Good morning, ladies and gentlemen and welcome to the Owens & Minor’s first quarter 2009 conference call. My name is Genita and I will be your operator for today. (Operator Instructions) I would now like to turn the presentation over to your host for today’s call, Mr. Craig Smith, President and Chief Executive Officer of Owens & Minor. Please proceed, sir.

Thank you, Genita and good morning everyone. Welcome to the Owens & Minor first quarter 2009 conference call. We’ll review our results and take your questions in a moment, but first let me introduce my colleagues that are on the call with me today, Jim Bierman, our Chief Financial Officer; Charlie Colpo, Executive Vice President; Grace den Hartog, General Counsel; Dick Bozard, Treasurer; and Olwen Cape, Controller. Now before we begin, Trudi Allcott, our Director of Investor and Media Relations, will read a safe harbor statement. Trudi.

Thank you, Craig. Our comments today will be focused on company results for the 2009 first quarter, which are included in our press release. The press release as well as the related presentation can be found in our website. In the course of our call today we may make forward-looking statements. These statements are subject to risk and uncertainty that could cause actual results to differ materially from those projected. Please see our press release and our SEC filings for a full discussion of these risk factors. Finally, this conference call will be archived on our website. Thank you. Craig.

Thank you, Trudi. And now, let me call along Jim to brief his sound financial results. Jim.

Thank you, Craig, and good morning, everyone. The first quarter of 2009 was characterized by a number of strong positives and encouraging trends. While not all of our metrics included, we view revenue growth, expense control and debt reduction as all very positive for the quarter. What’s more significant we achieved these results in the context of a short downturn in our economy that has pressured just about every market sector. I will present an overview of the first quarter results and Craig will then provide comments on our business, the healthcare market and progress on our strategic initiatives during the quarter. As a reminder, we completed the sale of certain assets of our direct-to-consumer diabetes supply business on January 2, 2009, and thus it is shown as discontinued operations in our consolidated financial statements. All prior periods have been re-classified consistent with the current period presentation. First quarter 2009 revenues were $1.95 billion, an increase of $221 million or 12.8% when compared to first quarter 2008. Approximately 70% of the increase in revenue resulted from the positive impact of net new business, including the Burrows Company acquisition. The remaining 30% of revenue growth resulted from penetration of existing accounts. Gross margin for the first quarter 2009 was $184 million, an increase of $14 million when compared to the first quarter of the prior year. However, as a percentage of revenues, gross margin in the first quarter of 2009 was 9.42%, a decrease of 43 basis points from the prior year. The decline in the first quarter gross margin as a percentage of revenues resulted from the combination of two factors. First, we experienced larger than anticipated supplier price increases during the quarter, some 60% greater than increases in 2008, which if you will recall, were also greater than historical…

Thanks, Jim and looking back, we performed well this quarter and exceeded internal expectations on key measures in our business. I would say, overall we are pleased with our quarterly progress and believe we are well positioned for the year ahead. During the quarter, revenues grew at a strong pace, including contributions from the Burrows acquisition and the new DTC business that we talked about signed in late 2008. To put our growth in context, quarterly revenues were greater than revenues for the entire year in 1993, just 15 years ago. We firmly believe our ability to bring about real supply chain improvement as a plus in this market, where customers are seeking every avenue to improve and reduce costs. Our broad focus on process improvement is exactly the idea behind some of the agreements we have signed recently with larger healthcare systems. We are partnering with them to create real efficiencies. Now the good thing about these contracts is they are a long term in nature and are based on both parties achieving performance targets. We believe our ability to offer these advanced services to select customers represent a competitive advantage, and while these contracts will sometimes fall deferring revenue until performance targets are met, we believe they are an excellent addition to our portfolio. New customers, along with the Burrows transition made for a very busy quarter. One, again one of the busiest ones we’ve had as long as I have been here. Consequently, we are very pleased with our success in controlling expenses during the quarter. We also continue to invest in our strategic initiatives and made positive steps in moving these projects forward. Strong asset management and the resulting debt reduction was a big story for us during the quarter. As a result, we have paid…

(Operator Instructions) Your first question comes from Larry Marsh - Barclays Capital.

