Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Matt Duncan – Stephens, Inc.
Matt Duncan – Stephens, Inc.
The first question I’ve got and Bill you talked about this a little bit on the gross margins being driven by some very good projection execution on some projects that were closed in the quarter. Kind of looking forward what would be your expectation for gross margin? Is this sort of an unusually high number and we shouldn’t be thinking about using this in our models going forward? Any help you can provide us there would be great.
William George, III
I would absolutely say that this I a very high number. The number that we experienced in the fourth quarter of 2008 is a number that I’ve never seen before. I would like to think we’ve established a new base line but I don’t know that I’d be comfortable making that conclusion. Seriously thought, we mean what we say in the K and elsewhere, we do expect to have a profitable year coming up, it’s just that 2008 was a very special year.
Matt Duncan – Stephens, Inc.
Then looking at the G&A line, can you quantify for us was there anything sort of unusually high in that line? As a percent of sales that was quite a bit higher than normal. Talk a little bit about what drove that.
William George, III
SG&A, the percentages are up but the controllable SG&A expenses that most people think about when they’re scratching their heads about SG&A actually were down as a percentage of revenues. The things that lead our SG&A percentages to be much higher in the quarter and to be noticeably higher for the year included the normal things that you see in a good year like strong incentive payments at all levels of the organization.
We have bonus programs where people get a share of the profit once they break through a threshold and we had a lot of profits. We also had things like bad debt expense that was much higher than usual and I will take a minute just to comment on that. We made substantial bad debt accruals, our bad debt expense for the year was $3.6 million, it was $1.6 million for the quarter and that’s much, much higher than the prior year and quite honestly a lot of that came from the fact that we made a judgment late in the year that it was not prudent for us to use historical assumptions when we were looking forward in assessing our debt.
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