Peter Frechette - Chairman of the Board Steve Armstrong - EVP, CFO

Robert Willoughby - Banc of America Securities Jeff Johnson - Robert Baird Larry Marsh - Lehman Brothers David Veal - Morgan Stanley Jeff Johnson - Robert Baird Mike Minchak - JPMorgan

Welcome to the Patterson Companies, fourth quarter 2008 Earnings Call. (Operator Instructions) Now, I'd like to turn the conference over to Mr. Peter Frechette, Chairman of the Board. Please go ahead.

Good morning, and thanks for participating in our fourth quarter conference call. I'm filling in for Jim Wiltz who, as so we stated in this morning's release, has undergone some surgery. Jim will be on a limited schedule for next four to six weeks and during that time, I'll be assisting him. Joining me today is Steve Armstrong, our Executive Vice President and Chief Financial Officer, and we’ll be pleased to take your questions at the conclusion of our remarks. Since regulation FD prohibits us from providing investors with any earnings guidance, unless we release that information simultaneously. We’ve included financial guidance for the first quarter of fiscal 2009 in our press release earlier today. We have also provided guidance for the full fiscal year. Our guidance is subject to a number of risks and uncertainties that could cause Patterson’s actual results to vary from our forecast. These risks and uncertainties are discussed in detail in our Annual Report on Form 10-K, and our other SEC filings and we urge you to review this material. Turning now to our fourth quarter results. Consolidated sales rose 5% to $778.4 million, net income of $63.2 million or $0.51 per diluted share increased 6% from $59.9 million or $0.44 per diluted share in the fourth quarter of fiscal 2007. For the full year fiscal 2008, consolidated sales increased 7% to $3 billion, from $2.8 billion in fiscal 2007. Net income of $224.9 million or $1.69 per diluted share was up 8% from the $208.3 million or $1.51 in fiscal 2007. Turning now to discussion of our business units. Patterson Dental recorded a generally solid quarter. Sales of consumable supplies increased 5% in the fourth quarter. We believe this reflects the continued strength of the North American dental market. In addition, sales of basic dental equipment, excluding digital x-ray products, were up 6% for the quarter. We are particularly encouraged by the strong 14% year-over-year sales growth of the CEREC line. This performance followed the 10% year-over-year increase reported in the third quarter of this year. We are generating growing momentum in CEREC systems sales, reflecting the positive impact of the new software and crown milling chamber introduced in the fourth quarter of 2007. The new software and milling unit have taken CEREC's ease of use and performance to a new level. We believe this is drawing considerable attention in the marketplace. We believe the sales progress generated during the second half of fiscal 2008 for our CEREC line should continue in the new fiscal year. Sales of digital x-ray systems were below forecasted levels. This shortfall also affected sales of related chair-side software and computer hardware, as a digital sensor sale will in many cases include the installation of a database and compute hardware. While it's true that digital x-ray sales benefited from a special promotion in last year's fourth quarter, and from a more limited promotion in this year's third quarter, we are nonetheless disappointed by this quarter's performance. Digital radiography continues to be a high demand with dentists. We've positioned Patterson as the leader in providing the practitioner with a complete digital x-ray solution, including the market leading Schick product line, and the full capabilities of the Patterson technology center for designing, installing, training and supporting the customer. We believe this area of our equipment business should return to higher rates of growth in fiscal 2009. We will be announcing several enchantments to our programs over the coming weeks that will further differentiate Patterson as the leader in digital radiography. Turning now to Webster, sales of our veterinary supply unit increased 9% in the fourth quarter to a $119.5 million. Webster's consumable supply business continued to perform well during this period, growing at more than 12% year-over-year. Our previously announced strategic decision to provide more choices for our customer, in several key product categories, including vaccines, flea and tick and heartworm is progressing on schedule. Sales of veterinary equipment and IntraVet practice management software were below planned level for this period. The short term result of efforts to restructure, refine and further expand this relatively new aspect of Webster's business. We believe equipment and software sales will benefit from these initiatives going forward in fiscal 2009. Patterson Medical, our rehabilitation supply and equipment unit posted fourth quarter sales growth of 11% to $96.8 million. Excluding, the impact of acquisitions earlier in the year related to this unit's branch office strategy, and foreign currency translation, fourth quarter sales of Patterson Medical rose to solid 7%. During fiscal 2008, Patterson Medical acquired or internally started 12 branch offices, as part of its initiative to expand and strengthen its value added business model. Patterson Medical also, is starting to realize the benefits from its acquisition last November of PTOS Software, the industry leading practice management software for physical therapist. Patterson Medical has made significant progress over the past year at strengthening its operations and market position. We believe this unit is increasingly well positioned to realize its full potential in the global rehabilitation market. Each of our three businesses is currently implementing sales and marketing strategies designed to accelerate Patterson's growth and profitability. At our dental division we will be deploying over the next several weeks new strategies to boaster sales of digital x-ray systems. In addition, equipment sales at each of our business unit should benefit over the near-term from tax incentives contained in the administrations' economic stimulus package. At the same time we believe our CEREC line will generate added momentum in the fiscal 2009. Webster Veterinary’s focus on restructuring and expanding its equipment business will lead to additional market penetration, and Patterson Medical is pushing ahead with plans to strengthen and expand its value added business platform. All of these factors make us believe fiscal 2009 should be a year of improved operating performance for Patterson. Before reviewing our guidance for fiscal 2009, I want to review the rationale for the stock repurchases that we undertook this past fiscal year, as well as, the debt issuance that was used to fund some of this activity. During fiscal 2008, we repurchased approximately 18 million shares under our previously announced 25 million share repurchase authorization. In the fourth quarter we closed on $525 million of long-term debt financing. I want to make it clear that our strategies with regard to capital deployment have not changed. Investing in our three businesses is our first priority. Our future growth will continue to require capital, and there continue to be investment opportunities, as exemplified by the fourth quarter acquisitions of Leventhal in the dental market and Associated Medical in the veterinary market. However, during fiscal 2008, we executed a series of transactions that accomplished several things for us. First, we were able to take advantage of excellent pricing in the dent markets to secure a more economical capital, which lowered our weighted average cost of capital by about a 100 basis points. Second, through our buybacks, we returned $630 million to our shareholders, and coupled with a $105 million that we used to increase the investment in our employee stock ownership plan during fiscal 2007. We have effectively returned almost $0.75 billion over the past two years. Third, we positioned Patterson to increase the returns to current shareholders. Fourth, we've maintained our financial flexibility to take advantage of additional investment opportunities. Patterson will continue to generate strong cash flow from operations over the next several years. If we are unable to complete prudently priced acquisition opportunities, it would be our intention to return excess cash to our shareholders through open market purchases or possibly a dividend strategy. Turning now to our guidance for fiscal 2009, we are forecasting earnings of $0.38 to $0.40 per diluted share for the first quarter, ending July 26th, 2008. For the full year, we are forecasting earnings of $1.94 to $1.98 per diluted share. Our goal is to position Patterson for achieving financial results more consistent with our historic metrics. We believe fiscal 2009 should mark a solid step in that direction. Thank you. Now, I'd like to turn the conference call over to Steve Armstrong, who will review some highlights from our fourth quarter results. Steve?