I can relate to the advice some one of your hospital CEOs, except most days I feel like I’m knowing that’s getting blocked and tackled, anyway just a couple of quick things. First on pricing; actually you talked about, and I’m not used to seeing this kind of LIFO charge of your business, obviously a big up tick in the first quarter. Two things here; one, what do you think your full LIFO charge is going to be for the year and then two; how are you thinking about this environment when you talk about a supplier’s raising prices, with that trigger any of rebate. Is that really good for you or do you think the pricing could be going in an extreme or that could come back and hurt some suppliers?

Larry, let me take the first one on the LIFO charge for a year, because you hit upon the essence of the accounting issue, which is in a sense the accounting for LIFO provision is similar in concept to the accounting for income taxes were one needs to have an estimate or a view as to what the amount would be for the course of the year. Our provision in the first quarter of $16.4 million compares to last year’s $10.4 million. So, you are absolutely right, it’s a significant increase for the course of the year. If you consider the variables that one would take into consideration and determining the LIFO provision for the year, certainly inventory levels come into play and the expectation as to both the quantity and type of the inventory that you would have as well as the critical variables of what the expectation for inflation and price increases would be over the course of the year. What we’ve historically seen, and if we don’t look any further back than last year to this year, what we saw was a significant amount of supplier price increases in the first quarter, followed by two more quarters, second and third were very little activity and then in the forth quarter we saw a small amount of price increases. We’re taking that expectation as we move forward in to the remainder of this year and fundamentally saying that the experienced pattern that we saw in 2008 seems reasonable as an amount to target to occur in to 2009. So, that’s all we’ve looked it, and that’s all we’re considering it. Obviously, we have little to no control over many of the price increase factor. So we’re somewhat at the mercy of the suppliers, but as we sit here today that’s our best estimate as to what the future may look like. Let me defer that the second question aspect to your question to Charlie to give his view on the supplier side of this.

Sure. Good morning, Larry. As Jim mentioned, the comment that we had with our supplier who had a price increase that they hadn’t taken in a number of years and then remained almost 28 years at Owens & Minor, this was the most significant and broad base price increase that I recall. So it really came down to the fact that the supplier was unwilling really to give us an unlimited rebate or funding to this price increase. We work at this more as a one-time event than a trend that will happen in the future.

I have a follow-up. Second question is around the $4.4 million deferred revenues, Craig, I know you talked about, is part of a contract that’s creating competitive advantage. Was this deferral at all has surprised you in this quarter and are you in a position to elaborate on what sort of performance target do you need to meet with this contingency?

One, I think we are very comfortable that we are going to hit our performance targets and you especially, many others has forward us for a long period of time. This is really not something new to the company, I mean we’ve been doing guaranteed savings on paying debt for 35 years. I think with the onset of OM solutions over the last five years, we have a pretty good track record in terms of gaining shares. Now I think, part of the challenge was as we signed three of these in one quarter and these are six-month negotiation deals, one-year negotiation deals where there is a lot of back and forth in terms of setting targets. So it was probably that all three closed in one quarter might have been a little bit of a surprise, because they’re usually stretched out over a period time. But let me be very clear that we are very comfortable that all of that revenue will be coming back, the majority of it in 2009 and historically we have proven time and time again that the savings that we set up with individual customers or IDMs were able to hit those benchmarks. So I think the one piece was, we closed the three pretty quickly, one was one that I had talked about in terms of new competitive business, which was pretty big, but we are very comfortable that the targets we set are very achievable. Now to the second part of your answer is that could be around asset management, it could be around labor reduction, it could be around transportation cost reduction, it could be a number of probably 10 to 12 different financial metrics that what we feel we’ve been investing in the company since 1999 starting with the Owen, our whole drive towards technology, that we have the right tools and that’s why we’re comfortable that that we’re going be able to get this revenue back over the period of the year.

