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

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

Thank you, Glenn, and goodmorning everybody, and again, I would like to add my welcome to all of you whohave taken out to call into for our second fiscal quarter conference call. In aminute I will turn the call over to Jon for our normal review of the quarter,followed by a question-and-answer period. But this morning, as supposed to whatwe usually do before Jon runs through the details of the quarter, I would liketo take a few minutes to, just an overall context to, the current state ofaffairs. For those who have listened in onour last several calls, during the last few quarters we've shared with you ourexperience in the market and most notably, our experience to get to that depththe industry was bouncing along the bottom. We were not experiencing much of anup tick but we were also not experiencing a significant additionaldeterioration in activity from the level we saw really, in the spring andthrough the early and mid summer. As events have continued tounfold during the last few months, it now appears that we were experiencing afalse bottom. Every week seems to bring another revelation regarding thefallout from subprime and other credit issues. Many of the major builders havesignificantly curtailed or even ceased in some markets all building activity.We have seen a relatively rapid rise in existing home liftings on the marketand a reduction in the turnover which is in some markets, the month’s supply ofexisting houses for resale is 14 to 16 months. So, we are really seeing that go upsignificantly and that's resulted in potential buyers of new homes exercisingthe contingency, if they have one, to get out of their new home contract. And,if they don't, they even walk away from deposits because they can't get outtheir equity in their existing home, which has caused another increase in thecancellation rates reported by the major builders in the last few months. And of course, oil is approaching$100 a barrel, we are pressing that. So, I could go on with that list for quitesome time. But, I think the point is, is that the cumulative impact of both thereal and perceived events has culminated in some rather dismal consumerconfidence numbers over the last several weeks. Some experts look at this dataset and come to the conclusion that the entire economy is headed for asignificant recession that would impact everybody well in the calendar 2009.Others have pointed to some of the positive signs, to more positive signs. Jobgrowth, for example, and continued employment levels are consistent with thefull employment economy; people who want to work have a job. Incomes are rising, real incomesare rising. Consumer spending is holding that increased 3.25% to 3.5% on ayear-over-year basis. The first numbers reported from the holiday season wererelatively good they are up with traditional retailers and of course, internetsales were extremely, they were well in to the double-digits in terms of theirgrowth on a year-over-year basis. So consumer spending is holdingcore inflation as well. Long-term rates remained very affordable. The creditmarkets are still little bit tougher and it's taking longer even if you arequalified for credit to get through the process, but the rates remain veryaffordable. And some markets appear ready for growth. Las Vegas for example, forecast -- all the way is forecasted, I saw forLas Vegas.Vegas is expecting an influx of 70,000 new people and the creation of around40,000 jobs in 2008. So it's very mixed out there. Looking forward, the reality isthat nobody knows the timing of the cycle. The recovery is not going to be thisquarter, the quarter that we're currently in. But will we see some life in thespring, will it be next fall? Will it be sometime in 2009? The reality is thatnobody knows. In this environment from ourperspective, we are not going to maintain product-to-profitability clearly we'veseen over the last five years. We just can't cut that cost to get to $2 a shareon EPS. You can spend yourself into trouble, but you can't save your way to prosperity. Somewhere between another $0.10 and another$1 a share and cost cuts in the short-term environments, somewhere out there,there is a switch over point where you just stop saving money and you start toinflict long-term damage on the value of the franchise. In our opinion, that is clearlynot in the best long-term interest of the shareholders. We clearly believe,firmly believe that it is when, not if, the market recovers. We are a nation ofhomeowners. Its core to, who we are as a people, fundamentally it's in our DNA.So we believe that the market is going to come back and nobody really knows thetiming. So, in the meantime, the corequestion is what are we doing? And when we get in there in a minute when I turnover to Jon, behind all the numbers he'll review is our approach over the nextperiod of time. And our approach and the thing that Jon will talk about andrefer to in the review of the quarter really gives the result of three choicesthat we've have made. The first is to protect the coreassets of the business. You can probably think of this as the franchise value.We are protecting the organization, we are protecting key employees, we arefiling customer facing and critical skills positions. We are maintaining ourtraining programs. We continue to invest in our HR programs to reallyperpetuate the vitality of the company. We are also protecting ourrelationships with both customers and vendors. Of the long standing, these longstanding relationships and the strength of these relationships are a core assetto the company. And we are protecting our fixed asset base. We are maintainingour facilities. We are staying current with technology. So the first choice is we'regoing to protect our core assets. The second choice is to pursue volume. Weneed business, as everybody does right now. There aren't as many kitchens outthere to be had as there were a year or two years ago. The ones that are, thenew houses that are being built and the remodel jobs that are occurring, we wantand quite frankly we want more than our share. We are not going to do anythingstupid, having said that. We have to be competitive in this environment. It'snot just about price. It still includes quality and service, but we certainlyhave to be competitive on price. On the other hand, the businesswe are pursuing must make sense within our strategy, within our offering to themarkets and within our capabilities. For this next period of time, volume isgoing to come from market share gains and our focus continues to be onpenetrating share. Our third choice is to run thebusiness given the context and make sure we are as efficient as we can. Giventhe first two choices, make sure all of our expenditures are appropriate,generate cash, protect our outstanding balance sheet and just all-around, begood stewards of the business. Again, nobody knows what themarket is going to do, nobody. The so-called experts can go on and on, butnobody knows. Ultimately, as we go through this next period, we are going tomake decisions that we can live with either way. If the market does come backin the strength, we need to be in the position to support our customers. If themarket stays or drops even further, we need to be in a position to continue tobuild the core franchise value of the company that will be recognized andrealized on the other side of the cycle. With those comments kind of stillin the context, let me now turn it over to Jon, to run through the numbers forthe quarter and the forward-looking statements and then our outlook. And thenboth Jon and I will be available for questions. Jon?

