Good morning. My name is Stephanie, and I will be your conference operator today. At this time, I would like to welcome everyone to the Mohawk Industries First Quarter 2008 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers remark, there will be a question-and-answer period. [Operator Instructions]. As a reminder ladies and gentlemen, this conference is being recorded today Friday, April 18, 2008. Thank you. I would now like to introduce Jeff Lorberbaum, Chairman and CEO of Mohawk Industries. Mr. Lorberbaum, you may begin your conference.

Good morning and thank you for joining us for the Mohawk first quarter conference call. With me, I have Frank Boykin, our CFO. We appreciate your interest in Mohawk and will review the current business environment, the company's performance, and our strategic direction. Before we proceed, Frank will review the Safe Harbor statement.

I would like to remind everyone that our press release and statements we make on this call may include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995, which are subject to various risks and uncertainties, including but not limited to those set forward in our press release and our periodic filings with the Securitas and Exchange Commission. Jeff

Thank you. Our performance for the first quarter, exceeded our guidance for the period in a very difficult environment. First quarter net income was $65 million and diluted earnings per share were $0.95. Last year in the period, a $9 million pre-tax custom refund was included in other income and did not reoccur this year. We are still anticipating additional refunds to be received in the future. Net sales for the quarter were $1.7 billion, reflecting a decrease from the prior of 7%. Our balance sheet remained strong with debt-to-capitalization at 32% and debt-to-EBITDA ratio at 2.3%. The US economy continues to slow and many believe we've already entered a recession that has not yet been recognized. The economy is being impacted by tightening credit, contracting residential home sales, declining consumer confidence and increasing cost. The flooring industry is in a cyclical downturn with residential at a significant decline. Spending in the commercial channel has remained positive though it's expected to slow in the future. The US flooring industry is entering its third year of decline. In Europe, we began seeing slowing trends in the fourth quarter last year, as US credit problems affected Europe. Growth is different country by country, and the UK and Spain are slowing more than the balance of Western Europe. Most economist predict flat to modest growth in Europe overall, with Eastern Europe and Russia still maturing with higher economic expansion. All of our business segments have managed through cyclical downturns in the past. We are presently anticipating weakness in the flooring industry, with a future rebound beginning in the remodeling channel when the economy improves. All segments are focused on improving productivity and quality, reducing infrastructure, passing along increased cost, controlling working capital, and investing in products and assets which will enhance our future.

Yes. If we first look at the income statement, Net sales came in at $1.738 billion or 6.7% down from last year. We experienced a decrease in our US residential business, which was partially offset by our US commercial business, our acquisition of Columbia Wood Products, and favorable foreign exchange. The gross profit for the quarter came in at $460 million or 26.5% of net sales comparing to 28.1% last year. The decline in gross profit was primarily related to lower volumes and increasing raw material and energy cost. SG&A was $336 million or 19.3% of sales, which compares to 18.9% last year. SG&A dollars are down $17 million from last year or 5%, but we have less leverage and lower sales this year. Operating income and margin at 7.2%, compares to 9.2% last year. Interest at $34 million was favorable to last year, down primarily because of lower levels of debt. And as Jeff had mentioned in the prior year 2007, in other income we had a $9 million favorable pretax benefit from the US customs refund. Our income tax rate for the quarter was 25.5%. That compares to 32.5% last year, lower this year because of the European tax planning that we put in place in the fourth quarter of last year. We continue to expect that our future tax rate for this year will be in the 26% range. Earnings per share coming in at $0.95 a share down from last year, but better than the results that we had initially anticipated. If we move to the segment information looking at the Mohawk segment sales came in at $905 million, down 13.6% from last year. This segment was more impacted by the residential decline than our other business, with both soft and hard surface products down, but…

