Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to the AngioDynamics' Fourth Quarter Fiscal 2008 Conference Call. During today's presentation, all parties will be in a listen-only mode. Following the presentation, the conference will be opened for questions. (Operator Instructions). As a reminder, this conference is being recorded today, Thursday, July 24, 2008. I would now like to turn the conference over to Mr. Doug Sherk with EVC.

Thank you, Operator, and good afternoon, everyone. Thank you for joining us this afternoon for the AngioDynamics' conference call to review the fourth quarter and full fiscal year 2008 financial results. As you know, both periods ended on May 31, 2008. The news release announcing the fourth quarter results crossed the wires this afternoon, shortly after the market closed and is available on the AngioDynamics' website. We've arranged for a tape replay of this call, which maybe accessed by phone. The replay will become available approximately 6:30 p.m. Eastern Standard Time, this evening and remain available for seven days. The dial-in number to access the replay is 800-405-2236 or for international callers, 303-590-3000. Both numbers will need the passcode of 11110709 followed by the pound sign. The call is being broadcast live and an archived replay will also be available. To access the webcast, go to AngioDynamics' website at www.angiodynamics.com. Before we get started, during the course of this conference call, the company will make projections or other forward-looking statements regarding future events, including the statements about the sales and the company's beliefs about its revenues and earnings for fiscal 2009 and certain financial metrics for fiscal year 2010. We encourage you to review the company's past and future filings with the SEC, including without limitation, the company's Forms 10-Q and 10-K, which identify specific factors that may cause actual results or events to differ materially from those described in forward-looking statements. In addition, management will be reviewing various non-GAAP measures during today's call. Investors should consider these non-GAAP measures in addition to, not as a substitute for or superior to, financial reporting measures prepared in accordance with GAAP. During today's call, the company will discuss non-GAAP measures, adjusted income and adjusted EPS. Adjusted income and adjusted EPS exclude certain expenses relating to the acquisition of RITA Medical, stock-based compensation expense, litigation damages, and others, including the cash benefits from the use of acquired net operating losses and assumed taxes on net income where applicable. Management believes these measures provide investors with useful information in comparing the company's performance over different periods, particularly when comparing this period to periods in which the company did incur any expenses relating to these activities or items. A reconciliation of all GAAP measures used during today's call was provided in the news release distributed this afternoon and is available on the c company's website. Finally, during the question-and-answer period today, we request each caller to limit themselves to two questions and then encourage a re-queue to ask additional questions. In advance, we appreciate everyone's cooperation with this procedure. Now, I'd like to turn the call over to Eamonn Hobbs, President and Chief Executive Officer of AngioDynamics.

Thanks, Doug, and good afternoon, everyone. Thank you for joining us today. With me is Joe Gersuk, our Chief Financial Officer. We've got a lot of positive news to share with you today. First, we want to review our strong fourth quarter results. Second, we want to detail for you the investments we are making to drive core operations growth through sales force expansion and improved organizational focus. Third, we want to review our investments in our recently launched NanoKnife and other IRE product development. Finally, we want to provide our fiscal 2009 financial performance guidance as well as some preliminary thoughts on fiscal 2010. Let's begin by reviewing our fourth quarter results. We achieved expectations for our financial performance by generating an overall increase in revenue of 14%. And we achieved profitability of $0.02 a share on a GAAP basis, despite the costs recorded in association with the settlement of all patent litigation with VNUS Medical. If you exclude the VNUS Medical settlement costs, our operating margin of 15.1% was the best for any quarterly period in the company's history. Since we last talked with you in early April, we've successfully closed the acquisition of the Diomed U.S. and Diomed U.K. assets and entered into the settlement with VNUS. As a result of these two developments, AngioDynamics has substantially strengthened its position in the worldwide market for the treatment of varicose veins. And we expect that combined venous product sales during fiscal 2009 will almost triple from the fiscal 2008 total of $13 million. The first human clinical trial of IRE technology was successfully completed in April. And as a result of this milestone, we completed the acquisition of Oncobionic in May. IRE is the single biggest growth opportunity for our company, and we believe it has tremendous potential across the very broad market of surgical resection, in addition to a wide range of other applications. For example, we are seeing very encouraging results in the early stages of development for applications outside of surgical resection, including cardiovascular applications, such as angioplasty and cardiac arrhythmia. As a result of the progress to date, we feel we have a tiger by the tail with IRE opportunities and we have decided to increase our investment in R&D for IRE clinical programs during fiscal 2009. I will provide you with more detail on our effort and the investment in that area in a few minutes. With the significant expansion of our venous product lines, with the enormous potential for IRE and with the need to keep our eye on the ball by successfully managing the growth of our other product lines, we also developed plans during the fourth quarter to create three business units to increase our focus and growth. We are in the midst of implementing this strategy, and I will review this new structure with our IRE plans after Joe provides you with a review of the fourth quarter operating performance. Joe?

