Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from the line of Brian Alexander - Raymond James
Brian Alexander - Raymond James
Could you talk a bit more about what drove the margin performance this quarter because we’ve seen a pretty meaningful deceleration in growth but we’re in unchartered territories from a profitability perspective, could you say what’s really driving that, is it BPO, is that the largest bucket?
Thomas Alsborg
First thing I want to point out is that as Kevin commented, our gross margin expansion was really driven by both the BPO line of our business as well as distribution side of our business so all of our business aspects continue to perform very well we’re pleased to say.
The only other thing I would comment is from the distribution side, again its really coming down to really solid execution and being able to achieve our goals in terms of vendor rebates and marketing and so forth.
Kevin Murai
From an overall operating margin standpoint as well we’ve been very disciplined and diligent in managing our cost structure and in particular in the soft environment that we’re in, we’ve been even more aggressive in looking under every corner of the rug so to speak to look for any additional cost savings and I think we’ve done a very good job in doing so.
Brian Alexander - Raymond James
On working capital I see the metrics moderated a little bit this quarter, can you talk about what you are doing to improve working capital internally and maybe where you see it heading in 2009.
Thomas Alsborg
First we have seen good improvement particularly where the areas we are most focused which is on the inventory and receivable side of our business. That really is coming by just blocking, tackling, key execution, key focus of our company on managing without taking away from the needs of our vendors and our customers.
Going forward from a cash to cash cycles perspective as we’ve shared in the past this continues to be a very key focus for our company and our objective is to continue to reduce that cash to cash cycle even in a soft economy.
Dennis Polk
I would just add that we have a laser focus on ROIC in this company and managing working capital is obviously a very important function of that and its been worked throughout the company very well this focus on this ROIC aspect and its produced dividends this quarter and we expect to have it produce dividends moving forward as well.
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