Question-and-Answer Session
Operator
(Operator instructions) Your first question comes from Arnie Ursaner from CJS.
Arnie Ursaner – CJS
Hi, good morning.
Mogens Bay
Good morning.
Arnie Ursaner – CJS
My first question relates to the Engineered Support Structures Segment margin. I've gone back five years and you've been no where near the five and half level in margin anywhere in that timeframe except for one quarter where still exploding on the upside. Can you walk us through some of the items that have impacted that in a little more detail, which of those you fix and so we can get a better feel for what maybe normalized margins would have been X these items?
Mogens Bay
Well, in general, if we start with the internal issues we've been dealing with, we had some significant operational challenges in two of our North American plants. We have made changes in management and we expect that the fixes we are putting in place will improve the business that these two client support. And important portion of may be the declining margins also is the fact that because of the very high demand in utility and a somewhat soft demand in the lighting and traffic business for large pole structures, we have allocated some of the capacity that belongs in the North American Engineered Structure segment to produce products for utility and that is transferred at margins that maybe just a little better than breakeven. So those are the two major elements. As the North American structural businesses overtime will strengthen again, they will get better margins from utilizing their plants more than sales and hopefully the fixes we are putting in place to address some of the operational issues will also help them improve the margins.
Arnie Ursaner – CJS
Again maybe dwell on a little bit more because 400 basis points of margin there is $0.28 of earnings, so it's really important to understand it. The utility, the work for highways or, if you will, being transferred to utilities is probably likely to continue given the demand, but the problems you had are too specific, plants are likely to be fixed. Can you separate out those two issues in a little more detail to help us?
Mogens Bay
We're not giving specific numbers; my feel would be that the operational improvements we're going to see internally in the North American structural businesses probably would have a bigger impact than the inner company sales to the utility business. So in other words, some of the operational issues we are dealing with should add more to that business reverting to more traditional margins.
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