Good day ladies and gentlemen and welcome to the second quarter 2009 CONMED earnings conference call. My name is Heather and I will be your coordinator for today. (Operator Instructions). I would now like to turn the presentation over to your host for today's call, Mr. Joseph Corasanti, President and CEO. Please proceed, sir.

Thank you, Heather. Good morning, everyone, welcome to CONMED Corporation's second quarter 2009 earnings conference call. With me today is Rob Shallish, our Chief Financial Officer. After formal remarks the call will be opened for questions. Before we begin, let me remind you that during this call we will be making comments and statements regarding our financial outlook, which represents forward-looking statements that involve risks and uncertainties as those terms are defined under the Federal Securities laws. Our actual results may differ materially from our current expectations. Please refer to the risk factors and other cautionary factors in today's press release as well as our SEC filings for more details on factors that may cause actual results to differ materially. You will also hear Rob and me refer to certain non-GAAP measurements during this discussion. While these figures are not a substitute for GAAP measurements, company management uses them to aid us in monitoring the company's ongoing financial performance from quarter-to-quarter and year-to-year on a regular basis and for benchmarking against other medical technology companies. Non-GAAP net income and non-GAAP earnings per share measure the income of the company excluding credits or charges that are considered by management to be unusual or outside of the normal ongoing operations of the company. These unusual items are specified in the reconciliation in the press release issued this morning. With these required announcements completed, I can now turn to my comments. We are now nine months through an extraordinary and difficult period in the world's economy and healthcare, in particular. Like many other medical technology companies, CONMED has been adversely affected by unfavorable foreign currency exchange rates, reduced capital spending by hospital customers and for some surgeries a lack of typical growth and procedure volume. And well, may be sometime before the company…

Thanks a lot, Joe. I will spend a few moments of this morning to discussing our second quarter's financial results and then spend the remainder of the time on a more detailed explanation of our second half forecast. While, we typically compare our financial results year-over-year, because of the adverse economic changes from a year ago, for the purpose of this discussion I think it maybe more useful to compare this year's second quarter results to those of the first quarter of this year. As you may recall from our first quarter conference call, we forecast that the second quarter of 2009 will produce financial results very similar to the first quarter on a GAAP adjusted operating basis. This in fact did occur with the company second quarter sales slightly better than the first quarter and was slightly higher non-GAAP income from operations than that of the first quarter. Non-GAAP diluted earnings per share in the second quarter were equal to $0.17, $0.02 less than the $0.19 in the first quarter. But only because of favorable income tax adjustment in the first quarter, that cause the effective rate to be much lower than normal. Foreign currency exchange rates moved in our favor during the second quarter when compared to the first quarter of the year. However, the rates remained unfavorable compared to the second quarter of 2008 and sales were $9.5 million less than they would have been if that 2Q '08 rates were in effect. Our gross margin percent of sales on a GAAP reported basis was 47% in the second quarter compared to 46.5% in the first quarter of 2009. Adding back the appropriate quarters manufacturing, restructuring cost included in cost of sales, the pro forma second quarter gross margin percentage was 49.2% compared to 48.3% in the…

Thank you. (Operator Instructions). Your first question is from the Matt Miksic with Piper Jaffray. Please proceed.

Hey Joe, hey Rob, couple of questions. Thanks for taking our questions this morning. First on the hospital trends that you're seeing, you mentioned I think in the past that you're seeing sort of increased evaluations and I think your comments this quarter are more focused on what some of your customers are saying to you regarding the back half. Could you sort of give us a sense of what exactly you're hearing or may be how that compares to previous years? What kind of leave time you might normally get from purchasing managers that they think about the back half?

Sure. There's one large institution in particular that we think is finally releasing the order for capital, so that's one indication, and maybe even more importantly this two hospital systems IBNs if you will large ones that have indicated that they are willing to release some budget money for capital for the second half of the year. So I think we are relying on those three sources and maybe several others that we hear from our sales force regarding individual hospital accounts and a lot of these are hospitals accounts for the evaluation that we were completed or are in process and they are getting indications that deal's on the way.