Thank you, Frank. The first quarter was challenging for all our segments, with all showing a decline on a local basis. All of our segments have strategies to react to slowing demand and rising costs. Our Mohawk segment has continued to slow due to weak industry conditions, resulting in sales declining about 13.5% in the quarter. New residential construction is running about half of peak levels. Remodeling sales continue to slow, due to lower existing home sales and postponed customer purchases. Mohawk hard surface products and cushion sales have fallen more than carpet in this segment. We've exceeded the sales of our flat woven products. Our price increases in carpet are being implemented and should be completed by the end of the second quarter. Additional reductions in infrastructure cost and production levels were made during the period to better align with present volumes. Productivity improvements were made throughout the operations. Some high cost production lines were idled and production consolidated into other more efficient lines. New residential introductions are been shipped earlier than prior years and are concentrated on fashion and valued engineered products. Many Mohawk branded wood products are now being manufactured by Columbia, rather than sourced. A new Mohawk consumer campaign is being launched that coordinate TV, print and digital marketing, appealing to the design enthusiast with fashionable styling and superior selection. Commercial product sales are stronger than residential. We consolidated our commercial products and the four distinct brands, each with its own sales and distribution channels. Regional strategic Account Managers are in place to coordinate our products and brands across channels. Carpet tiles continue to grow and we're increasing our offerings in all our brands, including a new Wall Star [ph] value collection under our Bigelow brand. Our new Encycle tile has leading-edge technology with significant benefits…

[Operator Instructions]. Your first question comes from the line of Sam Darkatsh with Raymond James.

Thanks Frank. How are you?

Well, good morning, Sam. How're you doing?

A couple of quick questions. First off, commercial has been really hanging in there and it's been helping out with the offsetting, at least a part of the residential downturn. Are you seeing any recent signs of a slowdown in commercial or are there specific parts of the commercial end markets that are a bit troubling, or is it still pretty much the same sort of demand trends as we have had been seeing for sometime now.

I mean the demand is still hanging in, but it appears that the future projects that are being worked on by the designers could be slowing down a little bit and we won't see that for a while. Our best guess is that for most of the year we'll have… we should have reasonable business throughout this year as far as we can see, but we'll have to see what happens. But we believe it's going to slowdown as we go forward.

The only other thing to add to that Sam is that the flooring goes in at the very end of the construction cycle, so there is some lag there for our benefit.

Got you. Second question, you're using your free cash flow to pay down debt at this point as oppose to, are they making acquisitions or buying stock back. Could you talk about that going forward with your debt, and seemingly in a pretty good shape here at this point, what your preferences is to use for free cash and what your appetite might be for acquisitions at this point?

We really like the position we are in. We like that as the business goes through the cycle, we believe there'll be opportunities come available. We'll continue evaluating those as they come, those will be mostly likely offset. Again, at what point do we decided to have found the right acquisitions to do. And at some point if we don't find the ones, we'll probably go back and buy stock back at that point. And if we can't do any of those in between - I mean in between we'll be paying down debt as we continue, if one of those don't happen.

Last question and I will defer to others. Unilin margins always seem to be troublesome at least for us. Outside of the company they're trying to model and they have declined for three quarters in a row now. How should we look at Unilin margins over the course of 2008 based on input inflation, based on Europe slowing a little bit? How should we look at that?

First, you have to do is separate out the Columbia piece with it. We think that we'll probably lose in the quarter about another $4 million to $5 million.

On Columbia?

On Columbia and we expect that. You know we hope by the end of the year to have that positive, but that's going to be impacted by what happens with the whole economy and sales in that category. When you separate from there, we expect to have… we expect the effects to continue positive with the business. We do see - we really don't anticipate a significant change in the environment, that's going on in total. On the other hand, we see some positive things going on such as, as the industry weakens in Europe historically, the cost of the product and the raw material we buy tend to weaken too, and they tend to go down with it. We see some, we are working on the controllable cost pieces and keeping them in line with the business as we go through. So as you look at the whole thing, we think that we're going to have a good year, but the margins will be down from this year.

Thank you so much.

You're welcome.

Your next question comes from the line of David MacGregor with Longbow Research.

Hello David

I guess I'm hoping to get from you some sense of the run rate of cost savings, and if you think about the plant closing and the ideal lines, and the headcount reductions. Where are we right now in terms of run rates on cost savings?

We don't have the number to give you. There are a tremendous amount of cost savings going on and in every part of the business. We have, I mean, since the slowdown has started we have closed over 10 facilities, we have shut down numerous number of lines. We have moved productions between different ones. We have continued to invest in improving our productivity and costs as we go through. What?

