Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Carter Malloy.
Carter Malloy – Stephens, Inc.
Can you help us think about the segments in 08 as it relates to the guidance?
John Lamson
We’re not giving specific guidance on segments but, as we said in our earnings call we’re really looking or the lender services and those businesses that are impacted by the housing and credit issues for that to turnaround in the second half of the year and that would be our lender segment and certain pieces of our data segment as Anand alluded to.
Carter Malloy – Stephens, Inc.
Then kind of as a follow up to that I’m looking at fairly rapid margin deterioration within the lender services. Is there any scenario where you think those EBIT margins could actually go into the red?
Anand K. Nallathambi
I don’t think so. The fourth quarter margins were impacted because of bad debt and we were aggressive in taking a look at this and cleaning it up. If you really think about it as we mentioned, in January our volumes were back up like 34% and revenue was also relatively close in the same range of increases and our margins are back up in the mid 20s. So we think fourth quarter was approbation because of what the macroeconomic environment brought upon us.
Carter Malloy – Stephens, Inc.
Just so I can have a little more clarity maybe, can you give us some ideas to the cost structure within that as far as fixed versus variable and some of the levers you may have, additional levers you can pull.
John Lamson
Certainly, right off the top about a third of the costs are cost of goods so that’s certainly all directly variable costs. Once you get past that there is a lot of fixed costs in the business, that’s why when the volumes are up, if you go back last year, even in the beginning of 2007 and 2006 you’re looking at margins approaching 30% operating margins and why you see margins this quarter below 10 and certainly a lot of that had to do with the increase bad debt we mentioned and volumes. But, at least through January, as Anand alluded to the volumes are up so it’s a two way street.
Operator
Your next question comes from Jeffrey Kessler.
Jeffrey T. Kessler – Lehman Brothers
A couple of months ago an electronic litigation some kind of briefing and the number of small companies in it and the business was interesting particularly given the position of Kroll in it. It seems like you are now up in the bracket of top companies in that part of the business and certainly the growth in your business has gotten up there. I’m just wondering given the strength in that business, what types of clients are you seeing, are coming to you and is this mainly international growth that you’re seeing at this point? Or, is this something that you’re getting both in the United States and internationally?
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