Richard Cleys - Vice President of Finance and Chief Financial Officer Michael Baur - Chief Executive Officer Scott Benbenek - President of Worldwide Operations

Reik Read - Robert Baird Jeff Rosenberg - William Blair Ajit Pai - Thomas Weisel Chris Quilty - Raymond James

I would like to thank all participants’ for holding and welcome you to the ScanSource Quarterly Earnings Conference Call. (Operator Instructions). I would now like to turn the call over to Mr. Rich Cleys.

Thank you, Brian, and thank you for joining us for the ScanSource conference call to discuss financial results for the quarter ended December 31, 2007. My name is Rich Cleys, Chief Financial Officer of ScanSource, and with me is Scott Benbenek, President of Worldwide Operations and Mike Baur, Chief Executive Officer. We will review with you the quarter’s operating results and then take your questions. This conference call contains certain comments which are forward-looking statements that involve risk and uncertainties. These statements are subject to the Safe Harbor created by the Private Securities Litigation Reform Act of 1995. Any number of important factors could cause actual results to differ materially from the anticipated results. For more information concerning the factors that could cause such a difference, see the company’s Annual Report on Form 10-K for the year ended June 30, 2007, filed with the Securities and Exchange Commission. I will start our discussion by providing overall sales and operating results. The company posted sales of $553.3 million for the quarter ended December 31, 2007, an increase of 17% of sales of $473.7 million for the same quarter last year. Measuring sales based upon our product groups shows year-over-year growth of 20% in AIDC and point of sale, along with an 11% year-over-year increase in Communications products for the quarter ended December 31, 2007. That produced a 65:35 mix of AIDC/POS versus Communications products. Gross margin was 10.7% for the December 2007 quarter, compared to 11.1% for the same period last year. This quarter’s margin of 10.7% was favorably impacted as we took advantage of several one-time vendor programs, as well as stronger than anticipated achievement of recurring vendor incentive programs. Adjusted for the two issues we have just discussed, a more normalized margin would be 10.3%. Operating expenses were $33.7 million or 6.1% of sales, compared to 7.8% for the prior year. Included in this year’s expense were special committee expenses of $468,000 related to the company’s stock option review. In addition, we had one-time warehouse costs of approximately $400,000 due to the relocation of our North American distribution facility to Southaven, Mississippi. The company’s bad debt expense was approximately $900,000 less than planned, due to improved aging and collections. In addition, the company had $500,000 in recoveries of receivables previously written off. Overall, the company’s bad debt reserve increased $700,000 from the prior quarter reserve total. Operating income for the December 2007 quarter increased 60% to $25.4 million. Without costs related to the special committee, the increase was 63%. Operating income as a percent of sales without costs related to the special committee was 4.7%, which is improved over the prior year quarter results dated on the same basis of 4.4%. Net interest expense was $870,000, compared to $1.6 million for the prior year quarter. Interest is improved from prior quarters on lower debt primarily due to increased accounts payable. Overall, our DSO, inventory days, and payable days improved by 13 days from last quarter end to this quarter end. To a lesser extent, interest expense was also lower due to improved borrowing rates. The tax rate for December 2007 quarter was 37.7%, compared with the prior year quarter of 39%. Net income for the December 2007 quarter increased to $15.5 million, or 2.7% of sales compared to the prior quarter of $8.8 million, which was 1.9% of sales. Excluding special committee costs, non-GAAP net income was 2.8% of sales, compared to 2.5% of sales for the same period last year. We were very pleased with our return on invested capital this quarter of 25%. When adjusted to exclude special committee costs, the ROIC result is 26% for the second quarter. Balance sheet metrics and cash management were as follows: inventory turns were 6.3 times at the end of December 2007, down slightly from the 6.5 turns posted in December 2006 quarter, and 7.0 turns for the September 2007 quarter. The number of days in receivables – DSO – was 57 days at December 31, 2007, compared to 60 days posted in December 2006. This reflects collection improvement in all operations and a favorable change in business unit sales mix. Paid-for inventory days were a negative 1.7 days for the December 2007 quarter, and a negative 2.5 days for the end of December 2006. At September 2007, our paid-for inventory days were a positive 7.2 days. As a reminder, we manage our business units and their vendor relationships based upon return on invested capital. Therefore, we may accept higher costs for inventory if we have sufficient improvement by way of lower balance sheet investment for a particular vendor. We have recently agreed to reduce our net balance sheet investment with a major vendor due to better payment terms, partially offset with higher inventory levels and higher pricing. In addition, as we have stated in the past, the paid-for inventory days metric can be temporarily lower or higher, due to the normal timing as to when the last day of a quarter falls, relative to the bi-monthly payments we make to vendors. Timing had a significant impact on payables days, as checks presented but not cleared – which are included as accounts payable – increased to $72 million compared to $15 million in September. The September amount was unusually low, and the December amount was higher than past periods. Our interest-bearing debt was $51 million at December 31, 2007, compared to $78 million at December 31, 2006. At September 30, 2007, our interest-bearing debt was $149 million. Mike will now give you an update on our business.