Thank you, Pete. Beginning with gross margins, our fourth quarter consolidated gross margin declined 10 basis points, due to a pricing adjustment from the sponsors of the commercial paper conduit that we used as a source of funding for a majority of our customer financing. As many of you know, when we self-finance contracts received from customers, the gain from the sales is a component of our other revenue category. The adjustment from the conduit had the effect of retroactively repricing portfolio of contracts, previously sold to the conduits, which cost us $2 million in the quarter. Going forward, we have already observed the impact of the change on the existing portfolio and the affect on our operating results will be far less dramatic because it will only apply to new business. We also have the option of passing the rate increase on to the customer. As we mentioned during the third quarter conference call, we did lower our local pricing in Canada, as a result of the continued strength of the Canadian dollar. This action had an adverse impact on the dental segment gross margin this quarter as well. Despite the Canadian price change, dental gross margin were at level, comparable to historic norms, and were in line with our expectations. Gross margins increased 110 basis points in the veterinary segment, and 70 basis points in the rehabilitation segment. This was the result of rebates in product mix in the veterinary business, and better pricing and great management at the Medical unit. Our consolidated operating expenses ratio improved by 10 basis points for the quarter, as other efficiencies gained throughout the expense structure were diminished as the Medical segment absorbed the increased infrastructure cost from its branch expansions. For the quarter, operating margins by segment were, 13.9% in dental, 14.9% in Medical, and 7.5% in veterinary. Earlier Pete discussed the rationale for the share repurchase and the debt insurance that we undertook in the third quarter and fourth quarters. The full impact of this series of transactions is expected to provide approximately $0.08 of accretion to our earnings per share, compared to our results had we not done the transactions. Since the transactions did have a nominal impact on the third and fourth quarters of fiscal 2008, we estimate the incremental impact on fiscal 2009 earnings per share will be $0.06 to $0.07. In reviewing our cash flow, we generated $95 million from operations in the fourth quarter, compared to $127 million in the prior year. The prior year cash flow was favorably impacted by the sale of $45 million of finance contracts that had been issued earlier in that fiscal year. Our CapEx for fiscal 2008 was about $6 million more than we had projected, primarily due to the successful resolution of a dispute over a purchase option on our distribution center in Kent, Washington, and the uncertainty of when that issue would be resolved. For fiscal 2009, our CapEx and our depreciation and amortization should both approximate $25 million. Turning to our balance sheet; inventories, when compared to the prior year, reflect the fact that in our veterinary unit, we are now distributing two brands of flea and tick products. This necessitates we carry inventory for these brands. Previously we were selling a different brand of flea and tick, under an agency agreement that did not require us to handle inventory. In dental, we now have an inventory of the XL milling chambers for the CEREC product. Our accounts receivable DSO stood at 43 days versus 44 in the prior year. As noted earlier, we issued $525 million of long term debt in the quarter with maturities of 5, 7 and 10 years. At closing, the weighted average interest rate of this debt, $450 million of which is fixed rate, was approximately 5.1%. As a reminder, we will pay off $130 million of previously outstanding debt when it matures this November. With that, I'll turn it back to Paddy, who will poll you for your questions. Paddy?