Thanks Kent. As you all know, this morningwe released the results of our second quarter fiscal year 2008 that endedOctober 31, 2007. In case you've not had the chance to read the release, hereare few highlights. Net sales for the quarter were$160.3 million, down 24% below the prior year second quarter. Net income forthe quarter was $1.2 million, down 87% below the prior year's second quarternet income of $9.2 million. Diluted earnings per share of $0.08 for the quarterwere 86% lower than the $0.57 we earned in the prior year's second quarter. For the six months ended October31st, net sales were $326.3 million, down 25% versus the prior year's first sixmonths. Net income was $6.3 million, down 72% versus the prior year's first sixmonths and diluted earnings per share of $0.42 were 70% lower than the $1.40 weearned in the prior year's first six months. As we've previously discussed, inFebruary of this year, we completed the transition that had commenced inOctober of 2005, at a certain low margin products, including the in-stockcabinet business at Lowe's. As in the recent calls, I willcontinue to provide a separate breakout of the transition impact, as our prioryear comparative numbers will continue to include sales relating to theseproducts for the next two quarters. Regarding our second quarter salesperformance, our previous sales guidance anticipated that our sales of coreproducts for the fiscal year would be 8% to 12% below core sales levelsachieved in the prior year, with sales declining more in the first half andless in the second half of the year. Our actual core product sales declined by17% and 18% in the second quarter and first half of fiscal year 2008respectively, a slightly greater decline than we had expected. Total sales were 24% lower thanin the second quarter of fiscal 2007, as the impact of the transition lowmargin products were eliminated as planned resulting in a $14 million reductionas compared with the prior year's second quarter. In new construction, totalresidential housing starts on a year-to-date basis have drifted down to the$1.2 million annualized level, approximately 25% below 2006 levels. Theshort-term outlook for the new construction market seems obvious, as marketsentiment has become decidedly negative. However, we believe the outlook forthe industry is far from certain. We are enforcing the short-term outlook, mostof our large builder customers continue to report limited to no visibility asto when an improvement in their sales order rates will occur and builderconfidence according to the NAHB, Wells Fargo Housing Market Index is at itslowest level since the index commenced in 1985. Yet, on the positive side, 30year mortgage rates, as reported by Freddie Mac have drifted down to theirlowest level of the year and remain low by historical standards. The underlyingeconomy remains strong, as Kentindicated, as job growth continues above 100,000 per month. And the FederalReserve has begun to take action to cushion the impact of the credit cost. Our new construction sales werealmost 25% lower than in the prior year second quarter. However, newconstruction sales managed a modest sequential improvement for the second consecutivequarter as the impact from our market share gains continued to exceed theimpact of the declining market. At the conclusion of the quarter,two of our new construction customers filed for Chapter 11 bankruptcyprotection. After evaluating the likelihood of collection from these and someof our other new construction customers, we added $1.5 million to our allowancefor doubtful accounts. Although the new constructionmarket continues to be slow, we continued to aggressively bid and win new business,focusing on companies that we believe have the staying power to outlast thisdownturn. Based on the value of our Timberlake product line, our extensiveservice reach and our partnerships with many leading homebuilders, we believewe are growing our market share and what looks to be a relatively weak newconstruction sector for the next several quarters. For the remodeling market,economic fundamentals remained healthier than for new construction but momentumcontinues to be negative. Existing home sales are leading indicator for homeimprovement spending have declined from the mid $6 million level at thebeginning of the calendar year to the present $5 million level on an annualizedbasis. The consumer confidence indexfell for the fourth consecutive month and now stands at a three year low. Themedian sales price of existing homes has been trending lower for the past yearand our two primary remodeling customers continue to report declines incomparable store sales. During our second quarter, our coreremodeling sales were approximately 10% lower than in the prior year for thesecond consecutive quarter driven entirely by reduced market performance in ourproduct category. We continue to expect that theremodeling market will be flat to down until credit availability, housingprices and the associated headlines settle down. As we remain bullish on thehousing market's long-term viability, we continue to invest company resourcesto pursue additional share gain initiatives. We believe that our market sharegains and our market position as the value provider of goods and services,positions us well during this down phase