Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Art Hatfield – Morgan Keegan.
Art Hatfield – Morgan Keegan
As we look at the numbers for the quarter, and Alvaro I appreciate you talking about the adjustments on the operating numbers. I would assume that the $8.3 million in severance and other costs, was that primarily in the SG&A line?
Alvaro Garcia-Tunon
No. Actually primarily in cost of sales. And that's when I did the pro forma, adding back the $8.3 million, I went all the way to operating margin so as not to get confused between the cost of sales. But I'd say probably $6 million to $7 million of that $8.3 million is in cost of sales.
Art Hatfield – Morgan Keegan
When I think about going down further, and the tax line is a little bit hard to look at this quarter/.
Albert Neupaver
Not for us, the tax line is pretty easy to look at in the quarter.
Art Hatfield – Morgan Keegan
Theoretically, yes. I'm all for no taxes whatsoever, but to kind of look at it more normalized, if we adjust for the severance costs and add back the tax benefit, what would the effective tax rate have been in the quarter?
Alvaro Garcia-Tunon
The severance costs are deductible, so basically what you have to do is add back the effect of clearing up the additional items which was the $9.7 million. And once you do that, then the tax rate should be about 36% to 36.2% I think, in that range which is our normal tax rate.
Art Hatfield – Morgan Keegan
I thought it may have been, but I just wanted to ask. Al, as we kind of look out, and it looks with some of these key freight markets in the U.S., it's possible that we could see build rates bottom out in the back half of this year. No telling when they'll start to grow again, but we could see them fall off further from where they're at in Q2.
When you look out to '10 and I'm not asking for you to pin you down to guidance, but if you think about trying to grow earnings next year, what do you think has to take place in the markets that you serve or what could you do internally to accomplish a goal like that?
Albert Neupaver
I think if you look forward, and I think we agree with you that we're going to see in the third and fourth quarter hopefully a bottoming out. There's not much more room for deliveries to go down, so that's going to bottom out. And, we don't know when the recovery is going to be.
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