Steven R. Rowley – President & Chief Executive Officer Arthur R.

Zunker, Jr. – Senior Vice President & Chief Financial Officer Craig Kesler – Vice President, Investor Relations & Corporate Development

David MacGregor – Longbow Research Mike Betts – JPMorgan Jack Kasprzk – BB&T Capital Markets Trey Grooms – Stevens, Inc. Ken Zener – Merrill Lynch Cliff Greenberg – Baron Capital [Tripp Rogers] – Carlson Capital Alex Mitchell – Scopus Asset Management Alan Mitrani – Sylvan Lake Asset Management Michael Corelli – Barry Vogel & Associates

Welcome to Eagle Materials conference call for the 3rd quarter of fiscal 2008. Joining me today are Art Zunker our Senior Vice President and CFO and Craig Kesler our Vice President, Investor Relations and Corporate Development.

There will be a slide presentation made next with this call. To access it please go to www.EagleMaterials.com and click on the link to the webcast.

While you’re accessing the slides please note the first slide covers our cautionary disclosures regarding forward-looking statements made during this call. These statements are subject to risks and uncertainties that could cause results to differ from those discussed during the call.

For further information please refer to this disclosure which is also included at the end of press release. Housing industry and financial market problems continue to feed off one another thereby reducing U.S.

wallboard sales opportunities. In the near term these reduce sales opportunities, lower U.S.

wallboard capacity utilization which increases marketplace competitiveness. However on an optimistic note a large drop in housing starts and permits is absolutely necessary because the current high inventory level of homes must first be reduced before the U.S.

housing market can recover. For Eagle the impact to our third quarter was lower wallboard demand and lowered wallboard prices causing Eagle’s quarterly comparative revenues to decline 19% and operating earnings to decline 38%.

During the first nine months of fiscal 2008 we generated approximately $147 million cash flow from operations a 29% decline from the same period a year ago. Approximately $76 million was utilized to fund capital expenditures the majority towards the construction of our new wallboard plant in South Carolina.

In order to facilitate the appeals process with the IRS during the third quarter we paid the IRS $45.8 million related to the audit of our 2001 through 2003 tax returns. In addition approximately $180 million was utilized to repurchase shares and pay dividends.

The combination of capital spending and repurchasing stock has increased our net debt to cap ratio at December 31 to approximately 43%. During the quarter we issued $200 million in senior unsecured notes in a private pledging transaction.

The average maturity of the notes is approximately ten years with an average interest rate of 6.35%. As previously mentioned our wallboard revenues and earnings declined during this quarter because of greatly reduced new residential construction relative to last year.

Our average net sales price declined 37% compared to the prior year while our sales volumes declined 8%. The 83% drop in wallboard operating earnings compared to the prior year was the result of a very competitive marketplace causing a 37% year-over-year drop in price.

American Gypsum’s continual efforts to reduce operating costs were rewarded again this quarter with production costs 2% lower than last year’s costs even with significantly reduced production volumes. This chart shows the wallboard pricing cycle and the current trend.

During the past three months the rate of decline has been cut approximately in half to about $2.50 to $3.00 per MSF per month. Currently wallboard pricing remains challenging; however pricing adjustments have become more local in nature and are not occurring as frequently.

Additionally most of the industry has announced a 10% price increase scheduled to be implemented next month. Gypsum specialty dealers through which the vast majority of wallboard is distributed have always announced a similar price increase.

Construction of our new wallboard facility in Georgetown, South Carolina was completed during the quarter. The plant started up in early January and it was completed 5% under budget.

So far we are very pleased with commissioning and start up of Georgetown and we are optimistic that one-time start costs budgeted at about $8 to $10 million will be also well under budget. Our third quarter cement revenue increase was associated with both price and volume improvements of 3% and 9% respectively.

Currently seasonal winter weather is impacting our sales volumes in the West and Midwest. However inventory levels remain normal for this time of year.

Cement price increases ranking from $5.00 to $10.00 per ton have been announced in all of our markets for April of this year. This year’s third quarter operating earnings were 60% greater than the prior year and were an all-time record for Eagle.

Higher cement prices combined with additional manufacturing capacity at our Illinois cement plant attributed to the increased operating earnings. Our cement sales volumes set a record for third quarter sales volumes and our $96.31 per ton mill net was up 3% and was a record high for Eagle.

