Good afternoon. My name is Tracy and I'll be your conference operator today. At this time, I would like to welcome everyone to the Mohawk Industries first quarter earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer period. (Operator Instructions). As a reminder, ladies and gentlemen, this conference is being recorded today, April 30th, 2010. Thank you. I would like to now introduce Mr. Lorberbaum. You may begin your conference.

Thank you. Welcome to our first quarter conference call for Mohawk Industries. With me on the call is Frank Boykin, our CFO, who will review or Safe Harbor statement and later the financial results.

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 is subject to various risks and uncertainties including but not limited to those set forth in our press release and our periodic filings with the Securities and Exchange Commission. This call may include a discussion of non-GAAP numbers. You can refer to our press release at the investor information section of our web site for a reconciliation of any non-GAAP to GAAP amounts. Jeff?

Our first quarter earnings per share were $0.30, which exceeded our expectations. Earnings per share were $0.35, excluding restructuring charges of $4 million from activities we initiated in 2009. Our earnings were higher than expected as the economic cycle has bottomed and we had more favorable cost reductions in foreign exchange. First quarter sales were $1.3 billion, which was a 2% increase from 2009 adjusted sales or a 1% increase with a constant exchange rate. As discussed in the quarter, we have four more shipping days or about a 6% impact. Our cash position and liquidity remains strong with over $450 million in cash and a capital structure that supports our business. Our net debt to total capital ratio was 28% and net debt to adjusted EBITDA ratio was 2.2 times. More signs are pointing towards an economic recovery with consumer spending, housing and GDP all rising. Existing single family home sales increased compared to the prior year for ten consecutive months, which will benefit our residential remodeling business. Residential vacancy rates have peaked, home prices have stabilized and housing starts continue to improve. In addition, the forecasted U.S. population growth indicates long-term housing demand will continue to increase. Our first quarter sales were flat, compared to the fourth quarter due to an improving residential business. Additionally, the product mix appears to have stabilized from the fourth quarter throughout our business. Our European business is starting to show improvement following the economy. The commercial end markets continue under pressure and they are expected to remain difficult throughout the year. Continued economic growth is forecasted and should benefit our business in the second half of this year. Frank, could you give the financial report?

Thank you, Jeff. Good morning, everyone. Net sales of $1.347 billion grew 2% over last year's adjusted sales or 1% on a constant exchange rate basis. As we discussed last quarter, we had four additional days in 2010, positively impacting our sales by about 6%. Residential continues to show improvement with commercial still declining. Our gross profit was 25.6% after excluding $4 million of restructuring charges we incurred during the quarter. We improved over 2009 due to higher plant utilization. We were also impacted favorably by lower costs and the impact of last year's restructuring activities. SG&A of $287 million was 21.3% of sales. It was down $13 million or 5% over last year. Restructuring and cost-cutting benefits favorably impacted our SG&A this quarter. Restructuring charges of $4 million included $3 million in Mohawk segment and $1 million in the Unilin segment. These were both representing restructuring activities that began last year. Our operation income excluding charges was $58 million or 4.3% of sales. That compares to last year's 3.2% of sales. Our margin improved with lower costs this year. Interest expense of $34 million was higher this year, primarily due to the new bank facility we put in place in the second half of last year. In the second quarter of this year, we completed a tender purchase of $200 million of our outstanding bonds. We paid a premium in the second quarter of $7 million to buy those bonds back. We should have interest savings of about $3 million each quarter starting in the second quarter of this year with a pretax total savings net of the premium of about $2 million. Our other income this year in the first quarter was favorable, due to about $4 million of favorable foreign exchange. Our income tax rate for the…