Thanks, Rich. December quarter turned out to be an outstanding quarter and record setting across most of our business units and geographies. This quarter has generally been difficult to forecast over the years, and this year proved no different. Our overall business continues to be strong, due to solid and consistent execution by ScanSource employees worldwide. Our excellent relationships with vendors and resellers, coupled with operational excellence, allowed the company to gain market share even in a tougher economic environment. ScanSource is the clear leader in almost every market and invests in programs and services to help our vendors and resellers create demand and streamline the supply chain. An example is our IMPACT NOW event that was held in Orlando on November 12 and 13 of 2007. Over 800 attendees were on hand to learn from sales and marketing experts on how to improve their businesses and increase their opportunities for success. Jack Welch, the former General Electric CEO, hosted a question and answer session with our top customers to offer his perspectives on growing and managing a business. IMPACT NOW will become an annual event, where every ScanSource business unit exhibits the latest technology and showcases best practices in running a successful technology business. The new North American distribution center in Southaven, Mississippi opened during the quarter and provides additional capacity for growth. By the end of December, we had successfully completed the relocation from Memphis and had begun shipping all products with very minimal disruption to customers and vendors. Now, I will comment on each of our reporting segments. North American distribution includes sales in the United States and Canada and had excellent growth of 13.1% for the December quarter on a year-over-year basis. Our North American discussion will start with POS and Barcodes. We had a record quarter in the ScanSource POS and Barcoding unit, with double-digit year-over-year growth and strong sequential growth. We gained market shares. We benefited from better inventory availability than our competition and higher levels of customer service. In addition, we obtained business from certain resellers who were previously buying direct from the manufacturers. These resellers prefer our combination of value-added services, over the services offered by manufacturers, including: better fill rates on orders, systems integration services, web ordering and overall better customer service. We expect this type of channel shift to continue throughout 2008. We’ve also benefited from increased share of wallet with resellers who are purchasing from our competitors. As we referenced in the last conference call, we’ve added more sales reps during 2007 and are seeing the impact of their ability to service more customers. Sales were strong across all product categories and most vertical markets. We continue to see weakness in retail and hospitality but are seeing growth in new markets like healthcare and banking, where we had several large deals in the quarter. Several of our vendors have invested significant resources in developing the healthcare and banking market and are starting to reap benefits. We will next discuss our Catalyst Telecom unit. Catalyst had a difficult December quarter, after a very strong September quarter. The sequential decline in revenue was not as big as last year but was more than we projected. As a reminder, the September quarter is seasonally strong, due to Avaya’s fiscal year end sales push. This quarter was weaker than expected due to Avaya reseller program changes. We expect Avaya to resolve these issues and hope to see improvement during the March quarter. Catalyst has continued to execute very well with Juniper and saw significant growth year-over-year and quarter-over-quarter, as we gained market share due to better inventory fill rates and a focused sales effort. Meru, Adtran and SpectraLink also had good growth quarters. Next I will discuss ScanSource Communications. ScanSource Communications include results from two business units – Paracon and T2 Supply – that were combined during the December quarter. ScanSource Communications will benefit from increased sales and technical support capacity, and all products will be offered to the combined customer base. We plan to add more head count to this business unit and more marketing resources to take advantage of the larger opportunity we see ahead in 2008. For the December quarter, this team posted record results by taking advantage of Polycom and Dialogic’s successes and taking market share from competition. We also had an excellent quarter with Plantronics and AudioCodes. Over the next few quarters, ScanSource Communications will be rolling out a series of marketing programs designed to recruit and educate resellers on the opportunities available in voice, video, and networking. We will now update you on our third technology area, ScanSource Security. The Security business unit had another strong quarter, as we continued to add new customers and gain market share. Our business model of not competing with our customers or vendors, complimented by our large inventory and same-day shipping, is being well received by customers and vendors, with an excellent growth of Panasonic, Fargo, Alvarion, Axis, and Sony. Our customer base of security dealers continues to grow, as we benefit from our sales and marketing efforts. We plan to continue our investments in IT education and training by hosting more IP and wireless workshops throughout the United States. We are adding additional vendors to the workshops to compliment the content and increase the return on investment for our resellers. Our second reporting segment is International Distribution. International Distribution, which includes the geographies of Europe, Latin America and Mexico, posted record sales of $108.4 million, a growth rate of 35%. When measured on a local currency basis, our International business grew by 23%. ScanSource Europe POS and Barcoding had a record quarter in December, led by record results in France, Germany, Spain, Italy, and the Nordics. Our POS and barcoding vendors showed excellent growth year-over-year and quarter-over-quarter. We continue to achieve above average industry growth, due to more customers choosing ScanSource Europe. Our excellent inventory fill rates, complemented by more sales risk added this year, have resulted in increased market share. ScanSource Latin America and Mexico had record results in the December quarter. Our Miami-based export business continued to show strong sales in Central America, Venezuela, Argentina, Columbia, and the Dominican Republic. We added additional sales reps to expand our customer base, and the results are impressive. Our business results were strong across all of our barcoding vendors and most of our POS vendors. In Mexico, we had solid results and have continued to increase and improve our customer base, as we achieve scale and improved profitability. Both Mexico and Miami have higher operating costs than we would like, so we are trying to improve volumes on more profitable vendors and customers. Now, today, we are announcing that the SEC has completed their review of the stock option matter, with no enforcement action. We are glad to put this issue behind us and focus all of our resources on continuing to grow ScanSource. We will conclude this part of the call with our expectations for the March 31, 2008 quarter. We think total revenues for the March quarter could range from $550 million to $570 million and could range from $0.51 to $0.55 per share. At this time, we will be glad to answer your questions.

