Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from the line of Michael Gallo - C.L. King & Associates
Michael Gallo - C.L. King & Associates
On the Leiner acquisition I know you noted that it was about $12 million of integration and payroll costs, how much was the payroll portion of that and how much of that are people that are still ongoing as you come through the next quarter or two?
Harvey Kamil
The payroll portion was $5.6 million and addition costs and SG&A as we said, was an additional $2.5 million, but the payroll cost of $5.6 million, that is going to continue to come down and again expected to disappear sometime in the second quarter of 2009.
Michael Gallo - C.L. King & Associates
So is it still right to think that about $30 million of G&A on Leiner side ultimately goes away by sometime next year?
Harvey Kamil
I think we’ve given that estimate and I would think that we would say that’s a reasonable estimate, yes.
Michael Gallo - C.L. King & Associates
I know you’re doing a lot of things as you talked about improving the [selling] rates at Leiner, have you gotten the [selling] rates at Leiner where they need to be, and then once you have them there, what kind of opportunities do you see in improving the gross margins at the Leiner business?
Scott Rudolph
First, the term rates, we are fulfilling the orders right now and they’ve been climbing. I’m sure most of the customers, I think all of the customers are at satisfactory levels right now. So now we’re just looking at improving the efficiencies of the company. What happened with the Leiner, we are continuing to raise prices where its necessary and needed.
Leiner really didn’t have any long-term contracts because they were in Chapter 11, they were living day by day so once we went to go buy, purchase raw material it drove the market prices up in place and so adjustments have been made and are being made always on an ongoing basis.
Its difficult to really give you a set answer today. I think we’ll know more in the next quarter.
Harvey Kamil
And just to give you the answer for the severance and redundancy to payroll, anticipated, now this is just the payroll, $4.5 million for Q1 and $4 million for Q2.
Operator
Your next question comes from the line of [Larry Fuller – Fuller Asset Management]
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