Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Raymond Myers with Emerging Growth Equities.
Raymond Myers - Emerging Growth Equities
My first question is it looks like the operating expenses were lower than you had guided in the third quarter and perhaps R&D was down related to the tropic solutions. But SG&A was down as well. Could you help us understand what caused that and how we should expect that to fall in Q1 and beyond?
Ashley Lee
If you look at the fourth quarter, Ray, a lot of the short fall in the SG&A expenses were related to lower revenue. You know, we had less commission expense and other expense associated with pushing the product out the door, so that was partially the reason there. We also had an adjustment related to our product liability reserves in the fourth quarter of this year. Also, with the continued strengthening of the dollar, when we translated our expenses associated with International operations back to US dollars, those came back a little bit lower than we had anticipated also. So, if you go into 2009 we have guided SG&A expenses, I believe, to be between $50 and $52 million. I think that really kind of speaks for itself as to where we expect to be in 2009.
Raymond Myers - Emerging Growth Equities
How much product liability reserve adjustment was in the quarter?
Ashley Lee
About $500,000.00 and all of that will be detailed in our 10-K, which we expect to file probably by the end of the day tomorrow.
Raymond Myers - Emerging Growth Equities
Okay great, we will certainly look for that.
It looked like cardiac revenue was down in the quarter. I know an awful lot of that is just due to the economy, it can’t be helped, but how is that looking going into the first quarter? Are you seeing any turn around there? It was unusually low.
Ashley Lee
Let me make a comment about the cardiac revenues and especially as compared to vascular revenues. What we have seen in the past is that cardiac surgeons in hospitals have been more willing to keep a supply of valves in their freezers. You know, they need a variety of sizes and because of the critical nature of the surgeries that are involved, they are more willing to carry an inventory of valves as compared to the vascular surgeon. We have seen that in the past, and especially for the pediatric heart valves, I think hospitals have been more than willing to carry a large supply of valves there.
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