Thank you, Eamonn, and good afternoon, ladies and gentlemen. Following our June 5th sales preannouncement, today we are reporting final financial results for the fourth quarter and 2008 fiscal year. As you saw in the release, our fourth quarter operating results demonstrate a strong finish to the fiscal year. Net sales were at the high end of our guidance and we are reporting our highest ever gross profit margin. Additionally, if we exclude the impact of the VNUS and Diomed settlements, the fourth quarter marked records for operating income, operating margin, and cash flows from operations. Fourth quarter net sales increased by $5.9 million, or 14% to $46.8 million. From a product group perspective, the interventional products group constituted $35.9 million, or 77% of total sales. While the oncology products group constituted $10.9 million, or 23% of total sales. From a geographic perspective, 90% of sales were in the US, and 10%, or $4.8 million, came from international markets. From a growth perspective, oncology products led the way again this quarter, growing 22% over the prior year. This growth brought the full year pro forma growth rate for these products to 24%. Our RF ablation, chemoembolization, and surgical resection products all produced strong growth in the quarter and in the fiscal year, reflecting a leading market positions we enjoy in the segments in which we compete. Interventional products grew by 12% over the fourth quarter a year ago, bringing the full year pro forma growth rate for this product group to 10%. Sales of Smart Port CT were particularly strong in this quarter, as this recently introduced product continues to enjoy excellent market acceptance. Total port sales grew 32% in the quarter, demonstrating the success of our product development and sales efforts since we acquired this product group from RITA…

Thanks, Joe. Back in April, we reviewed our five-point plan to build consistent revenue growth, and our team has certainly made great strides toward implementing that plan. Step one, I think the fourth quarter financial performance illustrates that we have improved our ability to forecast the trends of the business. Now, we're taking steps to address the impact of not continuously investing in the sales team to maintain maximum rep productivity. For example, we found that our interventional product group revenues slowed significantly as average sales per rep exceeded $1.8 million. As I have noted in the recent past, we did not add enough sales territory since prior to the RITA acquisition in late 2006, as we wanted to integrate the sales forces before expanding. In retrospect, we should have continued to increase the sales territories to drive revenue growth more efficiently. In the fiscal fourth quarter, the average sales per rep in the interventional products group was $2.4 million. In analyzing the data, it became apparent that some of our very best reps were overstretched when it came to serving accounts in the AngioDynamics way. They were carrying a bag that was far too broad in product bandwidth and servicing far too many customers to be very efficient. To address this issue, as well as to capitalize on the growth potential of our product lines, we've launched an initiative to create three focused business units. We have divided our interventional products group into the Peripheral Vascular Division and the Access Division. As a result, total domestic sales territories for the two divisions have moved from 58 to 80. There are 41 territories in the Peripheral Vascular Division and 39 in the Access Division. We have also added two regional managers and three new clinical specialists. When fully staffed, the…

