Good day ladies and gentlemen and welcome to the second quarter 2008 Drew Industries Incorporated earnings conference call. My name is Katrina and I will be your coordinator for today. At this time, all participants are in a listen only mode. We will conduct a question and answer session towards the end of this conference. (Operator instructions) As a reminder, this conference is being recorded for replay purposes. I would now like to turn the presentation over to our host for today's call, Mr. Ryan McGrath with Drew Industries Investor Relations. Please proceed.

Thank you. Good morning everyone and welcome to Drew Industries 2008 second quarter conference call. I'm Ryan McGrath with Lambert Edwards, Drew's Investor Relations firm. I have with me today members of Drew's management team including Leigh Abrams, CEO and a Director of Drew; Fred Zinn, President and a Director of Drew; David Webster, President and CEO of Kinro and Director of Drew; Jason Lippert, President and CEO of Lippert Components, and a Director of Drew; and Joe Giordano, CFO and Treasurer of Drew. I want to take a few minutes to discuss our quarterly results. However, before we do so, it is my responsibility to inform you that certain statements made in today's conference call regarding Drew Industries and its operations may be considered forward-looking statements under the Securities Laws. As a result, I must caution you there are a number of factors, many of which are beyond the company's control, which could cause actual results and events to differ materially than those described in the forward-looking statements. These risk factors are identified in our press releases, our Form 10-K for the year ended 2007 and in our Form 10-Q for three months ended March 31, 2008, all filed with the SEC. With that, I'd like to turn the call over to Leigh Abrams. Leigh?

Thank you, Ryan and good morning and welcome to all of you on this call and to all of those listening on the Internet. As Mark Twain said in The Tale of Two Cities, “This is the best of times and the worst of times.” We all know about today's worst of times. The general economy is bad and possibly in recession. The consumer confidence is at extremely low levels. Both the RV and manufactured industries have experienced deep sales declines to some of the lowest levels in many years, and as a result, Drew sales and profits are below last year for the second quarter and six months periods. However, for the best of times, despite all of the difficulty, we continue to report profitable results to generate strong cash flow, to reduce our debt, and to gain market share. In addition, we just completed the acquisition of Seating Technology with pre-acquisition annual 2007 sales of about $40 million and also acquired a patent to effectively stabilize parked towable RVs. We believe that both transactions will result in positive growth for Drew. These transactions along with Drew's stock buyback of about 197,000 shares utilized about $36 million of our cash. Even though we also reduced debt during this period and had to pay much higher prices for inventory, we still have cash available. While our sales have declined, our sales content per RV continues to increase, which confirms market share growth in our RV segment. This RV content growth has been accomplished by continued emphasis of our strategic goals, which are to gain market share, to introduce new products, to make acquisitions while keeping overhead low. The healthy RV Industry in the longer term will work with our customers in their efforts to build RVs that address consumer concerns…

Thank you, Leigh. Since this is my first presentation to you as President of Drew, I thought I would give you a brief insight into my vision for the company. As you know, Leigh and I worked together for many years, probably more years than either one of us would like to admit and I really don't envision any sweeping changes in Drew's direction, because Leigh and I have the same basic philosophy on the key factors that have and will continue to make Drew successful. The first key factor in our success has been our focus on cash flow. For more than 25 years ago, when we were in very different businesses, Drew went through some difficult times. And during the difficult years that followed that period, we learned the extremely valuable lessons of focusing on cash flow and low overhead. Two years ago, these lessons and the business climate led us to focus on cost reduction and return on assets. Since then, we've closed 19 plants and eliminated nearly $11 million of fixed costs. We reduced capital expenditures from an average of $25 million annually in 2004 through 2006 for less than $9 million this year in 2008. During the last two years, we've collected over $25 million from the sale of facilities. All this has significantly strengthened our balance sheet and that will be critical in our ability to take advantage of strategic opportunities that usually arise in difficult economies like this. The second key factor is the careful disciplined acquisition strategy. Caution doesn't mean that we're going to avoid all risks; it means we evaluate many opportunities to find those few where we are most likely to control the risks and reap the rewards. Although we'll continue to be careful and disciplined in the future, that…

Thank you, Fred. In addition to the decline in demand for RVs and manufactured homes in 2008, we have experienced extraordinary increases in our raw material costs. Based on our current sales volume, we now estimate these raw material cost increases aggregate more than $70 million on an annualized basis. However, we are working with our customers to pass these cost increases along as quickly as possible. Despite this, these factors point to an adverse impact on Drew's operating results for the balance of 2008 and likely into 2009. And at this point, we are unable to quantify the impact. While there are no short-term cures for the difficulties that confront Drew in the industries we serve, we have prepared for these conditions by streamlining operations and reducing fixed costs over the last two years. During the 2008 second quarter, fixed cost reductions added $1.4 million to operating profit as compared to the 2007 second quarter. These fixed cost reductions are expected to benefit operating profit by approximately $5 million for all of 2008 in addition to the $6 million in savings we realized in 2007. Further, we have reduced our manufacturing work force by over 450 employees since June 2007. In the RV segment, an important key to our growth has been the ability to increase our content per RV. I should point out that the reference in the press release to our $1,725 content per travel trailer and fifth-wheel RV produced over the last 12 months does not include the impact of the July acquisition of Seating Technology, which will add approximately $150 to our content per unit. June manufactured housing industry production statistics are not yet available, but we estimate that our content per manufactured home produced was approximately $1600 for the 12 months ended June 2008.…

Thank you, Joe, and again we congratulate you on your promotion. Katrina, with that, we'll take questions.