Our first question comes from Reik Read - Robert Baird. Reik Read - Robert Baird: Mike, you’d touched on this in your remarks, but the status of adding more sales reps in Barcoding. Can you give us a sense for where you are in the hiring process and how much more you had to go? The training process, if there is one? And how those guys are ramping up from a productivity standpoint?

I’ll talk a little bit about that, but don’t want to get too much away to competition. But we recognized about eighteen months ago that we were not spending as much time as we would like to with some of our smaller customers, and some of them actually represented more business than we thought. And so when we brought on a few young, rookie sales people, they generated much better results than we’ve anticipated. So, we’ve spent last year really re-tooling our efforts to focus on these small to medium-sized resellers that are going after the small-to-medium business end users. And I think we will continue to do that. So, we are finding customers that we didn’t realize were as big as they are. We are also finding some really small customers and trying to find efficient ways to handle them. We sell to thousands of customers in the U.S., and we have hundreds of those customers that have dedicated sales reps. But we believe that we can continue to grow our business – even in North America – by continuing to add sales reps on a selective basis. Reik Read - Robert Baird: And then, Rich, you had talked about a change with the vendor program, adding some inventory and other. And I apologize, you talk faster than I could write. Can you just go through exactly what all the mechanics were of that and maybe give us some insight as to why something like that happens?