Okay, that's helpful. And then on spending also wondering whether you are seeing any change in either the kinds of evaluations you are getting pulled into or the way hospitals are behaving around sort of value pricing preferences for the second or third tier product offered at better pricing versus sort of the premium priced [to real end of] the market. And if you are seeing any of that first of all and if any of that does happen. Do you see any of your businesses benefiting from that kind of more selective behavior?

Well in Electrosurgery, our generators are priced a little bit under the competition. Though we could see a benefit there if that were the case, but I haven't seen any indications that the customers are seeking out more value propositions with capital. In terms of the video systems, pricing has consistently been pretty equal with the three or four competitors that have high definition video. But I haven't heard of customers seeking out value propositions in terms of not buying high definition or a more extreme example would be foregoing a three chip camera in favor of a less expensive single chip camera. I have not heard of any incidents like that.

Okay. And then on the P&L I guess I mean a question for you or for Rob, as I look at the reduction in the top line and for the full year number 10 million and I sort of do some rough math on how that drops through the P&L. The $0.07 reduction looks like a pretty steep drop through of that $10 million. Yet, you are talking about some consolidation of administrative offices I think based on where rates were in currency earlier in the year it seems like there would be some slight benefit potentially to the bottom-line, as well since that's where a big part of your talk was in the beginning of the year, right was around the hit from FX. I guess I was hoping for and would have expected maybe a little bit more reduction here some around your operating expenses or some benefits just from the effects in the back half to make that bottom-line cut, a little less severe than the top line cut, which I should say conservatism I think is welcome in this environment. We just love to see maybe a little less hit to the bottom-line. Any color you can provide on how you are thinking about the top and bottom-line, or anything you could do to quantify these administrative cuts that you are talking about?

Well, sure Matt. With the sales numbers we do want to provide a conservative estimate. So consequently we've brought the numbers down now from our previous estimate in April. I think that is the major factor there maybe the third quarter more so than the fourth quarter that three months ago we expect a little bit more of a pick up in the third quarter than I think we're going to get, and so consequently I think the reduction is more related to the third quarter than the fourth quarter. Now in the fourth quarter we still expect a strong finish to the year. From a cost perspective, I think you are right that the $10 million of sales change is effectively that $0.07 number on an earnings per share amount. We're a little bit cautious on the manufacturing restructuring. We think that that will provide positive benefits to us, but it's little bit higher to quantify exactly because the manufacturing benefits first roll into inventory on FIFO accounting basis and then roll out to the P&L as inventory turns. So as Joe mentioned that we're pretty much complete with the Mexico implementation of that plant and we should start seeing the production of that plant to produce lower cost product than we previously have had, but we still have to account for it on a FIFO basis. So I am a little bit cautious on when that benefit would roll out, whether we would see very much of it in the fourth quarter or certainly in the first quarter, and then with the restructuring of the Endoscopic Technologies sales office. We do expect to see some benefit in the fourth quarter but perhaps not as much as we would typically see as we would go through 2010. So, we've taken those factors into consideration, tried to provide a conservative estimate and I do believe that the actions that we're taking will end up with favorability on a profitability line as we enter 2010.

Just to push you a little bit on the cut. It almost looks like you should have taken your $10 million cut you've dropped it through as you say assuming modest to very conservative improvements from the manufacturing restructuring, but it almost seems like you are baking no benefit from the endoscopic SG&A reductions or improving FX rates. Am I not reading that the right way, I mean have you taken that conservative approach?

Well, I think the answer is, yes. I think that to some small degree we may have considered foreign currency which obviously is not necessarily guaranteed matter at this point, and the reduction for the administrative offices that's in rough terms about $0.02 a quarter, so it's within the range of variability that we've given $0.85 and $0.95. So, in a way it's a little bit difficult to actually quantify that as a, specific pennies per share number.