Thank you. (Operators instructions) The first question comes from the line of Ed Aaron representing RBC Capital Markets. Please proceed. Ed Aaron – RBC Capital Markets: Hi good morning everybody. Few questions for you. I was hoping you could give us the change – the year-over-year change in your inventory on the balance sheet, if you adjust out the impact of inflation.

Inflation and higher quantities both impacted our inventories this quarter. As you know, sales dropping rapidly and some of the longer term commitments for inventory purchases we had, we did see an increase in the quantities as well. It's probably, I don't know, two-thirds or half quantities and the balance raw material costs. Ed Aaron – RBC Capital Markets: That's helpful. Thanks.

I should point out also that it is raw materials. We carry, as you know, very, very little cash goods. So in terms of our risk of obsolescence or any of those types of things, it is almost nothing. We have only about two weeks of finished goods or less actually on hand. Ed Aaron – RBC Capital Markets: Okay, that's helpful, thank you. And then you mentioned in the press release the increase in the value of the inventory on the balance sheet for steel compared to what ran through the P&L for the second quarter. Would you happen to have those – if you would have made those comments in your last quarter press release, what would that increase have been?

I honestly don't remember. I don't think we have that information. We can look into it and get back to you. Ed Aaron – RBC Capital Markets: Okay thanks. And then just lastly, what was the contribution from price increases both in the RV segment and manufactured housing in the quarter?

Yes. I'd really not give that information right now. We are working and developing that. We will have some additional disclosures in the 10-Q. It wasn't a huge amount of selling price increasing but clearly we did have selling price increase. Ed Aaron – RBC Capital Markets: Okay, thanks guys.

The next question comes from the line of Kathryn Thompson representing Avondale Partners. Please proceed. Kathryn Thompson – Avondale Partners: Hi Thanks. Could you remind us what percentage of cost of goods sold is of steel and then aluminum?

Well, just broadly, we haven't really disclosed that type of information very specifically. But broadly, raw materials are about half of our sales dollar, a little bit more, and about half of those raw materials are steel and be a little bit more with the rise in steel. Aluminum is a lesser amount. I'm going to guess it is about, I don't know, 10% or 12% something in that range. Kathryn Thompson – Avondale Partners: Okay. And are there any offsets to cost of goods sold in terms of raw materials going into the back half of the year, above and beyond steel and aluminum, which are obviously –?

Price increases which we are working with our customers on.

You mean, offsets to help us or other –? Kathryn Thompson – Avondale Partners: Are there any other raw materials where you are seeing prices come down as opposed to increase?

No, I wish we were. Things are volatile, so one day you might see it down, next day – but generally prices are headed up except where we have been lucky enough to get some nice commitments, but generally prices even for our smaller raw materials are going up. Kathryn Thompson – Avondale Partners: In line of that, how do you again plan to get on pricing in the current market and how do you manage particularly around a market where dealers are liquidating inventories, you have overall lower volumes and just to continue march-up and commodity pricing?

That's why we are very unspecific in the press release. It is just too difficult to quantify just what's happening because price increases are going up constantly and our management team is constantly working with costumers to try to adjust what they are doing and that's why this has too many unknown factors to try to quantify what it is going to be. All I can tell you is that, over the years, our team has handled price increases very, very effectively. They have handled it effectively in the first six months of this year. Sure they will continue to handle it in the last six months of this year. And if you go back and look at our operating results for the last ten years, except for one quarter where we have a goodwill write-down, we have been profitable every single quarter. Whether times were good or times were bad or whether prices were going up or going down, both David and Jason are able to handle that, so [ph] operations was just not easy. Kathryn Thompson – Avondale Partners: Would you say that this is the most challenging pricing environment you've encountered in the past ten years at least?

Very difficult.

This is Dave Webster, but at the same time, I don't think that we have experienced anymore price increases. Sure, this has been a difficult time but take 30 years ago, we went through price increases and we continue to go through price increases. But, I don't feel like that this is anything new really. It is just something that we have to deal with and when we do, you deal with it.

Price of steel doubled in – price of hot rolled steel doubled in 2005 and it was challenging, but you go out and do what you got to do, just like any other supplier. Kathryn Thompson – Avondale Partners: Okay. So, do you feel like you are able to get margin on your price increases? I mean, not just pass on from a dollars basis but also in debt.

I think in this type of economy, that would be very, very difficult. I don't anticipate we'll be doing that. As you know, in the past, we've tried to work with our customers wherever we can. We are not trying to get any margin really on these price increases. We are just trying to hold our own. Kathryn Thompson – Avondale Partners: Okay. And just remind me, are you expecting to see a similar hit on SG&A given with fuel pricing, I know that was an issue in the previous quarter?