(Operator Instructions). Our first question comes from the line of Robert Willoughby from Banc of America Securities. Please go ahead. Robert Willoughby - Banc of America Securities: Hi. Good morning. Pete, Steve. I am always kind of surprised. I mean if you're the leader in digital imaging, I mean how do you get caught kind of flat-footed with such a disappointing imaging number? I mean do you not see this into a quarter here, pull the religion offices and get a better sense as to what the trends are and can you not make some corrective action on that front, particularly for this kind of product line?

Bob, I think you're absolutely correct in terms of sense of disappointment vis-à-vis those numbers. We continue to believe that that market is growing at a 15% to 20% range. We clearly, in the fourth quarter lost market share. We are in the process and will be over the next several weeks implementing programs to take care of that or to reenergize those sales. And I think that from the perspective of the competitive aspect, Robert, I am hesitant to go any further than that, but we continue to believe that we've got an excellent relationship with Sirona. We think we've got the best product line and the best support in terms of that product line. And quite frankly, share your disappointment and we will get that rascal back to where it needs to be in terms of our equipment growth of the goals. Robert Willoughby - Banc of America Securities: Well, I guess, Pete, this has been the problem over the years whenever there has been a somewhat disappointing equipment number. Is it your branch manager who tells you, hey, sales are fine? And then at the end of the quarter he says, guess what, kind of missed my plan. Isn't this more of a problem of the decentralized business model or is it just, hey, we dropped the ball operationally here on one thing.

I think execution is an issue. But I'll be quite frank with you Bob; equipment sales aren't consistent in any sense as it relates to our consumable track. Robert Willoughby - Banc of America Securities: Sure.

And the reality is there're vary fairly dramatically in any given month or any given quarter. So from the perspective of identifying the problem, quite frankly, it occurs sometimes in the last quarter of the month -- last month of the quarter, I'm sorry. Robert Willoughby - Banc of America Securities: And Steve just a question on the guidance here, can you give any granularity maybe in and around revenues. I mean, what have you factored in for a potentially disappointing consumer spend on dental services or a dentist investment on equipment? Have you tempered your topline expectations, the EPS number doesn't honestly tell the entire story.