Thanks, Eamonn. As far as guidance for fiscal 2009, we anticipate net sales in the range of $205 million to $210 million, which implies a 23% to 26% rate of growth. The Diomed acquisition, which closed on June 18th, is expected to contribute $19 million to $20 million in sales this fiscal year. This reflects Diomed's loss of momentum during the bankruptcy and sale process that occurred over the past several months, resulting in our lower expectations. The guidance also includes $1 million in sales of our first IRE product, NanoKnife. This too is prudent and reflects our expectation of a long sales cycle for this product. We expect gross margins to be in the 60% to 61% range, or close to the gross margin of 61.6% that we reported in fiscal 2008. This reflects the significantly increased sales mix that the vein therapy products will represent in 2009 following the acquisition of Diomed. We've raised prices to compensate for royalty payments to VNUS. We expect to return to 1 to 2 percentage points improvement in annual gross margin in fiscal 2010. Operating expenses are forecasted to be approximately $102 million to $106 million. As Eamonn mentioned, we're dedicating significant R&D resources to the development of IRE technology this year. In addition, we'll begin to ramp-up our NanoKnife sales and marketing activities as the year progresses. Also, as detailed earlier, we intend to expand our Peripheral Vascular and Access sales forces. Even with these noteworthy investments, we anticipate generating GAAP operating income of $21 million to $22 million in fiscal 2009, representing a 31% to 37% increase over the prior year result, or a 5% to 10% increase, excluding the 2008 litigation settlements. Our fiscal 2009 GAAP earnings are expected to approximate $0.55 per share, which is consistent with the prior year result absent the litigation charges, despite the impact of the IRE and sales force expansion initiatives. We expect the Diomed acquisition to have a $0.01 per share dilutive effect on fiscal 2009 results. However, there will be some one-time integration costs absorbed in the first or second quarter that will reduce EPS by $0.04 to $0.05 per share. Thereafter, we expect the acquisition to be accretive to earnings every quarter. Finally, we believe the significant investments we are making in IRE and the expansion of the sales force will enable us to accelerate organic sales growth to approach 20% in fiscal 2010 and for operating income to increase by 2 to 4 percentage points in that year. I'll now turn the call back to the operator to start the Q&A.

Thank you, sir. (Operator Instructions). Our first question comes from the line of Phil Nalbone with RBC Capital Markets. Please go ahead, sir.

Hi, guys. Congratulations on such a strong finish to a very turbulent fiscal year.

Thank you very much, Phil

Looking ahead, the question really pertains to your decision here to ramp-up the investment for NanoKnife. Everything that I've seen in the preclinical literature and my discussions with physicians would suggest tremendous promise here. But, to date, we have 15 patients as part of a prostate cancer pilot study. You're ramping up spending and building a lot of infrastructure around this product opportunity in sort of one fell swoop.The question is, why not take a more cautious, gradual approach to your investments in this area and sort of spending commensurate with additional progress in clinical development and further observations about the potential here? And the second part to that question is really, what happens here if IRE doesn't pan out quite the way you're expecting? What can you do to restore the costs structure to a more normalized pace?

Well, in answer to your first question, Phil, why not be more cautious? Of course, we have access to a lot more information than is public. So, needless to say, we are feeling extremely comfortable with the potential for the NanoKnife and the IRE technology. The results to-date have been really exemplary, very comforting from the perspective of meeting and exceeding our expectations. We are very, very comfortable with the level of investment that we are putting forward. With regard to your second question, what happens if it doesn't work out? The answer is that our investments at this stage really center around R&D programs that can be shifted to other things. So we really have not burnt any bridges at all with regard to moving to other types of products that we have in the pipeline. The doomsday scenario with the IRE in general, I suppose, is that the infrastructure we have in place is sales and marketing oriented and can sell whatever we give them along the lines of the same customer. So, we are not taking that big a risk. In fact, we've considered much larger risks. And, really, the limiting factor here was, we think we've created the perfect balance between what we would like to do and what we practically can do. But at the end of the day, we are very, very, very excited by all the uniform interest in IRE. We have 60 of the top sites in the world for cancer therapy and benign disease therapy, very, very interested in actually, chopping it a bit to take on NanoKnife and put it through its paces. So, I guess we are pretty confident.

Great. Thanks for the thoughtful response, and congratulations on the addition of Dave McDonald.

Thanks very much.

Thank you, sir. Our next question comes from the line of Jason Mills with Canaccord Adams. Please go ahead, sir.

Hi, Eamonn and Joe, congratulations, as well, on a good quarter...

Thanks you, Jason.

….out the year. Eamonn, I want to follow up on Phil's question, a very thoughtful question from him. And your answer included some thoughts on some information that perhaps we don't have access to that you do. Perhaps, you could elaborate on that because it would seem that any clinical data or patients that have been done on NanoKnife either have been reported on or should be. So that would imply we should see additional data sets from the IRE technology going forward. Perhaps, you could give us an idea of what you know that makes you excited, if you are in a position to do that now, or perhaps, when we could expect to see additional data sets published in the public domain.

Well, the data that we find compelling is that, so far, the extensive preclinical work that we've done has been mirrored exactly as we would have expected in the human clinical work. So the first 15 patients that we have done now have presented absolutely zero curve balls that one would expect, if they were going to happen with regard to unexpected events from our extensive preclinical experience. We have also brought into the fold a tremendous amount of thought leaders in the area of surgical resection, ablation, focal therapy, et cetera, et cetera. Everybody in the area that really is a thought leader and gotten their input as to the potential for this technology. And the ones that have witnessed the technology in use have been extraordinarily excited. And, if you will, they've become believers upon seeing it for themselves. Well, I, frankly, have never been involved with anything that's been this consistently a performer. There is always something. And we have yet to find what that is with NanoKnife.