Yes, fuel, those are more – much, much more marginal issues. We don't use a whole hell of a lot of fuel, it is not a great percentage and sometimes it ticks up a little bit. Certainly, it has ticked up a little bit for us, but it's not going to be a startling change for us. Kathryn Thompson – Avondale Partners: Okay.

Because the bigger impact really on our delivery costs is if volume is down, we are putting less on the truckload or that kind of thing, but fuel is a factor but not that big. Kathryn Thompson – Avondale Partners: Okay. And then my final question, are your costumer balance sheets an issue in getting pricing in the current environment?

No. We always look at our costumer balance sheets. We have probably one of the best credit departments in the industry as you could see. June 30th, our day sales were 17 days outstanding. So, we have a terrific credit department but we have worked very closely with our customers. In the past, when we had to take a bad debt, we took a bad debt but as of now, we are in very good financial shape and our customers are paying on time as you can see about 17 days. Kathryn Thompson – Avondale Partners: Okay. Great, well thank you so much.

Thanks.

The next question comes from the line of John Diffendal representing BB&T Capital Markets. Please proceed. John Diffendal – BB&T Capital Markets: Yes, good morning. A couple of questions. You mentioned that July sales I believe were down about 20% and I assume that includes the Seating acquisition in that. If you back that out, there were things implied that ex acquisition, that decline was even more. Can you break that out for us a little bit, or give some thoughts there?

It was even more and probably would add on the order of 5% – 4% or 5%. John Diffendal – BB&T Capital Markets: Would have been down 24% to 25%, ex the acquisition?

As all of you know, the first part of July was particularly difficult. Our costumers were closing their factories for longer than they had last year, and that certainly impacted us and that is why that number is so big. John Diffendal – BB&T Capital Markets: I hear you. And the MH margins were back 11%, 12% after being in sort of single digit for a while. Give us some indication of what's driving that and is this sustainable?

Again, we did exit late last year a bunch of low-margin product sales. Removing those low-margin product sales helped increase profits, and in addition to that, I think Fred can add some more.

Yes. Specifically, we saw some nice improvements in our production efficiencies, our labor cost also. We are still a reasonably small company, so some of our accruals like for group insurance or workers' compensation, they fluctuate over time. And we saw some nice pickups in some of those areas relative to the prior year when those were a little bit higher than we would have liked.

That's great. Thank you. BB&T Capital Markets: That's great. Thank you.

The next question comes from the line of Mitch O'Brien representing CJS Securities. Please proceed. Mitch O'Brien – CJS Securities: Thank you. I have a quick question on cash. After the closing of the acquisitions, what would the cash balance be?

Well, what do we have, $43 million.

Less than $31 million.

Less than $10 million.

Yes. I mean, we used $31 million just for the acquisitions. Mitch O'Brien – CJS Securities: Right. And then you mentioned the manufactured homes exiting some of the less profitable businesses. Which order did that begin last year?

I'm sorry. Could you speak up, Mitch? Mitch O'Brien – CJS Securities: You mentioned you exited some of the lower performing parts of the business. When did that start?

It really started late in the second quarter and continued on primarily in the third quarter and into the early fourth quarter. Mitch O'Brien – CJS Securities: Okay. So you've basically lapped it now?

No. We're just starting to lap it. So we'll see probably some impact on the third quarter and maybe a little bit on the fourth quarter. Mitch O'Brien – CJS Securities: Okay.

But as we said, I think in the press release or in the speech, we are starting to see a little bit of turnaround there in terms of our market share in manufactured housing, picking up some business, not huge amounts but meaningful amounts. So hopefully that will help. Mitch O'Brien – CJS Securities: And still on manufactured housing, typically you see a little bit of margin decline off the peak in 2Q through the remainder of the year. Do you think that trend will remain or is there anything to really throw that off?

We really do not talk about future, but then you have to look at the past history. But we are – Fred mentioned in his speech our incentive compensation plan. As a result, our management team works very hard to control costs. Mitch O'Brien – CJS Securities: Right. But there's no fundamental change out there, so historical trends are probably better than nothing, right?

Yes. Although you know that things have changed so much with – Mitch O'Brien – CJS Securities: But the volumes in the space are – I mean, you're having some negative leverage related to the multi-section versus single.

Yes. We have a [ph] little of that now. Mitch O'Brien – CJS Securities: But all things being equal, it's not that you're rating more than maybe I'm expecting. I mean, the plan is pretty good in the quarter. Obviously, the COGS are a bigger issue in 3Q and it's just a matter of getting that aligned a little better. And the RV Segment, and just overall, if you take the July 20% down and assume that for the quarter, you end up running at about 140 for the quarter in revenue and you ran it at about 140 in Q4 of 2007. Is there any reason based on that run rate that you couldn't attain the same consolidated margin?