What happened was we agreed to get extended terms on payables while also agreeing to carry more inventory to improve the fill rates. And there is a slight increase to the pricing of the inventory. But what we do, as we’ve told you in the past, is we look at all of our vendors, we look at all of our business units on a return on invested capital basis. And this was a good business decision for us and for the vendor. Reik Read - Robert Baird: It seems like that would be just part of the general give and take of your business. Is this unusual?

No. It is normal, but because of the impact – it may hit our balance sheet – we thought we would go ahead and talk about it. Reik Read - Robert Baird: Okay. I see. That’s great. And then, give just a quick overview on the Security side of things. You’ve obviously been at this a while, and you have grown that business. Can you talk a little bit about, Mike, the number of vendors that you now have engaged in that area; maybe the number of resellers? And how that reseller recruitment has gone in the past six months? It just seems like you are in a little bit of an acceleration mode, but I am trying to gauge how that might be moving forward.

Okay, I will give a little more color. As a reminder, we started this business unit by moving our card printer business that was in the Barcode business unit over to a separate sales force and separate management team to give us a base of business to start from. So, that’s what’s included in that Security business as we started out with almost all of our business coming from card printer customers and card printer vendors. And then over the last two years, we’ve added quite a few security vendors; I would say more than we typically would have in a business unit. Part of our challenge over the last few years has been finding some key vendors who really were willing to trust distribution, to do a good job of satisfying demand for the channel, but also operating in a mode where, an example would be in typical distribution in the Security business, the distributors don’t have loyalty to vendors, even if the vendors create demand. So one of the things that we’ve had a hallmark in at ScanSource, in all of our business units, is, we don’t switch vendors’ brands. So, if someone calls and wants a Panasonic camera, we are not going to switch that. And that’s unusual. So, we are introducing some unusual concepts to vendors from a distributor relationship standpoint. And so some of them didn’t necessarily believe that we would do that. And I think we are seeing some real support now from some key vendors, like Panasonic, like Axis vendors who are really in the security business. We had strong support from our card printer vendors, but this is really a good sign for us to try to get traction there.

Our next question comes from Jeff Rosenberg - William Blair. Jeff Rosenberg - William Blair: In terms of the things that Reik was talking about on the balance sheet, and then it certainly benefited you this quarter on the interest expense line; is any of that changing? Or should the improvement you saw in interest expense likely carry forward into the March quarter?

I think that the interest expense difference that we had will essentially stay there. We will be investing a little bit in the balance sheet, so you’ll see it creep up some, based on investment in the balance sheet. Jeff Rosenberg - William Blair: Okay. And then, from that perspective, there were a lot of moving pieces on the margin too. You gave us some flavor for a normalized gross margin, but is there anything we also should adjust for? Or could I also ask you outright what you are thinking about in terms of margin, as it relates to some of the bad debt expense and the receivable collection, and how that benefited you this quarter?

With regard to receivables, we obviously had a very good result in terms of forecasting. Given this business environment, we would probably forecast to go back to the normalized expenses that we’ve had in the past, even though our bad debt reserve is higher than what it was in June and higher than last quarter, we would go ahead and forecast, in this business environment, that we’d be back to the normalized bad debt expense. Jeff Rosenberg - William Blair: So we can figure out from there what you are thinking about in terms of operating margin. I assume that the reason that the revenue was not as strong as it might have otherwise be, you said it was Avaya. Can you provide a little bit of detail on these program changes? And just, from a higher level, what you are seeing there in terms of how they are running the company differently as a private company, and how that might put you at risk or help you? What are the factors there? Is it the management team’s focus on how they are going to run the business going forward?

