Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from David Burtzlaff – Stephens Inc.
David Burtzlaff – Stephens Inc.
Can you give a little more color on what you did differently in advertising this quarter?
Patrick O’Shaughnessy
Specifically if you compare it to the prior year we did a second very large direct mail drop of about $1.4 million the last week of June, trying to get additional customers in for the July 4th weekend. As you know, this is typically one of our largest spend quarters for advertising, it was just larger then last year this year.
David Burtzlaff – Stephens Inc.
The $1.7 million in costs where does that show up?
Patrick O’Shaughnessy
It is in a few different places. Part of it will be in severance but only about $100,000. Most of it will be in other center expenses for de-imaging and actually tearing down the centers. A bit would also be in the occupancy cost for lease termination.
David Burtzlaff – Stephens Inc.
How much of the loss rate increase is due to Virginia?
Patrick O’Shaughnessy
Most of it, I think I gave you the numbers.
David Burtzlaff – Stephens Inc.
What were those numbers again?
Patrick O’Shaughnessy
If I take out both the debt sale and the revenue and losses for Virginia the loss rate would have been 19.6% in the quarter compared to 18.9% for the same period last year. The other thing affecting the loss rate when you exclude the line of credit, as Ken mentioned we have a big tick up in new customers and overall loan balances right at the end of the quarter and that’s going to affect the provision as well.
David Burtzlaff – Stephens Inc.
Given the tax rate was much lower this quarter, what do you think the tax rate is going forward or what should we look for?
Patrick O’Shaughnessy
This was obviously a large benefit in this quarter, we may have some additional benefits but I would expect it to be in the 42% range for the year. I think for this quarter we calculated that the effective tax rate would have been 42.7% without those benefits.
Operator
Your next question comes from John Hecht – JMP Securities
John Hecht – JMP Securities
On credit, you mentioned you’re kind of learning through the product in Virginia and I guess enhancing underwriting. Do you expect the credit losses for that product to come down or is that just inherently a product that has more credit losses?
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