Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from A.J. Rice - Soleil Securities.
A.J. Rice - Soleil Securities
Joe, you referenced some headcount reduction as well as expense management reductions in place. Is there any way to flush that out and talk a little more in detail about how much potential savings there could be? I know you mentioned print advertising and internet advertising as well as the place you can get some savings.
Joe Boshart
Well I guess at a high level, I don’t have the exact numbers in front of me A.J. If you look at the total company head count excluding MDA, which was acquired in September, but on September 1 to the end of February or even into March, we are down roughly 160 headcount, which order of magnitude is roughly a $7 million SG&A salary reduction including benefits.
Advertising expense is down more than $0.5 million on a run rate basis year over year. And, of course, there are other discretionary items that we really screwed down that have less impact. But just to send a message to the organization that we’re doing everything we can to maximize the cash flow from this business, such as travel restrictions, we’re going to attend less trade shows, things of that nature.
A.J. Rice - Soleil Securities
Right, okay, that gives me a flavor. On the write-down of the goodwill and intangibles, I know a lot of that isn’t amortized, but is there any income statement impacts from that write off in terms of amortization expense that’s going to go away going forward?
Emil Hensel
There was a very small impact related to a customer relation intangible that we wrote off, but it’s in the order of maybe $100,000.00 or so per year.
A.J. Rice - Soleil Securities
Okay and then I know you referenced that you still have availability under the share repurchase program. You did pay down debt nicely in the quarter, are you at a point yet with the bank credit agreement that you can go out and repurchase, or what leverage ratio has to change, if you’re not yet there, to get you to that point?
Emil Hensel
It is not so much the leverage ratio that is constraining us from repurchases, but the fact that we have a basket of 40 purchases as based on our cumulative net income from the date the credit agreement was put into place. As a result of the impairment charge, absent any waivers from the lenders, we are technically not in the position now to repurchase, because we have a negative basket.
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