Fair enough and just to clarify, none of this was a surprise to you in terms of the trigger on the contingency in the quarter which is the magnitude was higher, given there were three out of one. So in some ways, I know you don’t add to the quarter, but I guess none of us anticipated any of this from a timing standpoint.

Yes, I think Larry just sort of stepping back in putting the quarter in a context of expectations. I think there are always pluses and minuses in any given quarter that ends up coming down to what the results are. I think generally in this quarter, we were pleased and saw revenue come in, probably a little bit more than we were originally targeting, and expense control came in better than we were originally targeting, and gross margin came in a little below where we were targeting such that we ended up within the general range of what we were targeting for the first quarter. Last one I make is, we’ve said consistently since December in large part because of the timing of the Burrows transition that 2009 was a back half of the year story. So we remain confident with the guidance we’ve given for 2009.

The final questions, I’m following upon Craig, your comments about solutions, we are certainly hearing more and more customers asking ways to save money, whys to think about pricing, your solutions has got some feedback and referred in the marketplace. Can you remind us since running that business now and how you think about growing this as an opportunity set for ‘09 and ’10?

That’s a gentleman by the name of [Jeff Marlett] who took solutions over probably about two years ago. He came from McKesson, and he came from the consulting side of McKesson and he has done just an outstanding job for us. I think one of the key parts he did Larry was, he really honed the focus down in that organization in terms of three initiatives. I think we are trying to deal all things to our people which one you are starting the business, sometimes you try to do that to gain some market share, but we are primarily focused today in the operating room, the cath lab and nuclear radiology, our innovational radiology and he is really keen that will drive in terms of QSight and WISDOM Gold logistics inventory reduction and he is doing a yeoman’s job for us. We are also are doing a lot of logistics engagements in terms of inventory optimization overall for an IDN reduction in warehouse space, transportation, so it’s really primarily driven on a technology piece, the OR and logistics. He’s done a nice job of getting that organization really focused, and I would say he has also done a good job on expense control and really ramping up appropriately as the engagements become full blend.

Your next question comes from Glen Santangelo - Credit Suisse.

Hi Jim, I just want to follow-up with you on the LIFO reserve question again. I thought, if I heard you correctly, I thought you said in your prepared remarks that you thought this loss will be offset by other supplier initiatives, could you maybe just elaborate on that point a little bit?

I’ll let Charlie address that, because over the course of the year when you see manufacturer price increases like this there is a knock-on effect where we get some elements recovered, but Charlie can be more specific.

Sure. Glen, we supply clothes to 2,000 suppliers and we have relationships with a good many of them and certainly all the top ones. A lot of these are performance based on growth incentives and things of that nature. So we continue to negotiate with these suppliers, we are beginning to move more toward operational efficiency programs with them, and we believe those will offset a good bit of the reserve that we saw in the first quarter.

Is it fair to say, Jim, just a kind of follow up you don’t think you’ll have to take any additional LIFO reserves later in the year? You feel like you have taken pretty conservative swipe at the reserve?

I think I’ll start short of making that blanket statement, Glen. I think again I’d point everyone to the 2008 experience where we saw about 80% of the provision for the year being recorded in the first quarter, and then another adjustment at year-end as we saw another flurry on as much smaller scale of supplier price increases. I guess my point would be if we see a similar amount of flurry of price increases towards the back half of the year, we’d see a similar kind of an event. I’m sorry, you have a question there?

Yes. In kind of sales like a lot of the price increases that surprised you were concentrated in primarily one supplier, we would just say that’s sure then I’m trying to understand that these price increases come at the beginning of the quarter, middle of the quarter or late in the quarter? The reason I ask is, because I understand you sort of commented that there would be some variability to the earnings depending upon manufacturer price increases, but I’m trying to figure out if on February 5 when you reported your fourth quarter and gave your guidance for 2009, I am guessing you didn’t anticipate taking this level of a LIFO reserve this early in the year?

That is correct. At that point in time and over the course of the quarter as the negotiations continued with suppliers and we began to see additional suppliers raise prices, we began to get greater clarity as to what the quarter was going to look like.