We will look forward to more data sets being published. Do we have an idea of either trade shows or publications, Lancet, et cetera, perhaps even moving up the curve in terms of the publication reputation going forward over the next, let's call it, 12 months in terms of data sets published? It is the first question. And I just have one more follow-up, and I'll get back in queue after you answer.

Sure. With the rollout of the 20 NanoKnife systems to thought leaders, I would expect that, by our next conference call, we're going to have a tremendous amount of surgical resection data that is going to be anecdotal in itself. But it will give some insight into interim results in multiple protocols that are ongoing for a broad base of surgical resection trials. For instance, I would expect that by our next call, we had have made initial progress on a protocol in liver, lung, potentially uterine fibroids, certainly, a lot more prostate cases for prostate resection, potentially brain and others, as well kidney. So, I think there is going to be a real ramp-up in the amount of independent clinical data that is going to start to come out. And we are going to do our best to present that. Of course, keeping in mind that, the investigators are going to want to publish that. So we will walk the line as best we can. But, clearly, we want to get the information out as quickly as we can.

That's great. And just a follow-up and I promise, I will get back in queue. Is the technology of the NanoKnife the console and the consumables, the entire package as it's currently being shipped to the 17 and then, ultimately 20 over the September timeframe. Is this package, if you will, commercial ready to the extent that, as you roll into fiscal 2010 and you do expect, I think in your words, a meaningful contribution to that 20% growth from IRE? So will we see or do you need to do significant or even somewhat minor tweaks or changes to the technology, either the console or the consumables to get it where you want it to be to launch it sort of to the masses, if you will, beyond 2009?

No. I think it's ready to go. Commercially viable the way it is today. It has been released for commercial distribution as it is today. Now, having said that, I mean all products evolve and I would expect that there will be a NanoKnife II and III and IV, as the years go by with added bells and whistles, but it is ready to go as it is.

Great. Thanks, Eamonn.

Thank you.

Thank you, sir. Our next question comes from the line of Brooks West with Craig-Hallum Capital. Please go ahead.

Hi, guys.

Hi, Brooks.

Hi.

A couple questions here. Joe, can you give us some idea, as you breakout into these business units for '09, kind of expected growth rates within these categories that gets us to your revenue?

Sure. As we said, the three are Peripheral Vascular, Access, and Surgery/Oncology. And, I would mention that we will be reporting in segments starting in the first quarter on our filings and that we will also be offering some historical perspective. So I will offer the baseline fiscal '08 numbers. The Peripheral Vascular business was about a $64 million business in fiscal '08. That includes the venous, angiographic, PTA, drainage, and thrombolytic products. The Access group was also about a $64 million business in '08. That includes dialysis, PICC, and ports. And the Surgery/Oncology was $38 million in '08, and that, of course, includes the RFA, the chemoembolization, Habib, and now the NanoKnife product in '09. In terms of our growth expectations, Peripheral Vascular, which will have the benefit of the Diomed acquisition in it, should grow about 40% to 45%. Access should grow 12% to 15%. And Surgery/Oncology should grow 18% to 20% over those figures. And that gets you to the range of about $205 million to $210 million, and overall revenue growth of 23% to 26%.

Okay. Great. Thank you. And Eamonn, going back to your five-point plan, on the national accounts, with Rob switching over to manage the, what is it, the Access Division, how are you going to approach that? Is that going to stick with him as he goes into Access? Or are you going to have some other centralized position to pursue the national accounts?

That is going to stick with him and one of his direct reports, because the vast majority of our national account activity centers around dialysis and Access products.

Okay. And, with the MedAssets contract, can you give us an idea of the scale of that?

Well, the MedAssets is one of the biggest GPOs in the country. Its very, very hard to translate that into what it means as far as upside revenue. But, you can certainly measure it in millions of dollars.

Let me ask it a different way. I mean what do you guys targeting for a national account number in terms of what's the potential market? What do you think is achievable in the next year or two?

