Question-and-Answer Session
Operator
(Operator Instructions) Our first question comes from Richard Greulich from REG Capital. Go ahead please.
Richard Greulich - REG Capital
Good afternoon. In the third and fourth quarter, are you going to be identifying the excess manufacturing costs, as you did this quarter?
Tom Brunton
Yes. Rich, this is Tom Brunton.
Richard Greulich - REG Capital
Hi, Tom.
Tom Brunton
We plan on doing that of course.
Richard Greulich - REG Capital
What do you estimate the excess costs will be in the third quarter?
Tom Brunton
I think it will be slightly higher than what we have in the press release probably because we are still shipping a fair amount of material and the Flex factory overhead billing in Q2 was really only two months, so that will go up a month. So, I'd say it's probably around $600,000to $700,000.
Richard Greulich - REG Capital
And those costs are true excess costs then?
Tom Brunton
Yeah. It's smaller, and Tom just correct me. It's probably more like $700,000 to $800,000. But it's definitely excess because what we are doing literally is draining the inventory out of the Singapore factory and sending it to Flex to build the unit. So, getting it up and sending it. And then we have typically choose staffs so you can think of it this way. If we have 50 people in Singapore and Flex has 50 people in China, both of which are sort of covering each other and transitioning the process, we basically have two sets of factory cost in this transition period. And we've set a really [towering] schedule as Tom has indicated relative to the knowledge transfers and so we just got to be careful and make sure that we do it right and maintain the quality by doing this as quickly as we can. So we think that that plan basically is on schedule for the most part, and by the time we get into Q4 and I would say just a question of what part in Q4 that we’ll [go over] to draw our conclusion to it and basically feel comfortable that we don’t need that staff and go from there.
Richard Greulich - REG Capital
Okay the second question I had if I may is to get to the 40% margin, and let me get a clarification: is that overall corporate or just for the 6000 product line?
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