Could you hazard a guess in terms of orders of magnitude?

The problem is, I don't have the number in front of me, and each division has their own piece, and they are going through it. And offsetting the positives you have negative variances that are going out in the different places, as well as the costs associated with moving the product and pieces around.

Right.

So, I can't give you a number at this point.

Okay. Maybe I can follow up with you afterwards. Just as a follow-up, there is a lot of talk about pricing and I am just wondering where within your mix of products do you feel you have the greatest pricing power today and where do you feel you may have the greatest challenge in terms of getting any relief on the pass through?

As with anything, the more differentiated and unique, and the stronger the brand, the more power you have of controlling the prices. And at the other extreme the more you commoditize it and less value the brands have, the less you have because the customers is going to move from one to the other and it is typical across all the businesses. If you look at the segments, what you have is the strategies are different. The Unilin strategic has been to participate in the flooring business, in the premium parts of the marketplace with differentiation and they have a very minimal amount of commodity business in floorings. On the other hand at the other extreme you have the Mohawk segment, which participates heavily in commodity category, as well as the premium one. And then you have Dal-Tile that falls somewhere between the two.

Okay. Great. Thanks very much.

Your next question comes from the line of David Goldberg with UBS.

Thanks, good afternoon. I was wondering if you guys could give us an idea, in terms of the price increases that you've done so far, and what do you expect through second quarter, what's the differential, kind of year-to-date on how much your raw material input costs are up versus what you've been able to put through on prices, I guess kind of specifically for the Mohawk segment?

In the Mohawk segment, we think we are going to probably realize about a 4% price increase from the last one, when it gets fully implemented in it. Maybe, it will take through the second quarter. The cost increases, I can't give you, we thought it was going to cover it. The question is, given oil prices and chemical prices, we are evaluating daily what's going to happen to them. Our future estimates are really poor if you want to know the truth. I didn't think oil would be $100 and where it is today, its $115 a barrel and we are reevaluating what we have to do with pricing and how long or how sustainable these levels are. So, we haven't decided what to do next at this minute.

I guess the follow-up to that would be, how long the lag between changes in the spot price for oil, let's say, does it take to hit your… to flip through to you guys in terms of higher raw material costs, I mean, is there a lag there at all?

There is and we've gone back and looked at it and if you look at our history where it is, there is not a model that matches it because you have between us and the oil well, you have various pieces in between and the prices don't come through exactly the same. Each one of the raw materials that we buy has a different supply and demand structured, any moment in time. And for period of time they can run opposite directions and for other ones they can… Ours can actually lead them at points in time. It all depends on how the channel, the whole thing is flowing through there, so there is no exact answer to it.

And then if I could just get a follow-up, actually a follow-up to an earlier question that was asked about some of the changes you guys have been making to make some inroads in the commercial segments. If commercial starts to slow more quickly, kind of moving forward, how difficult is it going to be for you to change some of the costs that you've moved over to concentrate more on the commercial end user, are you to factor residential to eliminate those costs altogether?

We will have to go through the same process we're going in residential. But you have to evaluate all your SG&A costs, where you're putting them. You have to decide do you want to maintain them for some period of time or do you want to get rid of them as quickly. You have to look at the manufacturing assets and decide how to align the production capacities with the demands at that moment in time. And you have to start reducing them and you know, there's a large portion of them that go up and down and proportionate to the place that you can cut in proportion to the business. On the other hand, you have to make sure and keep the strength of the business, which is the people that make the whole thing work. And then you have all the overhead pieces, that's the investments are here they don't change if the volume goes down. So I think that we can react to it reasonably, but it will have an effect.

Okay. Thanks a lot.

You're welcome.

Your next question comes from Laura Champine with Morgan Keegan.

Good morning.

Good morning.

Could you talk a little bit about what drove the inventories up? I think we were looking for a reduction there, and we'd just be interested to hear what the breakout is there, that drove that increase?