Very high recycled fiber costs combined with reduced gypsum liner board sales negatively impacted our third quarter operating results. However, proceeds of $2.3 million from the settlement of an outstanding lawsuit offset these factors.

Northern California remains a very difficult market for our concrete and aggregates business which is the primary driver of the decline quarterly comparative for volumes, profitability and average aggregate sales price. Thank you for attending today’s call.

We will now move to the question and answer session.

Steve, the wallboard, we’ve got a growing percentage of industry capacity that is now operating at less, below cash costs or at least they’re selling below cash costs. How do you see trough pricing being different than where we got to in 2000, 2001?

That’s really difficult to predict. Our prices are currently lower now.

I think that one chart kind of shows where we are. We’re estimating that our costs relative to the last drop, there were costs that are up, a combination of production costs and really freight to the market are up about $35.

When we look at our trough I think for a year we’ve had kind of a trough price of about $65. It starts to feel like you’re very close to where you were in the last trough but each competitor has different components whether it’s freight or production costs to where they come up with their delivery costs to market.

I guess on the cement business just looking at the 35% increase in joint venture volumes I guess that’s a reflection of the import terminal tonnage. Can you give us a sense of what kind of tonnage is coming through the import terminal now?

And also what’s changing in terms of the profitability of your import business? I’m surprised margin’s help up relatively well given the increase in import tonnage.

The import volume is about as predicted. The partnership there has about 500,000 tons that we can move through there and technically I moved about that amount so we would see about half of that increased volume coming through and as far as pricing, pricing has not deteriorated that much although margins may have on the imports.

We’ve seen where prices are up dramatically since the beginning of this year. Pretty much when you import cement you lock it in for a fairly long period of time.

Generally you’ll set your deals almost a year in advance so the increase in price of import cement really won’t hit us until this quarter and going forward.

Have you seen relief on freight costs with respect to these imports? And if so what influence do you expect it to have on sort of the landed cost of your imports?

Currently we’re really not seeing much relief although we see some of the indexes changing a little bit and maybe some of the larger vessels, there’s a little relief. But for cement it’s usually in smaller size vessels and we’re not seeing a lot of relief there and year-over-year it’s still up.

Maybe in the last month or so it’s kind of peaked over the top but even the little bit that those rates have come down, year-over-year it’s still much higher.

Last question, just on the paperboard. Can you give us the margins without the lawsuit benefit in there?

I don’t know that the margins were. Essentially I think you take 2.3 from the –

And divide it by 65,000. That’s about $40 something dollars difference right there.

Couple of areas of questioning if I could. The first one please is just to get a little bit more steer on the impact of the new plant, the Georgetown, South Carolina wallboard plant.

Can you give us some idea, Steve, of what sort of costs were incurred in the third quarter in terms of shipping wallboard across to build up market share? And when you’re talking about – I think you said $8 to $10 of startup costs, I think you indicated it might be a bit less than – but is that all expected to be in Q4 or would that spread over a couple of quarters?

That’s my first question.

The impact of startup costs. That really should be this quarter and instead of $8 to $10 per MSF it’s really $8 to $10 million, what we budgeted when we put the project together.

When you start up a wallboard plant a lot of times you generate a fair amount of waste and you have other issues that you have deal with including people and consultants that you bring in during that time frame. But so far we’re very pleased with the startup and hope to minimize these one-time costs.

As far as the impact in the last quarter very little relative to prior quarters. We really didn’t start up until this quarter.

No, I was meaning more though, Steven, since you were shifting wallboard across the country to build up market share, some idea of what the additional cost of maybe transporting that wallboard rather than now being able to supply it from the new plant?

I’d have to do a quick little calculation to relatively – The freight for what we were going at 18 was generally we’ve been shipping into that market about a third to half of what we plan to ship out of the new plant. And the additional freight is $65 to $70 per MSF to push the wallboard from Oklahoma into the Southeastern markets.

Okay, that’s great. I can calculate it from that side.

Second question just on the payment to the IRS. Can you just remind me – I think you were taking an element in the finance costs related to that.

Maybe my notes are wrong but I have something like you were charging a finance cost of $1.9 million a quarter. Is that right?

