Industry

Our operations fall under the broadly defined home improvement industry. Annual residential remodeling expenditures exceed $250 billion. There are currently more than 200,000 firms and 600,000 self employed remodelers that derive most of their revenue from remodeling jobs. Less than 60 of these remodeling companies generate annual revenues in excess of $10 million. According to Qualified Remodeler, we are the third largest remodeler in the United States in terms of revenue.

We believe that remodeling and replacement activity most often occurs within the first year of a purchase of a home and is impacted greatly by the age of the property. Consequently, the increase in primary and secondary home ownership, as well as increased housing turnover, are two key economic factors driving the industry. According to the U.S. Census Bureau, home ownership rate is at an all time high.

Within the home improvement industry our business segments operate in a number of sub-sectors. A brief overview of each follows:

Kitchens and Baths: In 2007, Kitchen Remodeling expenditures reached $26.9 billion, while Bathroom Remodeling expenditures were over $15.4 billion, according to the JCHS tabulations of the 2007 American Housing Survey.

Home Organization: Included in this category are Closests & Pantries, Laundry & Utility Rooms and Garages

This article may contain forward-looking statements that are based on a number of assumptions, including expectations for continued market growth and anticipated revenue levels. Although the Company believes these assumptions are reasonable, no assurance can be given that they will prove correct. The Company's ability to continue to grow sales and to expand geographically and through new products and acquisitions will be key to its success in the future. If the industry's or the Company's performance differs materially from these assumptions or estimates, U.S. Home Systems' actual results could vary significantly from the estimated performance reflected in any forward-looking statement.

U.S. Home Systems Overview

U.S. Home Systems is engaged in the specialty product home improvement business. In its home improvement business, the Company manufactures or procures, designs, sells and installs custom kitchen and bathroom cabinet refacing products and organizational storage systems for closets and garages.

U.S. Home Systems, Inc. markets its products under the Home Depot brand for:

   Kitchen Cabinet Refacing
   Bathroom Refacing
   Garage Organization
   Closet Organization

The home improvement products are marketed through a variety of sources, including direct mail, marriage mail, magazines, newspaper inserts and in-store displays at selected The Home Depot stores. The Company’s home improvement business serves The Home Depot in 42 markets covering 27 states.

Ticker Symbol : USHS