Question-and-Answer Session
Operator
(Operator Instructions)
Your first question comes from the line of Glenn Reicin – Morgan Stanley
Glenn Reicin – Morgan Stanley
Two areas regarding the P&L so I think this is for Charles, you’ve previously stated that you wanted to leverage your SG&A going forward, I’m wondering if that’s really a reality given where FX and given the hires you’ve made and TSL, so maybe talk about SG&A for the back half of the year and what maybe ’08 would look like in terms of absolute growth off of that. And then on the tax rate I heard you say there’s still another 200 to 300 basis points, you’ve never given any timelines to that improvement and I’m wondering if you can bless any sort of number for next year if I throw out a 27% number, I want to just know if you cringe at that tax rate for ?09.
Charles Dockendorff
First of all talking about the leverage of SG&A, a couple of points about that. We have talked about that not so much in 2008 but more in 2009 and really that’s how we will achieve our goal of achieving double-digit and income growth on a consistent basis. We are in the process of still hiring a lot of people in selling and marketing and we have pretty much fully hired on the administrative side. There are still a few people we’re bringing in in different areas but for the most part we’re complete on that end. But in the SG&A as we add these people this year, that impact will be felt next year but we will begin to leverage it in 2009 and it won’t be where it will grow with inflation but it will be at a position that will be less than sales growth that we have in the business.
As far as the back half of this year, we still have increases coming in SG&A that’s going to be reflected as part of the FX change. You know this FX around the world, those expenses in the other outside the US will come in at a higher rate and we expect that to hit and we still have planned increases in hiring for selling and marketing for the balance of the year. So I would expect SG&A to increase over the back half of the year from where it is in the first half.
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