And I guess you will no longer need to charge that although you will actually be paying interest on the debt. Is that how it’s going to work?

Mike, that’s correct. We had approximately $2 million in this quarter.

Going forward it’s going to be a little over $1 million and the reason for that is, is that under the 1048 we accrued for full exposure for the year that we’re not under audit. Let’s say which we continue to accrue interest on it, so going forward you accrue additional $1 million, $1.2 million per quarter going forward for the IRS payment for the part that was approved but was not paid to the IRS.

The final question from me and it’s back to you I guess, Steve. The potential for this cement price increase in April.

It has been put back in many regions from January to April, what are you seeing at the moment? I think a lot of my European companies aren’t really expecting to get much of a price increase.

From what you’re saying and what you read in the press release you seem more optimistic. Is that a fair judgment or is it just a case of wait and see really?

No, I really think it’s a fair judgment. When people put January price increases out in a marketplace that has a lot of potential winter seasonality it’s very difficult to get a price increase when sales volumes are very, very slow when the weather is really miserable.

I don’t anticipate January price increases in cement to hold very often, certainly in the Northern parts of the country. But in other parts you can.

April is more typical of the time you see a price increase and cement sales have been very, very strong demand. They’ve been very strong in the Texas region, they seem very comfortable with that.

Sales have been very strong in the Mountain region as well. So the two areas where sales have been slow and really hit by winter weather has been in the Northern California and the Midwest.

And the $10 is in which region? I think you said $5 to $10.

Where’s the $10?

The $10 is predominantly in the Texas region.

Steve, the $8 to $10 million of startup costs, is that something we think we’ll hit in this March quarter for the wallboard, the South Carolina plant? Is that what you were saying?

That’s correct.

Can you update us, Art, on Cap X for fiscal 08? And if you have any projection for fiscal 09?

Yeah, Jack, we’re looking fourth quarter somewhere between $15 and $20 million and that should bring us for the year in maybe the $90 to $95 million range for fiscal 08. In fiscal 09 we’re still looking at something in the $110 to $120 million range.

Can you update us on the cement plant expansions? Where are you in that process in terms of timing?

We believe we will start Nevada Cement early this spring. We’re getting very, very close to finalizing our permit, we do have a draft permit in hand.

We’re most of the way through a public commentary and believe that that will be in hand shortly and our plans are to start this project early spring.

And how much is that projected to cost, Steve?

Currently we have budgeted about $200 million. We think we might be able to that for slightly less.

We’re looking at various options right now, but somewhere $200 million which is what I think we’ve been saying for quite a while. It’s what we budgeted but as things are getting a little more competitive in the construction business so we may be able to improve that slightly.

And if you start in the spring, when would you think it would be finished?

This is a 14 to 16 month build out.

How about Mountain Cement?

At Mountain, we’ve also made some progress there. The State has deemed our application complete and now we’re into the second phase of permitting there.

Not sure when we’ll get our permit to construct but believe that will happen sometime this Summer if all goes well.

So if you got it in the Summer – If things went well and you got it in the Summer, would you start that project fairly soon thereafter, you would think?

If we had everything ready to go we could, but it would have to start before winter weather. It gets very hard to construct in Laramie in the dead of winter especially the stuff below ground.

Right now could flop either to next spring or we’d be going very hard at it late Summer, early fall to at least get the stuff below ground in place.

And then I wanted to ask about aggregates in your California market. It sure looks like demand for aggregates has fallen off a cliff.

Is that a fair statement? I would have thought that – We know the housing market is very bad in California, but the public works market looked like it was going to maybe get a little better here in the coming months.

What are you guys seeing out there?

You couldn’t say it any better. Aggregate demand or just construction in general in Northern California is very, very slow so business is hard to come by for everybody out there.

Residential is slow. Some of the development that had a residential absolutely is non-existent and I think the state and the Governor took a while to pass the budget.

We have started bidding some work for this spring, but now I know the Governor has declared an economic state of emergency. So I’m not sure where those funds are going to end up.

I may have missed something here but I don’t know if you touched on this or not, but in cement it looked like the margins were a little bit lower in the quarter relative to what we’ve been seeing. Is there something in the quarter that would have caused the margins to come in other than just the higher imports?

Yes, we had a quarter shift in major maintenance. We had a major maintenance outage in our plant in Laramie, Wyoming.

