<A Michael Willoughby President & Chief Information Officer>: Its in that category so
theres a variety of different types of products. Some are liquids. Some are other powder type
products. And theres also merchandise and consumer electronic type products in there as well.
<Q Mark Argento Craig-Hallum Capital Group LLC>: Got you. Okay, thats helpful. And
then you guys, you expect to have it up and running by the end of the year?
<A Michael Willoughby President & Chief Information Officer>: Before Christmas.
<Q Mark Argento Craig-Hallum Capital Group LLC>: Got you, okay. And will they let you
to hopefully announce the client at that time? Or...
<A Michael Willoughby President & Chief Information Officer>: We expect to be able to
announce the client at or after the launch.
<Q Mark Argento Craig-Hallum Capital Group LLC>: Got you, okay. Mark, when you talk
about, I mean, you guys are cool, is it just a massive pipeline of business here, and you talked
about gearing up to be able to handle that business. When youre talking about incremental spend,
are you is it hiring people to call center people, operations people, what maybe you could kind
of, high level bucket out the spend a little better or help us think about that?
<A Mark Layton Chairman & Chief Executive Officer>: Okay well, it is a combination of
people and then capital investments in other existing infrastructure to expand it or new
capabilities that we have. So specifically, technology developers for example that area has grown
pretty significantly over the last year. And we have a period of time during their ramp-up period
as we train them on the technology backbone that we use that they are not necessary assigned to a
client. So that results in a, increase in SG&A during that period of time that we would then expect
will move in the cost of goods as new client programs are implemented with those people working on
Thats a similar scenario for account managers that manage our client relationships. Weve seen a
significant head count increase in that area as well, again there is a training period thats
involved with that. Particularly our entry level account manager are primarily new college
graduates. So our recruit program and the runway run up time period if you will for their training
is included in SG&A during that period of time until they are assigned specifically to a client
area and then they will show in our cost of goods. So, what youre seeing is a people component
running through SG&A that we expect over time will move to cost of goods and be associated with new
revenue that we would make in that area. So, thats the people front.
On the infrastructure side of things in here weve made some pretty significant investments in
terms of our mobile pick cart technology in our facilities in Memphis. The pick cart technology is
a very highly productive picking method for many of our clients and with the growth that weve
experienced with clients like Carters and a number of the others, the pick cart technology has
grown significantly in that area so weve made significant investments there. Weve talked about
the food grade facility already that we added earlier this year so thats some of the
And then we just have facility expansion needs so, for example, our call center agents will grow
substantially. We have a smaller period of time where they are in SG&A but theyve become
productive much more quickly in our environment that were ramping up infrastructure requirements
to support the seat needs for the new clients that Mike described as well a pretty significant
fourth quarter peak that we expect at this point.
So that is square footage, furniture, telecom equipment I mean PCs and so on and so forth in that
area that from an infrastructure needs and again a lot of that will end up in cost of goods as the
revenue comes from there. So you see a bit of a ballooning in the SG&A component that will move