sheet, if you look back, youraverage price on the shares was in the $26, $27 level for the quarter and youbought back about $6 million. In previous quarters you've been willing to spenda bit more at a higher share price, is there something we're reading into thator you need kind of cash to run the business given your outlook right now or--?

No.

Should we expect kind of activityto resume at a higher level perhaps?

Yeah, what our approach is on therepurchase is, just like we try to coach all you guys, market time it doesn'treally work and so, what we have as we set internal targets in terms of cashbalances. And when we have cash, that's an excess to that and we don't thinkthere is anything really strange going on in the market. Then we are in themarket as buyers and when our cash reserves hit or drop below our targets, weare out of the market until they recover. I wouldn't read anything into ouractivity, especially, on a short-term basis like the quarter. That's a signalof any change that's coming.

Okay. And then just turning overto the credits, I guess with the two customers, the $1.5 million that you guysreserved this quarter, is that fully those two customers or is that you guyskind of taking up proactive approach to the other ones on credit launch rightnow?

It's the ladder. It's actuallyboth. It's certainly in a 100% write-off on the two customers that did file forbankruptcy. Although we hope there can be some collection there, we haven'tassumed that will occur. In addition, we proactively review the rest of theportfolio and made some additional adjustments based upon that review.

Okay. And I guess --

One thing, this is Kent. Don'tread into that as it's done. I mean, if we do, the situation remains fluid andwhen you go through market cycle like we are going through now, there are lotof builders out there that are distressed and what we did as we went through,like we do every quarter and did a complete evaluation of all of our exposurein light of the performance with these companies. If there is a builder outthere that if we learned about tomorrow all of a sudden it goes from hanging inthere to severe distress, will every quarter through that based on what we seeour exposure is.

Okay. And in general, are youkind of tightening your AR days? With those customers, you are gradually takingevery one down?

Well, that will be a verydesirable outcome from our perspective, which is that the reality is that asKent indicated, several of these companies are distressed and their ability tojust reduce our DSO is not necessarily there right now given their own cashflow dynamics, but, having said that, we are working very closely with thenumber of these customers. There are in some cases, weekly or even dailyconversations on cash flow, on housing starts and so forth, and on when cash isgoing to commence to get the accounts receivable balance managed down as muchas possible.

I'd also add to that from an operationalstandpoint, our terms, we believe are well within reason. The thing can get youexposed, really get you exposed is if you can't do the punch list and get thehouse signed-off and get it into their system there starts a clock tick. If you wait a week or two weeksor three weeks or however long it is to get that last piece of molding there orthat last door or that last part to make that last service call, the clockisn't ticking yet. And so there is a real premium, particularly with customersthat they are working at the margins, with making sure that our first timeinstalls are complete and we get sign-off, so we get into the system. Once we get into the system theprocess works pretty normally and we get paid in a timely fashion. The realthing that we can control is to make sure that our first time complete installis done and we get them. We get the superintendent to sign-off and get the samecleared into the system.

Okay. And then just turning overto the gross margin line, you attributed the decline to about four or fivefactors? If you were to weight those factors, is that really just the lowersales volume or the one I am kind of curious about is just the fuel prices,because that seen to spike up. This diesel prices seem to spike up in thequarter and just what's your outlook is there?

Yes, the impact of diesel pricesis actually going to get worse, because after the conclusion of the quarter theyshot up another $0.30 per gallon. So, that's going to become more and more ofan impact, and as I said, we're evaluating taking pricing actions there withcustomers because of that dynamic. But in terms of order ofmagnitude, I'd say that the biggest impact upon us at this point, is the lowersales volume and the labor inefficiencies that that causes. And, as I indicatedin my comments, having reduced the direct labor force by 26%, 27% over the last18 months, we've been pretty much on that. We tend trail it, we don't lead it.So there is some of that impact as well.

Okay. Thank you. I'll get back inqueue.

Thank you.

Thank you. (OperatorInstructions). And we'll go next to Robert Kelly with Sidoti.

Good morning. Thank you fortaking my question.

Good morning.

Hey, Bob.

I have just a follow-up on thediesel-fuel expense. Is that kind of included in your guidance, some sort offlat level with the recent spike for the remainder of the year?

Yeah, it's not going to move the needleversus the guidance that we've just put out there.

You are not expecting any sort ofrelief there?

No. Not at this point.

Also a question, you guys have targetedthe top builders for market share. Now, we've heard quite a bit about marginpressure up and down the supply chain throughout the year here. Is thatsomething you are experiencing or is this just an opportunity for those guys togo after the lower price point that you guys are providing?

I am not sure, I understand your question.

We've heard from many guys in thesupply chain, how the builders are looking to hammer the suppliers over thehead. Is that something that you are experiencing or are they kind of tradingdown to your price point? It seems like you have done a pretty good job on the builderside. Could you just give us a little color there?