We had a new backhouse that we installed and in addition to that we did a lot of maintenance. We changed out a gearbox on the [inaudible], put a lot of chain into a long-dry kiln that we have there, so that was really associated the quarter-to-quarter shift in maintenance costs, those costs above the prior year’s quarter were about $4 million.

In regards to the price increase in wallboard that you guys have announced, is that an industry-wide price increase that’s been announced? I guess has everybody else in the industry followed with those same type price increase levels?

And then secondly, I think you mentioned it was 10% and that the distributors had also announced a similar type of price increase, if we were to see that level of price increase come on in the mid-February time frame, what kind of base do you think that we would be looking for to model that off of?

It was an industry price increase. This is going to be 10% off the current gross price average somewhere in the $140 range.

Off of that also, as far as at the end of the quarter – you might have said it and I could have possibly missed it, I got on the call a little bit late – did you guys happen to mention where we were as far as wallboard pricing as of the end of the quarter?

Wallboard pricing near the end of the quarter was just slightly under the $100 level.

Lastly, on paperboard once you take out the gain, it looked like costs were very high as you guys had mentioned in the press release. Is that something that we should think about as far as a run rate?

I know OCB prices are high and costs are a lot higher than they have been, is that something we should expect going forward, or do you see costs possibly coming down in the next few quarters?

Fiber costs, they really bounce all over. I believe that maybe not this next quarter but a couple quarters out, recycled fiber costs will start to come down a little bit.

We also have within the way that we price our paperboard sales, some of those costs get passed through but they’re delayed a quarter. So there’ll be some offsets with that as well once that occurs.

In addition to that the big impact was reduced wallboard demands and our sales into the other markets are really below our cost, not below cash cost, but below our operating cost. You get impacted by the amount of additional sales within the marketplace, the lower priced products.

And then just my last question is you gave us quite a bit of color on aggregates in California. Could you also give us some color on kind of what you’re seeing in Texas as far as the environment there for aggregates in that market?

Our Texas market is strong, the aggregate volumes have been strong and prices are pretty strong. We did, however, sell some waste products at a little lower cost.

We just had a one-time sale of a waste product which kind of insulates the price slightly down to average price, slightly down. That doesn’t happen very often.

Pricing for both wallboard and cement, there’s obviously a lot of skepticism out there. So I wonder the confidence that you guys have about April pricing increase, what CNX talked about just the other day across many markets and other cement manufacturers have also mentioned, how does that really tie off, or what are your concerns about making that statement?

When you think about what you just said about aggregate demand in California relative to public expenditures. Perhaps them not coming up which would impact a big portion of cement’s end market.

Could you kind of think out your concerns about slowing public expenditure tie in to your confidence about pricing on the cement side being positive?

Cement is really a retail business so you have to look at each one of the regions that you are selling cement into and then decide what are the dynamics in each one of those regions. So we can talk a little bit about the regions that we have a fair amount of confidence.

Texas, we’re very, very confident that demand is strong, import prices are going up and there’s a need for a price increase in the Texas market especially because the cost of imports are going up so much and without a price increase the importers would be upside down. That’s the first market.

Could you also talk about the supply and demand? I guess the deficit because while I agree with you, I think there’s obviously a very strong argument being made that with public expenditure perhaps falling down, can you talk about the gap between the deficit and the capacity as well?

Again it’s in each market demand remains strong so there is still a lot of work going on in Texas in many areas. Some of this work is private sector funded, not public funded, so we are still seeing a very, very strong demand for cement and concrete in the state of Texas.

As I said, all of the imports which are a major factor in the volumes of cement sold in Texas, without a price increase it would be very, very difficult or in fact you would just be maintaining a position at quite a high loss if you sold at last year’s prices with the current price of imports going up so much and so much versus year-over-year. The Midwest, there’s a lot of weather right now and you never know about in the middle of winter what the spring will bring, but the Midwest and the whole Mississippi River system still has a lot of imports that supply demand throughout that system as well.

So again you’re going to have the impact of higher imports impacting that market. The Mountain region, demand is very strong and pricing looks stable there right now and we could easily see a price increase there.

We know we have a competitor starting a new plant up. That’s going to happen sometime in either this quarter or the next, but I think by that time that plant really gets producing well, we’re almost through this shipping season.

