Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from John Baugh – Stifel Nicolaus.
John Baugh – Stifel Nicolaus
Let's focus on the charges, just to be clear, is it $7 million and $9 million pre-tax for calendar '08?
Albert Prillaman
It's $7 million and $9 million pre-tax. I'm not sure if it will all be recorded in calendar '08. Some of it could very go into calendar '09 depending upon the timing of the disposition of some of the real estate and machinery and equipment and so forth, associated with the consolidation of two factories into one.
John Baugh – Stifel Nicolaus
As we look at the third quarter, how do the charges break out between gross profit and SG&A?
Albert Prillaman
Gross profit is in the gross profit. There is a piece that is in SG&A.
John Baugh – Stifel Nicolaus
You broke even on an EBIT level at $54.5 million roughly. How do I think about the break even EBIT going forward once the restructuring steps you're taking are in place? Are we making money at $218 million, $219 million in revenue, or are we still break even EBIT? How do I think about that?
Albert Prillaman
Let's go back. I've got the answer to your first question, then we'll come to that one. The restructuring break down between gross profit and SG&A for the third quarter is about $3.8 million was restructuring charges included in gross profit, or cost of goods sold, and about $1.4 million was in SG&A. That should total up to about $5.2 million in operating charges.
Your second question about profitability and where are we going forward, assuming that sales stay where they're at, as you know the moves that we've made, we've indicated and we expect that to result in improving our cost structure in the range of $5 million to $6 million going forward. We won't begin seeing that, or all of that in the fourth quarter.
I would expect that we would begin to gain some traction, but we'll still be going through some transition and ramping up our Robinsville facility in the fourth quarter of this year. But as we move into 2009, I would expect that we would see that improvement in our cost structure.
We're sort of at a break even level currently, at the current sales level, so we expect to see that at the operating income line, we expect to see that move back up in the positive area going forward, assuming sales stay where they're at.
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