Yes. There is probably 100 reasons. I mean, raw material cost structures are entirely different. The product mix is very different. We've had significant cost cutting since then, facility consolidations. Though you can use it as a guide, there are a lot of things that have changed since then. Unfortunately, it's never simple. Mitch O'Brien – CJS Securities: Okay. So it's just – net-net, there's probably –?

Pluses and minuses. Mitch O'Brien – CJS Securities: It's not a very safe assumption, that's why.

No. You're right, it's – Mitch O'Brien – CJS Securities: Yes. But – okay, that's fine. Let's see, is there anything else? No. That's it. Thanks a lot, guys.

Mitch, thanks.

The next question comes from the line of Peter Eisele representing Snyder Capital. Please proceed. Peter Eisele – Snyder Capital: Thanks, good morning Leigh and Fred. Given the current environment, as you mentioned pretty tough, I would imagine that there is a – you're seeing a lot of opportunities on the acquisition side. Can you talk about that? And given that, where is your comfort level in terms of how much leverage you would apply to the balance sheet? And lastly, how do you take that into consideration versus perhaps buying your own stock?

Well, as you know we'll start out with the buying the stock question. We announced back I guess in November that we would buy up to 1 million shares of stock and so far we bought just under 200,000 shares, and we will continue to buy stock. As to leverage, at the current time, we have less than $20 million of debt, most of it is mortgage debt. There is no pressure on it. We have plenty of lines of credit. But historically, we have never been – Fred and I have been relatively conservative and with feeling never look to go to more than two times EBITDA and at this point, there is no risk of even coming anywhere near that even if we would buy back a substantial amount of stock because cash flow is still very strong. Peter Eisele – Snyder Capital: And can you talk, I mean, are you seeing more acquisition opportunities?

There are acquisition opportunities. There are lots of different opportunities now and that's why we are going ahead and negotiating lines right now. We have not rushed into them. Lines were available to us at any time we wanted them and we're just kind of waiting for what we hope will be the best time. But, at this particular moment, there is absolutely no need to worry about raising cash. But acquisitions are available, we made the one and we made the little patent acquisition. There are other companies out there but just like the homeowner who doesn't want to sell his $300,000 home that he's quoted was worth for $250,000. A lot of companies don't want to sell their company which they thought may have been worth $10 million and today is worth $7 million. So, you have that to contend with and we are just at this point continuing to look – always looking at acquisitions. When the right one comes along, we will make it. Peter Eisele – Snyder Capital: Okay, great. Thanks very much.

The next question comes from the line of Barry Vogel representing Barry Vogel & Associates. Please proceed. Barry Vogel – Barry Vogel & Associates: Good morning gentlemen.

Hi Barry. How you doing? Barry Vogel – Barry Vogel & Associates: Good. First question, it goes back to that raw material cost squeeze and maybe you can give us a little bit of color. Assuming the current trends continue, which includes obviously a worsening of the trend in RVs, going to the second half versus where it was in the first half, can you tell me the generality, again if current trends continue with worsening trends, what the raw material cost squeeze in the second half can be versus the first half? Again, it's a general question.

Yes. It is very difficult, Barry. First, I wish I had a good answer for myself, and second of all, I wish could be specific but really we can't do either one. We have raw – we have so many different raw materials that are all volatile. They are adjusting and increasing at different rates. The industry is in a flux. It's very, very difficult to say. We did say in the press release that on an annualized basis, our cost increases, our scheduling added about $70 million at current sale.

Annualized over the next 12 months.

Annualized at current sales levels. But in terms of the varying impacts of the industry and future raw material cost, it's impossible to say. Barry Vogel – Barry Vogel & Associates: Okay and –

We go back to the basic question, Barry. Barry Vogel – Barry Vogel & Associates: Excuse me?

We go back to the basics. What is our management team going to do, are they going to do what they have done very successfully in the past? Barry Vogel – Barry Vogel & Associates: I understand that. Now, it's obvious with the bankruptcies and closures that are occurring in RVs that you are going to have the most significant consolidation in this industry in a long time. And a perfect example of the consolidation is the announcement by Monaco of what they're doing in the Midwest which is really massive. If there is continuation of this consolidation, loss of individual costumers, how does that affect you as a company in terms of profitability if that continues?

I think really, Barry, we have very large market shares and as companies consolidate, hopefully they are becoming more efficient too so they're helping here, which is good for us in the long term. But in terms of the mix of customers, if one customer goes away or reduces its market share, someone else is picking it up and we're staying fairly stable. So I do not view it as a real risk. I view it as a long-term benefit to the industry, healthier industry is better for us. Barry Vogel – Barry Vogel & Associates: Okay.

This is Jason. I just want to add something real quick there. I think one of the important things to know is that both Kinro and Lippert are taking market share in a down market and that's about one of the only things you can do when business gets as bad as it is. But Monaco has made the announcement where their whole game plan and they already have 50% capacity right now, so – or whatever it was that they announced the other day. So, I mean, we have seen that trickle in the last four or five or six months, so we have seen the most of those effects. Their consolidation moved to Oregon and down to Warsaw from where they are at in Wakarusa, will have some effect to us because I think they continue to do a little bit less volume. But I mean, the bulk of what they are down, I mean, they're at right now in my opinion so.

