Question-and-Answer Session
Operator
(Operator instructions) And we’ll take our first question from John Walthausen with Walthausen & Company.
John Walthausen – Walthausen & Company
Yes, good morning.
Dale Barnhart
Hi, John, how are you doing?
John Walthausen – Walthausen & Company
Pretty well, pretty well. Some good things here in spite of all the bad news that everybody is reporting. I guess I wanted to touch base. You had talked about four new products, I think all in the filtration. I wasn’t sure whether they are related to – well, could you just talk about what they relate to, that they are significant new products, whether it brings you into different capabilities or different markets?
Dale Barnhart
Yes, I’d be glad to, John. You’re right, I wasn’t real clear. Those four new grades that are being developed are part of the Arioso product line, which is a result of the acquisition of DSM Solutech. And that is a membrane air filtration media. And it does – it will as we get the four grades out, get us into other HEPA and ULPA applications and segments that we are not in today. One of significance is dust collection or industrial applications, where we don't have high market penetration today. We believe this product has durability, flexibility and a cost point that will be attractive in that segment.
John Walthausen – Walthausen & Company
Good. The other question I had was on SG&A. It’s down significantly of course year-over-year, but up a bit from where you are running in the third and fourth quarter, that in spite of the fact that you’ve all done the right thing and taken reduced compensation. Can you talk about what the factors are behind that?
Dale Barnhart
I would suspect – I don’t have a definitive answer for that, but I know we’ve had increased severance cost and other expenses associated with the consolidation so that that would impact SG&A. And we’ve had severance expenses as it relates to other admin individuals.
John Walthausen – Walthausen & Company
Okay. And then finally, with regard to DSM, you had mentioned that there were some startup costs in the quarter. Could you give some idea of what the scope of those were and whether we expect those to increase as we get into the subsequent quarters where they should start to narrow?
Dale Barnhart
We don’t expect them to increase. They are pretty much in line with what we anticipated when we made the acquisition. There were some charges as it relates to inventory write-ups and valuations and intellectual property, all things that tend to happen when you do an acquisition. But we had a clear focus on the four grades that we needed to develop, and we actually – the first three were completed on time and actually ahead of schedule. So we feel very good about that. Going forward, we don’t anticipate any significant increase in the startup cost than what we have in our operating plan for that unit. And in fact, we expect that business unit to be on target with their plan for operating income goals for this year.
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