First thing to remember is you have to pullout if you're comparing it year-over-year, through first quarter to first quarter, you have to pullout the $50 million that we have in there from Columbia this year, that we didn't have last year. And then, secondly, there is always a seasonal increase in inventory from the end of the fourth quarter to the end of the first quarter. As the raw material prices went up and impacted… if you look at the turns, the turns went from 4.1 to 4.0, so it changed a little bit, but not significantly. And part of that was the raw material changes and the other part was the business was really slow than what we had anticipated.

Okay. And then, just a housekeeping, do you still think CapEx will be basically in line with G&A at around $325 million for the year?

We have, in this environment, I think that was the number we started with, but in this environment we're looking at something more along the lines of 2.25.

And then, what projects are getting cut to save you $100 million or so in CapEx?

Getting cut or not, the question is… well, there are strategic project that we have, that we can potentially do, such as putting in a new ceramic plant, putting in additional capacity in laminate to support our business in different places. So there is a major capital project that haven't been turn loose at this point that we're watching. It could even be acquisitions that we're going to do, and none of those are included in the $225 million. The $225 million is basically to support the maintenance pieces, money spent on cost and productivity improvements. The two major projects that are moving forward at the moment is there is a US laminate expansion that we've talked about. The money is spent in going in as we speak, and there is a new extrusion capacity being put in that in the shorter time will replace older capacity that we have. That higher cost and longer term will give us more flexibility and better position in the marketplace.

Got it. Thank you.

You're welcome.

Your next question comes from the line of Michael Rehaut with JP Morgan.

Hi thanks. Good morning, everyone.

Good morning.

First question, I was hoping to get a little bit more of a breakdown on the Unilin segment, you had mentioned that sales were up in US laminate and the Europe roofing, but down in other parts. And I was wondering if you could just give us sort of a rough idea with the US laminate sales up low single digits, mid single digit also, kind of put some framework around European roofing and maybe Europe flooring.

I mean we have hundreds of product in each of the different pieces, and there are a lot of different categories and we don't break them out. The US business share has got limited and the roofing business is more stable as a business in total, because when people need the roofs… the structure deteriorates, they have to replace the roofs. So it's been more stable, and the rest of them, there's pressure on all of them. So, yes. And the US business was going to continue to be pressure on.

Right. So you're thinking more just like that growth is relatively modest in the US laminate, more flattish in European roofing, and maybe that would imply it may be down double-digit in European flooring if the total sales were down to 6%?

That's a lot of assumption you've made. I mean you're welcome to make them.

I was just working off of what you said.

We don't give up individual product volume.

Okay. Also just… there's been a couple of question about margin, and I was just trying to get a sense for, you're finally starting to see… there was an upside to the Unilin margins last year, excluding Columbia, I guess, your margins are down about 300 bps, and maybe some of that is due to the core sales being down on an organic ex-currency basis. But I was wondering if you could give us a sense for if there were some, either plan start-up costs or if there is a product mix shift that you had been assuming would occur and be a negative impact on margins or what are the primary drivers there?

As we said before, I mean there are some costs related to the start-up of the new plant in the US. There is pressure on the… some of the building products business in Europe, the building products business is under significant pressure. There has been pricing pressure on it this year, where last year it was that the market was doing really well and you were able to push the price increases and maximize margins. We're on the other side of that at this moment, which is typical of what goes on. So this year, I mean, the margin we expect them to be better than the first quarter as we go through it, but they will not be up to the level of last year as we go through.

The only thing I would add to that, Mike, I mean we've calculated the margins without Columbia maybe being down a little bit over 200 basis points, 210, 220 somewhere around there.

Okay, great. One last question, if I may. Just thinking again about pricing, but now I'm thinking from the carpet Mohawk segment. I think the question have been asked before about ability to pass through price in a softer environment, and your response was more just, you know, it's product by product, it's the ability leverage or pass through on unique products or products that you have a good position in. But on a more macro-conceptual basis, I mean do you, as you model things over the next year or two, do you expect the same ability to pass through higher raw material prices as the demand continues to be in a very challenged and potentially promotional activity and such might increase?

