Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from the line of Rick Nelson – Stephens Inc.
Rick Nelson – Stephens Inc.
I’d like to get some more insight if I could into gross margin decline in the quarter and the SG&A rise in the fourth quarter.
Peter Christianson
Looking at the gross margin, I think you’re looking somewhat at the, you’re talking to the fourth quarter?
Rick Nelson – Stephens Inc.
Yes, the year over year decline through the nine months, we have been tracking higher year over year and fourth quarter we did see a decline.
Peter Christianson
Yes, we went from 17.4% to 17.2% and that’s partly on our mix of our equipment sales and it also has to do with some marketing programs that we got last year in the fourth quarter that we realized. Last year our revenue was stronger in our fourth quarter relative to the quarter before.
Rick Nelson – Stephens Inc.
Then the SG&A to gross profit or SG&A to revenue a rise there, what was the driver.
Peter Christianson
Our difference in our SG&A, part of that is that we are completing our Sarbanes-Oxley compliance and there are a lot of different legal costs and costs associated with being a publicly traded company. And in addition to that we did some big acquisitions in our fourth quarter and there are additional costs associated with doing those acquisitions.
Rick Nelson – Stephens Inc.
And your expectation for revenue, I’m wondering if you could provide us your same store sales estimate and how much acquisition revenue are you baking into the revenue guidance.
Peter Christianson
Looking at our same store sales, normally we have modeled 5% same store sales growth, but based on last year being such a spectacular year that was when I referred to that slide in my presentation in looking at the net income growth, what we did this year when we were modeling is we modeled a 10% negative on our same store sales and that was bringing us back in line with what we had looked at, if you look at that graph, it would show based on our historical revenue and net income, if we look back to last year what we were originally were forecasting and put that in relationship to where we’re at this year, then we’re more in line with that positive same store sales on a consistent year over year basis.
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