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Hanger Orthopedic Group Inc. Q2 2010 Earnings Call Transcript

We continue to do a credible job of managing expenses. Personal costs were below budgeted amounts. Operating expenses were below budget across the board and in some cases below the prior year. We could not continue this trend without the commitment of all our employees and we commend them for their efforts.

As discussed in our Q1 call, we are in the process of moving the corporate headquarters from Bethesda, Maryland to Austin, Texas. In this quarter, we incurred $4.2 million, principally comprised of either employee severance or a move expenses for the employees who are reallocating. These expenses are non-incurring and are shown on a separate line in our income statement. I’ll talk more about the move in a couple of minutes.

Our D&A increased by $600,000 which is commensurate with the capital expenditures over the last 12 months. Our interest approximated the prior years, there was no significant change in variable interest rates. Our tax rate of 37.5% benefited from approximately $300,000 in one-time release of FIN 48 reserve. So we did have a benefit there of $0.01.

We anticipate our full-year rate will be in the 39.5% to 40% range for the remainder of the year. All the factors I’ve just discussed led to the 19.4% increase in pro forma EPS for the quarter.

Moving onto the first six months, our overall performance from the first half is in line with our expectations in terms of sales and profits. Operating leverage improved slightly more than we expected and we’re pretty pleased with that.

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