Question-and-Answer Session
Operator
[Operator Instructions]. And your first question comes from the line of Vanessa Miranda of Stanfield Capital Partners.
Amy Bloom
Hi. This is Amy Bloom of Stanfield. For the Hamilton Beach Subsidiary wise, it looks like the covenant next quarter will also be tight considering that the outlook for the fourth quarter is weak? Are you expecting to contribute more capital to keep that company in mind with these covenant requirements? Thank you.
Al Rankin
We monitor the performance of the companies very carefully and believe we have the ability to address covenant issues one way or another in each of our businesses at this time. So it obviously depends on -- the degree of difficulty depends on the assumptions you make about the markets themselves but we feel we have outstanding businesses in each of our four subsidiaries and we will take the actions that are necessary to move us through this period.
Amy Bloom
Thank you. And also on that subsidiary, are you expecting any type of inventory write-downs in Hamilton Beach?
Al Rankin
We have a couple of areas where there is potential expertise due to some degree but it's not abnormal for the business and the general levels of inventory and the quality of the products the Hamilton Beach is just fine. Its not -- and there are no issues of significance in terms of phasing out products and phasing a new products that might leave us with significant problem areas as we look forward. There is almost always a case, we have a couple of areas where we are focused on special programs to deal with inventories, but they are not in the scheme of things of major issues.
Amy Bloom
Okay. Great, thanks for you support.
Operator
[Operator Instructions]. The next question comes from the line of Frank Magdlen of The Robins group.
Frank Magdlen
Good morning.
Al Rankin
Good morning.
Frank Magdlen
Al, at Hamilton Beach, if raw material prices stayed flat, what would it taken away price increases to get to the desired margin?
Al Rankin
Well, I am not sure I can really answer the question. What I would you tell you is about the process we’ve gone through. We have reviewed at Hamilton Beach essentially every single stock keeping unit, skew in the business. We have loved the current prices. We have asked our suppliers to reflect in their ongoing prices for next year. The kinds of reductions and commodity cost that we have seen and our engineers are basically reverse engineered, our products, we understand the material of those products in great detail and we know what commodity content is in them and therefore what we think should be appropriate reductions. So some portion of the recovery will come from decreased prices. But we believe that our decreased cost -- but we believe that the prices we put in place as a result of the reviews that we’ve done of every single skew put us in a pretty good position to have more normal margins in 2009.
- To read the full transcript on Seeking Alpha, click here »
