Question-and-Answer Session
Operator
(Operator Instructions). Our first question comes from the line of Alexander Draper - Raymond James.
Alexander Draper - Raymond James
Just a couple of quick questions. Did you say Tom, on the RMS commentary, is that comparable to the third quarter in terms of being stable or year-over-year?
Thomas F. Ackerman
Third quarter to fourth quarter.
Alexander Draper - Raymond James
Okay, so you don’t expect the normal seasonal decline that you’ve seen historically?
Thomas F. Ackerman
In some aspects of the business such as the models we would expect some decline for seasonality, but as I noted we expect an uptick in our large animal models and an uptick in some of our services so that on a total sales basis, yes, we expect it to be stable versus the third quarter, but because of the profitability of the small models, we expect a decline in margin.
Alexander Draper - Raymond James
The second question and I’ll jump out; I know you’re not making any specific commentary on 2010, but I wanted to think of in terms of the longer-term add-backs, we’ve had a lot of different adjustments; severance, one, can you outline what basic areas I should be thinking about taking costs out in terms of the severance and the restructuring and where that’s going to go longer term, and then also, what are the ongoing add-backs in each of the divisions as I should be thinking about longer-term add-backs and how you think about a pro forma margin versus a lot of the severance and impairments that have made the numbers move around a lot this year.
Thomas F. Ackerman
While of course a lot of the severance actions were excluded from our non-GAAP results; so if you look at our non-GAAP results this year and our margins, they are on a non-GAAP basis untainted by those actions. In my last remarks I mentioned that the cost savings actions contributed about $40 million this year and would contribute about $50 million next year. The reason why the numbers are not a little bit higher next year is because some of the actions that were taken are not necessarily recurring such as some of the incentive action. So, it’s a little difficult to answer your question in terms of margins directionally because as the demand has softened, some of the actions have been actually mitigated by further demand weakness. So, I think as demand returns, that’s really where we would see the benefit of some of those actions, and of course if demand returns more slowly or it takes a little bit longer, then the actions while they’re beneficial, continue to be diminished by the impact of the demand. So, I hope that clarifies it a little bit. Obviously, a lot of it is dependent on demand return and how fast that rebounds.
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