I see. So maybe those things might push you to the top end of your range if they were to come in, but you may wind up at the bottom and range if they are less. Is that fair?

Yes, I would agree with that and we've obviously got an information forecast from each of our divisions what they expect to be doing for the rest of the year. If you add all that up that comes to a much stronger number than what we are talking about right here. So we herein in head quarters have taken a conservative approach, cut that little bit in case the economy is little bit softer than what our divisions are expecting and effectively result in that $0.85 to $0.95. We could be very fortunate and see much higher than that, but as I say, we want to provide a conservative estimate.

Okay, well thanks for taking the questions. I will get out of the way here for some other folks to jump in.

Your next question comes from the line of Raj Denhoy with Thomas Weisel Partners. Please proceed.

Hi, good morning. Wonder if I could ask a little bit about the arthroscopy product line. I mean that was one that deteriorated even from the first quarter number. And I'm curious, if there is something behind that?

No, nothing really behind that from our capital standpoint, we have this business we call Integrated Systems which is a very enhanced video system in an operating room where the monitors are hung from the ceiling and we integrate the camera with the monitors with the computer control system. I think we've talked about this before that this particular business can be somewhat choppy because of how hospitals give us their orders and then when they allow us to get into the operating room to do the installations. That particular business was down about $2 million from the first quarter. So I don't necessarily see that as an overall negative just because of that kind of a decline. So if we add the $2 million or adjust for that $2 million the arthroscopy business is pretty much in-line. And I do say I guess I do have to say that I'm on a single-use line, we are down a little bit more than we were in the first quarter. I think in the first quarter we were down 1.5% or so and now we are down about 4% on a single-use basis. But we don't really see any trend that might be developing. I think it just happens to be the normal variation that we see in the business from time-to-time.

Well that's actually when I was kind of getting, I think it was flat in the first quarter and then it was down 4% this quarter and I think Smith & Nephew just reported this morning and they showed I think pretty strong growth in kind of single-use for arthroscopy. I know it doesn't compare exactly across. But I guess I was just trying to see if there was anything maybe on the competitive side that was happening there or if you have any other explanations around that?

I really don't. What we do feel very positive about is this Shoulder Restoration System that we just came out with about three or four weeks ago. We really feel very positive that will help us to grow that business more than the market.

Okay. When the cash flow is on the margin side, on the SG&A line which was higher this quarter I think you mentioned you had some higher marketing cost scenario expected to moderate. Maybe you could explain a little more what that was?

Yes. In the second quarter there are just many more marketing opportunities, various conferences that we go to and we are preparing for the roll out of the Shoulder Restoration System. So all of that added up to more than what we would typically see on an annualized basis.

Okay. But we should expect that to moderate on a dollar basis going forward or it would be relatively flat here?

Moderate on a dollar basis and also as a percentage of sales.

Okay. On the plant consolidation to move to Mexico, interesting, to see gross margins being basically flat, on the first quarter and also on the second quarter last year. I guess on one hand your capital business has been a lot weaker than your disposal business. I'm surprised why that gross margin hasn't maybe improved a little bit? And then secondly, as we move into 2010 with the move in manufacturing and the consolidation of plants here, what do you think that gross margin can start to do? I mean, we were talking something in the low 50s, mid 50s and where can this number start to move towards?

Well, I think the low 50s is certainly a number that we would be working toward. It could be higher than that. But I think at this point anything more than the mid 50s or the low 50s is probably what we are to be looking towards. In terms of the gross margin comparison to the second quarter last year which is about the same as you pointed out, we really haven't seen the benefit yet of the manufacturing change to Mexico. We're just now fully operational in Mexico and anything that's been produced there is still sitting in inventory from a FIFO standpoint and would not have affected the P&L.

