Question-and-Answer Session
Operator
(Operator Instructions). We'll take our first question today from Randy Hugen with Piper Jaffray.
Randy Hugen - Piper Jaffray
Wanted to dig into the big sequential decline in SG&A where some of those cuts might have been made.
Christopher Wolf
Sequentially we’re down about $10.5 million dollars and that’s kind of composed of two things. First, we actually did reclass on expenses out of SG&A in this quarter to direct expenses. It had to do with some incentive compensation with some of the units as part of the restructuring. We had kept those in SG&A in previous periods and as part of the restructuring we moved them into direct expenses and that was about half of the sequential decline.
The other half was a combination of some effectiveness of some of the measures that we’ve taken. We did get some little benefit on some jobs credits so as far as the sustainability, the way I’d look at it, I’d kind of look at it from a total operating expense point of view, but if you really did want to hone in on SG&A, I’d say half of that is sustainable on an ongoing basis of the change.
Randy Hugen - Piper Jaffray
How have your clients been adjusting the marketing budgets during the quarter and where have you seen that impacting your business?
Christopher Wolf
Randy, actually we haven’t seen dramatic changes yet and I can’t tell you whether it’s because we are going to seem to be maintaining the same. I think some of it is driven especially in the bank mergers. It’s kind of business as usual right now, because banks have been focused more on survival than on efficiencies.
I expect sometime in the future we’re going to see some up in work as we are being asked to do a lot of project related things to bring multiple databases into single databases on this.
The other part is we’re pushing the team to carry new things into existing customers. The white space analysis like I talked about last time and we’re seeing some traction in that. You know, the good things that we were doing for clients and have done for years, it’s carrying a bit of halo effect into the willingness for clients to look at us and say oh you’re doing the direct mail. You mean you can do direct mail. You can do email. You can do SMS. You can do mobile advertising and you can bring it all back into one place that as a chief marketing officer I can evaluate that.
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