Thank you. During the first quarter we've introduced innovative new products, enhanced manufacturing and distribution processes, reduced the cost structure further and improved quality throughout the business. We continue to invest in product innovation by introducing new products including carpets from our proprietary SmartStrand fiber and Reveal Imaging and Ceramic to provide new designs and performance features for today's consumers. We're implementing new systems in our distribution, customer and sales force management to improve our service and our efficiency of the organization. The G&A manufacturing, distribution and infrastructure reductions initiated last year will enhance the cost structure and profitability of our business as demand increases. Our restructuring and cost-cutting efforts are positively impacting results in the first quarter. We purchased $200 million of our bonds in April that will save cash as well as improve earnings this year. We will de-lever our balance sheet further as we generate cash this year and prepare to retire our 2011 bond. Both rating agencies upgraded their outlook of Mohawk to stable in recognition of our strong cash flow and the improving economy. Our Mohawk segment sales were up 2%, compared to adjusted sales last year. The industry is lagging the overall economy as compressed housing pricing reduced consumer remodeling. We're leading the industry and satisfying the customer's desires for softer fibers, utilizing soft fusion nylon, using extra soft polyester and proprietary SmartStrand fibers. Consumer tests show our SmartStrand Sorona carpets are the softest products available in the marketplace and are favored by our consumers. Mohawk's Etchware, part of our bio-based SmartStrand carpet collection was recently voted the number one carpet choice by retailers in 2010. Our new product collections are reaching the retailer's floors earlier this year and should enhance our position. Changes in the markets for fiber and carpet continue to evolve…

(Operator Instructions). Your first question comes from the line of Sam Darkatsh from Raymond James. Your line is open. Sam Darkatsh – Raymond James: Good morning Jeff, Frank. How are you?

Good, how are you Sam? Sam Darkatsh – Raymond James: Talk about a couple of things. First off, commercial versus residential price increases, are they roughly the same level? Are the timing of them different? You have different end market dynamics in terms of demand happening there. What are your thoughts there, Jeff?

There are commercial increases going on. The commercial increases get implemented slightly different. With a specified marketplace it is on a job-by-job basis. You typically don't see the increases. We just put out the increases as Mohawk's in the same way we do the other as (inaudible) has done it. But we believe that the price increases will be in similar ranges, maybe a little less than the residential ones in general. Sam Darkatsh – Raymond James: And Frank, could you help quantify the restructuring savings in the quarter, the benefit the year-on-year restructuring savings?

Sam, what we've said is we've incurred about $60 million of costs and write-offs last year and that we thought we've get about a year and a half payback on those and we got a portion of that last year and the rest of it is falling into this year, throughout the year. And so it'll be about $30 million for the full year, this year. Sam Darkatsh – Raymond James: $30 million savings for the full year?

Correct. Sam Darkatsh – Raymond James: And then Q1 does that ramp as the year progresses or is that pretty steady all throughout the offering?

I think it'll ramp up as the year progresses. Sam Darkatsh – Raymond James: Any sense of the benefit from FIFO inventory accounting usage versus LIFO or average cost?

No. We don't really keep up with LIFO anymore since we're not on it. Sam Darkatsh – Raymond James: Okay. And then, I guess the last question. At retail, there's a lot of favorable benefits from some creative promotions at retail such as whole house installations and the such. What do you think the promotional environment or calendar might look like after the May price increases go through and how price sensitive do you believe the consumer is right now, Jeff?

All of our retailers are pushing value propositions, which has reduced the mix of the products in all the different categories. With the volume where it was, everyone has been hesitant to promote anything other than price. So when they come in the store, there is a heavy direction towards lower value products. Typically, as you go through these recoveries what happens is, the consumers really don't want the lowest value thing they can get. They really have the desire for the best quality and products they can afford. And so as you change those things typically improve and the mix typically improves as we go through the recovery. Sam Darkatsh – Raymond James: Thanks so much.

Your next question comes from the line of Eric Bosshard from Cleveland Research. Your line is open. Eric Bosshard – Cleveland Research: Good morning.

