Question-and-Answer Session
Operator
(Operator instructions). Our first question comes from the line of Brian Kintslinger with Sidoti & Company. Please proceed.
Brian Kintslinger – Sidoti & Company
Hi, good morning. First question I had on the cost cutting you have done in the fourth quarter and the first quarter at what point based on your revenue expectations do you expect the utilization to return to sort of what’s you guys have experienced in the past?
Paul Martin
If you look at where we are, Brian, we are targeting for the year, 35% or better gross margins on services X.com [ph] and that is lower than 38%, 39% that we were targeting in a healthy recommend environment. We may do better from 35%, but you’re going to have somewhat on a unit demand environment and some that where we are setting expectations target that’s where we're at.
Brian Kintslinger – Sidoti & Company
And that was where you were in the fourth quarter that because little bit more so you’re bringing down people inspect the best or if not additionally, is that right? Also little bit of pricing.
Paul Martin
We could talk about price – Jeff can talk about pricing little bit more and I think I may have referenced it but I got drop there for a minute but if the pricing environment has been fine the – of course you had some (inaudible) demand, but yes, of course, as we mentioned we took headcount down in response to lower demand environment. We are talking about revenues in the 50 million range in the fourth quarter versus the higher revenue run rate in the first quarter versus the higher revenue run rate for so we made those adjustments consistent with the way we always operated the business, keep the fixed costs low, adjust the variable cost quickly if you see a demand and a change in market demand level, and let’s get back to business being profitable and ultimately grow when this economy recovers.
Brian Kintslinger – Sidoti & Company
I think (inaudible) could you go over some of those pricing rates that you had mentioned?
Paul Martin
Actually, in the fourth quarter we actually saw an increase, if you exclude the offshore. I think it’s become more and more of factors we move on and continue to grow the offshore component. But it was actually 116 versus 114 in the third quarter. 106 – 104 versus 106 when you bring offshore back in to it, but again the function there was that we actually increased our offshore work by 70% in the fourth quarter. So it’s become more of an interest and complicated to the track that, net-net in the fourth quarter we really didn’t have a pricing issue and we had – I think we had good rates for the market for any market really in the fourth quarter.
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