Then just one final question on the deferred revenue piece, I am kind of curious just from a practical standpoint if there are performance metrics you have to be in the certain contingencies here, why would you get paid this revenue upfront if you feel that we didn’t qualify for it yet at this point. Why does a customer willing to pay you upfront for potentially revenues you haven’t even earned yet?

Well, I think and obviously the timing of cash payments in the contractual negotiation or in a contract is negotiated. So, if we are expanding effort on behalf of our customer even if there is a contingent component that exists out into the future through negotiations, we are compensated for the activity that we are spending on behalf of the customer and at some future date, certain milestone date, there is a settlement function to see did we do what we had committed to do, and did the customer commit or do what they have committed to do. At that point, there is a settlement type of a feature and I think that’s really what we are speaking off within the notion of the deferred revenue.

This is Craig. There is always low hanging fruit too. So I think you are talking about every customer is different in terms of what they are looking for and what they are trying to accomplish. So, you really can’t put a box around five customers or 10 customers or 20 customers. The other thing I would say is we are going to selectively pick where we do this. What we are trying to do is, pick back to my story about winners and losers, clearly we are trying to align what some of these bigger organizations and lock then for seven to 10 years. So I think you can’t have a cookie-cutter on this in terms of every deal is going to be the same, because the opportunities are all different, some are long term, some are short term. So if it is a little bit of a challenge to try to put this into a cookie-cutter form. But I think long-term what we got to think about is; one, the revenue will be captured this year; two, we are very comfortable with that we are going to capture that; and three, we are fully experienced at what we do, and I think as these deals got a little bit bigger and you did three in one quarter, this kind of jumped up out of the blue a little bit.

Craig, when you do going to capture those revenues if you are successful in 2009, there is no incremental expenses that should be almost pure gross profit, is that a fair comment?

Most of the investment plan goes in the first 30 to 60 days where we are putting people on site, things are being identified, technology, the fees for technology are being built and then it’s on a short term and long term basis we recognize the savings with the customer and then that’s captured. So, a lot of the expense to your point is startup cost.

Your next question comes from Lisa Gill - J.P.Morgan.

Good morning. I wonder if I could just ask more kind of general questions of what you are seeing in the hospital right now. Craig, are you seeing any changes to inventory levels that the hospitals are willing to carry, just given the broader economic outlook, number one? And then number two, the brands remained pretty wide from a revenue perspective going forward 8% to 12%. Can you maybe talk about if there are some opportunities for you to gain from additional contracts? You’ve been really good at winning business over the last couple of years, is that part of the expectation at the upper end of the range?

Yes. I think going back to where we were earlier, Lisa we were probably being somewhat conservatively cautious in the second half. We had originally said 10 to 12. Then we came back at the end of the first quarter to say eight to 12 and based on Jim’s remarks, what he was talking about, there might still be, it’s still somewhat based on the second half of the year. But as you can see, our numbers were very strong in the first quarter and we brought on a lot of business in the fourth quarter along with the Burrows business. So, I think prior to the year in the fourth quarter and in the first quarter, we feel very strong about the revenue and I think, because of some of these tools that we have, we continue to take business and have the opportunity to be at a higher percentage. I’ll speak to the first part of your question a little bit anecdotally, I think we saw maybe a little bit of, I wouldn’t call it a drop off, but I think we saw a little bit of slowing in January, late December maybe early February. But it looks like things are revving up. Even as I talked to people, and maybe its more rich men it just seems like business is seeming to pick up to some degree, perhaps even in some other businesses, some small businesses here around a camp, but I would say overall, we broke out our existing business and our new business, and we are still growing obviously the existing business. It did slowdown a little bit in January early February, but it looks like it has picked back up here in March and April.

Okay great and what about on the inventory levels side. What you are seeing hospitals doing at this point?

Well, I think that’s where we saw the dip a little bit in January, early February and it seems like its picking back up again in terms of tracking our top 50, and then we track our top 200. We’re seeing the sales actually starting to, it isn’t dynamic but we certainly see it starting to pick up here in March and April.

