Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from [John Harold – Harold & Associates].
[John Harold – Harold & Associates]
I’ve got a question about dilution, if in fact the note holders chose to convert to common stock it appears that right now the outstanding shares is somewhere around 31 million, how would that impact the outstanding share count, up to what figure?
Marvin E. Toland
We do not have an offer currently on the table to our convertible stock but I would note that the maximum outstanding shares allowed under our articles of incorporation are 100 million shares.
[John Harold – Harold & Associates]
Would there be a chance of having to raise the authorized share count?
Marvin E. Toland
Raising authorized share count would require a shareholder vote.
[John Harold – Harold & Associates]
So the worst case scenario would be the outstanding shares would rise from about 31 million up to 100 million.
Marvin E. Toland
That’s the maximum allowed under our bylaws.
Operator
Your next question comes from Analyst for Mimi Bartow – Telsey Advisory Group.
Analyst for Mimi Bartow – Telsey Advisory Group
Could you talk a little bit about what expense areas you are targeting with the $10 to $15 million in SG&A reduction that you mentioned?
Neil Fiske
Sure, as you may recall we went through in January of this year another reduction in force where we laid off a substantially large number of employees again this year bringing our total I think over the last two years of reduction in force to something like 310 employees. So, the reduction in force is a big piece. We are also continuing to optimize our marketing spending and expect to take a fairly good chunk of money out of marketing that could be more effectively spent. Then, just across the board reductions in every functional areas budget for the year.
Analyst for Mimi Bartow – Telsey Advisory Group
If I could follow up just for a second, on marketing could you talk a little bit more on what you’re planning to do there?
Neil Fiske
One of the things that we’re having some real success in now is getting more precise about the science if you will behind our catalog mailings which as you know is the dominant part of our marketing budget. We believe that the productivity gains that we generated last year in sales per page circulated we can continue to generate this year by more effectively targeting our catalogs segmenting them, reducing pages to only the targeted segments where those pages make sense. So, it’s really a combination of optimizing, circulation and segmenting our catalogs more precisely.
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