Question-and-Answer Session
Operator
Ladies and gentlemen, if you’d like to ask a question, please press star one on your touchtone telephone. If your question has been answered or you wish to withdraw your question, please press star two. Questions will be taken in the order received. Please press star one to begin. Please stand by for your first question. Your first question comes from the line of Mr. David Leiker of Robert W. Baird, please proceed sir.
David Leiker – Robert W. Baird
Hello, can you hear me? First of all, George I missed the depreciation number.
George Strickler
It’s $28.5 million for the year.
David Leiker – Robert W. Baird
Okay great. The gross profit margin you put up during the quarter, you know it’s clearly well beyond anything you’ve done in the last three years, how much of that is sustainable on a go forward basis? Was there anything really unusual in there or is this, have you finally gotten back to what your old level of profitability has been?
John Corey
Well I think we’re looking at things, two things. We did make some operational improvements, we shut down factories, we’ve consolidated that, we believe that will be sustainable. We also had on some things that we were closing out with certain customers some disputes and discrepancies and so that benefitted us, we don’t expect those to go forward in the future. But I think that what we’re trying to do is build in the floor on a gross margin level, I think you’ve seen that we’ve been able to build in that floor and operate from that level and improve it as we continue with these operation improvements, particularly when we finish with this restructuring.
David Leiker – Robert W. Baird
What do you think that normal level of gross margin would have been in the quarter?
John Corey
David I think we’ve always said that we’d run at a rate between that 23-25%. We were clearly benefitted with the new mix of business. We picked up I think as you mentioned, John mentioned the government business we have that’s predominately in the second half of this year and then we have some of that business flowing through the first half of next year.
That had a nice mix of margin to it and we had with the down market especially in the wiring business was impacted by heavy duty truck that has a lower margin business so when you see that mix of a better run rate of commercial heavy duty truck I think you’re going to see some of the margins come down because of the volume there. And then the continuation of the government business will not run at the same level we experienced in the second half of this year and what we’re expecting the first half of next year. So that will tend to reduce the margins from what you’re seeing right now in the fourth quarter but I think we’ll get us back in that range that we’ve always said that we’re striving for in that 23-25% range.
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