Question-and-Answer Session
Operator
(Operator Instructions) It looks like we will take our first question from Jeff Evanson with Sanford Bernstein.
Jeff Evanson - Sanford Bernstein
Thank you. I noticed during the quarter that your R&D expenses were a bit higher sequentially. I was wondering if you could go over why that is.
Jay Zager
I don’t think there’s anything particularly significant about that. Our R&D expense basically have two elements to it -- our headcount related spending and then non-headcount project spending. We continue to manage our headcount and R&D essentially flat to slightly down, so on a particular quarter, depending upon non-headcount or project spending, you might see a little bit of an increase but there’s nothing particularly significant to draw from that.
Jeff Evanson - Sanford Bernstein
I guess I would draw if your headcount is slightly down and you went up by $2 million that you are spending a bit more on projects that might portend to future product announcements.
Jay Zager
I wouldn’t draw that conclusion. We have several products that we’ve introduced in the last year and we have several products in development across all of our portfolio. But when you look at sequential quarters, things like the way we might accrue for salaries and bonuses and other factors can alter sometimes a quarterly projection, so as I said, I wouldn’t read into it anything substantial in the modest increase.
Jeff Evanson - Sanford Bernstein
According to my notes, in the last quarter we heard that you had attained about $40 million in annualized cost savings from the integration efforts and today I heard Bob say we were up to about $50 million. Assuming those are the right numbers, you’ve got an additional $10 million this quarter. But if I look at R&D and SG&A, it looks like all the expenses went up. Where should I look on your income statement to see the proof of that $10 million improvement in the annualized savings?
Jay Zager
It’s in R&D and you won’t see it in the sequential quarter because, as I mentioned, we actually took some headcount out this quarter. That ultimately, as we cost out the savings from that headcount, results in additional R&D savings but you may not see it in the quarter, depending upon non-headcount savings. So at this point compared to last quarter, we have continued to take R&D costs out on an annualized basis. And when we talk about these savings, we’re talking about them on an annualized basis, not on a quarter by quarter basis.
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