Is this an opportunity for distributors so that the use of distributor more than to buy the product directly, because obviously they are buying the product directly, they are going to get it shipped when the manufacturer wants to ship it. They could probably have a better relationship with you as far as carrying that inventory for them, is that an opportunity in this environment?

That’s what we’ve been obviously, I mean, we do work in pretty hard in the direct sales piece for the last two years of traditional manufacturers. I think the one thing, Lisa you followed us a long time, I think probably two years ago, three years ago, we really went after the provider side pretty hard and I think our numbers have shown where we are, but we work in the supplier side even through this 3PL healthcare logistics model. We’re working at both ends of the supply chain and we think there is an opportunity for some non-traditional suppliers who are trying to cut cost or trying to get a competitive edge to take a look at and I think I’ll speak for us, looking at Owens & Minor, maybe to pick up more of the work load or get them exposure to some customers traditionally they haven’t been able to crack into and they see with our name and our reputation and opportunity maybe to pick up some market share.

But I just not understand as kind of go without that’s not in your expectation of that 8% to 12% of revenue growth rate. I mean that’s a future opportunity but not in your current expectations?

That is a future opportunity.

Your next question comes from Robert Willoughby - Banc of America.

I just mentioned all or part of this, but it looks like you’re watching to the portion of the sales in the quarters where not subject to rebates. Is that a manufacturer decision? I mean how do we look at that as being something that’s temporary?

Robert its Charlie Colpo. This was negotiation with the supplier and the way that they would fund these price increases as we claim the rebates on the sale of that product. So this was very much discussed negotiated over a fairly long period of time and how this would play out. Again I discussed the uniqueness of this price increase is our first in a number of years and then was just significant and then really broad based.

Robert and just to clarify, if you look at the first quarter of 2008 and compare the rebate component, this aspect of the rebate component in 2008 to what we received and recognized in 2009, we recognized $1.5 million more in 2009 than we did in 2008, but on a relative basis to the LIFO provision, it cost there to be at a net decrease, but in absolute dollars it was $1.5 million greater.

Okay and in conclusion, I mean inventories do trend down going forward correct, even if you see some revenue growth comparable to what’s you reported here in the first quarter we should see a lower inventory balance as you work through that Burrows conversion inventory?

That’s an excellent observation. We’ve built inventory in the last two quarters in anticipation of the significant number of customer conversions and distribution center conversions associated with the Burrows transaction. So as we complete the transition activities towards the end of the second quarter, we are anticipating that the inventory level should start to trend downward.

Just lastly, are there any instances among your customer base, are there hospitals that you shut off for not paying as the economic environment, so punishing for the some of the smaller guys or is that just not a phenomena you are seeing?

We’re very carefully and aggressively pursuing the issue of credit risk with our hospital customers. We can do that in array of ideally positive manners, where we mitigate the financial risk. You are correct that on an isolated handful of customers, we can get to a point where there is no other solution to protect ourselves financially other than to choose to resign from the customer and the headcount, but there are an array of other vehicles we use or propose in advance of that to mitigate the financial risk and we aggressively pursue those opportunities.

How do I see that then, there was other opportunities, is it a lower revenue profit of an existing customer, I mean, how do I think about a change in the customer dynamic as it relates to the economy?

Well, I think Robert, this is Craig. If you look back to the McKesson deal, I know people thought we were pretty conservative in terms of our estimates, but there were some business there that we knew probably could become problematic over a period of time. I think Jeff and the finance team and RAR is somewhat decentralized. We need on a regular basis on credit risk, so I think; one, we’re very careful of who we give credit to and then secondly, we monitor it pretty carefully, you never say never but I think we’ve been fortunate, but I think it’s also because of our business practices that we haven’t seen a lot of closures of hospitals that we serve. I don’t know that it necessarily slows down when a customer has credit. I think what happens is, if you put the clamps and then they leave and go to somebody else who is more than willing to give them credit. So, this is something that we’ve been dealing with prior to the economy and we have regular conversations with all of our customers in terms of where they are and credits. So, I think this is probably one of the strong parts of our portfolio and our business in terms of how we manage credit and how we manage our customer sales. You want to make sure that when a customer sales start to go up rapidly, that they are not moving over to us just to make sure that somebody is either going to cut them off or going to stop giving him credit. I think it actually is a part of an art, it’s partly history, and it’s partly the technology. I think we have a very good understanding of our customer base in the history in the areas and our ARP bode very aggressive in the markets we serve. You never say never, but I think we do a very good job of managing our credit portfolio.

