Question-and-Answer Session
Operator
Thank you. (Operator Instructions). Our first question is from the line of Derek Leckow with Barrington Research. Please state your question.
Derek Leckow - Barrington Research
Thank you, good morning. Just had a question on the ramp up of production here, can you give us an update as to when we start to see the capacity get up to a level that you can start to like roll the distribution business? I mean is that why the distribution business is not higher? I mean are you seeing capacity constraints there at all?
Ronald Rubin
Hey Derek, it's Ron. No there's not so much of the issue in the distribution channel. First off on capacity, yeah we've got several piece of equipment that will come on line mid year that will get an initial bump in capacity on the new line with the bulk of the increased capacity coming online early in 2010. So we will start to see some improvements based on some new equipment that will coming online. But we've also seen a significant improvement in yield. So we're definitely headed in the right direction from a capacity and production standpoint.
As far as the decline in the distribution channel, I think we stated on the last quarter's call that we expected significant reductions in inventory days supply. Some of the wholesalers had brought significant stocking orders last year in the third and fourth quarters. So, we're starting to see that as 2009 primarily due to one customer is looking to solidify their liquidity and not only days supply but also as I mentioned on the call we've changed the buying terms with one of our large distributors. Now they're no longer be incentivised to make a large stocking order.
So we're anticipating a pretty healthy reduction in inventory. That we believe will lead in long-term into 2010 on a more typical buying patterns.
Derek Leckow - Barrington Research
I guess what I am trying to get out is that you've strategically you have decided to launch these products first at retail and mail and now you're kind of methodically going through the next phase starting to launch products in the distribution channel and I'm assuming that's because of the capacity levels that you currently are able to produce both in the meters and in the strips. Is that a fair assessment or?
Joseph Capper
Yeah, that's a fair assessment.
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