Good morning. Eric Bosshard – Cleveland Research: Two questions for you. You had indicated that the quarter was better than expected and I'm just wondering if you can narrow that in a little bit to say, was that on the revenue or margin line and in what area?

Well, I think it was spread across all of the areas, Eric. The easiest ones start off with FX was more favorable than we had anticipated and probably was $0.05 value. And then the rest of the benefit or the improvement is going to be spread between slightly better sales and better margins and lower costs. Eric Bosshard – Cleveland Research: On the sales line, as we work through the year, it seems like the commentary is that residential is where the improvement is. Am I hearing you right to suggest that sales in residential will show up mostly in the Mohawk segment, that we should start to see some sales growth in 2Q? Can you just give us a little sense of is that the right direction or the right timing?

We don't have any magic crystal balls about the future. We have about a two week backlog in the residential business because we ship the stuff so quickly. So anything we give you is just pulled out of the air. We believe that it's going to continue improving in the piece. We've in vetted in our estimates and improvement. We have the timing of those improvements. We can't estimate them much better than you can. We believe that by the second half we'll see significant improvement in the residential remodeling business. You have the new construction business that we can see the starts picking up. Since our products are almost the last thing that go in, we won't feel it until the end of the third quarter or the fourth quarter as the homes become almost complete. So, most of the benefit we'll see in the latter part of the year in new home construction. Our present estimates are that the commercial business will stay difficult through this year. We're anticipating a bottom out and next year they'll turn positive. But the exact timing in a month-to-month piece, we're just guessing same as you. Eric Bosshard – Cleveland Research: Within which we can't see but within the quarter and within the short backlog you have, has the replacement business shown progress?

It has shown some improvement. It is obfuscated in the way we see it because given these price increases we've done, people try to beat the price increases and make it difficult to read exactly what's happening in the demand level on the streets. Eric Bosshard – Cleveland Research: And then lastly, in terms of what's happened with input costs in this second round of pricing, you seem to suggest that 2Q, the timing would not be perfectly matched. By the time we get to 3Q, will you have matched up price and costs that allow for more favorable margin performance?

We should have the second increase. Some of it probably won't be completely implemented until some part at the start of the third quarter. So it will be somewhere in that neighborhood. Eric Bosshard – Cleveland Research: Okay, thank you.

Your next question comes from the line of David MacGregor from Longbow Research. Your line is open. David MacGregor – Longbow Research: Yes, good morning everyone.

Good morning David. David MacGregor – Longbow Research: Just to follow-up on Eric's question, what's the expected negative impact to 2Q from the raw materials?

We haven't quantified that or talked about it on the call here but it's going to be a drag on the quarter a little bit until we get the price increase implemented. David MacGregor – Longbow Research: Okay. How much are your raw materials up year-over-year for you right now? You talked in your inventory about $30 million of inflation in the inventory. I'm wondering how it impacts on year-over-year basis, first quarter?

We announced 4% to 7% price increase in the category. Typically, we have much more of it in the lower end of the business and typically we don't get all of it. So we need about a 3% to 4% price increase to cover it on average and we get through. And what we said about the amount of the increase we have in the second one, the second one is a little bit higher than the first one than. We need in the [ph] second one. David MacGregor – Longbow Research: Okay, all right. I'm just wondering with these price increases, if you're trying to get in front of anticipated raw material cost inflation or are you trying to keep up with what your suppliers are putting in front of you?

We make estimates of what we think they're going to be. Most of the raw materials are the large pieces we have that fluctuate month to month. So we're anticipating that in the future, given the volatility of commodities and oil prices, I can tell you there our estimates in December, when we put them together weren't too good. Our basis today is we believe we've anticipated where they're going to be. Our assumptions are that we think they're going to level out and hopefully we won't need anymore but we'll have to see what happens. David MacGregor – Longbow Research: Just, with respect to mix, there has been some discussion with an earlier question about mix. What was the impact year-over-year on revenues and margins from the weaker mix?