And besides, we have plans both in Oregon and throughout Indiana. Barry Vogel – Barry Vogel & Associates: Okay. Now, as far as Seating Technology, if the RV pocket remains in its current state in the second half of the year, would this be accretive?

Yes. Barry Vogel – Barry Vogel & Associates: Can you give us some idea of the accretion?

Actually, it's not a big number. You can play with the numbers yourself, probably I would rather let you do that, but we paid them six times EBITDA. We did mention that last year. It's $40 million and we are gaining market share. Obviously, they're going to have a hard time maintaining that $40 million with the industry down, but with the cash in the bank, we were earning 1.5% on and an opportunity to extend Seating Technology, it should be nicely accretive. Barry Vogel – Barry Vogel & Associates: In the second half?

Yes. Barry Vogel – Barry Vogel & Associates: Even though (inaudible) deteriorating conditions?

Yes. Don't forget, we were earning 1.5% to 1.6%. Barry Vogel – Barry Vogel & Associates: I know, I understand.

We took that into effect when we made the acquisition. Barry Vogel – Barry Vogel & Associates: Now, as far as buying back stock versus acquisitions, I know you announced that the buyback, I think you stopped at about 24 or 25?

Right. Barry Vogel – Barry Vogel & Associates: And I believe you got down to as low as 15. That is a major change in the price to buy yourselves, and of course you know your company better than any acquisition.

Right. Barry Vogel – Barry Vogel & Associates: And I know you said you are going to continue to buy stock. But do the matrix change, with the stock let's say theoretically at $15 a share and I know it's rallied, compared to when you started it, will you might be more aggressive on a share buyback?

Let me first start out, Barry. Barry Vogel – Barry Vogel & Associates: (inaudible)

Let me first start out. At least in my opinion, we operate for the long term. Acquisitions benefit a company in the long term more than a stock buyback. But if I had to make a choice between a buyback and an acquisition, I would make an acquisition. But in the present financial condition that we are in, we can do both and we will continue to do both. Barry Vogel – Barry Vogel & Associates: Okay.

In terms of the dynamics, Barry, of course, when you are looking at a stock price, it's 30% lower, 40% lower than (inaudible) changes your view but – so it's what's going on in the world. In a weaker economy and a weaker industry also change your view. But at this level, it is much lower, it changes out view a little bit. Barry Vogel – Barry Vogel & Associates: Okay. So, you basically – you will lean towards an acquisition of your common stock at the right prices unless you had an acquisition that was so phenomenal that would change things?

Yes, but as Leigh said, fortunately for us, right now, we don't have to make that choice because the types of acquisitions that we do, we could still make a couple of them and we can still buy back shares and be fine in terms of our leverage. Barry Vogel – Barry Vogel & Associates: Thank you very much. You are doing a great job as usual.

The next question comes from the line of Jamie Wilen representing Wilen Management. Please proceed. Jamie Wilen – Wilen Management: Hi fellows, a couple of little different things. In the quarter, were the material fluctuations helpful or hurtful to your numbers? I was talking about your pretax profit numbers.

Material costs were up this quarter. Jamie Wilen – Wilen Management: So it already had an impact to margins in this quarter as well?

Right. But as you said it didn't impact it quite as quickly as we estimated three or four months ago, because volume was down, but it clearly did impact us. Jamie Wilen – Wilen Management: And as you move forward, obviously people would like to lightweight the chassis a little bit and that would cost us less money. Do we have any capabilities of altering our materials or light-weighting our chassis so it can be more fuel efficient and more economical and we get less material cost conscious?

Both Kinro and Lippert have products that they have spoken to our customers about, that will hopefully reduce the weight of an RV. Kinro, we have talked about it for years, has this new composite material that they can use for the outer skin. And Lippert has likewise at various shows introduced a number of products which they think can reduce the weight. And I think that that is the number one question right now why customers have them, how can they reduce the weight of the RV? Now, you have two choices. You can reduce the size, you reduce the weight, or you can do something to increase fuel utilization and I think probably the industry will work on all three areas at the same time. Jamie Wilen – Wilen Management: When you are talking about your acquisition criteria of six times EBITDA, is that current EBITDA or adjusted EBITDA after you've done all your (inaudible)?

No. That's a combination. Firstly, it's pro forma EBITDA that a former owner who was not going to come with us, was earning $1 million per year. We'll add that back less what we have to replace him with. It could be some very easy fixes we'll give to sell a credit for, for instance. He is buying material much worse than we are. We may give him credit for part of that material savings. But if we have to fix the product then we have to fix the factory; that we don't give him credit for. The easy stuff, we give him credit for. The stuff that we have to do work on, we don't give him credit for. Jamie Wilen – Wilen Management: Got you. Did you increase your availability by $100 million, is that what you said?

No, we are just saying that our – we have a shelf line with Prudential and they've indicated their willingness to increase it significantly.

