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Three analysts and top management from seven sector firms examine the sector in this special 41-page Home Furnishing issue from The Wall Street Transcript, available at (212/952-7433) or http://www.twst.com/info/info450.htm

TWST: What kind of guidance are you giving to investors?

Mr. Hughes: Near term (by "near term," I mean for the next several months), I think these stocks are going to move with the market, whichever way that is, depending on various macroeconomic data. I think investors have to remember that some sectors that have held up better through this year are now seeing pressure. These industries are not among them. They were among the first to start to see declines — in fact, we saw the industry starting to slow down in May 2000 — so we’re close to a year and a half into the slowdown. I think that’s one of the reasons why these sectors, in terms of demand trends pre- and post-attack, have held up better than other parts of the economy: they’ve been in a recession for a very long time. In terms of the stock price, I think that once we get any signs that the economy is getting better, whenever that occurs, these companies will be among the first ones to go up. Their comparisons are very easy heading into next year, and they’ve done a lot of cost cutting, which will really help the bottom line once they get volume running back through their plants.

TWST: How do you see consumer sentiment today?

Mr. Hughes: Consumer sentiment hasn’t really deteriorated as much as some think since the second quarter, when these products bottomed out, as a lot of the marginal buyers were chased out of the market at that time. What’s going to happen moving forward? So far we’ve seen the sectors hold their own. There are a lot of issues, both international and domestic, that could affect consumer demand, and I don’t even try to predict those. But I think sentiment, at least from what we know now, seems to have bottomed.

TWST: In a recent report you had a neutral on Interface. What’s happened there?

Mr. Hughes: Interface (Nasdaq:IFSIA) supplies commercial carpet, both broadloom and tile. Their biggest market would be the corporate world, and the commercial side of floor covering has been very, very poor in 2001. I think that’s going to continue as commercial is going to lag a recovery on the residential side. I feel that Interface, after several tumultuous years, is refocusing its business and getting in line for a recovery. Until then, I don’t think we’re going to see a lot of price appreciation at Interface, but they seem to be doing the right things.

TWST: Do they have any new products?

Mr. Hughes: They’re innovators in the market. There are a lot of new approaches to the commercial furnishings realm. They’re really focusing on moving their business away from just the corporate market toward more stable areas such as education and government. We’re really just at the beginning of that. But it’s not consumer-product driven; it’s more commercial.

TWST: In conclusion, back to the home furnishings and the floor coverings, what are some of the questions that investors are asking you these days?

Mr. Hughes: The first question is when is the recovery going to come in the economy — and I’m not sure I have a firm answer for that at this point! I think a lot of people understand how well these companies are going to do in a recovery and all the dynamics they have. Their fundamental questions relate to what’s going on in the market and the role of the private companies and when a turn in the economy is going to come.

This special issue includes:

1) Furniture & Floor Covering Stocks - In an in-depth (4,600 words) Analyst Interview, John A. Baugh, Managing Director at First Union Securities, Inc., examines the outlook for the sector and shares specific stock recommendations.

2) Furniture & Home Furnishing Companies - In an in-depth (4,300 words) Analyst Interview, Keith Hughes, a Vice President at SunTrust Robinson Humphrey Capital Markets, examines the outlook for the sector and shares specific stock recommendations.

3) Outlook for US Residential Furniture Stocks - In an in-depth (3,500 words) Analyst Interview, Margaret M. Whelan, Associate Director at UBS Warburg, examines the outlook for the sector and shares specific stock recommendations.

4) CEO interviews (average 2,500 words). Top management of seven sector firms examine the outlook for their firm and the sector.