Question-and-Answer Session
Operator
(Operator Instructions) We’ll take our first question from Sean McGowan with Needham & Company.
Sean McGowan - Needham & Company
I have a couple of questions -- some of them are kind of quick here. Is Little Mommy now going to be included in the other girls, or I thought that was a Fisher Price product?
Robert A. Eckert
It is, Sean, a Fisher Price product but it’s always been included in other girls.
Sean McGowan - Needham & Company
Okay, not a big deal. Kevin, could you give us some more color on how much of the increase in SG&A was related to the incentive compensation increase and what we can expect for the full year impact?
Kevin M. Farr
Let me just go through the increase in the SG&A for the quarter. You know, third quarter SG&A expense increased by $24 million to $385 million and the year-over-year increase is primarily driven by higher incentive accrual and an incremental $5 million charge to the reserve for product liability related litigation, partially offset by foreign exchange benefits, lower litigation related expenses of $4 million, and gross savings of $22 million related to global cost leadership program, which were partially offset by $18 million severance charge.
For the quarter, [ECO] compensation was $14.9 million compared to $11.7 million in the third quarter of 2008, and consistent with GAAP and as we’ve done in the past, we’ve begun to accrue incentive compensation based on year-to-date performance. We don’t provide guidance on incentive compensation. However, you should be able to estimate a range for the full year referring back to historical payments. In 2006, we had a good year -- it was $94 million. In 2007, it was about $74 million and we didn’t hit our goals last year it was about $15 million. And we accrue that expense when we earn our operating profits and that is usually in the third and fourth quarter.
Sean McGowan - Needham & Company
Okay, so did I hear you correctly then that the increase in that particular component was only roughly $3 million in the quarter?
Kevin M. Farr
On incentive compensation expense? No, that was the equity compensation.
Sean McGowan - Needham & Company
Oh, equity, okay, okay.
Kevin M. Farr
The incentive compensation was higher. It was a driver of the year-over-year increase.
Sean McGowan - Needham & Company
Right, okay, thanks. And then the final question I guess is probably more for Bob but do you feel like at this point with your inventories down as much as they are in the third quarter, and given retail has been managing pretty tight and yet there’s Christmas coming, do you have the inventory to handle a late surge?
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