Question-and-Answer Session
Operator
Our first question comes from Arnie Ursaner, CJS Securities.
Arnie Ursaner - CJS Securities
Hi, good morning, Don.
Don Morel
Good morning, Arnie.
Bill Federici
Good morning, Arnie.
Arnie Ursaner - CJS Securities
Don or Bill, in the Q2 conference call, you had quantified you expected a $0.06 hit from oil in the quarter. And now, that it's behind us and oil has been all over the place, can you attempt to quantify what the actual impact was in the quarter?
Bill Federici
Arnie, on the gross dollar basis, it was about $2 million, $2.5 million. About the issue and just let me clarify this, the $0.06 that you were talking about. We expected that over the final two quarters of 2008 and that was a net number, net of the surcharges that we were expecting to get from our customers in that same time period.
So on a gross basis, we were expecting about $5 million and $2 million of price increases. So we are right on target in the $2.5 million that we incurred in the third quarter and expect about the same number, rough numbers, in the fourth quarter.
Arnie Ursaner - CJS Securities
Okay. Again, can you perhaps expand a little bit on the gross margin hit? You were up against the pretty easy comp last year, where you had inefficiencies as well. I mean again, simplistically, relative to my numbers, you had a $4 million revenue shortfall, but a $6 million gross profit hit. Can you expand a little bit more on some of the factors that hit? And why you're confident some of them may reverse?
Bill Federici
Sure. As you know, Arnie, there are a number of items that impact our margins in any particular quarter. If you look at the third quarter gross margin in 2008 versus 2007, and let's focus on Pharm Systems now, because we told you what the consolidated story was in the prepared remarks.
You had 31.8% gross margin in Q3 2007. We got price increases that gave us a positive 1.6% impact. We had raw material at $2.5 million translated into a 1.6% decline in margins due to raw material and energy.
Labor and overhead, during the same period in Q3 '08 versus Q3 '07 was another 1.6% negative. The lost sales impact that we have been quantifying for you was approximately 0.5% decrease in margin quarter-over-quarter. And FX was slightly negative when you look at it on a percentage of sales basis. So, those are the deltas that move you in that 2.3% down from Q3 '07 to Q3 '08.
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