of the housing cycle. Moving onto gross profits, grossprofit for the second quarter was 17.3% of sales well below both the 20.3% wegenerated in the second quarter of last year and the 20.7% we generated in theprevious quarter. The primary drivers to this disappointing performance wereinefficiencies and labor and overhead costs that were caused by the impact oflower sales volumes, new product launches, higher medical cost and also, due torising fuel cost. We reduced production in responseto lower order rates during the quarter and made a small correspondingreduction in head count at the same time. Through attrition and reductions inforce, we've reduced the size of our direct labor force by over 27% in the pasteighteen months. Subsequent to the reductions, some inefficiency has occurredas the remaining employees are reassigned to new areas of responsibility, whichhas in turn, contributed to the increased labor cost. The gross margin rate was alsoreduced by change in the form of the company's sales promotion reimbursementwith one of its resale customer. This change in form did not affect net incomebut shifted cost that have previously been selling and marketing expenses to areduction of sales revenue. Excluding this change, the company's gross marginwould have been 18.3%. Somewhat offsetting the impact ofthese adverse factors was the continuing positive impact upon the company'ssales mix from the completed low margin products transition. The low marginproducts had higher materials and freight costs in relation to their salesprices. By removing the impact of the low margin products, materials andfreight costs has improved as the percentage of sales, and are expected tocontinue to show improvement through the balance of the fiscal year. Regarding SG&A cost, totalSG&A expense was 16.5% of sales in the second quarter of fiscal 2008 ascompared to a 16.2% in the first quarter of fiscal 2008 and 13.5% in the secondquarter of the prior year. SG&A expense was 16.4% of sales in the firsthalf of the fiscal year as compared with 13.5% of sales from the first half ofthe prior fiscal year. Total SG&A expenses for the first half of fiscal2008 were lower than in the comparable period of the prior year by $3.1 millionor 6% on a 25% decline in sales. Selling and marketing expenseswere 11.6% of sales in the second quarter, up from 8.5% in the previous yeardriven by a 3% increase in cost and the reduced second quarter sales level. Sellingand marketing expenses were 11.9% of sales in the first half of fiscal 2008, upfrom 8.3% in the first half of the prior year. The increased level of sales andmarketing costs was driven by the company's continued investments to gainmarket share. These investments included increased amounts of product displaysdeployed with new customers in the new construction channel as well asremaining costs relating to the company's December product launch. General and administrativeexpenses were 4.9% of sales in the second quarter as compared with 5% in the prioryear second quarter. General and administrative expenses were 4.5% of sales inthe first half of fiscal 2008, down from 4.7% in the first half of the prioryear. A reduction from prior yearreflected primarily lower cost relating to the company's pay-for-performanceincentive plans. The higher level of costs in the second quarter of fiscal 2008reflected the company's $1.5 million provision for doubtful accounts from newconstruction customers. Regarding our capital spending,capital expenditures and promotional displays deployed in the first half offiscal 2008 were $10.6 million, in line with the prior year's first halfamount. As in the prior year, our investments and promotional displays andproperty, plant and equipment were roughly comparable in amount. Capitalexpenditures continue to comprise a variety of small to medium size projectsand no new plants were constructed. The company expects to continueto fund its capital spending from a combination of operating cash flow andexisting cash on hand. Outlays for fiscal year 2008 are expected to be in linewith those of fiscal year of 2007. Regarding the balance sheet thecompany's financial position, as Kent explained, remainsoutstanding. Long-term debt-to-capital on a book value basis was 10.9% as ofOctober 31, 2007. Cash provided by operating activities in the first half offiscal 2008 was $19.3 million while free cash flow was $8.6 million. The company repurchased $17.8million of its common stock in the first half of fiscal 2008, encompassing549,000 shares, including these repurchases the company's weighted averageshares have been reduced by $1.5 million in the last 12 months or 9% of theprevious share base. Net of this utilization of freecash flow, the company's cash on hand was $46 million as of October 31, 2007.The company has approximately $102 million remaining on stock repurchaseauthorizations. In closing, we believe the company'scontinued emphasis upon improving the quality and breadth of its products andservices and investing to drive future growth is the right course of actionduring this -- to turn this market downturn. We continue to manage the businesswith the objective of creating long-term value for our shareholders. In sodoing, we continue to maintain our staffing levels for our customer facing jobsand maintain