Question-and-Answer Session
Operator
(Operator Instructions) It looks like our first question comes from Eli Lustgarten - Longbow Securities.
Eli Lustgarten - Longbow Securities
Good afternoon. A couple quick questions; one, can you talk about the pricing environment that’s occurred in the last quarter and what you see going forward both here and abroad, and particularly, one problem we’ve had was the price erosion was causing a problem and the impressive gains you alluded to in your prepared comments, were helped by a more stable pricing?
Give us some feel for what’s going on and the magnitude of the benefit of pricing versus volume in the quarter?
Mike A. Wills
I’d be happy to address that issue. There are a couple of comments that I’d like to weave around your question. First of all, as we have mentioned in previous quarterly calls, we had experienced some pricing erosion in some of our product lines partly due to I believe a moment in time as far as status of what was happening within the competitive environment, consolidation activities, et cetera, going on inside of our market.
Also the status of our own product lines in terms of releasing certain new competitive models into spaces where we needed to be. What we’ve seen in the latter half of third quarter, and certainly in fourth quarter, is that that has stabilized and is certainly coming back to this topic and notion that Pat mentioned which is our selling methodology in terms of having a competitive product position across the board, having a great partner base with well-tuned solutions for our customers and a knowledgeable, focused sales team helps us yield those kind of premiums now.
Eli Lustgarten - Longbow Securities
Is there any way to quantify the magnitude of the pricing improvement year-over-year or quarter-to-quarter?
Mike A. Wills
I don’t believe so at this point, Eli. We certainly from a selling methodology standpoint and discipline standpoint, that’s a practice that we will continue to adhere to even through this transition here in the U.S., especially with this transition here in the U.S. to a channel-centric model. So I do believe that this is a thing of the past but it’s a tough one for us to quantify going forward.
Eli Lustgarten - Longbow Securities
As far as going to that increased channel strategy, as you move from 53% to 70% U.S. channels, can you quantify what the costs look like? I assume that’s part that’s embedded in the 50% incremental margin you’re assuming for the year in the quarter? Or is that below it?
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