Question-and-Answer Session
Operator
(Operator Instructions) Your first question will come from the line of Rich Kwas with Wachovia.
Rich Kwas - Wachovia Capital Markets
Question on the launch cost issue Robin; I know it’s an emerging market, but how do we think about it from a product prospective given that you are being pretty aggressive with the new product launches overseas right now?
Robin Adams
Yeah, Rich actually a good portion of that was in Europe and an inside to our dual-clutch transmission product area and as I said it’s predominantly supply chain issues both from a capacity prospective and a quality prospective. As you point out we have got a number of new launches, VCT is growing quite rapidly for us and our supply chain is struggling to keep up those.
Timothy Manganello
Rich, it was an issue with a relatively new supplier. We have a sense -- we are working to improve the things at that supplier and we made progress there and they’re coming out of the words. We are also capacitating ourselves to do the same thing, so we don’t have to rely on this suppliers much and with the growth we have we’re actually bringing on other suppliers, so this issues is going to be fade away reasonably soon.
Rich Kwas - Wachovia Capital Markets
Okay, thank you for that and then, in terms on the guidance relatively to where we were three months ago, you maintained it for the year and I know, you talked about currency be conservative at least right now, but what’s changed in last three or four months in terms of puts and takes relative to initial expectation?
Timothy Manganello
Well, as I mentioned raw material prices -- we are at this point in time looking at least $10 million increase where we thought we were three months ago. The second, I think, if we look at the U.S. markets, as we expected about $50 million a quarter decline in our sales in the U.S. in our base operations and the first quarter was about 45, so pretty close. The second quarter, we are looking more like 75. So, as we look at the year right now we are seeing more deterioration in the U.S. market than we actually had expected three months ago and again it’s primarily on the light truck and SUV side. We are not sure how much it is this Industry labor, disruption related or a real decline in demand for these products. When you think actually most of it is the latter, the real decline in demand for these types of products, but certainly the U.S. looks weaker than we thought. It look three months ago -- raw material prices again our inching up that -- and those are the two major factors that we are looking at right now.
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