Question-and-Answer Session
Operator
(Operator Instructions) We’ll pause for just a moment to compile the Q&A roster. Your first question comes from the line of Curt Woodworth, JP Morgan.
Curtis Woodworth – JP Morgan
In terms of the foreign exchange and the pretty dramatic impact its having on your cost structure, what percent of your costs are in Canadian dollars or the Brazilian currency? And, what was the fx sensitivity around it in terms of if we wanted to make our own views of where the currencies were going to go this year?
Calvin E. Jenness
A percent, just to give you an idea of the different currencies, a percent strength indicating dollars worth about $600,000 pre-tax.
Curtis Woodworth – JP Morgan
I’m sorry how much?
Calvin E. Jenness
$600,000 pre-tax.
Curtis Woodworth – JP Morgan
For what percent?
Calvin E. Jenness
1%.
Curtis Woodworth – JP Morgan
1%, okay.
Calvin E. Jenness
[Inaudible] 1% increments here Curtis. Then, the Brazilian Real is about $200,000 for every 1%. Then, the Euro which obviously is going the right way for us is about – it cost $200,000 for 1% movement there too.
Curtis Woodworth – JP Morgan
And what are the assumptions in your guidance for 2008 in terms of the negative currency impact?
Calvin E. Jenness
It’s about $5 million, say over 2007 negative.
Curtis Woodworth – JP Morgan
Okay. Then, in terms of the view that international markets are going to outperform the US market, can you remind us what your mix is US versus international and also what the dynamics are that are more favorable in the markets outside of the US?
James S. Osterman
Right now we’re doing about 68% of our business outside of the United States. The orders that we’re receiving in right now and our backlog clearly shows that the international markets remain very robust.
Curtis Woodworth – JP Morgan
And why is that? Is it just regional economics?
James S. Osterman
It’s regional economics. We’re seeing Latin America stay strong, we’re seeing a lot of growth in the eastern part of Europe and Europe remains strong. Right now the international markets totally seem quite robust for us.
Curtis Woodworth – JP Morgan
Okay. Great. Then, in terms of the new product development initiative that you’re launching at the company, can you talk about whether that’s going to be kind of brand new product sets or enhancements to your existing base of business? Are you trying to get in new markets with this job function you’ve created? Can you just give me a level of clarity there?
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