Let's see. We don't really break out mix separate from price because it's difficult to do that. But it's probably in the low to mid single digit area. David MacGregor – Longbow Research: For price and mix together or just mix?

Yes, its price and mix together. David MacGregor – Longbow Research: Okay, and then last question, just on Unilin, 9% year-over-year growth looks pretty good. I know you've got a lot going on in that segment. Can you just update us on what percentage of Unilin is actually laminate flooring?

About two-thirds of the business is what we call the laminate flooring industry, the category, which would include the board business that supports that. It also includes the licensing pieces and everything else that has to do with that. And the rest of the business is made up of a roofing business and another board business. The board business has started improving. As the volume has gone up, the capacity utilization of the plants have gone up significantly in the first quarter. The problem we're having is they're all wood based materials as well as the chemicals that go into glue and we're lagging in the pricing on those. We've put through a price increase in the first quarter, and we've announced a second one for the second quarter. So we hope by the third quarter we'll have the pricing aligned with the costs with it. The roofing structure – it's a roofing structure business where we make custom made roofing structures. It suffered during the first quarter due to the lower construction going on, as well as the weather has impacted it. The more severe weather has impacted it. So it was negative in the period. It should improve as we go forward. David MacGregor – Longbow Research: Okay, last question, Just nylon versus polyester mix within carpet. Can you give us a rough sense of where that is today?

I don't have the percent in front of me. What's happening is that the polyester prices have increased less than the nylon prices or the polypropylene prices and the commodities that support each have changed. What's happening is the industry is moving the mix from the other categories of polyester. We are investing more and putting those in place. ':

Yes, just give me a call David and I'll give you more specific numbers.

Your next question comes from the line of Laura Champine from Cowen and Company. Your line is open. Laura Champine – Cowen and Company: Frank, I'm wondering if you've got the unit numbers by segment in front of you this morning.

Maybe, Laura, if you want to call me back, I've got them. But rather than take up time here if you call me back I can go through those with you. That might be the easiest way to it. Laura Champine – Cowen and Company: And then driving – the laminate segment showed stronger growth and profits than we were looking for. Do you think that you're taking share in Europe, because that's what it looks like from our perspective and if so, what's driving share gains?

I think that our laminate business in Europe is positioned differently than the average market. In Europe, what happened is that we're positioned mostly in the mid to high range. We have started taking business. We've been talking about the last quarter too of expanding our channels and going into the lower end of the marketplace and we're doing things to do that. Our goal is not to become the commodity supplier in the marketplace though because we've spent a lot of effort in creating innovation in the marketplace. Those things have positively impacted our margin versus the mix of the industry as a whole. On the other hand, last year when the consumers were moving to more pricing, we were suffering a little bit with that strategy and the mix of the products, the low end was doing a little better than the high end. I think that we're performing well versus the marketplace.

The other thing to point out here, too, Laura on the Unilin results is, they were 9% up topline year-over-year on a constant exchange rate basis but if you adjust it through a constant day's basis, its just 2% to 3% up. Laura Champine – Cowen and Company: Got it. Thank you.

Your next question comes from the line of Dennis McGill from Zelman Associates. Your line is open. Dennis McGill – Zelman Associates: Good morning guys, thank you. So first question on pricing, the comments about the first increase in the Mohawk segment being fully implemented by the second quarter, that doesn't imply that you actually got the full amount, right? It goes back to your comments of you're getting a portion of that?

When you say the full amount, there's a mix that goes into it. So we announced a price increase of X and typically there's more of it at the lower end than the higher end because of the mix of the industry and the prices and then we do lose some of it as we go through in different places as we adapt to market conditions. Dennis McGill – Zelman Associates:

Actually somewhere in the middle of it, we'll have implemented all that will be gotten. Dennis McGill – Zelman Associates: Okay. On the Dal-Tile, I'm realizing margins are being impacted by volumes there. Aside from the volume impact, can you help us think about margins through the end of the year as to whether you could see some improvement there based on some of the initiatives you have in place, absent a recovery in volume?

