Welcome to the CorVel Corporation earnings release conference call. During the course of this conference call, CorVel Corporation may make projections or other forward-looking statements regarding future events of the future financial performance of the company. CorVel wishes to caution you that these statements are only predictions and that actually events or results may differ materially. CorVel refers to you the documents the company files from time to time with the Securities and Exchange Commission, specifically the company’s last Form 10-K and 10-Q filed for the most recent fiscal year and quarter. These documents contain and identify important factors that could cause the actual results to differ materially from those contained in our projections for forward-looking statements. (Operator Instructions) I would now like to turn the conference over to your host, Dan Starck. Sir, please go ahead.

Thank you, Ashley. I would like to thank everyone for joining us today to review and discuss CorVel's fiscal 2008 results and March 2008 quarter results. I am joined today by our Chairman, Gordon Clemons. Since the March quarter is the last quarter of our fiscal year, during the financial discussion I’ll cover both the quarter information as well as fiscal year results. And as we have for the past several calls, I will be covering the financial results and future initiatives and Gordon will be covering product development. After our overview, we will open the call to questions. Now to the financial results. Revenue for the March quarter was $77.4 million, which is a 9.1% increase from the March 2007 quarter. Earnings per share were $0.44 for the quarter, up 20% from the $0.37 reported in the March 2007 quarter. For the fiscal year, revenue was $302 million, up 10% over fiscal 2007, and earnings were $1.67, up 28% from fiscal 2007. During the March quarter, in our traditional business lines our network solutions savings continued to expand and our case management business line appears to be stabilizing. We continued our strategic initiative of our enterprise comp expansion, which is our initiative of bringing a new approach to claims management and repositioning CorVel as a full service provider to the workers’ compensation market. And, as we have in the past, we continue to make substantial investments in our current technology platform, a key building block in our strategic development and evolution. From a marketplace perspective, claim volumes continued to decline to historic lows. Based on a recently -- based on some recently released data, claim frequency declined approximately 2.5% in 2007. For the prior two years, claim frequencies had dropped at nearly 7%. The 2.5% decline in 2007 is…

Thanks, Dan. As Dan mentioned, the March quarter was a particularly busy time for our development teams, as well as for the rest of the people involved in the launch of enterprise comp. The ongoing expansion of the enterprise comp service line offers both excellent short-term and long-term opportunities and will therefore continue to occupy an important portion of our product development priorities. As we had hoped, our existing and longstanding base in managed care systems has provided a platform onto which to add full service claims management solutions. Our sales efforts thus far in the employer market for full service solutions and workers’ compensation have indicated that prospective customers have a high interest in vendors that can credibly offer a service solution that integrates all related information in a smoothly functioning, total claims management environment. We believe that market conditions are well-suited, therefore, to the goal of our enterprise comp strategy. Now specifically on enterprise comp, the development effort was focused on the integration of the acquired claims system, which we picked up last year, within the CareMC web portal which we had been developing over the last eight years. In addition, we are beginning to move some of the technology which has been productive for us in medical review to the claims environment. These projects will extend through the planning horizon with interim milestones. In addition, during the quarter we had a busy schedule of projects in support of new customers beginning enterprise comp service in the current June quarter. Secondly on the CareMC portal, the CareMC portal, including our medical review strategy, continues to be the centerpiece of CorVel's technological advantage in the marketplace. We committed to this project back when the dot.com boom was kind of the hot subject and we have built upon that initial…

Thanks, Gordon. I’d like to add just a few more items prior to opening the call to questions. Cash flow for the quarter was positive $6.6 million, with a quarter ending cash balance of $17.9 million. Our DSO decreased to 46 days. Stock repurchases were very small in the quarter. 3,800 shares were repurchased for $86,000. We spent $162.3 million inception to date and have repurchased 11.7 million shares inception to date. Diluted EPS shares for the quarter were 13,958,000. In summary, we are pleased with the progress that we are making in a number of areas. We’ve been able to make substantial progress on our strategic initiative enterprise comp, improve operating margins, and make long-term IT investments, all while achieving record earnings per share. Our ability to execute in all of these areas is only made possible by the outstanding work of the entire CorVel organization. This concludes my comments and I’d like to open the call to questions.

(Operator Instructions) Our first question is from John Szabo with Flintridge Capital.

Thank you. I guess the first thing was on acquisitions -- anything sort of new on any potential acquisitions, similar to Schaffer or Hazelrigg?

I’d say that we continue to look for the right opportunities. We don’t particularly have anything that’s real hot right now but we are really focused on trying to get the organic side of the growth going and if the right acquisition comes up with the -- not necessarily the right price but what I would say would be the right strategic opportunity, we’d execute on that. I think that we are in a situation where we’ve had a nice cash build-up and we would like to do a very strategic acquisition that would really bring something new to the organization.

Okay. Would that be in [inaudible] --

John, I’m only catching part of your question here.

