Question-and-Answer Session
Operator
Ladies and gentlemen if you would like to ask a question please press star followed by one on your touch tone telephone. If you’re question has been answered and you wish to withdraw your question, press star two. So please press star one to begin and stand by for the questions. First question comes from the line of Chris Donaghey with SunTrust Robinson Humphrey, please proceed.
Chris Donaghey - SunTrust Robinson Humphrey
Hi, good evening guys, Tim I was wondering if you could walk us through the business mix sequentially, obviously 36% gross margin in the unmanned aerial systems in the second quarter of ’08 and then on lower revenue dollars, higher absolute gross profit dollars and higher gross margin in the third quarter of ’08. So if you could just talk about the business mix in the third quarter and what caused such a pretty significant shift in UAS gross margin.
Stephen Wright
Let me, Chris I’m going to start off and maybe Tim can add to that. The gross margin rates are going to shift around quarter by quarter. Having said that, in Q3, despite having higher services revenue in the quarter, we did have higher gross margins and that was sort of in both the services area and the product area. We had some higher margins in the services area based on the work that we were doing in the quarter, but particularly on the product, fixed priced work we had very good margins in the quarter and that was because of the fixed priced contract content that we were working on plus the commercial and international deliveries that we made in the quarter. I don’t know, Tim if you want to talk about the mix other than that, the services versus contracts.
Timothy Conver
Yeah, I don’t know that there’s anything that I can add to that Chris unless you have a, unless Steve didn’t adequately cover it.
Chris Donaghey - SunTrust Robinson Humphrey
No that’s fine.
Stephen Wright
One other thing I would add in terms of the services it was very high in the quarter and I think Tim touch on this a little bit, but one, in addition to the typical services that we work on we did have a lot of content in the services line to upgrade a number Raven A’s to Raven B configuration.
Chris Donaghey - SunTrust Robinson Humphrey
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