Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Analyst for David Leiker - Robert W. Baird.
Analyst for David Leiker - Robert W. Baird
Don and Doug, with the power distribution segment, we have a couple of moving parts, provided margin is down there. You mentioned that the business had ended and also some of these higher costs. A, is the business that ended just not coming back and what sort of pressures does that put on margins and what should we expect going forward and what was the impact of these higher costs on margins in that business?
Donald Duda
Okay the business you are referring to that went into end-of-life was the IBM business we’ve talked about. That was a higher margin business but it will be offset moving forward by larger business gains that offset it. I don’t know if that will replace the margin one for one, but we are certainly going to replace it on the way of different customers, so we are less dependant on one. Material impact; I don’t know if we are able to quantify the material impact, but the material lag is a significant reason for the growth.
To put it in perspective Keith, I’m not as concerned about the IBM end-of-life, that something that we haven’t taken into account. Our projections are more concerned about the material costs that went up and plus more logistical cost. On the other hand the business has grown and we are pretty good at taking costs that will address those issues, so it is something that we can have an effect on the control.
I’m so positive about the business. If you think about it, we took a business that was located in Walden Meadow and have now expanded business in two other continents, so there is going to be some issues and increased material costs. I’d prefer it didn’t happen, but again it’s something we can’t control.
Analyst for David Leiker - Robert W. Baird
Just two more follow-ups to that; do you have any success passing those material costs on to your customers or is this a negotiated contract in advance?
Donald Duda
A little bit of a mixed bag, but in contrast to it, automotive was very difficult; we are probably going to be able to do some of that. We have done it with some customers and it’s a viable option in this case what it wouldn’t have been very difficult in auto.
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