Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Walt Liptak - Barrington Research.
Walt Liptak - Barrington Research
I wanted to ask, you mentioned something about a LIFO adjustment in the quarter, Vince?
Vincent Petrella
Yes, so we’ve had LIFO adjustments during the course of the year and the quarter included $7.7 million and the year-to-date adjustments were approximately $13.6 million.
Walt Liptak - Barrington Research
Okay, and was that included in the adjusted numbers?
Vincent Petrella
No.
Walt Liptak - Barrington Research
Okay, so that increased your gross profit by $7.7 million.
Vincent Petrella
Yes, and that’s reflective of declining commodity cost during this the course of the year. So LIFO is a cost flow assumption methodology that matches your most current cost with your most current revenues. And so $13.6 million for the year and $7.7 million for the quarter are estimates of what our most current cost will be at the end of the year. So just one further point Walt is you would have to annualize that year-to-date figure to estimate what our total 2009 credits will be for LIFO accounting.
Walt Liptak - Barrington Research
Okay, does that means that in the fourth quarter we would not see a LIFO adjustment?
Vincent Petrella
No, that means you will see another LIFO adjustment. That annualizes the $13.6 million based on current estimates. So this is subject to LIFO accounting methodologies are subject to estimating what your year-end inventory levels will be and what your year-end cost environment will be.
So, they are adjusted during the course of the year, and currently our best estimate is for the nine months, $13.6 million and so annualizing that for the full year would raise the number somewhere around 18 plus million.
Walt Liptak - Barrington Research
Okay, wanted to ask you about the European profitability that improved, was that related to the cost out action that John talked about earlier?
Vincent Petrella
Yes, certainly cost savings actions have aided Europe significantly during the course of the year. One important factor that has affected us in the third quarter and going forward is, what we have been talking about all year in terms of liquidating high cost inventories in Europe.
So we had a headwind, a drag in the first two quarters, and we have talking it in the first two quarters about putting that behind us by the third quarter, and that is certainly now through the system and clean, and so those headwinds are now behind us and has improved our operating profit in the region.
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