And just lastly, when I look at the foreign currency effect in the quarter, if I am not mistaken and I think you've shared this in the past, about $0.60 of every dollar of foreign currency falls through to the operating lines?

Yes, that's a good percentage.

Sort of [that's right]. So I guess, if we look at the increase in operating income in the quarter, over the last quarter, I mean it was actually I think even less than what the foreign currency benefit would have been, which implies that you're still seeing a little bit of potentially negative leverage happening here. I guess I'm just trying to get at when we can really start to expect to see this leverage flow through because it's been several quarters if not a couple of years that we've been waiting for the leverage to start materializing to a great degree. I know you're still doing a lot of initiatives in your closing manufacturing facilities, some of the earlier questions, some of the deconsolidation of the operations. But at what point do we actually see the leverage, outside of foreign currency driven leverage really start to play through on your P&L?

Yeah, well that's a good question. Yeah, we were starting to see benefit on the leverage and I think through the third quarter of last year and then of course, currency went the other way. So, I do think we were seeing some benefit through say September of last year. I think, so much was masked right now by the economy and the low level of sales that we currently have as compared to what we think we should be having in a more routine situation from an economic standpoint. So, as we go into 2010, I do looks back to some benefit from leverage. We've seen the negative effect of leverage to-date in the last three quarters. The third quarter coming up probably it's going to be a repeat of what we've seen in the first and second quarter. So I don't expect too much change there with respect to say operating profits as a percentage of sales. But, when we get to the fourth quarter, with increased sales I think we should see that number go up and then I think it should go up, as we go through 2010.

But, if I'm not mistaken, I mean do you even think the fourth quarter what you're sort of alluding to is that, leverage and in sense, the profit building improvement you're seeing in the fourth quarter is all being driven by the top line. And I'm trying to get, when we'll see start to see some of these expense reductions played through? And it sounds like, if the top line doesn't materialize this year, as your projecting it does in the fourth quarter, that you're not going to see any expense reduction driven leverage in the model, in the sense it's not anticipated, its really come here until next year, is that fair?

Well, I think it's fair with respect to manufacturing, because as I mentioned before with FIFO inventory, it's probably unlikely that any of the reduced costs from the restructuring will flow through into the P&L until 2010. And of course, that's going to be factor in leverage. The Endoscopic Technologies administrative change and some of the other things that we've been doing, in the scheme of things they are important and will be beneficial to the organization going forward. But on a comparison to total expense it's rather low and only a few basis points perhaps in percentage. So, the major thing is the manufacturing restructuring that we would expect to see benefit from in 2010.

Okay, fair enough. Thanks.

Your next question comes from the line of James Sidoti with Sidoti and Company. Please proceed.

Good morning Rob, good morning Joe.

Good morning.

I just want to go back to your guidance Rob I agree with you say about what's the seasonality in the fourth quarter that all makes sense to me. The question I have now is your guidance for the third quarter basically is looking for flat revenue and if you look at those same years you saw revenue had dropped in the third quarter due to the vacations and such, why do you think this year will be different?

Well that's a good question, Jim. You're absolutely right in a traditional year we would see the third quarter being softer than the second quarter sequentially. So, frankly we are expecting, we believe the second quarter and the first quarter were abnormally low because of economic activity and that the third quarter should show some improvement so to speak in economic activity making the sequence of sales and profitability about the same as the second quarter. So, I guess what we are saying is that the second quarter is and first quarter were abnormally low just because of the economy.

And now that we are about one month in the quarter I assume that you still, these numbers reflect the first month of the third quarter?

Well not to get in the monthly information but we obviously do have insight into what's going and in one month of the quarter. One month doesn't make a quarter, however just to be cautious but we do have that knowledge yes.

Okay and then on the Arthroscopy line I believe a lot of that is healthy distribution. Do you have any comment on inventory levels? Do you think that there could have been some destocking in the quarter or do you have any comment in all on what you think the inventory levels are in some of your distributors?