Then back to California, the Northern California market is very difficult. It might be difficult to see a price increase there as you mentioned earlier.

For the wallboard part, while the industry has announced $10 and you guys are out today, people have talked about that before. How much of that do you think is going to stick, A?

B, given past cycles, we tend to trough pricing to me at least, there seems to have been occasioned by capitulation of pricing because inventory had risen so much at the local level within reasons. So, A, how much do you think will stick?

B, have you seen that type of capitulation that would seem to indicate you’re near the trough pricing in wallboard?

What’s happened this time, which is what happens every cycle in wallboard, pricing goes down at such a high velocity that you overshoot the cash cost position of many plants and it’s just not sustainable. That’ll happen and you’ll go below cash cost for a quarter or two and get to the point where either a lot of capacity has to come out or the price has to come back, one or the other happens.

Clearly we’ve done the same thing this time and it’s not sustainable. Either we’re going to have a lot of plant closures or we’ll get a price increase.

I guess related to that, with not sustainable, some other – [Remarge] Manufacturers announced their results and they had an almost double-digit increase in their costs. Can you highlight the delta in dollars that you faced from wastepaper, realizing you were down year-over-year?

But kind of focus on the delta in terms of dollars from wastepaper, energy and absorption costs that lowered capacity?

Are you talking about from the bottom of the last cycle or year-over-year?

Year-over-year please. Just so we can kind of get a sense of – Because paper has gone up for example, energy has too.

But absorption costs. I just want to see in total how you guys have managed that cost structure so well and what the delta was in those inputs.

Actually our natural gas costs are somewhat lower than last year, not by a huge amount, but by a small amount, by a couple of dollars per MSF and our paper costs are up about the same. Paper and some other purchased raw materials that we have, they kind of offset that.

That’s kind of where we ended up there, we were a little lower on repair parts and supplies and some other things. So we ended up being net year-over-year slightly lower cost this year than the prior quarter.

So the absorption at lower capacity because it’s such a variable business wasn’t so impactful in your mid-70% capacity utilization?

That’s correct.

Could you just remind us on the metrics of the South Carolina plant? What are your cash costs down there and what are your expected realizations presently on selling price?

Do you have a home or can you easily in essence take back the wallboard that you’ve been shipping there from Oklahoma and put that, or get that out to the market back closer to the plant without affecting that region dramatically?

I’ll take the last question first. This is a very difficult with housing where it is and so bringing it back home is difficult.

We do have the ability to bring it closer to home with a higher margin, but the first half of this year, new residential construction is going to be very, very low. Much lower than last year.

If you’re following permits and starts, you’ll see that they’re dramatically down and I think that’s a good thing. I really think that it’s going to take a dramatic reduction in housing starts to get the inventory levels under control, to get this housing cycle behind us and start back into the normal housing market that we’ve seen in the past.

Confident that that will occur, but it’s not going to occur with a little pain here in the front half of 2008. Volumes are going to be low, our estimated volumes for wallboard next year – Last year the industry shifts a little over 30 million feet, our current estimates are in the 27 million foot range -

That’s calendar 08 versus – Right. Okay.

- of opportunity for calendar 08. Our cost structure at Georgetown is going to be as good as our other plants, if not slightly better.

Our current total costs are in the mid-80 range and that includes SG&A and everything that we can throw into the number. Our cash costs are somewhat lower than that and we’ll be in the range of the $65 to $70 range out of that plant once it’s fully up and completely efficient.

Remind us, what is the weighted capacity and how quickly can you get up to that? What is the scale up plan?

The weighted capacity is 750 million square feet per year and we’re having a very good start up. We could get there within six months for sure, maybe within a quarter.

We’re very, very pleased with the people that we’ve hired and the people that we’ve transferred there is performing exceptionally well but this is also a very difficult market to try to force additional wallboard into the marketplace.

Do I understand that you could, after you have the start up of the new plant, you could get that up to full capacity very quickly? What capacity do you expect you’d run that at and what does that mean to the capacities you’d run, Duke and the plant in New Mexico?

I assume that would lower your cost mix but also prices are lower in that region so that would also affect your average price as well?

Typically we’re going to run industry average capacity utilization. Now obviously our capacity is much higher today than it was three months ago.

