Question-and-Answer Session
Operator
(Operator Instructions). Our first question today comes from Greg Gilbert - Merrill Lynch.
Greg Gilbert - Merrill Lynch
I have a couple. First some housekeep stuff for Jeff. I was hoping you could provide actuals or estimates for gross margin for API for the fourth quarter and the full year and perhaps the same for allocation of eliminations in Other to API for 4Q and full year.
Secondly, for Dean, can you provide some color on the FLECTOR stocking at both the wholesaler and retailer levels and to what extent you’re already getting reorders?
Jeffrey Campbell
I’ll take your question maybe in reverse order. As far as corporate and unallocated expenses, Greg, we basically run the business as a portfolio of three businesses so they are just that, corporate and unallocated expenses. And of course we’ll provide more insight into our view on those for 2008 when we give our guidance call.
And as far as gross profit margins, when we report in 2008 on a discontinued operations basis you’ll of course get a better line of sight as to the gross profit of the company for our Pharmaceuticals and Animal Health businesses together.
We’ve traditionally reported three operating margins and haven’t broken gross profit margins out separately by business. I’d ask you to wait till we recast the discontinued operations and I think you’ll have a better line of sight to that then.
Greg Gilbert - Merrill Lynch
Maybe I could ask it in a different way. The operating margin of the Animal Health business obviously fluctuates based on seasonality. Is there any reason to think that the gross margin does not fluctuate in a similar manner relative to operating margin for Animal Health?
Jeffrey Campbell
I think the seasonality of Animal Health which is basically a second half, U.S. livestock being more robust in first half. Other than that Animal Health isn’t very seasonal at all, and I think their variable contribution holds true throughout the year. So it would just follow the natural seasonality of the business in that regard, Greg.
Greg Gilbert - Merrill Lynch
Okay.
Dean Mitchell
Greg just to answer your question on the FLECTOR Patch. We had a very comprehensive distribution program ahead of the launch early in January. We had approximately over 50% of pharmacies stocked at the launch period which was about 18,000 pharmacies. A number of those were on auto-shipment programs, so we’ve actually had a fair amount of reordering both from major chains and smaller pharmacies. So we are pretty encouraged by that so far.
- To read the full transcript on Seeking Alpha, click here »