Jim, that's direct selling to our hospitals.

Okay. So that's all direct even the…

Its all direct, sometime in our investor presentations we mentioned that we have a hybrid sales force of about half is direct company employees and the other are third party sales agent groups. But they don't buy our product and resell it.

Okay, right, so there's not stocking there.

Yeah.

And then the last question I have is on the timeline for the restructuring. Going on to 2010, do you think these charges will all be done or do you think you'll still be taking some charges from either of the Mexico restructuring and now the latest round in consolidating the Endoscopic Technologies plan?

Well, I think that the restructuring costs are going to be finished for what we have talked about this year. Though the restructuring cost relative to manufacturing would be finished by the fourth quarter and same would be true to the best of my knowledge of the Endoscopic Technologies restructuring too.

Okay unless you announce any additional consolidations next year's number should look relatively the GAAP and the pro forma number should look pretty much in line?

Yes, exactly. I guess what we've got to do is decide about this non-cash interest expense on the convertible debt. Right now, we're calling that out as an adjustment to GAAP, and so as we get to the end of this year, we'll think about how we call that out.

Right. I mean the same thing happened with options expense, most companies broken out the first year, but in the second year when you had an apple-to-apple comparison, you'd -- a lot of companies tended to leave it in.

Correct.

Okay, all right. Thank you.

The next question comes from the line of Dalton Chandler with Needham & Company. Please proceed. Dalton Chandler - Needham & Company: Good morning. Just to take it a little more detail on the expense side of the equation here. You've been breaking out in cost of goods, some of the restructuring related expenses. It was about 3.7 million this quarter. With the move to Mexico now largely complete, shouldn't we start to see that number come down in the third quarter and then it sounds like by the first quarter of next year it should be completely eliminated.

Yes Dalton, you're absolutely right. In the press release I think we gave a number of $2.5 million for restructuring costs for the rest of this year. So that would be split between the third and fourth quarters, probably more in the third quarter than the fourth quarter, but as you can see the $2.5 million for six months is much less than the $3.7 million or so for just one quarter. Dalton Chandler - Needham & Company: Okay, and then you talked about on the operating expense side you did have some unusually high marketing expenses, but when I look in total at the operating expenses, they're about little over $3 million higher when compared to the first quarter and it doesn't seem like all of that could have been marketing. Was there something else in there?

If we're just talking about SG&A, SG&A is about 2… Dalton Chandler - Needham & Company: I was looking at all operating expenses which would include R&D and it was about $69 million in the first quarter and $72.3 million this quarter.

Let me just make sure I've got the numbers that you're using here. Okay, in the first quarter the big difference is that other expense line are showing $734,000 of expense in this quarter and in the first quarter I think it was a credit of perhaps $1.4 million, $1.5 million, I can't find my numbers that I want to have look at. So we had credit in the first quarter in that line because of pension freezing there was a gain as a result of that particular decision. Dalton Chandler - Needham & Company: Okay, got you, and then in the past when you have made changes to your guidance, you've broken out for us the impact of your foreign currency assumptions. Do you have the breakout of that for the new guidance or I should say for the change in guidance?

Well, I guess to answer your question not directly, but in a way we've included some benefit for currency at on average of the second quarter rates, but not entirely if you will. So we've been a little bit cautious on that as well. Certainly the second quarter rates of exchange were more favorable for us than the first quarter rates, and we've taken into effect in our thinking and in the rest of the year some additional favorability in currency exchange rates, but perhaps not the full amount that we saw in the second quarter compared to the first. Dalton Chandler - Needham & Company: Okay, all right. Thanks a lot.

Thank you

Your next question comes from the line of Brad Even with Heartland Advisors. Please proceed.

Yes. Good morning. Just to be clear into the third quarter you expect gross margins to be up in the third quarter versus the second quarter, is that correct?