We have a new plant up and running, but we plan to operate our facilities average across the system, industry average or slightly better capacity utilization.

Does the new plant have much of an impact on average costs or average price?

This first quarter, we’re going to have these one-time costs but then after that, that should be very similar to the cost of our other plants and pricing should be a little bit better because we’ll have less freight to market out of this plant than we do out of our existing system of plants.

I just want to follow up on some of the commentary about the wallboard. Do you think we’re setting a bottom here on a structural basis or is it seasonally that normally prices just tend to have a seasonal trend going into the spring?

Can you just address that?

The only seasonality that we’ll see in the wallboard business is that demand is typically lower in the Holiday period, in the winter period. So competitiveness comes into play so usually you will see some issue around the first of the year, the first two months where you’ll see pricing come down.

This would be in a normal year. However prices already have been driven down dramatically because the reduced demand and in the increased supply coming into the marketplace, the industry has a tendency to be very aggressive protecting market share and has a tendency to have the price go below where many plants of low cash cost which just, once you get to that level it’s not sustainable.

Some time after you’ve been at that level you’re going to see prices come back up.

Do you want to take a bite at whether this is, structurally we’ve reached a bottom?

Everybody’s costs are different, it’s very hard for me to talk about competitiveness and understanding how the cost structure is of a competitor. Clearly, we made money this last quarter but things are tight and it’s a very difficult marketplace.

We like our position but we know that things are difficult and it’s a competitive marketplace, it’s really a question of how the industry is. It’s very difficult to estimate what the industry’s current competitive level is.

Can you just remind us how much so far this fiscal year, how many shares have you bought back in total and how much have you spent through as late as you can give it?

We’ve bought back about 10% of our shares this year. I’ll let Art talk to the detail.

It was $4.7 million rounded and I know this thing had an average price of a little over $37.

And how much is left as of now on the buy back?

A little over 100,000 shares.

What’s the appetite to renew?

We have not addressed that with the Board yet.

Regarding your Cap X, the answer to Jack’s questions earlier. Art, what do you think DD&A will be for the full year of 08?

08 is going to increase a little bit here in the fourth quarter due to the start up of South Carolina. We’re looking at approximately $45 million for 08 and projecting out into 09, it’s going to be somewhere in the $50 - $51 million range.

Cap X you said should come in somewhere maybe call it 90 to 95 this year. With the next fiscal year, obviously depending on timing of start ups, it maybe is that – Could we look at around 125 for fiscal 09?

Is that a fair number?

We were talking somewhere in that $120 million range, give or take.

Given that some of the projects seem like they’re going to extend into fiscal 2010, whereas if we were talking two years ago, we thought some of them would have already been finished by now. What can 2010 Cap X look like?

You know you have a couple of these projects that need to get done over the next couple of years.

10 will be comparable if not a little bit higher on this one. Probably a little bit higher.

And when the projects are finished, what do you think maintenance Cap X is again? Could you just remind us given how much lower Cap X was in the 2001 to 2005 time frame?

We think it will be in the $15 to $20 million range.

Do you think we’ll see maintenance Cap X or anywhere close to maintenance Cap X within the next couple of years or after these four years, five years of heavy Cap X build are finished?

I don’t quite understand what you mean.

If we count what you’ve spent basically in fiscal 2006 where you spent almost double depreciation, 07 where you tripled depreciation and 08 where you’re going to double it. And it sounds like 09 and 2010 are going to be years of heavy investment of double depreciation or more Cap X spend, my question is once these two, four, five full years of significant investment are done, and you said maintenance Cap X is closer to the twentyish level, are we going to see a year where the Cap X significantly drops off and the free cash flow ramps up?

Certainly no new projects coming on board the size that we’re currently anticipating will be in 2011 on this one.

Taking into consideration your projection for wallboard shipments this year which will be down about 10% from last year and the fact that it appears that industry capacity between the fourth calendar quarter of last year and the third calendar quarter of this year is going up somewhere around 10% to that effect, just your comments that typically you get below cash cost for a quarter or two and then people get more rational. Are you expecting a substantial decrease in industry capacity to offset the capacity that’s coming on or do you expect just much more rationality in the industry?

