Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from the line of David Koning – Robert W. Baird
David Koning – Robert W. Baird
Nice job on the margin expansion, I guess first of all the international margins, you talked about how much better those have gotten and it looked like EBIT almost doubled sequentially and I’m just wondering if that trajectory is expected to continue now to get strong expansion to continue as you layer on more portfolios etc. It just seems like we’ve reached an inflection point the last couple of quarters and maybe you could talk a little more about that.
George Scanlon
We obviously had an excellent quarter in margin in international and sequentially we’ve improved each quarter this year. If you look at our business, Brazil has been lagging in margin contribution and is starting to more meaningfully contribute.
But honestly across the board virtually all of our operations outside the US had improvements year over year. What I would say is we targeted a 20% margin by the end of the year. We obviously got there earlier. We would expect to maintain this level into the fourth quarter and as we look over the longer term, on an annualized basis I would say a 20% plus margin is attainable.
I would say at the same time that the margin will vary quarter to quarter based on product mix. This quarter as I mentioned in my remarks we had improved software sales year over year in the international segment. That was about $4 million but on a relative basis that can help the reported margins.
So we’re very encouraged by what we see internationally and expect good news to continue.
Lee Kennedy
I’ll add one thing, the software sales that we had internationally jumped and improved over prior year also so that also contributed to the lift that we saw in this quarter.
David Koning – Robert W. Baird
And then I guess one follow-up, just with the margin strong at both companies this quarter and it sounds like a nice savings, $60 million or so this year from synergies, is that pulled out of next year. I know initially when you announced the deal you talked about $195 million of synergies next year, but does that mean that some of those got pulled into 2009 and might not be incremental into next year. Is that a fair way to think about it.
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