First off, remember the first quarter seasonally is the slowest. So just the fact you're going into seasonally better quarters than the last three, you'll see some improvement from that in the third quarter.

And third quarter typically, they have the vacation period.

You're talking Dal-Tile or Unilin? Dennis McGill – Zelman Associates: Dal-Tile please.

Dal-Tile. The Dal-Tile, we have the normal seasonal uptick that we're going have. The thing that's different in Dal-Tile is, Dal-Tile as we went into the recession, it lagged coming in. The lag was caused because we have a higher commercial business. And with that, as we come out of it, that higher commercial business is going to cause it to probably trail a little bit on the other end. So we're expecting it to trail a little bit because we have about – almost 40% of the business is in commercial. Dennis McGill – Zelman Associates: I appreciate the non res [ph] and the sequential improvements. I guess what I'm thinking about is year-over-year and maybe if we look at it annually as opposed to by quarter, based on the initiatives you guys have put in place and some of the cost takeouts, could you see margins actually up in that business year-over-year even without an improvement in revenue or volume?

I don't think you're going to see margins year-over-year in Dal-Tile. I don't think that will happen. I think sequentially you'll see improvement in margins. Dennis McGill – Zelman Associates: Okay, that's helpful. And then I guess, just lastly within the 2Q guidance of $0.60 to $0.68, can you just talk about what the assumption is for revenue there roughly? As far as growth rate?

We generally don't give out that. We just guide for the earnings per share and then as we have said before, the real challenge we have is coming up with an outlook beyond a month or two because we just don't have a lot of visibility. So we just limit our guidance to the earnings per share. Dennis McGill – Zelman Associates: Okay, all right. Thanks a lot, guys.

Your next question comes from the line of John Baugh from Stifel Nicolaus. Your line is open. John Baugh – Stifel Nicolaus: Good morning. Congratulations. Quickly, what percentage now of Mohawk's division is soft surface versus hard surface roughly?

The great majority of it is in soft surface. There is a hard surface business that has not a bigger impact because the hard surfaces tend to have a more larger portion of the new home construction business in them and maybe if you call Frank back, we'll get you a better view of the percentage. John Baugh – Stifel Nicolaus: Could you comment, Jeff, on how you performed, – we have a feel for industry data in carpet and rug in the quarter – and bifurcate your comments between commercial and residential?

I think in general, we performed in line with the industry. I think that the residential business might have been slightly better and the commercial might have been slightly worse but they're close in total, when you adjust for all the days and the different product categories in the pieces. John Baugh – Stifel Nicolaus: And then how many pounds of polyester were you extruding coming into the year, with all the capacity you're going to add, roughly how much coming out or some sense of how much of a commitment you're making to that?

All the extrusion equipment we're buying, and all that was bought in the last X years is flexible to do either or so that it's not a one way street to commitment. Where the industry's having problems with extrusion is in the '90's when polypropylene was so great. A large portion of the capacity that was put in for polypropylene didn't have the capabilities of making the other fibers. And so the industry is having to realign and put capacity in to make white yarns of nylon polyester or either one and then we have the additional piece of the Triexta fiber which is a growing piece of our high end residential business. It's becoming a core port of that high end business. John Baugh – Stifel Nicolaus: So do you have a feel Jeff, for how many pounds of polyester/nylon extrusion or just a percentage increase of your existing polyester….

Why don't you give Frank a call? We'll get back to numbers on the fiber mix and we'll be glad to give it to you. John Baugh – Stifel Nicolaus: All right, is there anything you need to do with any nylon staple capacity?

We shut down the majority of it because there is none [ph] left. We have – most of what's left is now being used polyester staple. It has a longer, a different value proposition than the nylon did. And so we believe it will still have value on going out. It will be under pressure by the others. We are using more of the capacity to actually use the resins to put in filament polyester that we're using from bottles and we'll continue growing that as we go forward.