I’m trying not to tell Avaya’s story for them, and I have to reference them only because everyone knows that we have such a big part of our Catalyst business tied up with them. So, I am going to try to be a little bit vague about some of the details. But, just in general, the point is that Avaya, like every manufacturer, has different types of reseller programs, as I call them, that have incentives tied to growth sometimes. Sometimes they are tied to going after certain end user customers or going after certain geographies, and the Avaya management team is looking at all those things, and they did as they entered this year. Their year started October 1 with new ownership, but not really new management. The management is the same, managing the sales team that was same as it was last year. But, some of these program changes are quarterly in nature, and some are yearly in nature. And so as a vendor tries to drive a certain type of behavior in the channel, sometimes the programs they put in place don’t work with the channel. So, sometimes, you put a program in place that you hope will encourage behavior in the short term. But if the program is not attainable, then a reseller says ‘I’m not even going to try for that program. I’ll wait till next quarter.’ And so what we think happened is we might have had more business in the quarter if those programs had been structured differently. But, the reality is, for us, it’s just business we would have gotten sooner. And now, we will get it in the March quarter. So, we think that business has not gone away; it has just been deferred. Jeff Rosenberg - William Blair: And then, from a bigger picture point of view, their efforts to make greater use of the channel to attract resellers, to try to get people who are more effective in the converged environment, what resources are they putting up? How do you feel about your ability to grow the customer base there and what those programs are looking like?

Avaya has been public in that they have had an additional field people to help drive demand. And I think that’s what we have seen, and they just put those resources in place during the December quarter. They probably didn’t have all of them in place until the very end of the quarter. So we’ve been getting benefit from this additional field people that will drive demand through the channel in December. We do think it is the right move; we think it’s a good investment on Avaya’s part. It shows their commitment to channel, and we will see the impact of that over the next couple of quarters. Jeff Rosenberg - William Blair: Okay. And then, you had one of your strongest December quarters in the North American Barcode segment we’ve seen in a long time. If you wanted to weigh the strength in the market at year end, the ability to get new customers who are buying directly and competitive wins, is it pretty equal? Or should we think of any of those drivers as being more important?

I think what we saw was a combination of some vendors that, throughout last year, were starting to make some decisions that would favor two-step distribution. And we saw the impact of that start to really pile up in December, meaning some of these customers who – most people don’t believe it − are still buying direct even after fifteen years of having two-step distribution around. Some of those companies are now buying through distribution, and so we have benefited from that. And we think there is more of that to come. One vendor has publicly announced that during the last quarter; that was Intermec. And they have announced that they are going to drive more business to the channel and that distribution will benefit from that. And so, those are exciting times for us when we see vendors that are willing to do that. And then on top of that, you add the additional sales resources we’ve added that allow us to go after some customers that we may not have spent enough attention with last year, and now we are starting to get some reasonable business from those customers. So that was a big part of the strength this fall and December. We got that business from competitors. Jeff Rosenberg - William Blair: Have you seen any change in the overall tone of business as you make your way into ‘08, with all these concern about the economy? I know, it’s only been not even a month, but how do things look so far?

We had our ScanSource North America sales meeting last weekend, here in Greenville, where we brought in all of our sales reps from around the country. And we had a real exciting group of people. We didn’t have people that were worried about how they are going to make their numbers for this quarter. So the general feeling I got from our sales team is: ‘yes, people are talking about it, but it’s not a big deal for us right now.’ And I think based on what we know, we feel like we are in a good position. That all could change. But we have baked in everything we know about the current economic conditions in our forecast.

Our next question comes from Ajit Pai - Thomas Weisel. Ajit Pai - Thomas Weisel: Couple of quick questions. I think the first one is just on the very good receivables performance and just going into broader concerns that are out there. Is it because you tightened out your lending policy? Or are you actually looking at no deterioration at all in the market, in terms of folks trying to extend the credit terms with you, when you are looking at receivables and collections?

