Question-and-Answer Session
Operator
(Operator instructions) And we will go first to Tyler Hojo, Sidoti & Company.
Tyler Hojo – Sidoti & Company
Hi, good morning everyone.
Ron Saks
Good morning.
Ed Dickinson
Good morning.
Tyler Hojo – Sidoti & Company
First just to fill in a couple of blanks here, in terms of cash flow expectations for 2010, I don't think you addressed that and as well as depreciation and amortization?
Ed Dickinson
Again, I would expect depreciation and amortization to be somewhat unchanged next year. We did put out a Capex number here in the press release of 6 million to 7 million. So I would expect to see a little bit of cash benefit there somewhere around, I think our net income kind of the midpoint of the range would put us around 16 million. So if you add back or add in a million or two from difference between Capex and depreciation and amortization, it would put you in the upper teens in terms of where we are and depending upon work and capital demand from our customers, because we continue to see inventory and receivables pressures. At this point, I wouldn't want to put any conjecture on working capital benefits.
Tyler Hojo – Sidoti & Company
But generally speaking, you are anticipating another pretty strong year of cash flow generation in 2010?
Ed Dickinson
Yes, we are.
Ron Saks
Yes, I think that is fair especially with our expectation that earnings will increase as well. We have had as you may have noticed in our statements some sizeable increases in receivables. In October as Ed mentioned, we have had a decided reduction in our debt levels signifying free cash flow at least up through October. It is already gotten us to the level that we expected by the end of the year, and we are attempting to manage the receivables as customers keep trying to stretch, but as the inventory begins to rebound if what we are seeing begins to spread throughout the industry, the expectation is that some of that pressure on receivables may lessen.
We have to internally continue to focus on inventories because as we had this increase throughput, we need to be better at matching our sales to our overproduction. But on the basis of our experience this year, we would expect somewhat more free cash flow in 2010 and 2009.
Tyler Hojo – Sidoti & Company
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