Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Brian Johnson – Barclays Capital.
[Emmanuel] for Brian Johnson – Barclays Capital
This is Emmanuel for Brian. First a quick question on the commodities impacting LVS. I was wondering, you were saying that last year some of the recoveries were in lump sum? So does that mean that we should see maybe later this year some recoveries from the hit we’re seeing now?
Jeffrey A. Craig
Yes. In fact, in LVS the recoveries were in a lump sum, which is different than what we experienced on the CVS side where we were able to affect those changes through indices mechanisms. We are obviously working this year to have some recovery, but with the rapid drop in commodity prices, we do expect those discussions with the customers to be more difficult this year.
[Emmanuel] for Brian Johnson – Barclays Capital
Then on the cost savings, you did a good job of laying out what you expect for the year. Would you be able to, I guess, quantify how much was in the first quarter and then maybe the pace of how the coming quarters would compare to what we’ve seen in this past quarter.
Jeffrey A. Craig
As far as the cost savings in this quarter, the best way to dimension that is the impact we showed on SG&A sequentially, which I believe was $6 million sequentially from the fourth to the first quarter. The impact is not as traumatic that we experienced in the first quarter because many of the reductions were implemented at the end of that quarter.
So the reductions in workforce we had discussions with our impacted employees, for example, in October, and those employees left us during November, December and January. The salary reductions went into effect in January, along with the reduction in the 401K match. And obviously all the reductions we took in LVS in the month of January come in in the second quarter. So we do expect a much more traumatic reduction in cost in our second fiscal quarter.
[Emmanuel] for Brian Johnson – Barclays Capital
Anything that you can quantify, like can you reconcile your table of cost reductions for 2009, I guess on slide 5 to what this actually means in terms of cost reduction we would see any given quarter for the remainder of the year?
Jeffrey A. Craig
Obviously, we’re not providing guidance at this time but we do expect, other than directing you to refer to the annual run rate on the table and also the impact on 2009. We have quantified that and you should expect that those cost benefits increase relatively linearly throughout the year as we get more and more impact and they get added each month.
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