In the general market place as the raw materials go up, we increase the prices to reflect those material cost as an industry. Now offsetting those in the downtime you have more promotion, you have people taking business and categories at a lower margins which is why the margins are down, at lower margins than we would have under normal circumstances. And so those two things, there is a balancing act that the industry keeps going through. Given the margins where they are, I wish we all had made discipline than we actually have at this second, but all things considered, it's not bad. This year, we believe it's going to continuing being a difficult environment as we've said, and so far every time anyone in the industry has lead a price increase the entire industry has followed.

Okay. One last question if I could, I'm sorry to throw this one in. Do you have a sense for the negative impact on margins from running your plants at a lower rate this quarter due to, as you'd said going from the fourth quarter, the lower inventory build by retailers?

Our financial group has it, but I don't have it hear. And basically, I'm not sure I'm prepared to give it to you if I had it.

Okay. Thanks a lot, guys.

Okay. Thank you.

Your next question comes from Eric Bosshard with Cleveland Research.

Morning.

Good morning Eric.

First of all, can you… Frank you commented on cash flow in the year, and I guess I wanted to understand, you've historically generated $50 million or $100 million of cash from operations in the first quarter, and I think you used that amount this quarter. Can you explain why the business consumed cash rather than generated cash in the first quarter?

Yeah, Eric like I said before, you know, it was primarily timing related to receivables and payables, with receivables being affected by a shift in the calendar, between Q4 and Q1, and then also some timing issues related to dealer shows and related product rollouts. And then, in the payables area, as we moved to internalize more of our sourced products, that had an impact on our DPOs, and those were the few things that primarily impacted cash flow.

So for the year, are you… you said that cash flow should be positive for the year. Does that mean that--?

Correct.

And I guess I just want to make sure I understand what that means. That means the cash from operations for the full year will be up from what was generated a year ago?

Correct.

Okay. I understand.

No, no. What I mean is positive for the year, free cash flow would be positive for the year.

Okay, well, right. That's always really positive for the year.

And yeah that's from the beginning of the year to the end of year.

Right. But I guess, just to get a little more perspective, the cash from operations is going to be bend down from where it was a year ago by a meaningful amount and you've always generated…

What we're addressing right now is just free cash flow Eric.

And you think it's going to be positive for the year?

I mean we anticipate the earnings being down, that's going to pull the cash flow down.

Yeah. I guess… I mean, you've generated hundreds and hundreds of millions of dollars of free cash flow in prior years, so I mean, can you give us any range other than saying that it will be positive?

You know it kind of gets back to our inability to go out and give you guidance beyond the quarter out, because we have limited visibility beyond the quarter and so it's a little bit of the same issue.

Okay. And I guess, last point on this, the timing does not reverse itself in 2Q, it sort of showed up in 4Q instead, is that correct?

No, the real issue there was the… we looked at the last day of December '07, ending on Monday of this past year. So what happen was the cash from that weekend preceding that Monday and the Monday cash ended up in Q4 instead of Q1.

Okay. So we're not going to see - 2Q we'll not have a big benefit in cash from operations from this change?

No, it's a shift between Q4 and Q1.

Okay, great. And then my second question, whoever is the perfect person to answer it. When you think about the Unilin revenue momentum and the Dal-Tile segment revenue momentum in light of your comments about Europe and commercial trends, is it safe to say that the revenue performance and you've given the earnings performance. But the revenue performance trend that we saw on 1Q relative to 4Q, that that's kind of where thing goes, we work our way through the year with those two kind on ongoing headwinds. We should not expect a revenue reversal and if anything perhaps, I guess it makes logical sense that the revenues remain under pressure if not incremental pressure. How do you think about those things?

We have a limited forward review of our orders, because we ship them relatively quickly from the customer. So basically, we look at the high level economic pieces and make our internal estimates of what's going to happen over the next quarter or too. And with those we don't see anything that's going to change the present economic direction we see, and so we're still wary of what's going on, and we're projecting forward more of the same from a revenue standpoint.

Okay. Very good, thank you.

Okay.

Your next question comes from John Baugh with Stifel Nicolaus.

Good Morning, Jeff and Frank.

Hey John, how're you?

Good. You announced agreements with four Chinese laminate players and settling some litigation with another, any color on how meaningful that is?