The history of that, it was originally $60 million. We used $35 million. We prepaid part of it, but we have $25 million availability and they actually came to us and said we'll need to take that up much, much higher and they sent us close to $425 million and our banks are currently at $70 million, with an accordion feature that could go to $90 million. And we're deciding what numbers we want for both banks, for both Prudential and for the banks. That's something Fred will make decisions going forward on. Jamie Wilen – Wilen Management: Got you. And lastly on the competitive front, obviously you have to be much more well capitalized and probably more well managed than some of your competitors. Are any of them having difficulty and have any of them gone out of business?

I don't know if they're going out of business, but certainly they are – as you said, we're stronger than some of our competitors and hopefully we are starting to win some of those competitive battles.

We did lose one or two competitors, small ones in the last year or so. But people just – it wasn't for financial reasons. They just couldn't make money competing against us and they exited the product lines. Jamie Wilen – Wilen Management: Okay, very good. Great job, fellows. Thank you.

Okay, then.

The next question comes from the line of Arnold Brief representing Goldsmith & Harris. Please proceed. Arnold Brief – Goldsmith & Harris: Could you give us a little more color on how you view the impact of the housing legislation? What are people generally putting down on these mortgages with the down payment and raising the amount of the chattel mortgage versus the prices of the units? Give us some idea of the significance of this.

Some of our customers recently indicated that the average price of a home is $45,000, probably that's combined single section and multi-section. But in the past, the $40,000 limit that the FHA would guarantee was only basically for single section home. With $70,000 now, more multi-section homes will be qualified for FHA financing. So, that's got to help the industry whether it helps it by 100 units or 10,000 units, at this point, it's too early to say. Arnold Brief – Goldsmith & Harris: What are the average prices for multi units?

Oh, probably $70,000 or $80,000. Arnold Brief – Goldsmith & Harris: So you can finance almost the whole purchase at this point?

Yes.

Of an average one.

And then in addition (inaudible) $7500 credit I think will be very valuable. Arnold Brief – Goldsmith & Harris: I was trying to get to that. What is the average down payment required to get a chattel mortgage on this?

Well, it could be 10% but that again changes daily with the financing markets today. Arnold Brief – Goldsmith & Harris: Okay. My point is that if I bought a $60,000 unit and put 10% down?

Yes. Arnold Brief – Goldsmith & Harris: I get all my cash back from the tax credit?

Basically, assuming you pay taxes.

Don't forget that tax credit is really a loan by the government. You have to pay it back over 15 years. First of all, it's the maximum. It depends on lots of factors, the price of the house, income levels, and it is a loan that you pay back to the government. So, it's not quite as –

But it does – Arnold Brief – Goldsmith & Harris: On a cash basis, you can finance the home with nothing down?

Basically, yes.

If you get the full credit; if you're eligible for the full credit. Arnold Brief – Goldsmith & Harris: Is the industry excited about this bill? Are they –

It certainly won't hurt us. The only question is how much will it help us? It certainly will help us but the question is by how much? Arnold Brief – Goldsmith & Harris: Aren't most homes financed?

Yes, except for the retiree homes that very often use cash.

It should – there's no question. As Leigh said that this will be a help and clearly the industry is, I don't know if I'd say excited, but very happy about it. You look on the manufactured housing, (inaudible) Web site and you'll see some very nice commentary on it. Everybody is very happy about it. Back in the – just to put in perspective, back in the mid 90s when we were in the manufactured housing boom, there were 25,000 and more homes that were financed by FHA-insured loans. And last year, there were less than 2,000. So clearly there is quite a bit of room for expansion whether it is 1,000 homes or 10,000 homes, we'll find a way to save. Arnold Brief – Goldsmith & Harris: Thank you.

Thank you, Arnie.

The next question comes as a follow-up from the line of John Diffendal representing BB&T Capital Markets. Please proceed. John Diffendal – BB&T Capital Markets: My question was also sort of about this $7,500 tax credit. I was wondering if we can get, David and Jason, sort of input on that. I'm wondering if they Dave might remember back on the last time we had that and maybe give us any feedback they're hearing from their customers on that on whether – on what to expect to see in terms of any ramp up or just any sort of feedback from the customer space over the –

I'll let them both answer but the law passed yesterday. I'm sorry. John Diffendal - BB&T Capital Markets: No. I fully understand.

Customer feedback is probably negligible. John Diffendal - BB&T Capital Markets: Yes. I had to say, I mean one thing that you wonder about is people are sort of viewing it as almost like getting your down payment, but then you get it when you file taxes, so there is a gap there. I'm just trying to assess whether – I mean, it's a positive and certainly something that you can sell off of, but I'm just wondering what they think the impact will be and what the difference is here.

David, can you add anything?

I think it will have an impact on it, but here again it's just passed and I think we will see more homeowners. I think we are seeing it in Texas right now more than anywhere else. I think that the Texas market, as far as the manufactured housing industry is, is up over last year this month. I think with the type of home that we are building there and this being passed, I think it's going to help the industry. I think it will be a positive.

Jason, do you want to add anything to that?

No. John Diffendal - BB&T Capital Markets: And like you say, we haven't gotten the June shipment number yet. Is your sense given the flow of your business, I mean May was a disappointment, I mean it looked like we were tipping over as we were going into the better part of the selling season, is it your sense from an operating standpoint that June was similar to May and also should be down similarly?