Well, I would say it would be some minor improvement in gross margins. But on an overall basis, we think that the third quarter I am thinking about operating profit now, the third quarter would be about the same as the second quarter.

So do you think I am speaking gross margin. So you think gross margins should be flat to slightly up is that what you just said?

Yeah I think what's going to happen is that the third quarter gross margin would be slightly higher than second. That's correct.

And I thought I heard somebody say 50%, is that a fourth quarter target than you hope to be around 50% coming out of the fiscal year?

In the low 50s as we go into 2010, yes.

Low 50s, okay. Do you expect your operating cost to be down from the second quarter based on your current revenue outlook, so, below the gross profit line selling general and administrative expenses plus R&D expenses. Do you expect the some of those two line items do you expect them to be down versus the second quarter absolutely, not on a percentage basis in absolute dollars?

In absolute dollars I think that they are going to be just about the same.

Just about the same.

Between the two categories, yes.

How does that number, I realize there will be some -- if you hit your top line number for the fourth quarter obviously some selling commissions that will influence the number. But absent that, do you see that number staying relatively flat as you go into the fourth quarter excluding the sales commissions?

I am sorry SG&A, you mean SG&A and R&D.

I am speaking to the sum of selling, general and administrative expenses and R&D in the fourth quarter. I guess what I am asking is do you think you can hold your operating expenses flat, excluding sales commissions if you hit your top line guidance for the fourth quarter?

The answer is yes, I think obviously there is going to be some increase for commissions because of variability. We do see increasing healthcare costs and other benefit costs than lot of companies see. And offsetting that, we think that there will be some benefit out of Endoscopic technologies change.

And so there is a chance that we will show positive year-over-year comparisons than in the fourth at some, if the top line materializes?

Yes.

I heard a comment about sequential revenue growth, and I think you said, I think the comment was made that you expect sequential revenue growth over the next few quarters. So does that mean that if indeed you are able to meet your top line target for the fourth quarter that we could actually a sequential revenue growth into the first quarter of 2010?

What we see typically is that the first quarter's revenues are about the same as the fourth quarter's revenues. Now, we are coming out of an economic cycle, hopefully, we believe we are. So I think that the revenues that we've seen certainly in the past are diminished because of that. We think that the third quarter revenues are still going to be affected by the economy. But we should see some benefit in the fourth quarter as the economy improves and hospital budgets unfreeze, so to speak. But I still think it's less than what we would typically see in a normal environment. So it's not that I want to give the estimates for 2010 at this point. But it is possible that the first quarter's sequential revenues could increase over the fourth quarter. But I mentioned that only as an answer to your question Brad, I don't want to give guidance at this point.

No, I understand and I don't want you to, I guess, I'm just trying to just thinking about coming out of a challenging year and entering a period of stability if not some type of modest recovery. It sounds like 2008 would be kind of a good financial model to be thinking about in terms of where the company could perform in 2010, if the economy and year end markets improve as you're hoping.

Well I do agree with that. I think that 2008 is a model that we'll be shooting for. A lot depends on currency rates because for most of 2010 the rates were fairly, very favorable for us. But as of there, we still should be seeing improvement along the lines of what we saw in 2008.

Can I, just ask you in terms of free cash flow deployment. How do you, I saw that you've repurchased some bonds again in the quarter which I think is great. Any other thoughts in terms of free cash flow deployment?

Well actually in this quarter we did not purchase any bonds back. The last time we purchased bonds was back in the February timeframe so

I'm sorry, I misread that. Sorry.

Minor debt reduction we had was really just -- was just in a senior debt in the receivable facility that we have. So cash flow, we would expect that it would be primarily debt reduction as we go through the rest of the year.

Do you have a year end target, where you think you might be able to get total leverage to?

See, I don't have a number in mind to be honest with you, Brad. So I can't comment on that. As I mentioned, we would use the cash flow to reduce debt.

Do you expect to be free cash flow positive in the second half?

Yes.

Okay, thank you very much.