Those are part of what goes on with the IT process and licenses, and within that, as you see, we go through a lot of things which includes legal pieces, as well in order to get people not to utilize our licenses without paying for them. And in that case, what we had is, we're able to stop all inputs coming in that weren't licensed profitably. They were caught in that and anyone who chose to participate in the marketplace had to sign a license agreement with us, and those were some that came to an agreement and agreed to pay us on the sales they have in the US.

Have they seized shipments for the last three, four or five months, while you have been working this out or they've been shipping throughout this period? Is there any kind of change coming from the decision or this agreement?

I'm not close enough to tell you exactly what happened to this specific shipment.

Okay. I assume you're not going to tell me, what you're going to offer for full year, so we'll skip that question. Back on this working capital issue, Frank, you know if your revenues are down, I don't know, but let's say $400 million for the year, your working capital is usually bit of a 20% of dollars revenue, increase or decrease, and that would imply source of $40 million. I guess the question is how much of this inventory that is coming in house, if you will, it sounds like a permanent change, going to influence that number if you made that revenue assumption, because assuming the receivables, it was just timing, it will reverse a little bit, but maybe not this calendar year, but beyond?

I think the working capital thing like we said was either timing or one time related and once we get it behind us we got it behind us.

So, the expectation, nothing has really changed, we had a $400 million reduction in revenues, we should see roughly $40 million of our source from working capital.

I think the only caveat is that, like we said about first quarter inventories, business declines, and you are running to keep your… To catch up with you inventories, right? To keep your inventories in line, so that is the only caveat.

Okay.

The raw material inflation and how it impacts us.

Okay. And I calculated a loss for Columbia of about $10 million, if the numbers are right for the quarter, so you are running bigger losses than you thought is that simply due to volumes?

Stop. You calculated the loss wrong.

I calculated 2.5% margin differential within the Unilin segment, 14.9% was that you gave out versus 12.4%?

More like $5 million.

The loss is $4 million to $5 million.

Okay. In the current quarter? Okay.

And we are expecting it to be $3 million to $4 million in the next quarter and can continuing to decline.

Okay, super. Sorry for the error. Thank you.

Okay.

Your next question comes from Carl Reichardt with Wachovia.

Good morning, guys.

Good morning.

On that line of Columbia, I'm sorry this may be a prosaic question, but what specifically do you need to do to return it to profitability? Is it a filling capacity issue, a cost issue, what specifically do you need to do?

Well, we think we are doing those things as we are starting. First is that, we are improving the productivity and quality of the plants and quality coming out of these plant. We've dramatically improved the productivity of the plant. We have streamlined operations, we are taking out redundant overheads. We are taking out SG&A costs on one side. On the other side, we are introducing new products into the market place, which will start going in, in the second and the third quarter, of higher quality, more design oriented pieces, which will give us the higher average unit price. We are continuing to try to move imported products into the plant that we were purchasing outside. And then, we are continuing to increase the automation of the plant to reduce the cost even further, as we go through. And we've approved certain investments over the next few months to do that. In addition, the combination of all these things, we expect by the end of the year to be a low cost producer, high quality provider, of a broad, total line of wood and then what we need is the industry to pickup and we think that it can be a good money making proposition for us.

Okay. Thanks for the color Jeff. And then looking at your experience through other cycles historically, when you've seen a turn, let's go to the early 90s in business, especially residential remodel, the driver as you said earlier; is there a difference in performance between premium products versus more commoditized products? Do you expect the premium side to show a significant pickup in order activity before commodity products; is that your sign of improvement?

When you look at residential, what typically happens is that the remodeling business tends to use a higher quality product than the new construction business, on average. So, that is the portion that seems to pick up first, and a consumer who is picking it after their existing home therein tends to put better quality products than the builder would put it. And so, with that you tend to get a better mix as you come out of it.

Okay, great. And then, last question, I just want to make sure I understand your response to Eric. You expect to be cash flow from operations and free cash flow positive in Q2?

The only thing we were addressing was free cash flow for the year, from January 1 to December 31.

Okay. So you're not commenting on Q2?

Correct.

Okay. Thanks, guys.

You're welcome.