Well, the national accounts, the GPOs and the IDNs, the corporate accounts, the contract business is the majority of the marketplace that we have really not been a player in the Access and the dialysis products, or any of our other products, for that matter. In fact, we've historically run away from that business because we felt there was enough low hanging fruit that we could deal direct and go around these contracts when possible and keep growing our business. Well, of the non-contract business, we've reached a point where we have gotten a large share. And now, as of last year, we decided we had to go after the contract business. So the upside here is extremely significant. For example, in PICCs and ports, for instance, Bard is the market leader with the better part of a 60% to 65% market share in the United States, most of that being contract based. We have about a 20% market share. The vast majority of that being non-contract based. So you can see the magnitude of the market that we are going after. And we think we have the right tools to do it with better mousetraps in our PICCs and ports. They stand up very, very well in the clinical environment. The customers prefer them on many occasions. So, we think it's well worth our while to go after the contract business. And it was also a bit counterintuitive to us to believe that contract business could be available at a selling price. That would still be attractive to us. And, in fact, that Bard doesn't discount very much in their contracts they have been awarded. So it's a very, very attractive piece of business, as well as being very large in volume.

Okay. One last question, I guess, on what investors kind of think about as your legacy business, which would now, I guess, fall into peripheral vascular. Reflecting on your last answer, that's where we have had slowdowns. How much of that is really a new phenomenon in the market, increased competition and anything else? And how much of it is just not having enough guys on the street, not really going after GPOs? And when you think about that lower growth portion of the business, what can that really be? I guess you have given us the growth rate here, I guess it is 45. Breaking out Diomed, I mean, what is the growth of that business in '09?

Well, we think that the growth is about 10% to 12%....

In peripheral vascular

…in peripheral vascular

Okay, yeah.

Absent the acquisition impact.

Yes. And we think that's appropriately conservative, because we think there is upside based on the dramatically increased focus and dramatically reduced average sales per representative by making the sales force expansion. But we do not want to count those chickens before they are hatched. And I think an excellent example would be in our IPG sales force last year, not only did they have a volume of business that was unwieldy, but also, the product bandwidth was tremendously taxing in that. Why would you spent time really fighting the battles to sell angiographic catheters or PTA or drainage, when you could focus on Smart Port? It was very, very hard to manage the guys and incentivize them in such a way that they would sell the whole bag. So the legacy products, I think, are going to benefit tremendously from the added focus of the SBU structure.

Great. Thanks, guys.

Thank you, sir. Our next question comes from the line of Jayson Bedford with Raymond James. Please go ahead.

Hi. Good afternoon, guys.

Hi, Jason.

A couple of questions. Just in terms of the new business unit structure, besides ahead of oncology sales, what is left in the build out? And then, I think you mentioned 108 reps in the Access and Peripheral, how many in Oncology? And, then, how does that compare to, say, three or six months ago?

Well, for the most part, the SBUs are filled out with regard to all positions except for the -- there are a few odds and ends. But the SVP General Manager is a big position to fill and we have a retain and recruit going on since May to fill that position. So I am hopeful, we will have it filled before the next time we talk. As far as the Oncology/Surgery Division, they have 28 reps and four clinical specialists and four regional managers. The Access Division has 39 territories, and the Peripheral Vascular has 41. And the total complement for those 108 territories are; we have 14 field clinical specialists and 14 field regional managers. And then, we shouldn't forget our international sales force, which we have 15 people in that.

Okay. And I guess, simply, in the last three months, how many salespeople have you added?

We started the sales force build out in April/May timeframe. And we have added about 12 or 13.

Okay. That's all. I thought it was more. And then, just a quick question for Joe. Joe, you mentioned $0.04 to $0.05 in restructuring costs related to the Diomed acquisition. Is that assumed in the $0.55 guidance?

Yes

Okay.

Just one-time costs for rebranding and alike.

Great. Thank you.

Thank you, sir. Our next question comes from the line of Greg Brash with Sidoti & Company. Please go ahead. Greg Brash - Sidoti & Company: Hi, guys. Thanks for taking my call.

Hi, Greg Greg Brash - Sidoti & Company: Just a little bit of questions on Diomed here. When do you plan to sell both NeverTouch and the Dio kits. When do you think you can move production of these kits in-house? I know you would get a nice gross margin boost by doing so. And are there any plans to raise the prices on your kits now that you have this royalty payment?

