Question-and-Answer Session
Operator
Your first question comes from Arnold Ursaner - CJS Securities
Arnold Ursaner - CJS Securities
Good afternoon. How are you both? So Dana just to make sure I heard these numbers right, the atypical expenses for Elkhart were $500,000 in the quarter?
Dana Messina
Correct.
Arnold Ursaner - CJS Securities
And just to clarify, can you repeat what you said about the bad debt reduction?
Dana Messina
The bad debt, well what I said was our operating expenses were down 7% and most of that was due to reduction in bad debts but our core expense level went up by about 4%.
Arnold Ursaner - CJS Securities
Okay so just remind us, what was the bad debt expense last year and what is it this year please?
Dana Messina
Down about $3.5 million on the quarter.
Arnold Ursaner - CJS Securities
And just, I know you don’t want to say too much more about the building, but just to help us better understand how this could impact your financials, if I were to walk through your financials, remind us where you have the expenses related to the rental you have and the lease payments you get, kind of how the math would work on your rental payments and the money you get in on the lease payments if you will.
Dana Messina
So, it all really, the lease payments that we receive under the master lease and the payments we make under the land lease are contained in other income and expense and then the rent we pay on the space is in our operating expenses.
Arnold Ursaner - CJS Securities
So we should expect the other to essentially disappear and we should also expect the rental expense to be wound down, should be a reduction in your expenses from the rental?
Dana Messina
Correct.
Arnold Ursaner - CJS Securities
Okay. And are, would you want to put any quantification on that or is it too premature?
Dana Messina
It’s too premature.
Arnold Ursaner - CJS Securities
Okay and final question I have for right now is on the piano side, domestic sales have certainly been slowing or challenging, what if any steps are you planning to take on inventory reduction and should we assume or expect that you’ll shut down the Astoria plant better balance inventory during the first half of this year?
Dana Messina
You know, we’d like to take out more inventory whether it was, whether we think 2008 will be a good year or a bad year so we’re committed to take out some inventory and I think that’s going to necessitate taking some weeks out of production. We haven’t come up with a final figure on that but my expectation is that some production will come out to bring these inventories in line. In addition to that I think we believe the domestic business will be slower in 2008 than 2007. Although, you know sales at our own retail stores through February has been quite strong. Our dealer sales haven’t been quite at the same level we’ve achieved, but you know, that being said we read the newspapers like everyone else and we sense that’s there’s a little softness out there.
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