Your next question comes from the line of [Amit Nagpal with WCM]. Please proceed.

Hi, can you hear me?

Yeah, very well.

Thanks for taking my questions. Just to build on the last caller's questions I wanted to ask about how you're thinking about your operating expense management? In particular is your target spending for 2010 outside of the commissions, are you focused on a certain dollar, absolute dollar target for 2000 spend to get to or are you focused on a percentage of revenue? I would like to just to understand how you look at that from an operating expense management perspective?

While we are trying to look at it from a bottoms up perspective, so we're looking at dollars and of course we're trying to hold the dollar increase relatively flat as we look to 2010. So that would mean in the presence of increased revenues that the percentages will go up on a profitability standpoint. We haven't done all of our budgeting yet and so that something that we're always starting to think about.

Okay, and in terms of the gross margin outlook for 2010, once again not asking for guidance. You mentioned proactively that the sort of adjusted for FX and restructuring gross margin was 52% this quarter for the full year last year you were 52%. How would you ask us to think about the gross margin potential in 2010 given that you should have four quarters of the restructuring impacting the gross margin?

Well, I don't want to get into exact numbers. But we do feel that the restructuring that we've done should be positive for us going forward. Some of the new products that we have, the Shoulder Restoration System that we mentioned, that should have a positive impact, as well as the ECOM product. And we're hopeful that we can get the tissue-sealing product out early next year. So all of those things should be a benefit to the gross margin.

Okay. So once again to reiterate the comments made to the last caller, the profitability margins on the operating/EBITDA line that you've produced in 2008. Are those your stretch goals for 2010 or do you think that, can you just help us understand how you think about that?

Well as I said we really haven't set any goals yet for 2010 but looking at 2008 as a model I think maybe something that we should be thinking about. Certainly we should be doing better than 2009 and I guess I will get back to leverage, we do think we can leverage and structure that we have as an organization. What's happened in the last three quarters is that we have had negative leverage, so sales are less and our structure is such that it results in lower margins than we would typically want to have. The upside is that as sales increase we should see margins which are more appropriate for our business.

Okay, all right thanks guys.

(Operator Instructions). And your next question is a follow-up from the line of Matt Miksic with Piper Jaffray.

Hi Rob, Joe, one follow up here. I want to circle back to some of the costs you were talking about. Some of the benefits you were talking about as you head into the back half of the year that you weren't necessarily comfortable counting on for Q4, but if we look at the administrative restructuring that you are doing that's getting something like $0.02 a quarter once it starts rolling and maybe a little bit in Q4 but certainly in Q1 we would hope. How should we quantify the manufacturing benefit if we look at the same way?

Well I think we have talked about it in the past on the manufacturing side is $3 million to $5 million of benefit. Certainly we have got internal estimates which are greater than that and I would say that for sure we got to be hitting the top end of the $3 million to $5 million of benefit.

And just to be clear is that $3 million to $5 million incremental to what's been achieved so far?

Well, I can't say that we have achieved great strides at this point. We certainly have adopted lean manufacturing techniques and portions of our manufacturing plants and I think that's helped us to some extend, and will continue to help us, but I think the real strides will be when the full effect of the Mexican operation comes on line. As we mentioned we're just now fully operational in Mexico after moving into that plant on an initial basis back in January timeframe. So we got to work through FIFO inventory to see the benefits as I mentioned and so the full amount of restructuring benefit probably won't be seen until the first quarter of 2010.

Okay. So that's most of that if we pick the middle of there its sort of $4 million would get us maybe $0.08 a year roughly another $0.02 a quarter roughly?

Yeah. In rough terms. Yes.

Okay. That was all I had for follow-up. Thanks for taking all the questions.

There are no further questions in queue at this time.

Well I want to thank everyone for joining us today in our second quarter earnings conference call and we will look forward to talking about our third quarter review on our next call. Thanks very much.

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Have a great day.