adequate manufacturing and field installation capacity to ensureadherence to our stated service levels. As we have previously stated, webelieve the company should generate sustainable gross margins in a range from21% to 23%. Our performance in the second quarter of fiscal 2008 was well belowthis expectation and we are not satisfied with these results. As we look forward to theremainder of fiscal 2008, we continue to see a housing environment that isunderpinned by macroeconomic and demographic fundamentals that remain sound butalso overshadowed by inventory overhang, falling home prices and the recentcredit crunch. We believe that the impact ofthese factors and their associated media coverage have contributed to anegative buyer psychology and a reduced ability to obtain mortgage financing.We expect the outlook for the housing economy to remain uncertain until acredit crunch is resolved and housing prices have stabilized. From a marketing perspective, forthe remainder of our fiscal year, we expect the kitchen remodeling market willcontinue to experience weakness as compared with prior year comps. We furtherexpect that housing starts will continue to trend 25% lower than prior year, toapproximately the $1.1 million level on an annualized basis and roughly 20%less than had originally been forecasted for this year and approximately 50%below the market peak. As mentioned earlier, we had twonew construction customers filed for bankruptcy. We have several othercustomers on our credit watch list and it is possible that some of them couldalso follow the same route. During the quarter, we continueto win a greater share of business from some of our existing National HomeBuilder customers that have solid creditworthiness. In addition, we continue togain market share at the National Home Centers. Because of our strongcompetitive position and focus on continuing to enhance and differentiate ourvalue from that of competition, we believe that the market share gains ourcompany has achieved will continue for the foreseeable future. Our partnerships with the big boxretailers each of whom continue to grow their store counts and market coveragepositions the company to capture a growing share of remodeling activity. Ourmarket position, as a provider of superior products and services at competitiveprice points is extremely competitive in a more challenging retail salesenvironment. Most of our new construction customers expect to continue to gainmarket share. Our partnerships with these national and regional buildersposition us well to maintain and grow our market share. We expect that our remodelingsales for the second half of fiscal 2008 will be flat with that of the prioryear, resulting in a mid-single digit decline for the year. The continuingdecline in the new construction market, which has contributed to anincreasingly difficult credit situation for several of our new constructioncustomers, has cost us to once again, update our sales expectations for thataspect of our business. Our updated expectation is thatour new construction sales for the second half of fiscal 2008 will be flat withthe corresponding period of the prior fiscal year. Still evidencing our marketshare gains, but less optimistic than we had previously expected. For theentire fiscal year, we expect our new construction sales will decline in thehigh teens. Overall, we expect that our fiscal 2008 core sales will decline by10% to 12% as compared with prior year. During fiscal 2007, the companyhad approximately $35 million of low margin product sales that will not reoccurin fiscal year 2008. Inclusive of the impact of these transition products, thecompany now expects that total sales will decline 14% to 18% as compared withprior year levels. The company's gross margins hadheld up pretty well until the just completed quarter when the combined impactof lower production volumes, costs associated with the company's recent productlaunch, rising fuel costs and the change in the form of the company's salespromotional reimbursements all took their toll on the quarter's margins. The company has been workingaggressively to improve the issues which impacted labor productivity and nowexpect labor cost will exceed previously expected levels, but show gradualimprovement over the next few quarters. The company continues to monitor fuelcosts and will consider pricing actions as market conditions persist. Considering the company's salesoutlook and these increased costs, the company has reduced its forecast ofgross margin for the fiscal year to approximately 18.5%. This gross marginlevel reflects a reduction of approximately 50 basis points for the change inthe form of the company's sales promotion reimbursements. Because the company'scosts were higher than expected in its second quarter and because we expectmarket conditions to continue for the remainder of the fiscal year, we nowexpect that results for our seasonally weakest third quarter that ends January31st, will approach breakeven and that we will earn modest net income in thefourth quarter. Overall, we have reduced ourearnings guidance for the fiscal year to $0.70 to $0.90 per diluted share, ascompared with $2.04 per diluted share in the prior year. This concludes our preparedremarks. We will be happy to answer any questions you have at this time.