Yeah. I think, Bob, you're correct. We have been fairly cautious coming out of the box here. Last quarter, if you tracked activity as Pete said on a monthly basis, it sends some indications that we're probably down or from a market perspective. It maybe 1 percentage point from where we had been. But we've also got the issues with the equipment business. We think we've got great opportunities going through 2008 to 2009 -- early 2009 calendar years because of the tax incentive and so forth out there. But we are being a little bit cautious right now. Robert Willoughby - Banc of America Securities: And in terms of the share repurchases that Pete mentioned. Are we unlikely to see anything ahead of the debt reduction that you've got scheduled for this year?

I think the possibility could be late in the summer, early fall. Bob, you could see us in the market again, but we've got the ASR out there and its going to take us probably through the mid-summer months anyway. Robert Willoughby - Banc of America Securities: Okay.

And we're very precluded from staying -- being in the market during that timeframe. Robert Willoughby - Banc of America Securities: And just lastly, you did reference some sort of restructuring on the vet side on equipment in IT. I didn't see those businesses as really large enough to merit any kind of announcement on that front. What specifically are you referring to there?

Essentially, Bob, we're out in the marketplace hiring some people vis-à-vis that whole equipment customer hospital clinic planning aspect of the business. It got a little bit ahead of us frankly and we need to build up some capacity and we expect that to be back to a nice rate of growth for sure. Robert Willoughby - Banc of America Securities: Okay. Thank you.

Thank you. And our next question comes from the line of Jeff Johnson from Robert Baird. Please go ahead. Jeff Johnson - Robert Baird: Thank you. Pete, Steve, Good morning.

Good morning, Jeff.

Good morning, Jeff. Jeff Johnson - Robert Baird: A couple of things here, if I could. Steve, I believe Leventhal was an April 1 acquisition. Do you have kind of an organic number, I guess, on consumables or dental equipment in the quarter?

Same 5%, Pete talked about Leventhal, which had very little impact on the quarter, Jeff. Jeff Johnson - Robert Baird: Okay. Fair enough. And then on Pete, your comments about expecting an operational maybe up-tick here in fiscal '09 across all lines, when I look at vet in medical organically, if my model is right anyway, 12% vet organic growth this year in '08, 8% medical. Those are pretty good numbers already. Were your comments more focused on dental or do you think even those numbers could seen an up-tick in fiscal '09?

Yeah. I think, Jeff that we would be looking for an up-tick across the veterinary and the medical businesses as well. Jeff Johnson - Robert Baird: Okay. And that's a pretty strong statement that, I mean given, again, 12% organic this year. I think, am I right there, Steve, 12% organic this year in that?

Yes. Jeff Johnson - Robert Baird: Okay. Fair enough. And then, Steve, your comments just on holding some MCXL inventory here. I am assuming that's a pretty strong signal, but upgrade at least is part of the original trade-in program, are they now pretty much complete?

Yeah. Jeff, we completed that in the fourth quarter. And so, what my comment was directed to is that a year ago, we didn't essentially have XLs in inventory. And now we've got a working stock of inventory in that product category. Jeff Johnson - Robert Baird: Yeah. Fair. And then, as I look especially at Q1 here, very I think at least favorable or easy comp or are you going to look at it -- on CEREC side, I know you don't provide product line guidance, but in my model the way it's working out anyway, CEREC looks like it could stay a pretty grower in the first couple of quarters and then maybe face some tougher comps in the second half. Is that a fair way of thinking about the gating?

Yeah. I think so, Jeff. And as we've stated now for the last two or three quarters, the CEREC product category seems to be picking up momentum, and we see really that opportunity in front of us and we would expect it to continue. Jeff Johnson - Robert Baird: Yeah. Fair. It reminds me Q1 of last year. There was almost no upgrade and you have that drawdown kind of ahead of the MCXL launch or the issue in getting MCXL out there. So that's the real favorable comp and even in Q2, there wasn't a huge impact from XL, if I remember correctly.

Yeah. I think there was probably more XL delivered in Q2, Jeff. I think in Q2 actually -- about 50% of the volume in Q2 was actually due to upgrades last year. Jeff Johnson - Robert Baird: Yeah. But if I remember, you are having some issues then on the new system sales and in that CEREC was still overall fairly weak in that Q2.

Yeah. Jeff Johnson - Robert Baird: And those would be the two decent quarters here of comps, again, just as I think how I set up my model?

