Question-and-Answer Session
Operator
(Operator Instructions). Your first question comes from the line of David Lewis with Morgan Stanley.
David Lewis - Morgan Stanley
Good morning.
David Dvorak
Good morning, David.
Jim Crines
Good morning.
David Lewis - Morgan Stanley
Jim, I want to clarify some of your comments on gross margin. You've been saying throughout the year we'd expect the gross margin, kind of deceleration in the back half of the year, if you take the average back half gross margin compared to the first half is 50 or 60 basis points reduction on a reported basis, a reasonable assumption?
Jim Crines
Go back to the comment I made in the scripted comments. It's the step-down that we're anticipating in the second half of the year is more like 200 basis points.
David Lewis - Morgan Stanley
Was that on a year-over-year basis, I was speaking more sequentially?
Jim Crines
So tell me, you’re comparing that to what period?
David Lewis - Morgan Stanley
I'm just rolling off your first and second quarter and trending through the remainder of the year.
Jim Crines
Yes, so the gross margins we saw in the first half of the year averaged around 77%, and we're anticipating gross margins for the back half of the year to come in at around 75%.
David Lewis - Morgan Stanley
Okay and then maybe moving on to SG&A here for a second, you had pretty stellar SG&A here in the second quarter, so in terms of your ability to hold SG&A at current levels, given, so gross margins are probably incrementally lower than we’d expect it, you kind of talk about your visibility and expectations there?
Jim Crines
Yes, we talked about our expectations for the full year on SG&A to be in absolute dollar terms on the first quarter call to be in line with or slightly above the prior year, and that remains the case.
We would expect with the seasonal slowdown in revenues in the third quarter that the variable component of SG&A expenses will come down in the third quarter. So, you'd see sort of a modest sequential step-down in total in SG&A spend in the third quarter and then an increase in the fourth quarter with higher procedure volumes that we would expect to see in the fourth quarter.
David Lewis - Morgan Stanley
David just talking about share in the marketplace, you've been sort of hesitant to talk about the share gains. You've focused more on stabilization. Clearly, you have got two quarters here, where we seem to have some sort of relative stabilization. Are you anymore confident, given the training initiatives that should be increasing here in the back half of the year to kind of make a statement that share gains may be more possible in hips and knees and you would have expected, let's say six months ago?
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