It sounds like, just to sum up thing Craig, year-to-date can you count on one hand the number of hospitals where you just had to say, no thank you we are kind of done with you?

It’s been very small. We’ve been able in some other situations that they want to continue slower goods. They want to get in a situation where they take on a lot of expense moving over to another distributor. So they may look at alternatives such as providing cash upfront with deposits or they may wish to issue a letter of credit not pay receipt. A number of tools along those lines that we felt very helpful over the years and allows maintaining the business.

Your next question comes from Richard Close - Jefferies & Co. Richard Close - Jefferies & Co.: Jim, just to clarify on your expectations in the quarter, I think you said first quarter was in line with internal expectations on the bottom line. So, when you talk about back-end loaded, you don’t feel that the annual guidance that you previously set is any more of a stretch now that we are done with first quarter. You feel pretty confident on your ability to get there?

Yes. I think as Craig said, we all believe that we are off to a good start. If you look at really the key metrics that could potentially upset a year in general sense, revenue is always a critical one and expense control is sort of the second. I think in both those instances, we’re pleased with how we’re positioned accordingly. That being said, second quarter is pretty critical that we complete the Burrows transition, and we get those costs out of the organization and that’s an execution issue, but it’s with in our control to execute. Richard Close - Jefferies & Co.: Okay, and then with respect to the one supplier that had the broad based increase. Do you think the fact that rebates were not eligible is a function on that supplier being the first time they have increased prices in several years, I think you said three years?

Absolutely, I think the magnetite of the increase and which is in large part due to the fact that it is not and hasn’t been in annual occurrence for them and they’ve gotten around to it over a three-year period. Richard Close - Jefferies & Co.: And then, would you have any other major suppliers that fall into that same bucket?

We are not aware of any. Richard Close - Jefferies & Co.: Okay. And then I guess on the deferred revenue, just a point of clarification there. How should we think in those contracts and I apologize if you mentioned this earlier are they one year contracts you recognized that deferred revenue at the time as you annualized to signing of the contract?

The component where the contingency is related is about a three-year period, but the effort is front-end loaded. So, the motivation and objective is to identify the savings earlier than later in those contracts. If you think about it that make sense from the counter parties prospective too, if we have potential savings, ideas or activities for our customers that the sooner they can get those identified and implemented the sooner they can begin to realize the benefits. So the contracts are structured in a way to try to get that occur. Richard Close - Jefferies & Co.: I guess I’m trying to understand whether we look at those on an annual basis. Do you identify new targets, they are three year contract, do you identify new targets at the end of this year or end of the first year of the contract, and then we have a similar deferred revenue situation in the coming year?

Richard, actually the agreements, the savings part usually runs three years; the distribution part runs seven to 10 years. So at the end of three years, we could sit out with that customer and say, okay here’s another set of savings opportunities. I think the one thing you want to remember in this is, we had three big ones signed in one quarter and it takes six months to a year to set the targets and I think maybe the economy, there is a sense of urgency from some of these folks that they spread things up a little bit. We are going to selectively pick where we do these. So, I don’t think you’re going to see us do 10 of these in a year, maybe it’s one or two big ones a year. But I think the one thing you want to also remember is we are going to tweak this model a little bit so that it’s not quite as lumpy as it was this first quarter. So we’ll work on making sure that these going forward aren’t as lumpy as they were in this quarter of this year, but again we’re very comfortable of capturing the revenue. I think you can see this as a one-time deal where we had three in one quarter, so ordinarily we might sign maybe one in a quarter, one every six months, and so it doesn’t quite have the impact that maybe these three did for this first quarter, but again it’s a timing issue, it’s not a matter of if it’s a matter of what. Richard Close - Jefferies & Co.: I guess just one clarification on Lisa’s question. You had addressed with respect to the suppliers, and I’m just curious in terms of the current economic environment. We’ve heard that people, the provider’s hospitals maybe adhering to their GPO contracts a little bit more. Do you see this as an opportunity where the hospitals do adhere to those GPO contracts more rather than going outside it, also use yourselves more and current economy actually provides you guys an opportunity from additional business from the providers that maybe with leaking out in better times?