Well, we've already raised the prices on the kits commensurate with completely compensating for the royalty payments. So our gross margin in the US on kits is going to be at least, at or above where it was the year before. The impact to our overall gross margins really has to do with the fact that the volume has nearly tripled, which is a mix issue. We are going to offer both types of kits. And we are definitely going to look to reduce costs and increase gross margins up to the low-to-mid 60s by vertical integration and by continuing to innovate and raise the bar in performance. So there may very well be an evolution towards a unified product. But, we haven't made that decision yet. Greg Brash - Sidoti & Company: How long does it take to move those products in-house? And is that something that's included in your guidance?

It is not included in the guidance. The team is committed to get the gross margins up to the low-to-mid 60s over the next two-year period. Greg Brash - Sidoti & Company: Okay. And then I don't know if you mentioned the R&D, what percent that is of revenue. And then, I was just curious, with IRE. How many studies are you funding here? What are the sizes? And when can we expect to see data?

The R&D investment corporate wide is 9.1%, which is slightly higher than our normal target of 8%. And we think it will go back to 8% in fiscal 2010 and thereafter. So, this is sort of an one-time bump up to handle the driving clinical data. The exact number of clinical programs is a work-in-progress. Because, although, we're putting 20 units out to drive clinical data, we are not going to have 20 independent studies. There will be collaboration between some of the sites on different studies. But there will be, I would say, half a dozen going by the end of the calendar year. And, as I mentioned earlier, I would expect that we would be presenting interim data on those studies at every opportunity we can. Since we are out marketing this system, we are really driving the clinical data for marketing purposes, as well as advancing the science here. So, we're going to be looking to leverage it as it develops. Greg Brash - Sidoti & Company: Okay. Thanks, Eamonn.

Thank you.

Thank you, sir. Our next question comes from the line of Larry Haimovitch with HMTC. Please go ahead.

Good afternoon, gentlemen.

Hi, Larry, how are you?

Terrific. Eamonn, yourself?

Very well, thanks.

I have few, not too many questions for you. I want to harass Joe a little bit. Joe, I am looking at balance sheet questions. One, the year end cash, is that approximately what we are now? Are all the cash payments, litigation and all the bills and expenses behind us, and the cash balance is a real balance, so to speak?

Well yes, the balance is real, but…

Not a reason. That's it, it's not a real. Are there any other things that are not there that were post the year?

Yeah, no it does. The one that is not included there is the VNUS Medical settlement, and that will be about $7 million that actually was paid in June. This, of course, is a May 31st balance sheet.

Right.

And there would be a subsequent payment in August of about $10 million associated with the convertible debt instrument that we took on with the RITA acquisition.

Okay. That's why you have it in the liabilities or current portion of long-term debt, because you are going to be paying it fairly soon?

Right.

So cash balance is actually, we adjust for those two before any cash generated in the current quarter, it's roughly $60 million.

Well, yes, those two items. That's right.

Okay. And then, on the receivables and inventories it was interesting to me to see your receivables up 30%, which seems about right, considering your sales were up obviously, not quite that strong. But then your inventories were down significantly. I was trying to understand why receivables would have been up so much and inventories down so much.

Sure. Well, the receivables were, as we look at it, in terms of day sales outstanding, and they stood at 49 days outstanding. So that was quite a reasonable level. But as I mentioned in the comments, we have actually had a program going to work very hard to manage the inventory balances better. And we've been very successful with that. Primarily, the inventory balances here in Queensbury, which is about two-thirds of our inventory. The other third being down in Manchester, Georgia. And we just found, as we continue to peel back the onion, we found a lot of ways to buy less inventory and work balances down. And the only requirement we set is that we could never have a stock-out and did not want to ever impact on customer service. And I think we have been able to that this past year to get it down to the level you see. I don't think it's going to go down $5 million next year, but I think we've established some good principles that will stand us in good stead in the future with inventory management.

And going back to the cash for a second, the press release is obviously very thorough. You provide some nice guidance for '09 and '10. Did you provide any guidance on prepared remarks, because I was a little bit late jumping in, on cash flow expectations for fiscal '09?

Well, we did indicate EBITDA expectations at $33 million to $35 million.

Okay.

That is as much as we offered with respect to…

Is that a reasonable proxy, Joe, of cash generation, sort of, ballparkish, so to speak?

Yes. Well, it's before, of course, any normal capital expenditures or…..

Yes.

…anything else, of course.

Yes. And your CapEx are pretty low though?

Correct.

Yes. And then, finally, I think it was Brooks who asked the question earlier about the different divisions. Are you going to breakout, now that you have gone to three SBUs, the product sales by the three SBUs as opposed to interventional versus oncology as we go forward?