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

Good morning, guys.

Good morning.

Good morning, Mark.

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

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

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

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

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

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

Thanks guys.

Okay.

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

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

No.

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

Yeah, what our approach is on therepurchase is, just like we try to coach all you guys, market time it doesn'treally work and so, what we have as we set internal targets in terms of cashbalances. And when we have cash, that's an excess to that and we don't thinkthere is anything really strange going on in the market. Then we are in themarket as buyers and when our cash reserves hit or drop below our targets, weare out of the market until they recover. I wouldn't read anything into ouractivity, especially, on a short-term basis like the quarter. That's a signalof any change that's coming. John Haushalter- Robert Baird: Okay. And then just turning overto the credits, I guess with the two customers, the $1.5 million that you guysreserved this quarter, is that fully those two customers or is that you guyskind of taking up proactive approach to the other ones on credit launch rightnow?

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

Okay. And I guess --

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

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

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

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

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

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

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

Thank you.

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

Good morning. Thank you fortaking my question.

Good morning.

Hey, Bob.

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

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

You are not expecting any sort ofrelief there?

No. Not at this point.

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

I am not sure, I understand your question.

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

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

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

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

Okay, great. Thank you.

Good.

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

Hi. Good morning.

Hey, good morning.

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

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

Alright, so the --

So, I am getting those numberright?

Okay.

Roughly 34% give or take.

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

Yeah.

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

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

Okay, I appreciate the answers.Thanks.

Sure.

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

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

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