Your next question comes from Dennis McGill with Zelman & Associates. Dennis McGill - Zelman & Associates: Good morning. I was hoping you guys could just elaborate a little bit on the absolute growth rate you're seeing in the major end channels, whether it's new residential, home improvement spending, and then the commercial side?

The new construction business, we are looking at the same numbers of the new houses going up being about half of where they were at the peak. So we believe that that's going to represent what goes on in that channel. Dennis McGill - Zelman & Associates: Okay.

The remodeling part of the business is the one that's difficult to anticipate at the moment, given the squeeze in discretionary income of the average person, we believe that the increased spending on food, on transportation, on healthcare that's squeezing the income, and that's creating a significant reduction in discretionary expenditures, which is why the remodeling business is doing so poorly. In addition, there is a portion of the remodeling business that is related to the existing home sale. So as existing home sales go up and people starts buying more homes that will create more remodeling pieces. And again, the reason we don't give long-term numbers is because our ability to guess those things is not much greater than yours. Dennis McGill - Zelman & Associates: I was more concerned with what you're seeing right now, backwards looking?

Well, the industry numbers, I believe showed a--

The carpet.

The carpet industry showed about a 10% decrease in units in the first quarter. The ceramic numbers, I believe, were off 15% to 20%, but I don't know which numbers I'm remembering from which point if it's-- Dennis McGill - Zelman & Associates: Maybe I could clarify. So, I'm not sure how you guys look at it internally, but I'm just trying to understand within your end channel, looking at your customer base, if there is… essentially I'd like to get at the home improvement spending and the repair model spending, both the residential and the commercial side, as far as what you're seeing right now for those growth rates of that contraction.

The commercial rates were up and we believe that continue to be for a period of time. Dennis McGill - Zelman & Associates: And that's a low single digit increase?

We really did not disclose that information separately in the past. Dennis McGill - Zelman & Associates: Okay.

The two pieces in between the new constructions are off a cliff and then the remodeling somewhere between the two. Dennis McGill - Zelman & Associates: Anymore specific magnitude on the remodeling?

I don't have it to give you in front of me. And each of the divisions are different too. It's different between divisions, different pieces, we don't collect them altogether in that piece. So we look at it by segment Dennis McGill - Zelman & Associates: Okay. And just to make sure I got the comment you made earlier, at what point do you expect the Columbia assets to return to breakeven?

Our goal is to have them breakeven in the last quarter and the big question is what's going to happen to the volume? It's the only unpredictable piece. We are headed quickly from furthering the cost per unit and the quality and the broadening of the product line. The only question we can't answer is what's going to happen to the industry volume. Dennis McGill - Zelman & Associates: Okay, very good. And then just my last question, on your builder customers, are your days outstanding similar to what you reported at the corporate level staying in a fairly tight range?

Well, first, we don't sell directly to the builders. We sell to the contractors, and then the builder. Dennis McGill - Zelman & Associates: Right.

They are able to break out our receivables because we sell to customers that fell under both the remodel and our new construction channels. So we can't break that out separately. But overall, I'll just repeat again that our accounts receivable aging is in good shape. Dennis McGill - Zelman & Associates: Okay. All right. Well, thank you, guys.

Thank you.

Your next question comes from Keith Hughes with SunTrust.

My questions have been answered. Thank you.

Okay, Keith.

Your next question comes from Meryl Witmer with Eagle Capital.

Quick questions on Unilin, you talked about the Columbia operating loss and enumerated that. In the press release, you also mentioned the plant start-up expenses and imports costing more. And I guess, I was wondering if you could give us sort of a range on the plant start-up, and then, also, I guess you said you're going to start producing some stuff here in the US, so maybe if there are any changes, what sort of delta we might see?

Hold on. We're looking to see if we have the mirrors.

The start-up cost in the quarter was about $1 million to $2 million, and I don't have it what is going to be in the second quarter, but it's probably going to be of that magnitude or greater.

Okay. And is that from starting up something with Columbia?

No. That's the starting up of the new laminate flooring plant in the United States.

Okay. And then you also on the… you mentioned imports, higher costs US imports, is that something that will change when the plant is up and running?

