At the end of 2009, free cash flow was $572.5 million versus $430.0 million in 2008.  For 2010, FO has changed its measure of free cash flow to be more consistent with how a majority of companies calculate the measure. Going forward, free cash flow will be net of capital expenditure.  The Company announced that it is targeting to deliver free cash flow (cash flow from operations less net capital expenditures) in the range of $375.0-475.0 million in 2010, which would represent an earnings-to-free-cash-flow conversion rate of more than 100.0%.

The firms believe FO remains committed to using its free cash flow for debt reduction as well as organic growth, add on acquisitions, share repurchases, and the dividend.  Management noted that while the Company is looking for bolt-on acquisitions, it remains disciplined.  As for the dividend, the firms believe that FO looks to rebuilding it over time, in conjunction with its earnings growth, and will continue to consider it with regard to yield and payout ratio.  Finally, the Company does not anticipate share repurchase in the near term as its emphasis continues to be on liquidity at this time.

• External Deficiencies:  A material rise in lumber, steel, copper, and/or fuel costs could have an adverse impact on the demand of the Company's products and/or its profitability.

• Region-specific Changes in Economic Conditions:  Adverse regional, macroeconomic and (particularly) employment conditions could negatively impact home prices.

• Increased Competition from Private-label Products:  Major home centers continue to market private-label products, particularly in the kitchen and bath and home product segments.

• Adverse Foreign Currency Movements:   Adverse foreign currency movements could negatively impact profitability as FO derives approximately 23% of total sales from geographic markets outside the U.S.

• Housing Downturn:  Housing sector crisis could turn out to be more severe than the forecast of many analysts, which in turn will affect the Company’s Home and Security sector adversely.