Well, let me tell you that culturally and historically, our relationship has always been with the individual hospital. So whether a hospital chooses more than one GPO really does not impact us. Our relationship is with in Illinois hospital or UCLA or Stanford and who may choose to do business with from a GPO standpoint is really up to them. So our goal has always been to penetrate the existing customer with or without a GPO is best to our potential as possible. So we are a traditional distributor might be at 35% penetration, we issued for 40%, 45% or 50% penetration. So our goal has always been to continue to find new product categories, to find new business in existing customers, while we are outgoing after getting competitive business. So to give you a long wind to answer, yes we see this as an opportunity for us, but we always see it as an opportunity for any hospital that we do business with is to continue to penetrate and grow ourselves. The long term goal for us is really to have these bigger customers tied in for seven to 10 years and not worry about a GPO contract that gets renegotiated every three years. So many of these larger systems, we have a separate distribution agreement with and the relationship is between the hospital and us, and then they go out and decide which GPO. We never try to influence on that, our relationship is always with the individual hospital and allow them to pick the GPO that they want to participate. Richard Close - Jefferies & Co.: Jim, real quick on cash flow from operations for the year. I believe your target was 100 to 150, is that still the number out there?

I’m not sure we actually gave a dollar target of what cash flow from operations. I think what we have done as of Investor Day and subsequently was talk in terms of what would be reasonable giving a book of business that we were describing. I think within general ranges, yes, we remain very comfortable in sort of that dollar range. If you look at the components, the opportunity to increase cash flow from operations is squarely in the area of inventory. I think it’s going to be difficult to improve the metrics in receivables and so the key is going to be how we do inventory.

Operator, we have time for one more question.

Your final question comes from the line of Jeff Jonas - GAMCO Investors. Jeff Jonas – GAMCO Investors: I was wondering if there were any inventory step-up charges in the first quarter from the Burrows acquisition and if that gross margin line is something that should improve as the year goes on?

Jeff, could you define step-up charges? Jeff Jonas – GAMCO Investors: From the acquisition and from stepping up the inventory to fair value.

This is Olwen. Essentially, when we would value the inventory at the date of acquisition, which was the beginning fourth quarter of last year. We were valuing our inventories about the same as Burrows so there was no step-up at that time and there is no impact in the first quarter.

But we would expect the margin for Burrows related accounts to improve over the course of 2009 as much as we saw in the McKesson situation where we were successful at in array of different programs increasing the margin on those specific accounts. You are absolutely right on that. Jeff Jonas – GAMCO Investors: And as that integration starts to complete, and given your strong cash flow, do you start to think about taking advantage of any acquisition opportunities that might be out there?

We were pleased that we were able to use cash this quarter to reduce our debt outstanding. We realize that this is potentially an attractive time in the marketplace to be looking at expansion opportunities and I think on a selective basis, we continue to look for acquisition targets and we’ll continue to do so. It’s part of our overall strategy for expanding the complement and depth of our services.

This concludes the allotted time for questions-and-answers. I will now turn the call back over to Mr. Smith for his closing remarks.

Well, thank you everyone for joining us this morning. Thank you for your questions, and we look forward to seeing you and reporting out our progress over the next three quarters. Thank you and have a great day.

Thank you for your participation in today’s conference. This concludes the call. You may now disconnect. Good day.