Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Ittai Kidron – Oppenheimer
Ittai Kidron - Oppenheimer
Congratulations and great job especially on the balance sheet I never believed it but you’re delivering on your targets, very good. I wanted to ask about the incremental cost savings you expect in ’09 out of the realignment of the European operations. What hasn’t been done already that there is still to be done that can give you around $15 million plus or minus on an annual basis to go there.
What else can you do in order to get that and how do we see those improvements is that mainly if I look at that on a quarterly basis that’s around $3 or $4 million for quarter. Should I think of that mainly going forward as a gross margin improvement or more of an OpEx improvement?
Tony Boor
I think the easiest way to look at that is what we did in Q3. We’ve implemented I’d say the vast majority of the planned reductions in Q3. There’s still a bit of additional headcount reductions and other spending initiatives that will ramp through Q4 but you can see that in SG&A alone we decreased SG&A almost $8 million, $7.5 to $8 million from Q2 run rates.
I would expect there will be another small incremental increase in the spending reductions during Q4 but if you annualize those numbers we’re definitely on track to hit the $25 to $30 million probably towards the high end of that range for 2009 on an annualized basis going forward. Only thing remaining to do as I said is there are still a few heads that need to be addressed in specific countries because of certain statutory requirements that are required in terminating folks and/or because of waiting for the business to ramp down that we terminated or renegotiated.
As far as the breakdown between margin and SG&A we haven’t given that kind of granularity and don’t intend to. I will tell you that the largest majority of the spending reductions would come in the SG&A area with the smaller portion being above the line.
Ittai Kidron - Oppenheimer
Can you give us a little more color on what is other expenses you had around $1.8 million of other expenses this quarter it doesn’t seem to be a consistent line item for you guys on the P&L from one quarter to another how should we think about that?
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