Yeah. No doubt about it. Jeff Johnson - Robert Baird: Yeah, great. Alright. Thanks, guys, that's all I have.

Thank you and our next question comes from the line of John Kreger from William Blair. Please go ahead.

Hi, Good Morning, this is actually (inaudible) in for John today. I have a couple of questions. The first is what signs of slowing, if any, are you seeing in the dental business or the vet business as the result of the economy?

I think John, we aren't at this point seeing any real signs in the vet business. I think from the point of view of the dental business, if we're seeing anything, what we're seeing is not a reduction in patient visits to the dental office, but maybe a postponement of the more expensive elective kind of procedures on the part of the customer or the patient who obviously is still doing the preventive things et cetera. But we need to be very careful here that in our view, three months doesn't set a trend and we'll attempt to gain greater insight into a [net board] and say at the end of the next quarter.

Great. That's helpful. And just a, it's a follow-up on that. In your opinion, in your customer base on the dental side, what percentage of their business is being driven by discretionary procedures or those high end procedures that you referenced?

I think that's a tough one for us to answer from the point of view of what is discretionary of vis-à-vis the patient. The reality is, its going to vary by practice because clearly cosmetic procedures et cetera, et cetera are discretionary on the part of the patient.

Sure.

So I would be hesitant to try and give you a number that represents the total market, but there is a substantial amount of dental procedures which are discretionary.

Okay. Thank you.

Thanks [Robbie].

Thank you. And our next question comes from the line of Larry Marsh from Lehman Brothers. Please go ahead. Larry Marsh - Lehman Brothers: Thanks and good morning Pete and Steve. I hope Jim is back to fighting spirit very soon. Wanted to drill down on two main things. First of all Steve, could you elaborate a little bit on the conduit structure, was the change in terms retrospectively or retroactively a surprised you in the quarter, or did you come into the fourth quarter knowing you would get a rate reset? And remind us again what the opportunity is for you to pass on to your customers?

Okay. You are touching on a very sour subject here Larry. We got notified very late in the quarter, after starting enquiries really around the holidays, as far as what we could expect for both availability and pricing. I’m trying to be as objective as possible, I’m sure the banks were having a tough time gauging the markets and understanding what the pricing was going to be, but that pricing adjustment did come in quietly. We had no inkling of it when we gave you our fourth quarter guidance at the end of the third quarter. As I said, it's really the way it's priced. The mechanics, the terms of the agreement did not change. It was strictly a pricing amendment for us. So, it just changed the spreads by about 70 basis points to 80 basis points over what we had been paying. We will probably pass some of it onto the customer. Whether we pass it all on to the customer will depend upon, obviously, what's taking in the markets at that time. I would tell you, and I think it’s a very encouraging sign going forward, that the dental debt markets are very competitive right now, which is good for the dentist, because they have obviously got access to capital, should they decide to take advantage of ours, if we can convince them to take advantage of the stimulus package they should have no problem financing it in a at a very competitive rate. So, even though we got a little bit blindsided Larry, well I'll try to convey that maybe we did a poor job it. It's pretty much behind us. It won't have much of an impact going forward. Larry Marsh - Lehman Brothers: So, really $2 million pretax was something, clearly you didn't expect even sort of midway through the quarter?

We found out within a week of the end of the quarter. Larry Marsh - Lehman Brothers: It's a little counterintuitive then when you say, that dental debt markets are very competitive. Is that a case of capital seeking? Is it the safest outlet, because of some of the collateral benefits of the dental market? And when you say competitive, you mean rates are staying the same, and in some cases the rising rate environment is around certain markets, or is it coming down?

Well, the dentist is a very attractive customer for the banks and other financing institutions today. It's a statement of how well the dental industry is doing. They are generating very strong cash flow out of their practices. And so, they are considered a very good credit risk. A fairly stable market, as far as the dental market is concerned. So the banks would rather have those types of customers, they get a pretty decent spread on their money, maybe better than a high investment grade type customer might get. And so, they're seeking out those types of customers right now to bolster their portfolios. Larry Marsh - Lehman Brothers: So, how would you quote a rate, what's the current rate if you will in that market?