I don't expect to see a huge difference in the industry. John Diffendal - BB&T Capital Markets: Okay. Thank you.

Okay.

The next question comes from the line of Adriano Almeida representing DGHM. Please proceed. Adriano Almeida – DGHM: Hey gentleman.

Hi. Adriano Almeida – DGHM: Hi. I'm wondering just to clarify here, is it the case that most of the raw material cost pressure, is that mostly on the RV side or is it kind of equally spread between RV and manufactured home?

It's equally spread. We use steel for both. And this time, we use aluminum for both industries so it's across the board. Adriano Almeida – DGHM: Okay. Is there a difference in the lag between these two industries and passing along those higher prices?

I think there are differences based upon products and not so much based upon industries but clearly we sell some products that have higher steel content over higher aluminum content, some we have lower. There are some differences. Adriano Almeida – DGHM: Okay. I'm wondering on the, just kind of the negative operating leverage. You guys have really been ahead of the curve in terms of shutting down capacity, closing plants, and consolidating your assets? Is there more that you can do here, or even kind of the same question, do you plan to do more of that?

We really have to wait and see what happens with the economy. If things get really worse, we will have to look deeper. Jason, you want to add anything to that?

We have been at it for maybe two years in October now. We have been scaling back, and a lot of the stuff, we probably could or would have done if the industry wasn't taking a downturn so a lot of this stuff just, a lot of the cost saving stuff we're doing on our end is just some more outsourcing. We're doing some administrative stuff outsourcing more of our component and sell assembled needs and things like that for steel, electric motors, and whatnot. So, I mean, we're doing a lot of stuff anyway. If things continue to get worse, we will continue to consolidate where we can. We certainly have plans on the table if we need to go that direction so we have already given it quite a bit of thought. But, and as of right now, I think we are sitting pretty good, and the results reflect that I think.

Yes. That is a kind of where I am trying to dig in a little deeper there because the results in this quarter at least do reflect this notion that you have right-sized the business, but I guess a lot of the fear here and the negative commentary in your press release relates more to raw materials and not exactly kind of capacity utilization.

I think that – I think one of the other things to add is that you are seeing a lot of earnings reports and things like that, where people are just starting to look at that kind of stuff and I think the thing you have got with Drew is we have been at it for a couple of years now and we have been doing a lot and kind of stayed out ahead of it. So, we have at least been planning and have future plans if we need to execute those kinds of things.

There are a lot of companies that sit and say, well, things will get better, so we shouldn't cut because when they get better. Whereas we have always been realists and if things are bad, let us start cutting. We do not – if you are hoping for things to get better, because we think we always have the ability to add capacity real quickly. As we've talked about capacity, it is something that we really do not even focus on, because currently we are probably at an eight hour or less one-shift basis. And when the hurricanes came a couple of years ago, we were able to go to a three-shift seven day a week basis and operating. You cannot do that for long time, but if the economy should suddenly dramatically improve and RVs and manufactured housing should dramatically improve, we could handle the increases without any problem at all. And as a result, we can have always cut soon as we see a downtime or even before we can see a downtime.

Now, this notion that you are generally – historically, your track record has been to be ahead of the curve. That applies to getting through price increases as well, right? I mean, you have experienced this high raw material prices at least a couple of months.

As we said earlier, both David and Jason have been through this before, they have done a terrific job in the past and I have no doubt they will do a terrific job in the future.

Now, is it – I think you heard – I heard you say, I think to Kathryn's question, about 50% of your total cost to steel –?

50% of our raw materials.

Is raw material and half of that is steel. So, is it the case that you would need about a quarter of the price increase that steel has gone up?

Well. No, not really.

It does not work that way?

It does not really work that way. A quarter of the price increase – I have to think about it and play with it, but it is also true. No matter how you look at it, again, we have different increases for different types of steel that is up a lot more than others. We have some types that are a lot more or less and we have given increases in our aluminum costs, we have products that use little steel or products that use a lot of steel. So, I am not sure it is helpful to even think of it that way.

As we said in the press release, both David and Jason mentally are over careful on costs, but they constantly look at their products to see how they can improve their products, take out materials to do whatever they can to increase costs – decrease the cost of the product, and that has been an ongoing process for many, many years.

We are talking a lot about the cost savings and consolidating and stuff like that too, but we are spending just as much time on new product and new product innovation and market share pickups as we are though on cost-cutting and consolidations.

Yes, okay. Now, from a bigger picture trend perspective, at one point, that – I think we have discussed in the past, kind of this theme of the trend of some of the RV guys outsourcing more to suppliers. Where are we on that? Has there – has that accelerated with this downturn or is it on hold?

It should accelerate. I do not know if it has though. And we have, in most of the products that we're in, we have very big market shares already.

I think largely the RV manufacturers outsource the vast majority of their components, not as true on manufactured house, still generally true in our manufactured housing but not as true. So, I am not sure on RVs there is a lot more for them to outsource. The types of products that we are – the towables, travel trailers (inaudible) anyway.