I think the results that we are seeing in our receivables is really based upon about a twelve to eighteen-month effort that we started in working with our – we call it, the reseller financial services team, here in the States. Also working with our international guys to be better educated in terms of the kind of tools we can bring and then also spending a lot of time analyzing customer needs, being realistic as to what those needs are. And then also, expecting the customers to perform to what we’ve all agreed to. So this is really more a long-term effort, where we are starting to see the fruits of that effort. We have not put together any kind of program to tighten credit on our customers. If you talk to my team, what they are going to tell you, their job is to find ways to increase the purchasing power of the customers without taking undue risk. And that’s really what we’ve been doing over the last twelve to eighteen months, and we are starting to see the fruits of that effort now. Ajit Pai - Thomas Weisel: Got it. And then, when you are looking at the Auto ID, point-of-sale market, I know you called out Intermec specifically in terms of trying to put more products into the channel. But very broadly, if you had to talk about it, you sounded quite positive that the shift towards the two-tier distribution could continue. Could you give us some color as to with your total vendor base right now, what do you think the level of penetration of two-tier distribution is currently, and how high do you think that it could potentially go?

We used to publish a slide like that. And then we quit doing that after it seemed like there was a period of time where there wasn’t really a change year to year. But I would say the overall channel in the barcode space – and I’ll add the point-of-sale vendors in there too – is at least 65% to 70% of business. But there is still quite a bit of that 65% to 70% that doesn’t go through two-tier distribution. So, I would say, two-tier distributions’ share of that channel business is about 40%, maybe 50%. I don’t have any statistics or reports in front of me. That would be my guess right now. Ajit Pai - Thomas Weisel: Got it. And then, when you are looking at some of the new initiatives that you’ve taken on in terms of Security, getting new folks on board, in terms of vendors as well as integrators, are you seeing the need in that particular vertical, also, for your credit terms and inventory being as much value as it has been in the ADC, point of sale? Or is it basically some foreign vendors trying to get a channel in the U.S., and you folks are able to provide it, if that’s a big driver?

It’s funny, even when we went to Europe, I think people discounted the impact of having inventory on the shelf that can ship to-date would have on our success there. And after six years now in Europe, and after six years now in Latin America, we have proven that keeping higher inventory levels results in better service, market share gains and even good profit margins for our distributors. So, I think in the Security market, we are starting to see the same thing is that having better inventory availability is a key differentiator for us today. I think there are some people who still are testing us with that. So we are not getting the large resellers in that market yet. Integrators buy it from us. Those are the guys that we got to get to next. I think some of the very smallest customers in security are absolutely thrilled with our ability to make them more competitive, by reducing their need to keep any inventory on stock. And so, our ability to change the game and allow the small security dealer to compete more favorably with larger security dealers is generally the way we enter a market, and it catches the attention of the vendors and also catches the attention of the larger integrators, who can then say, ‘If the smaller guy gets next day service, why shouldn’t I?’ And so we think this trend will be the same in the Security business. Ajit Pai - Thomas Weisel: Got it. And then, when you look at the retail vertical, I think you mentioned on the call that continues to remain a little weak. You are seeing strength and penetration in healthcare and in financial services, particularly banking. On the retail side, I think you first saw signs of weakness in the beginning of calendar year 2005, and since then, it’s been volatile. It’s been weak. It’s been sluggish. Do you see an end to that at any point over the next six to twelve or eighteen months? And what would the driver of that change be? And then, on the same line as RFID, are you seeing any signs that RFID is going to see an uptick in 2008?

I’ll start with the last. RFID, it’s growing at about 20% to 30%, roughly, off of a very small base. So it’s not big enough or growing fast enough to make a big difference. We have actually seen some of our RFID-only customers go out of business this past year. So that business doesn’t look like one we are going to invest a lot of money in right now. But back to retail, what we are starting to see is there is always some replacement business out there. And there is some lumpiness in orders. So we will get a big order, or we’ll think we have one and then it gets delayed, as we talked about for quarters. I think the uptick will be some of the new things that are coming out of our larger vendors like IBM and NCR. And they are talking about the channel of delivery, more self-serve and kiosk type solutions to retail and hospitality. And I think they are proving that with some of their direct sales success with larger end user retailers, as that becomes a true productivity and a good ROI, I think you are going to see the channels – including distribution – start delivering more kiosks and more self-service solutions. And I think that could be a pretty nice opportunity for us.