Ours is running about 8.5% to 9% right now, Larry. So, I would characterize it as 1 to 2 points over prime would be a very completive rate for a dentist. Larry Marsh - Lehman Brothers: Okay. Second quick thing, the stimulus, can you remind us, again, what if anything is incremental this calendar year around tax benefits to your customer? And again, what could be happening as you sort of intent your sales force to go out and capture that, you know this year versus say the last several years.

Yeah, well, we put the marketing materials out several months ago now basically explaining the opportunities to the customer. What happened with the stimulus package, without going into excruciating detail is that Section 179, first year write-off was increased from basically $125,000 up to $200,000 for calendar 2008 investments. In addition, another code section, Sub0-Ssection, 168 was reinstituted, where there is bonus depreciation opportunity. So from $200,000 to $800,000, the customer, they can take the write-off on the first $200,000 and then from $200,000 to $800,000 they can basically get 50% depreciation on that increment of investment. And then if they spend above $800,000 they would actually have their regular deprecation rate on the remainder for the first year. So effectively you can right off almost 60% of an investment for tax purposes in the first year. Larry Marsh - Lehman Brothers: So, even though the typical capital spending is not going to be in that sort of multiple $100 to $1000 range, you would think that this should be an incremental positive catalyst to your business?

Well, definitely, because what you're trying to do and where the benefit is, is not only to that customer that may buy a CEREC or may buy a 3D digital Pan product of some type, which are -- ticket price is over a $100,000. Larry Marsh - Lehman Brothers: Yeah.

So they get to write that off immediately. For those dentists who have wanted to do an entire upgrade to their practices, those investments could run anywhere from $250,000 to a $1 million. But what you're trying to do is convince those customers, that this is a great time to do it because if they make the investment, they actually put money into their bank account in year one, even though they may have spent several $100,000 in the process. Larry Marsh - Lehman Brothers: Okay. And then just one quick clarification and I'll jump off then. The digital imaging category, for you guys, you said X digital imaging revenues to be up 7% for equipment. What's your rough ballpark of revenue run rate in that category -- just ballpark?

In the non-digital category? Larry Marsh - Lehman Brothers: No in the digital category.

I don't know whether we've ever made that public, and I think I would prefer not to, Larry. Larry Marsh - Lehman Brothers: Okay. And then finally, just a quick comment, Pete. Obviously, you are still the Chairman, now sort of stepping in with Jim. Just a final clarification, you stayed close with business and not as close obviously not as CEO, and I know you've been in a role of, sort of, filling in for Jim and several times over the last several years. So just, sort of, enunciation of your involvement with the company and Jim's -- the next two to three years, you're going to stay status quo for you both, or is that yet to be determined?

Well, I think we're still working through the succession process, Larry. And I think, from that point of view, the next two to three years is probably yet to be determined. Larry Marsh - Lehman Brothers: Okay. Very good. Thank you.

(Operator Instructions). And our next question comes from the line of David Veal from Morgan Stanley. Please go ahead. David Veal - Morgan Stanley: Pete, I'll ask Larry's question a little bit more pointedly. A couple of years ago at one of your Investor Days, you said, Buck, if we can't get the stock price up, we'll find somebody in the executive suite that will. I mean how much more patience do you have on that front?

Well, I'm not sure it's an issue of patience and I'm not sure the direct question that you are asking, but clearly, we're still working through the transition thing. We think we're doing that reasonably well. And we think from the perspective of company performance this time, it really in my mind is a revenue growth issue. And we're reasonably comfortable. We can get that headed in the right direction. David Veal - Morgan Stanley: Okay. Great. Thank you.

Thanks, David.

Thank you. And our next question comes from the line of Jeff Johnson from Robert Baird. Please Jeff Johnson - Robert Baird: Thanks. Just three quick follow-ups here, if I could, guys. Steve, tax rate, did you address why it was down maybe 150 basis points in the quarter. And then, what should we be thinking about for fiscal '09? And also clarify, I think the comments I heard from you last week at your conference, suggested maybe that an additional MCXL trade-in program here is probably unlikely at least in the near term. And then Pete, if I could go back to your point on the industry-wide exposure to consumer discretionary type dental consumable products, how would you quantify, maybe, Patterson's exposure there? What percentage of your business do you see, maybe, tooth whitening, crown and bridge, some of the higher end, restored type products, things like that?

