Question-and-Answer Session
Operator
(Operator Instructions) We’ll pause for just a moment to compose the Q&A roster. Your first question comes from the line of Avinash Kant with Broadpoint Capital.
Avinash Kant – Broadpoint Capital
A few questions, you talked about almost a $0.15 impact in earnings in calendar year 08. What kind of upside do you see in going forward in calendar 09 from these applications especially from the LevTech acquisition?
Timothy C. Carlson
Both of the investments themselves have upsides as it relates to improved market opportunity. The LevTech business itself as Doug, mentioned provides us with significant intellectual property as well as marketplace capability to have a very solid position in the life sciences space in 2009. As well as, as Doug mentioned are investment in high productivity development activity with Intermolecular will also ramp up revenue opportunities in 09 and we believe right now based upon everything that we see that both of those investments should be accretive in 2009.
Avinash Kant – Broadpoint Capital
Now if we were to assume that you continue to invest in Intermolecular opportunities, should we start to model R&D at a 10% rate even beyond 08 or that would come down after 08?
Timothy C. Carlson
I would suggest modeling for at least 08 and 09 and then we should see some additionally efficiencies and improvements within our own activity as well as the leverage on the top line. We should start seeing that come down again.
Douglas A. Neugold
Avinash you know the reality is that we’re very excited about the capabilities that these tool sets in combination with our existing positions creates. So we really wanted to get a start on this which is why we made what is a pretty big decision, right? For those incremental investments. We really believe that we are going to find efficiencies in our R&D processes because of this but we have many programs ongoing. The migration to this platform will take place over a year or two. So we expect the spike, you know Tim has indicated it will go on through 08 and to some degree through 09 but we expect it to come back down and actually we expect to see, on a percentage basis more revenues coming out of our existing R&D dollars, or if said differently we expect that we should get more efficiencies out of R&D. So you’ll see it spike up, we’re working through the long term impact really as we speak and we’ll learn everything we need to broadly speaking in 08 and early 09 and then you’ll see it get managed again.
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