Yeah, I am not sure in ourcategory there is especially between suppliers, that you really get a lot oftrading down or price points between suppliers. You don’t go from one supplierto another for that. I mean, fundamentally, it's different that way than theremodel market, where you'll get a significant amount of business in custom,semi-custom and then in our stock category. The builder market has a tensionand it would be mostly the stock manufacturers, primarily due to lead times.So, large production builders can't live with the lead times that come out ofsay a custom house. So, a lot of the volume, at leastall the volume from them, everybody pretty much has pretty similar price pointsand products. Now you have trade up strategy, but it is pretty similar. And, interms what we have seen from the builder, it varies by builder. Builder's thatare still trying to keep up their production rates are very aggressively tryingto bring down the price of the house and we are certainly in active discussionsabout how to do that. Value engineering, you can value engineer you can go to alower price point products there are all sorts of ways to do that. We have had pretty goodexperience, in terms of working with our builders in partnership, to be able tomake sure that the end result accomplishes something that all parties can livewith. And I think more of what I'm starting to see out there in terms of anemerging trend from the builders is, we have hit a lot at this. They are startingto talk about hitting really an inelastic part of the demand curve. And that isby taking another 20,000 or 30,000 or 40,000 out of a house, you are still notgoing to sell the house. And so, they have gone more interms of trying to get the inventory out and at least resume some production asopposed to continuing to drive down the point of a house, because they arefinding that, giving a few more bucks or extra plasma TV's in incentive ofwhatever, really isn’t moving inventory, because they are really in aninelastic section of the curve. We have to be very competitive. AsI mentioned in my opening comments, we certainly need to be competitive at theopening price points. But that's anything different, quite frankly, than it'salways been, it has always been very competitive at the opening price point.So, we think that right now, we are seeing a situation where our customers areworking with us and so far we think it's manageable.

That's great. And then finally,is there a level where your outlook drops or you have a chance to maybe go,consolidate some sort of your manufacturing capacity to maybe get the coststructure lower. Is that something that's even on the table at this point?

Well. The way I would answer thatquestion is first of all, we are constantly reviewing our asset base. For us tomake a decision on our asset base, it's a three to five year decision. What wewould have to do is come to the conclusion that, three to five years from now,for whatever reason, we would have excess assets, whether it's a facility orwhatever it might be. And right now, our evaluationagain, based on our view of the world, it's when not if those things going toget back to something normal. The real question is what, do you look like onthe other side. And we still think in terms of our core facilities, that on theother side that all of those our good assets are in the right place that wewill be going to earn an adequate return on. In terms of the shorter termissue, one is, again that would be inconsistent with looking out, in managingthe asset base longer term. But the other one is, say you think it's going tolast a year, but if you close the major facility, over the first 12 months, youare probably going to lose money. You are going to have an initial hit,certainly a book hit, some cash hit, to close hit and get you out of thatfacility. It will be a large facility, you would be covered by the Warren Act,you have to go through all the notifications and everything else in the world. But the other thing that Johnmentioned a little bit earlier, it's the similar impact in terms of when you reducehead count significantly. It's even after you go through those initialexpenditures, you're going to have to rebalance your entire network. We arevery freight intensive. For example, after the customer you're going to have tochange all your freight range, you're going to have to redo your distributionnetwork, you're going to have to change your internal flows. So, you're goingto go through even after the initial expenditures, you're going to go throughanother period of time where you're going to generate a lot of thisinefficiency, you rationalize your network. So, it's not easy to close downour mainline facility in the integrated global goods manufacture. So, wewouldn't do that based on a quarter or two quarters. We would only do that ifwe looked out many years, three to five years, and decided that we just didn'thave the platform. We didn't have the footprint that we think was appropriatefor, out there in a normalized environment.

Okay, great. Thank you.

Good.

Thank you. (OperatorInstructions). We'll go next to Keith Johnson with Morgan Keegan.

Hi. Good morning.

Hey, good morning.

I had a couple of quickquestions. First is on the quarter, it looks like the tax rate came in a littlebit lower and where you guys were in the first quarter of fiscal year. I didn'tknow if there was anything broader than that, if you could give us littleguidance on tax rate for the remainder of 2008?

Yeah, Keith. It's been comingdown as the year has been progressing, simply because our forecasted amount ofnet income has been going down and our permanent differences are roughlyconstant. So, the impact of the permanent difference is in relation to thepre-tax income has just been going up and that's been causing the effectiverate to go down. I would say that for the remainder of the fiscal year, ourexpectation is that the effective tax rate is going to be in the vicinity of --

Alright, so the --

So, I am getting those numberright?

Okay.

Roughly 34% give or take.

Okay, for the year? Okay. And, afollow-up question on the doubtful account allowance.

Yeah.

On the customers that we're starting to see the financial distressshow out, can you give us an idea what size, either from maybe a number ofhomes per year or some type of run rate, give us an idea of the size of thosecustomers?

There were numbers of largebuilder with a pretty large footprint and publicly traded. We're primarilyfocused on the eastern side of the United States. Another one was theWest Coast privately held company that was really focused as I said, prettymuch Midwest. In terms of some of the otherones that are showing some distress, it's sort of once a gallop.

Okay, I appreciate the answers.Thanks.

Sure.

Thank you. And at this time thereare no further questions. I would like to turn the program back over to Mr.Glenn Eanes for any additional or closing comments.

It seems there are no additionalquestions, this concludes our call. And again, I would like to thank you fortaking your time to participate. And speaking on behalf of the Manager of AmericanWoodmark, we appreciate your continuing support. Thank you.

That does conclude today'sconference. You may disconnect your lines at this time.