Yes. What's happening is we have… we import material made in our European plant to our Unilin US operation, and those shipments are all impacted by the euro. And then the US manufacturing plant will be able to produce those on a lend-it basis cheaper than we can import them from Europe. And that will also have a positive effect on the working capital because you have the time it takes to move it from one to the other. In addition to that as you put more capacity in the US facility, the facility was built to house this capacity from day one. So as you increase the unit throughput through the plant all the cost of the plant will be positively affected.

And then, I guess do you have… I don't know if you even can get a sense of how much that will save at this sort of current unit volumes, but if you could take a stab at it, is it in that $1 million to $2 million a quarter range like the plant start-up expense or is it with the savings be dramatically more?

I don't have that to give you. It's a moving target too. Lot of it depends on what the volume is at a given moment in time.

Okay. And then, I'm just wondering if, I don't know if you have data there, but in the Mohawk division, is there a way to look at sort of unit volume that was sold in say the year 2003?

Could you repeat the question?

I'm looking at Mohawk, and back in 2003, which was not a real robust year relative to… I'm sorry, it might be '04… you made $364 million in operating income in the Mohawk division. And I'm just wondering how that unit volume compares to the unit volume now, '04 versus '07 and/or any.

I'm trying just recall. I think that the industry in units from the peak which would have been 2005 is running about 20% off in units, and that there is as an expectation that this year it will be off another 5 to 10. As that fell from the peak period, it could be off 25% to 30% this year versus two years ago. And each of the different divisions have different numbers. We believe that the wood industry is off more than carpet in units because it has a higher proportion going into new home construction. We believe ceramic is left, and we believe that the laminate business is all that's left because it had almost none in new construction at all and it's probably still gaining on each year. But each one of the categories it's different.

Your next question comes from the line of Arnold Brief with Goldsmith & Harris. Arnold Brief - Goldsmith & Harris: You've talked about around it a little bit. I'm just wondering whether you could sort of sum up and give us a little better feel for what you feel your market share trends have been by the three major operations in the last couple of years and currently? And maybe some perspective on whether it becomes easier for you to increase market share in periods of industry decline versus industry growth? And then, the second question is, I would imagine, in this period of time, a number of your competitors, particularly some niche competitors may have become more financially challenged. I'm not asking if you, are negotiating with anybody, I'm just wondering, as the opportunity seems to be increasing for acquisition or exploration?

Well, that's a lot of questions. The market share pieces, we believe that we've been gaining share in our Unilin segment and our Dal-Tile segment. We believe that in our Mohawk segment, we were a little too aggressive in cost reductions last year and the timing of some of the pieces, and in some instances we lost some alternate [ph] opportunities and we're taking actions to collect those. What was the second part of the question? Arnold Brief - Goldsmith & Harris: Acquisition opportunities in light of the… And whether or not you see here in general to increase share during periods of downturns versus upturns and acquisition opportunities?

Okay. On the acquisition side, typically in downturn, the only people who try to sell their businesses are the ones who don't have any choice. So and the worst part of it, companies tend to not want to sell because the values are the least. And the only ones that sell are ones who have cash flow problem, who don't too many options. s you come out of the site, where there tends to be more cash to support the growth coming out and their future visibility looks more positive, you tend to see more deals we've done as you come out of the structure then we doing more work, with that we continuously talked to a number of different candidates all points in time and in many cases it doesn't happen overnight and we look for various options. And in some cases it comes through in some we want, we believe there will be opportunity to buy businesses over the next period of time. And I don't know whether it will be at what moment, but we think there are some very good companies that will come for sale and we would like to purchase them if it make sense, and if they have the right values, and that we can add value to them. Did I miss any other pieces? Arnold Brief - Goldsmith & Harris: Yes, you covered it all.

At this time there does… reached the allotted time for questions. Mr. Lorberbaum, do you have any closing remarks.

I'd like to thank everyone for joining us. I believe our team is performing well and managing through this downturn. Our Management group has been through this before and they're making significant improvements in all areas. But I believe, we'll produce numerous benefits to our business, as we go forward. Thank you very much and have a nice day.

Thank you. That does conclude today's conference call, you may now disconnect.