Question-and-Answer Session
Operator
(Operator Instructions) Your first comes from the line of William Katz with Buckingham Research.
William Katz – Buckingham Research
Okay. Thank you. And good afternoon. I would say a couple of questions around may be the margin outlook, and first one is I guess you are sort of accelerating some advertising on the back of very strong performance and what appears to be a reengaging investor globally, just sort of curious how we should think about a) if markets were to potentially pullback, how you think of that strategically? And then secondly could you give me a sense of what products you are most focused on and I do have a follow-up.
Gregory E. Johnson
Okay. Thanks Bill. I guess first I’d remind everyone that there is other thing other than advertising in that line and so this promotional expenses and distribution expenses that go up with both sales and with assets under management so those will tend to elevate when the assets come up and sales come up. In terms of the specific advertising, we have been - and I’d say promotional too, expenses on the product side, one of the recent campaigns that we’ve launched is an equity campaigns so you'll see that some expenses related to promotional activities related to the equity campaign, and then just the general advertising I think you’ve seen on TV that were being pretty opportunistic. Not only is our good message, but there’s been some good spots to buy at reasonable prices and get some good coverage.
William Katz – Buckingham Research
I guess the bigger picture question is, if I calculate right may be I haven’t but looks like you have almost a 49% manufacturing margin, if you net out the impact of distribution from the expenses and just from the revenues. So if you think about to sort of strategic way the company is right now, is a little bit of sort of pulling the incremental margin down here a little bit to reinvest the business or can you deliver both margin improvement and incremental growth at the same time?
Kenneth A. Lewis
Well, it’s quite the balancing act to do that. So there is two things there, one is revenue is unpredictable. So you don’t know how quicker or slow revenue will increase or decrease and that obviously has a big impact on margin. But in general in terms of spending, I think the message is that we are committed to invest in the business, not only on advertising but in all the expense categories. But we are going to be very cautious in doing that or thoughtful in doing that. The message we put in the prepared remarks is we will be thoughtful as well as increase the expense base as we are decreasing it. But certainly we will be investing in the business. It's just a matter of us feeling comfortable that the market improvement is sustainable and then we will kind of look at each opportunity to invest on it’s own merits and decide at that [point].
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