Yeah. I think some of that, Jeff, but really the only probably, kind of quantitative piece of information that we have, presenting at this point in time is subjective. If you go back to the 1991 recession, the number said that the dental market was down about 1%. And I think, at this particular point in time, if we had to guess, that would be the guess and we would kind of plug market growth at this point in time in the 4% to 6% kind of range. We still, obviously, are in a nice growing market and would not expect that to change certainly over the near term. Jeff Johnson - Robert Baird: Alright. And Steve, what's with the tax rate in trade-in program?

With regard to the tax rate, I think if you look at that little table at the end of the P&L, you see that there was some volatility in the fourth quarter in the rate. If you go back and look at third quarter, it went back the other way to be where it can, with you it drives me nuts, but if you look at the annual rates it's 37.1 versus high 36 as at last year. As far as guidance going forward, I would guide you to the low 37. But from a quarter-to-quarter basis, the way the accounts want you to imply the standards today, your rate is going to bounce back and forth and it's frustrating and all deck out. Jeff Johnson - Robert Baird: Now, I understood. And I'm assuming that either it was just the year end true-up or something there, but 37% for next year is fair. Okay. And then the trade-in?

The trade-in, I don't want to commit to anything, Jeff. And I didn't intend to guide anybody in that direction. I just said that the opportunity is that we've still got 80% of the original CEREC customers that have MCs that did not upgrade. That really to us is just fertile ground, if you will, but our real challenge and our real opportunity is to sell more customers on the CAD/CAM CEREC technology. And that's where we are focused. Jeff Johnson - Robert Baird: Alright. That makes sense. Thanks for the clarifications, Steve.

Okay.

Thank you. And our next question comes from the line of Lisa Gill. Please go ahead. Mike Minchak - JPMorgan: Thanks. It's actually Mike Minchak in for Lisa. So, following the Leventhal and Associated Medical acquisitions last month, can you comment on the acquisitions environment and maybe in terms of the number of opportunities you're seeing out there in your three markets and valuations?

There are continuing opportunities Mike.

Yeah. We're always looking at things Mike, and we do have activity going on in all three of the markets, and that's as much as I'll say about it. Mike Minchak - JPMorgan: Great. And then, just maybe a question on fuel costs with oil at record highs here. I am just wondering, what sort of impact has been the most recent quarter, and sort of the sensitivity to the outlook going forward?

We do most of our ground delivery as you may know through UPS, and we also use another common carrier. We are in the process of finalizing contracts negotiations with that carrier for the next several years and what the rates would be. I will tell you that we were under a cap on the previous contracts, so we were somewhat insulated from the impact. The last word I had is that freight and the rates that are being proposed right now will not be a substantial increase for us. It will be an increase and we'll have to manage around it, but it won't be anything that's going to be particularly devastating to the P&L in anyway. Mike Minchak - JPMorgan: And would you be able to pass them with your long tier customer or is that that--?

We certainly would, yes. But that's going to take some time to get done as well. Mike Minchak - JPMorgan: Great. Thanks for the comment.

You're welcome.

Thank you.

Thank you. And our next question is a follow-up from Larry Marsh from Lehman Brothers. Please go ahead. Larry Marsh - Lehman Brothers: Okay. Hi, thank you. The number of sales reps in the dental category this quarter, Steve, do you have that number?

Yeah. Hang on, Larry. I'll get that for you. I think we were up about 4%. For the year, we are at 1,599 in total. Larry Marsh - Lehman Brothers: Okay. And in the past, your goal was always to kind of expand that 4% to 5% a year, is that still a thought process?

Still a target and still where we are. Larry Marsh - Lehman Brothers: Okay. And then just back to X-Ray, just one last thing, where you talk about new initiatives, is this will be something that you would hope to announce and roll out in the first quarter or later this year?

No. We'll be announcing this within the first quarter Larry and should be able to give you an update on that in our next conference call. Larry Marsh - Lehman Brothers: Very good. Okay. Thank you.

Thank you. And I am showing that we have no further questions at this time. Please continue with any closing remarks that you might have.

Thank you for joining our call this morning. We appreciate the continuing support and look forward to following up with you at the end of the first fiscal in our 2009 year. Thank you.

Ladies and gentleman, that does conclude our conference for today. Thank you for your participation. You may now disconnect.