John, just to follow up on your question on hard surfaces in the Mohawk segment, remember we have rugs, (inaudible) carpet, commercial and residential and hard surface and hard surface is in the kind of 10% range of the building. John Baugh – Stifel Nicolaus: Thank you very much.

Your next question comes from the line of David Goldberg from UBS. Your line is open. David Goldberg – UBS: Thanks. Good morning guys.

Good morning. David Goldberg – UBS: The first question has to do with how your thinking about – I know Jeff made comments about (inaudible) by the time the 2011 debt is coming due, how you're thinking about debt retirement versus potentially refinancing in this market and the kind of cash usage, cash needs you're going to need going forward and why that makes sense?

We think that we'll be able to generate enough cash to pay for the 2011….

Between cash and using our bank facility, we think we can generate enough cash and have enough availability on that to take care of the remaining $300 million on the 2011s. David Goldberg – UBS: I guess the question is, as you look forward at the other maturities and other possible decisions around your capital structure, how are you thinking about that? Is it that kind of a as they come take care of it kind of question how you essentially think about the….

We continue to look over the different options. Basically today, we're not using any short-term debt. So the capital structure, we do need more short-term debt in it. On the other hand, what's happening, we'd like to push up the short-term debt as a proportion of the total. On the other hand, the money available today is at reasonable rates and readily available and we continue to re-evaluate periodically. We want to change the structure and do it. We won't need any money till next year to pay off the other debts. Unless we do some significant investments we don't have on the sheet today and we continue reanalyzing both those things as those conditions change.

It's an ongoing process. We're continuing to look at all of the different alternatives. David Goldberg – UBS: Is the presumption then that the working capital needs, as we moved through the year, if we get some stability on can that be significant?

We believe that we can handle them within the financial structures that we have, unless we make a significant change in either an investment or acquisitions or starting up something that's not on the plan today.

And we think we've got alternatives available on this market to address any kind of issue that comes along. David Goldberg – UBS: Okay, great. Thanks guys. Great quarter.

Thank you.

Your next question comes from the line of Dan Oppenheim from Credit Suisse. Your line is open. Dan Oppenheim – Credit Suisse: Thanks very much. Was wondering if you can talk a little bit about any potential for pushing through further price increases? Does your expectation of the tradeoff or the reversal of the trade down that we've seen into the more commoditized areas aid your thoughts of being able to push prices as we move through the recovery?

You're looking at additional price increases? Dan Oppenheim – Credit Suisse: Well, just thinking about it, just as we saw the trade down and some more commoditized price areas where there is some price pressure as we reverse that. Does that help your ability to push pricing?

I think that as we trade up, when's going to happen is the product mix – we make more money on some of the higher end stuff than we do on the little commoditized lower end. So as the mix changes, it will help our margins. At the moment, I don't have any plans this year to put through any other price increases, knowing what I know today, if the raw materials go up more than we anticipate in the next three to four months we might have to change our direction. But we believe that's where we are today with what we know today. Dan Oppenheim – Credit Suisse: Great, thanks. And then the second question relating just to the balance sheet and then – or use of cash. You talked about increasing the CapEx for the year. What do you think about potential for any smaller acquisitions, either internationally or smaller product lines? Is there any thought to that or would you need to see more in the way of a recovery before taking on them?

We continue to look at various pieces. The big CapEx pieces that we have on the books now are the filament fiber investment. We have – looking at a potential of adding more ceramic capacity, maybe in Mexico we're looking at the process of a laminate flooring plant in Russia that we're in the midst of looking at and we're reviewing several other opportunities as we speak. Dan Oppenheim – Credit Suisse: Okay. Thanks very much.