Because something’s going to have to change relatively dramatically in order for prices to stabilize here especially for any kind of an increase to be pushed through. So what do you expect to happen that will allow that to occur?

Clearly the high cost of plants will have to – There’s some tough decisions that need to be made, but when those decisions are a part of the system and you have your own new low cost capacity coming on line, one of the reasons you built the new lower cost and more modern capacity was to harvest some of this old capacity.

So you think it’s going to be a capacity reduction and more rationality that will allow prices to bottom out?

Yes. It’s very difficult.

You can run wallboard plants, four shifts, three shifts and maybe kind of go towards two shifts but beyond that you get to the point where you just shut them down.

Because so far, really only one company has been aggressively reducing capacity. There’s been very little from all the other major players in the industry.

So you’re expecting that to change?

I think a lot of times capacity just goes away and people don’t announce it.

Do you see that happening so far or you think that will happen going forward?

No, we’ve seen that happen.

Can you guys give us an update, I know we haven’t really heard much about it recently, but an update on the progress with the rail link up in the Northern California quarry?

This is a long process and we’re continuing to make steady progress every quarter but we still believe that before we’re substantially ready to make an announcement of something there, we have some time into the future before we do that.

Another question on wallboard. Can you remind us, I know it’s been mentioned in the past, but where you see kind of a mid-cycle wallboard price for you guys?

We’ve kind of estimated in the past $125 to $130 range is what we would call mid-cycle pricing even though wallboard it’s either tight supply or very loose and you go right through mid-cycle, you go up or down very rapidly. It’s either very high pricing or across.

I know it’s kind of hard to judge from now, but if we’re in a situation where you have all of these expansions completed in the next couple of years, we’re in a mid-cycle kind of environment with wallboard, what do you guys think as far as cash flow potential do you think that you guys have, after all of this is said and done given a lot of what if’s and assumptions that I just laid out? In that type of environment when all the expansions are said and done, if we were in a mid-cycle kind of environment with wallboard, what do you think you guys would be capable of as far as cash flow generation?

$350 to $400 million, I believe. I’d have to go back and look at some numbers, but that’s seat of the pants.

That’s where I’m at.

Can you give us a sense of where your comfort level is in terms of leverage ratios? You’ve bought back a significant amount of stock over the last five plus years and you’ve been aggressive ahead of the expansions and even while the cash flow has held up, some of the free cash has dropped off simply because the earnings have come down given the cycle timing.

I’m just wondering what your outlook would be in terms of your comfort level to continue to buy back stock or to make an acquisition and where you’re comfortable with leverage?

We’re comfortable with leverage in the two and a half range so this would be a EBITDA leverage ratio. The debt that we have, the long-term debt has 3.5 limit on but we’re clearly very comfortable in the two and a half range.

Is that trailing? Is that two and a half times run rate levels?

Can you give us a sense given that your business is highly cyclical?

That’s a trailing 12.

Trailing 12 months. Given the favorable move in rates that we’ve seen, is there an ability for you to lower, even though you have a low rate, but to lower your rates with swap agreements and have you looked at that?

Most of the debt that we have we’ve just put into place and it’s all long-term debt. The impact would be if we go beyond the debt that we have, I think it’s about $400 million, that is a variable rate with our revolver Then if interest rates are down tipped, you may get a little lower rate depending on the LIBOR rate at the time.

Remind us your line that you had in the LIBOR rates you pay? The level of LIBOR rates you pay.

Based on a grid, say anywhere the leverage ratio is, but it’s anywhere from 55 BIPS to 150 BIPS.

And how large is that? It’s like $300 or $400 million?

$350 million.

Given that you’re comfortable with two and a half times debt to EBITDA, you still have some room to continue to repurchase stock. Is that fair?

That’s correct.

Can you just give us an update on the acquisitions? You guys tend to be very opportunistic in downturns and I haven’t seen you yet be opportunistic.

It’s mostly been organic growth. Just give us a sense of what your sense is of the landscape out there and which end markets you might be looking to make acquisitions in.

We continue to look. We don’t have anything to announce.

Any end markets that could be interesting?

We looked at the major businesses that we’re in, so we’re always looking at the current business lines but we’re not comfortable at this point adding a new business line to Eagle Materials.

Thanks everybody for attending the third quarter. Look forward to talking to you after the year end.

Thank you.