Yes, we will. Both sales and gross profit and, actually down to a fully allocated operating income level for the three business units.

Well, on behalf of the analysts, thank you. And on behalf of all your competitors, thank you, too. They love me, of course, don’t they.

Yes, indeed.

Okay. I'll jump back and give. Congrats on all the progress, guys.

Thank you.

Thank you.

Thank you, sir. Our next question is a follow-up question from the line of Jason Mills. Please, go ahead.

Thanks for taking the follow-up guys. I just wanted to clarify or make sure I understand adjacent about first question, Joe, on the charge associated with Diomed. So your guidance of $0.55 includes $0.04 to $0.05 from Diomed. Could you just remind me because, supposedly I guess I didn't catch it clearly enough. What exactly that is and confirm that that is part of the $0.55 and it will all fall in the first quarter. Is that all right?

Well, are we talking in fiscal '09?

Yes.

The settlement payment to VNUS will take place. But are you talking about the Diomed…

Accretive or dilutive aspect.

Yes. The dilutive aspect of it.

Yes. That is included in the $0.55.

And how much is that again?

That was $0.03 or $0.04. Well, it's in the first couple quarter, as we said.

That's right. It is $0.01 dilutive on a year.

Okay.

And it's only dilutive in Q1 and then becomes….

Yes.

So it nets out to about $0.01.

Okay. So the $0.55 is inclusive of about $0.01?

That is right.

And the $0.05 was associated with last year, right ? Okay. I got it now. And then the last question I have is with respect to your R&D budget, Eamonn and Joe. So if I am understanding this correctly, you are looking at the midpoint of your guidance at about $19 million in spending this year on R&D. And assuming, as Joe mentioned, approaching 20% in 2010, 20% growth off that midpoint is an 8% R&D budget. It's about $20 million. So is it about accurate to assume that, within $1 million, you will be spending similarly on the R&D franchise in 2010 that you plan to spend in 2009?

Yes. We think that's exactly the way it will rollout.

Okay. So what I just want to make sure of is, it seems like the R&D franchise should grow slower if you are growing 20%. But I guess, in my own mind that seems a little bit conservative, that perhaps we could see more growth in 2010. What am I missing? And what am I not getting clearly enough to be able to wrap my mind around spending the same amount on R&D in 2010, especially giving that IRE will still be relatively in its infancy in 2010, having done roughly $1 million in 2009. So you are probably going to be driving that, I would say.

Yes. This year about 40% of that $19 million is going into IRE.

Okay.

The reason for that is really a big bolus going into driving these clinical programs going forward.

Okay.

As these clinical programs progress, the amount of investment we are going to need to make to generate more clinical data, we expect to decline because it will take on a life of its own because this is an approved product. And these are resection studies. So we're not out trying to prove five-year survival data. We are out trying to show that this is a better scalpel. So the clinicians will take this on with a life of its own and start doing their own studies. And we expect it to evolve much more alike that. And the amount of investment that we're putting into, in fiscal 2010 into IRE should be a lower percentage of the overall R&D budget, for a NanoKnife anyway. There will be other things that may pop up. But the net-net is we went through a pretty detailed review of what the R&D budget was going to look like in 2010 and felt that it could live at 8% of revenues, assuming that we're growing at something close to 20% revenue growth.

Okay. So nominally, it sounds like, Eamonn, that you'll be spending less not only as a percentage of that $20 million on IRE, but nominally it would stand to reason, given what you said, that you would be spending less on IRE in 2010 as well, right?

Yes.

Okay.

Yes. On the R&D side. I would expect marketing expenses will ramp-up as sales do.

Okay, great. Thanks, guys.

Thank you, sir. And that does conclude our question-and-answer session today. I'd like to turn it back to management for any closing remarks.

Well, I would like to thank you all for your attention today. We look forward to updating you on our progress and appreciate your interest in AngioDynamics. Have a great evening. Thanks very much.

Ladies and gentlemen, this concludes the AngioDynamics fourth quarter fiscal 2008 conference call. If you would like to listen to a replay of today's call, please dial 303-590-3000, or 1-800-405-2236 entering passcode 11117392. Once again, if you'd like to listen to a replay of today's conference, please dial 303-590-3000 or 1-800-405-2236 entering passcode 11117392. ACT would like to thank you for your participation. You may now disconnect. Have a pleasant day.