Question-and-Answer Session
Operator
(Operator instructions) Your first question comes from the line of Keith Hughes with SunTrust. Please proceed.
Keith Hughes – SunTrust
Thank you. Just have some question – one question on the fourth quarter. The operating income decline that you're discussing in the chart on that is a lot more severe than revenue decline. Are we going to be pulling back in production, preparing for weak business next year, or is there something unusual seasonal going on in the fourth quarter?
Nick Grasberger
No, there is certainly no plans to pull back on production necessarily. Of course, we're looking at that in a continuous basis. But, no, I think part of this reflects, as we mentioned, the way business coming off a little bit in the fourth quarter from a margin standpoint relative to where they've been. So we'll see lower earnings from WAVE and, of course, there's no– we don't consolidate their sales. So there's a bit higher leverage than you might expect on the downside because of WAVE.
Mike Lockhart
And the weakness in residential in the North American Flooring business is going to be in commercial and that has a much higher margin than the residential products do.
Keith Hughes – SunTrust
Okay. Thank you.
Operator
Your next question comes from the line of John Baugh with Stifel. Please proceed.
John Baugh – Stifel
Okay. John Baugh. Good morning. I'm curious whether you can give us some kind of feel. We're all trying to feel or think about how bad ?bad? is going to be next year, and maybe two areas – you think you can remain profitable or break even, let's say, in Flooring, globally, next year under ?any scenario? within reason? And what is the sensitivity to WAVE if we were to assume that revenues fell 10% to 30% or something. What kind of variable fixed expense and what’s the net margin there that's been running around 30% year-to-date. What happens under such a scenario? Thank you.
Mike Lockhart
Well, first, I'd say that it is hard to imagine a scenario in 2009 where the Flooring business on a global basis would lose money. We would expect the European business pre-restructuring to continue to make losses, but certainly the North American Flooring business and the Asian Flooring business are solvently [ph] profitable and we would expect that to continue, although at lower levels. Certainly North America.
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