Our next question comes from Chris Quilty - Raymond James. Chris Quilty - Raymond James: Congratulations on the good numbers. I’d hate to go back to this, but I just want to make a clarification. The bump you saw in inventories in the current quarter was being proactive in buying some cheap inventory. The vendor changes that you’ve discussed are something that should subsequently show up when you report your third quarter results?

The vendor change that we talked about should be something that we are able to sustain in terms of payable size. Chris Quilty - Raymond James: You’ve always said your business model is that you carry up to 20 days paid inventory. It’s usually been closer to zero. The new vendor arrangement doesn’t change that basic operating model?

Not really, I think what we are saying is we sit down on an at least annual basis, and sometimes more frequently, depending on the vendor and what they are trying to achieve, and we talk about what role we are going to play. In the past we’ve talked about, we need to have more inventory if a manufacturer, for example, is getting ready to shift a bunch of business that they are normally selling direct to distribution. Because then the vendor wants to make sure that the distributors are prepared for that increase in business. So, that’s an example of where it’s to support a strategy change on the vendor’s part. Chris Quilty - Raymond James: Okay, but in terms of the impact on your balance sheet, it’s going to show up as higher days inventory than we’ve seen on a historic basis?

It could, but it doesn’t necessarily have to be that as much as it is we may give up some discounts to carry higher inventory and reduce our balance sheet investment with the goal to have a similar or better ROIC. So, the goal really is, as long as we can get a similar ROIC, and in today’s environment, having less debt over the last eighteen months would have been something that a lot of our investors would have preferred us doing. So, we’ve been looking at that as something that we could do if possible, but we weren’t forcing the vendor to do that. This was something that was agreed to by both of us. Chris Quilty - Raymond James: Okay. And Rich, you seemed to be implying that you had a bit of a positive benefit here on the gross margin. But if I remember correctly, in years past, when you’ve taken on end-of-the-year inventory at lower prices, typically, in the subsequent quarter, when you sell that stuff through, you get a pretty nice gross margin benefit. Is that something we should expect to see if normal practices carry through in the third quarter?

I think it’s in our forecast. Chris Quilty - Raymond James: Okay.

Yes. Chris Quilty - Raymond James: Fair enough. Question for you, North America, it sounds like the good Q4 performance was probably more heavily weighted towards market share gains than underlying strength in the market. At least, the reports we’ve seen to date don’t indicate that it was a particularly strong quarter for most companies. And so the question is, how sustainable do you think market share gains are next year to maintain that type of growth? Or is your general outlook that the end market itself may show a little bit of improvement over what we saw in 2007?

We’ve got visibility into what we believe will happen from a channel shift and our ability to take market share from either vendors selling direct to resellers or our competitors, who may not be doing a good job these days. So, we think we have got enough visibility into that that even if the market doesn’t grow in 2008, like it did in 2007, that we could still have a strong Barcoded, point-of-sale year. Chris Quilty - Raymond James: Okay. Fair enough. One final question, you have now had two large barcode vendors – Hand Held Products and Symbol – that have both been acquired. And have you seen any impact in their thought on the distribution model, either positive or negative?

I think the good news for us is both of those companies were being run by the management team very well. And so we haven’t seen a change, nor would we expect one near-term, because they seem to be doing very well. And not talking out of school, because we all can read the news, Motorola has got their hands busy with other parts of their business. So, we feel very good that the management team, post-acquisition, has almost identical strategies regarding the role distribution plays and the role the channel plays. We feel very good about that.

At this time, I am showing no questions.

Thank you, operator. Thanks for joining us. Our next conference call to discuss March 31 quarterly earnings is expected to be on April 24. Thank you.