Your next question comes from the line of Stephen East from Ticonderoga Securities. Your line is open. Stephen East – Ticonderoga Securities: Thank you. Good morning, guys. If I could just look at some demand issues on the commercial side in Europe, starting with Europe, it's been pretty good for you. I guess I'm worried about everything that's going on there. You talked about your visibility. For example, Mohawk soft flooring is only a couple of weeks. What type of visibility do you have in the European business?

It's not significantly different. In the roofing business, it's further out because the stuff is custom made. In the board businesses typically we have agreements that could be anywhere from one month to a quarter out. But the general agreements, it can change. The flooring business is not much different than it is here. Stephen East – Ticonderoga Securities: Okay, and then on the commercial side, I know that's still tough. In you break apart the different sectors within the commercial; can you just give a little color on what you all see in those markets?

I think that they're all under pressure. We see that they're all going to be suffering this year, unless something changes, which is good that we don't see where they are. I think in the carpet piece more you see the trends are continuing to more modular carpet. So the modular carpet is doing better in the categories as people use more of it and different pieces. Stephen East – Ticonderoga Securities: …like the hospitality or the healthcare sectors of the business improving?

We haven't seen it yet because. You can say [ph] that we can see it changing. People are still being very conservative with their investments. There has been no new construction started in the last year and a half or two years. Most of what was out there is finished. So it was very moderately done. Debt's still difficult to come by to start new projects. They have to put up more money for it. So those things are starting to change but when the new part starts it will be a year and a half out before you see it. The new construction part is not going to help us in the short term. So it's really all dependent on the remodeling side of both the specified and non-specified businesses that come in. And if the hospitality business can turn, you can't rent out rooms for $300 – $400 a room and have dilapidated rooms. So as people see this business improving, those things can change rapidly. I'm sure the projects on the book that we have with – many of them have been postponed. So the question is what's the timing of those and when it's going to turn loose. We can't predict them. Stephen East – Ticonderoga Securities: Okay. And, just one last question sort of along the lines of the raw materials. Over the years, you've gone vertical in some of your processes. You've avoided going vertical in other parts. With everything that's going on, do you re-evaluate your thought processes on those?

Most of the businesses were fairly vertical in most of the pieces. I think that we made a choice not to go back into nylon resin at one point, given the change in the mix of polyester. That looks like a reasonable decision. The polyester and polypropylene resins, the carpet industry is a very limited portion relative to the total uses in the market place. So the scale you need to participate in those, we don't have enough to participate in and we're very commoditized in expenditures. So we think we're well positioned to do that. We just have to make sure that we have enough conversion capacity to support our business which we think we're putting in place. Stephen East – Ticonderoga Securities: Okay. Thank you.

Your next question comes from the line of Joshua Pollard from Goldman Sachs. Your line is open. Joshua Pollard – Goldman Sachs: Good morning, thanks. Last quarter you talked about moving into the DIY segments and laminate. Did that help your business and if it did could you talk about the impact to sales and what the impact to margins may have been?

': We think we bring to the marketplace innovation and differentiation of product and different performance features that add value to the customers in each channel. The European market is a country-by-country strategy and account-by-account strategy. In the U.S., it's broader. There's fewer options and we have a program that's in (inaudible) today that we didn't have a year ago and we're working with other ones to develop programs with them Joshua Pollard – Goldman Sachs: On an overall basis, is that a benefit to mix or a detriment? And my other question. There's been a lot of conversation around commercial. From a – call it second derivative standpoint, are you seeing commercial declines getting worse, staying stable or are you seeing them ease up and can you mix that with your comments on sort of mix stabilizing across the business? Thank you.

