Question-and-Answer Session
Your first question comes from Pj Juvekar - Citi
Pj Juvekar - Citi
The reality appreciated significantly against the dollar recently. That should be a benefit on the translation impact but maybe Brazilian export growth slows down. Can you talk about those pluses and minuses and how are you hedged against the real.
Jim Sawyer
It is pretty much back to where it was in its high a roughly year ago and that has given us some boost on translation this quarter and if it stays at this level will give us some boost next quarter and in 2010, but so far we haven’t seen that has heard the competitiveness of the REI in terms of its domestic business or export business and in fact what we’re really seeing in Brazil right now is a very significant increase in GDP economic activity which is pretty much consumer led.
The auto production in Brazil reached an all time high a couple of months ago. So, it is very different than what we are seeing in the United States. Secondly there is an election coming up at the end of 2010 and the administration has got an accelerating growth initiative underway to stimulate the economy and, also they have lowered interest rates from about 18% to 8% and now they have won the 2016 Olympics. I think there will be a lot of domestic enthusiasm going on in Brazil and domestic growth in Brazil. Therefore, the strength of the REI right now I don’t see as impacting the economy negatively.
Pj Juvekar - Citi
Just quickly, you mentioned Jim that some of your onsite customers are still on taker pay. Can you tell us what percent of your customers are on taker pay? Thank you.
Jim Sawyer
There are very little that are left that are on taker pay. Right now just about $2 million of revenue and operating profit in this quarter are coming from taker pay and that is actually coming in Germany.
Operator
Your next question comes from Don Carson - UBS.
Don Carson - UBS
Jim, can you talk a bit about the quality of the backlog. I know initially you thought it might fall off because of reduced energy activity, but you have seen to would maintained it at a fairly constant level. Are they return in the backlog as attractive as a year ago? How would you characterize them especially with the new hydrogen projects?
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