Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from David Leiker - Robert W. Baird.
David Leiker – Robert W. Baird & Co., Inc.
A couple of things, the one big item that jumps out is the SG&A line. Can you give us some perspective of how much of that performance there is a function of you taking costs out of the business on a permanent basis as opposed to the numbers flexing with where the revenue line is so we have some sense going forward how sustainable this level of SG&A spending is?
Nicholas T. Pinchuk
Well, generally the way we view it, David, is like this, it's an imprecise science, of course, but we figure about 5% comes out, about $5 million, you got $100 million worth of movement, which we had in the quarter in sans currency. You get about $5 million out for direct variable costs associated with the selling operation. And then you got between $7 and $10 associated with I'll say temporary cost reductions associated with the volume of activity, and then the rest I think are pretty good permanent type cost reductions.
David Leiker – Robert W. Baird & Co., Inc.
If you look back at the beginning of the quarter, where are the things that are most different than what you were expecting them to be?
Nicholas T. Pinchuk
I think a few things. I think first of all we didn't expect as much de-stocking of the European distributor businesses. That was a little stronger than we thought. So we saw de-stocking there through January into February. That lasted longer than we thought it was going to be. As I said, it seems to be abating a little bit. Big ticket items drove deeper than we thought. Those are the two, and then I think we saw industrial, the mission critical businesses soften somewhat more than we had expected.
I would have said, David, that directionally we expected de-stocking both in our franchisees and in the distributors, so we're not talking directionally we're talking about how much. And we expected big ticket items, we've been talking big ticket items for a long time and certainly that's an issue. I think we didn't know where industrial was going to come out.
We knew we'd be impacted eventually by the uncertainty and so on, so we didn't know where that was going to happen and it came out maybe a little lower than we thought. I'm not sure how that's going to play out going forward because we had some good news and some bad news in that area, as I elaborated on in the call. Schools were up and some of our other businesses were down. So that's really where we were, we are.
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