Question-and-Answer Session
Operator
We will now begin the formal question-and-answer session. In order to ask your question please press *1 on your touchtone phone. You will be announced prior to asking your question. To withdraw your question you may press *2. Once again, to ask your question press *1 on your touchtone phone.
Our first question comes from Peter Lisnic of Robert W. Baird & Co.
Peter Lisnic - Robert W. Baird & Co.
Good morning gentlemen. Vern, I guess the first question I had is if you can expand a little bit on really what you are doing on the productivity side because I think margins here continue to surprise on the upside and I’m getting a sense that part of that is driven by productivity. So can you just peel back the onion a little bit more on the productivity side of the equation and why it is driving margins?
Vernon Nagel
Sure. We have been on, if you will, our lean journey for more than three years now and I believe as we become a leaner, more customer centric company that is committed to driving both continuous improvement as well as improving operational excellence in everything we do the organization is rallying to these calls. As a consequence we are very aggressive as a company about reducing or eliminating lesser value added activities and focusing on higher value added activities. Our facilities, whether it be manufacturing facilities, distribution facilities or even at the office we are seeing productivity at all levels. This is something we believe is contributing significantly not only to our bottom line vis-a-vie cost savings but it is affording us the opportunity to better serve our customers which allows us to gain share, if you will, as well as create a better experience allowing us to differentiate that value and lastly it is allowing us to invest more aggressively in our new product development which is allowing us to have enhanced product mix if you will of sales. So all of this is a conservative program to drive greater value for our customers, allowing our associates to continue to grow and the benefit we are really seeing enlarging improvement in cash flow generation and upper quartile performance for our shareholders.
Peter Lisnic - Robert W. Baird & Co.
Okay and if you look at your productivity metrics I guess how would you rank yourselves in terms of being world class? What I’m trying to get a sense of is how much more opportunity is there? You’ve been successfully doing this for quite a few quarters in a row now and I’m just wondering if you use the baseball analogy what inning are we in? How much more opportunity is there?
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