On the home centers…

The first question's is the home centers. The home centers in general show a lower product mix than the marketplace in general. The do it yourself part of the businesses tend to be at the lower end of the marketplace. So products going into there have a lower mix and value proposition and would have lower margins relative to the market in total because they have a less participation in the higher end of it. And then the second part of the question was commercial trends. Again, the commercial trends are – we're seeing the commercial businesses are under pressure. The remodeling pieces will react first and those will be on projects that are in place and the large ones that have been postponed and we really can't tell when it's going to turn or not. There are some positive signs out there, but not enough to say there's a new direction. We're still predicting the whole year to be down. Joshua Pollard – Goldman Sachs: Understood. If I could sneak one last one in. Your capacity utilization across your three business lines if you have it?

In general, we're running 75% to 80% of the general piece. But all the businesses have a lot of different parts and pieces to them and some could be running in the 90% and others in the 60s.

Your final question comes from the line of Keith Hughes from SunTrust. Your line is open. Keith Hughes – SunTrust: Thank you. Just a final question on the turn of business particularly in the residential segment. Did it swing up as we went through margin and how has it been in April?

We are seeing some improvement that we perceive but it's really difficult to read, given the price changes that are going on that we see in the pieces. But we are seeing improvement. The customers are more optimistic and we are anticipating improvement as we go through the year. We really think that in all the historical cycles, the remodeling business has really jumped. It has been a leading edge of the economy. Given the decrease in the housing prices we think that people are postponing some of the remodeling. But we think that there's a huge opportunity that's going to come through. We just can't identify the timing of it. Keith Hughes – SunTrust: And in Europe, has there been any change in demand as the quarter went along with the controversy over there?

We haven't been able to connect the two together. We see improvement in general and haven't been able to connect the great [ph] economic problems to what we're seeing today. Keith Hughes – SunTrust: All right, thank you.

You have one more question from the line of Arnold Brief from Goldsmith & Harris. Your line is open. Arnold Brief – Goldsmith & Harris: Granted the economy is improving, but given the level of activity and how far down it still is, it seems to me that this whole industry from the supplier end of it right through the carpet manufacturing end of is exhibiting an extraordinary level of pricing power. Could you discuss some of the reasons for that and to what extent if oil prices come down do you think your prices would hold?

You have to understand that when you talk about the carpet industry, that the raw materials make up such a huge part of it that when they change, it has a huge impact on our business and the industry and so as those raw materials change, the industry has to push those prices through and our Mohawk's margins get impacted so much that you really don't have any choice if you don't want them to deteriorate substantially and that's what creates the structure that it goes through or not. The Mohawk's margins are lower than we'd like them, and we need to get the price increases through and we're focused on increasing the prices to achieve those results. Arnold Brief – Goldsmith & Harris: Could you go back farther into the pricing power of the fiber suppliers and where demand for carpet is so weak, how are they justified in holding their price increases?

If you go back in the chain, what's happened is that the fiber part of it, which is the last piece in front of us, little by little, the carpet manufacturers have taken over a majority of it. You have a few suppliers left that have a smaller and smaller share. So they become less relevant to the total. There's been a huge amount of capacity that was taken out in the last couple of years in consolidation of what's left. So then you go back to the next phase behind that one which is the chemicals. You get back to chemicals, the chemical prices are based on worldwide demands and supply and demand of each of those chemicals. They move across borders rapidly and so it really comes down to the worldwide demand for those chemicals and we're just the tail of the dog on that one. Arnold Brief – Goldsmith & Harris: You think that as demand improves on the one hand, if oil prices come back a little bit that prices could hold? Do you have that much pricing power?

I missed the question. Arnold Brief – Goldsmith & Harris:

I think that we, Mohawk, need higher margins than we have and I think we're going to do everything we can to maintain them because we have to get back to our historical margins in order to have the money to invest in our business and satisfy our customers. Arnold Brief – Goldsmith & Harris: Thank you very much.

There are no further questions at this time. I turn the call back over to you, Mr. Lorberbaum.

We appreciate you joining us. We think that the economic recovery is here. We think that we'll see continued improvement throughout the year and we're doing everything we can to get the business profitability to where we want it. Have a good day. Thank you very much.

This concludes today's conference call. You may now disconnect.