Okay, yes. There was more opportunity, more on the –

Manufactured housing side.

Okay. And on this manufactured housing, another theme we've talked about is that, that is where really a lot of your leverage lies, I mean, that industry has been kind of in a depression here for several years with some false starts. But is it still the case? I mean, if you look at your two divisions, which one do you think actually has the potential to deliver more earnings over the next several years?

Firstly, if you look at the margins, both industries' margins are fairly similar and have been in the past. Secondly, both industries are down. Manufactured housing is down a lot more than RV industry. But they're both still producing lots of homes and lots of revenues. I mean, for the first six months of this year, there was 162,000 RVs sold probably looking at close to 300,000 RVs sold for the year. So, we can keep talking about declines. But the bottom line is, there's a lot of RVs being sold, there's a lot of homes being sold. And I think once the economy improves, both of them will improve.

Adriano, in terms of the kind of incremental margins that you're talking about, they're very similar, so there is not a lot more leverage really in one industry than the other. We have cut back on our capacity in manufactured housing so that we we're not – we wouldn't have that much more leverage than we do in RVs.

And another thing about the RV industry is that you got to remember gentlemen, that the RV industry is down but yet still probably going to be one of the top five years of the entire industry. So, being down and as Leigh said, from 160,000, we will probably hit the 300,000 mark more than likely this year, and that's a pretty good year for the industry. Adriano Almeida – DGHM: Yes, well that's why I was coming at it from a – I mean, I would have thought that from an upturn scenario perspective, there was a lot more upside in manufactured housing just because it's been depressed a lot.

I think that's probably true. I think we will see more upside on the industry in the manufactured housing side of it because of the situation that we're going through right now and that we've been going through for the past seven or eight years. I think there's a tremendous upside on the manufactured housing industry. Adriano Almeida – DGHM: Now, why haven't you done more deals on the MH side then?

Because, there's less products on the MH side. MH side is the lower cost housing. There's a very few bells and whistles on manufactured housing. They are just very basic product. We've looked at other products to get into and most of them just have not been profitable and that's why we exited some of those product lines last year. It's nice to get sales, but if you are getting sales at no margin, why bother spending the time and capital on it? So, whereas the RV-er tends to like the latest gadgets and he always wants the most up-to-date RV, and that's why we're constantly looking and able to find new products. The stabilizer that we just found, I think, will be a nice improvement. Last year, we added the suspension product. There's always some new gadget that you can get onto an RV. Lippert today is one of the leading slide-out suppliers. Kinro has been the leading window supplier for many years. So, and they constantly add new products. Adriano Almeida – DGHM: Okay, that makes sense. Now, the content per unit numbers that you gave in this order that were up pretty nicely, that doesn't include the latest acquisition, right?

That's right. That's what was Joe saying in his speech that Seating Technology will add about $150. Adriano Almeida – DGHM: Okay.

We are going to take one more question. Adriano Almeida – DGHM: Thank you guys.

Okay.

Gentleman, your final question will come as a follow-up from the line of Kathryn Thompson representing Avondale Partners. Please proceed.

Hi Kathryn. Kathryn Thompson – Avondale Partners: Hi. You answered most of my questions. I guess the one question I just wanted clarified, what I was trying to say earlier, because of the state of the industry and the balance sheet of some of your players, is it more difficult now to pass on price increases just conceptually?

It's not so much the state of the balance sheet of our customers; it is the state of the economy. Kathryn Thompson – Avondale Partners: Okay. Well, those kind of go hand in hand.

Normally, when you have a declining economy, you have declining prices. In this particular environment, we have declining economy with rising prices. So, when people are having trouble buying a product to begin with and then you want to raise price on it, it's going to make it even harder to raise the price.

It's never easy to go in with a price increase regardless of what the situation is, whether it's a declining market or an upswing in the market.

In this downturn, all the parties have had to share in the pain. Suppliers have been hurt, customer, the manufacturer has been hurt, the dealer has been hurt, and in some instances, the customer has been hurt, the end customer, because he had to pay a higher price for the product. Very difficult in a downturn, but again I go back to what we said earlier. If you have a good management team who's been through this before, they're going to accomplish and successfully accomplish getting through the price increases. I'm extremely confident they will do it again this time. Kathryn Thompson – Avondale Partners: Sure, yes, and you've always done a great job of that. I have no beef against that, but it's just really kind of getting a better understanding of how do you manage, because it does seem a bit different now than it was say even in ‘04 and ‘05 and even ‘91.

It's harder and these guys will work harder to do it. Kathryn Thompson – Avondale Partners: Okay great, thank you so much.

Okay. All right. With that again, I thank everybody for listening in. We will speak to you at the end of the third quarter and we will be around for many more years to come, and with our strong balance sheet and our ability to gain market share and to continually to increase new products – introduce new products and to make acquisitions, we are very optimistic in the long term that we will be successful. So, thanks again.

Ladies and gentlemen, thank you for your participation in today's conference. This concludes your presentation. You may now disconnect. Good day.