Sorry. What would be sort of an example of something that would be strategic? Would it be an adjacent market or a new product or service?

It would really be on our current strategy of repositioning the organization into this full service vendor and probably and most likely in the third-party administrator market. I think the issue for us right now is we have a lot of integration activity going on and we are really not necessarily in the market of just layering on more work to do, so we would really want to focus on does this -- does an acquisition bring us a strategic either market from a TPA perspective or specific customers?

Okay, when you say market, you mean geographic?

Exactly.

Okay, and is it fair to say that Schaffer is completely integrated and that we’ve seen most of the benefit of that, or is there still a little bit more to go there?

I think that’s safe to say. Most of the benefit has been realized from both acquisitions.

Okay. I guess just sort of a bigger picture question -- you know, if you look over the last three years, you’ve done a great job of improving the margins with a relatively small increase in the top line. In fact, your EBITDA margins have almost doubled. You know, if you look out over the next couple of years, how do you see the progression? I mean, do you see further margin improvement or do you see maybe an acceleration in the top line from new products and services? Just how do you think about the next couple of years from here, relative to what you’ve done in the past?

I’ll take a first shot at it and then I’ll turn it over to Gordon as well. From my perspective, I think there’s a couple of things going. In our patient management and case management product lines, we’ve seen some nice improvement in margin as well in network solutions and I think from a network solutions perspective, it’s going to be very difficult. We’ve seen 13 straight quarters of margin improvement. I don’t know how many more we can sustain as that continues to get better. The network solution -- I’m sorry, the patient management business is a fairly low margin business, and I shouldn’t say too low. It’s better than our pure case management business, but it’s one that what we really need to do is drive growth through the system. So we are heavily dependent on volume and so for us to really expand our EPS and growth in the next couple of years, we want to return the company to a higher growth rate. Some of that may be acquisition. We’d like to see the organic growth rate at a higher rate, and be able to leverage the current investments we have on the product line. So the next couple of years really to me is about how can we grow the organization and not necessarily how do we squeeze more out of it from a margin perspective. Gordon, did you want to add your thoughts?

Sure. I guess that I feel that our nearest term opportunity is to move from a very tiny market share position in the TPA business to a much more representative share and that does I think open quite a bit of opportunity to the company. Beyond that, I think there will be some contiguous market opportunities that will be a little more clear perhaps a couple of years from now. So I see the company with opportunities to continue this kind of expansion into contiguous opportunities and I think the thing that really fuels it is that we have a high return on equity, so ultimately we are going to develop the capital resource to either acquire our way into additional opportunities or to build proprietary tools.

Okay. And I seem to recall from prior quarters you talked about some of the sales opportunities from the acquisitions in the TPA market, and I think it was along the lines of sort of multi-state opportunities. Is that playing out about as you thought, or what’s the potential for further leveraging the top line from the existing TPA business that you have?

John, let me see if I can answer that in the area I think you are asking. We’ve realized most of the synergies between the two organizations, bringing our managed care products to those, and so those did play out as we thought. From a new growth opportunity perspective, I think that’s probably been a little slower than we expected and part of that has been I think just getting the organizations integrated to a standpoint where we have a common language and that we’re moving forward and selling this product. If I was to look at the past year and really think about the investment we made in that business and the integration activity, I’d say we were very successful from the standpoint that we were able to buy the businesses, integrate them, and basically secure 99% of the current customers. So from a first year investment, I feel that very successful. I think now we need to be able to understand how we accelerate the growth rate there over the next couple of years.

Okay. I guess if you look out over the next year, maybe coming back a little bit to this sort of question of where do you go from here, if you just sort of annualize the fourth quarter run-rate, that would get you to about a 6% or 7% EPS growth going into 2009. I mean, would it be unreasonable to think that you couldn’t get another four to five to get you to a double-digit EPS increase from some of these initiatives that you’ve discussed today? Or is it going to take additional acquisitions to kind of push the ball or push -- advance the ball a little bit more than just the current run-rate?

I would say that that’s not unreasonable. Our goals are certainly at a double-digit expectation but there’s a lot of things going on in the market right now and from a repositioning standpoint, there’s some things that we have to get through from a sales perspective and get the growth rate. We have to get some growth to be able to get to that double-digit rate though.

Okay. Fair enough. Thanks for another good quarter. Appreciate it.

(Operator Instructions) We do have a follow-up question from Mr. John Szabo of Flintridge Capital.

Sorry, thought I’d give someone else a chance -- just a couple of detail financial questions here. Do you know about what you’re going to spend on CapEx for ’09, roughly?

Our CapEx is probably going to be somewhere between the $12 million and $13 million mark this year. We were at 16.5 last year but that was off of 8.5 in fiscal 2007 and a 7.8 in fiscal 2006.

Okay, and is that -- what would that be for primarily?

Mostly IT investment.

In the network solutions or sort of across the board or --

In both supporting network solutions and the growth into the enterprise comp business, our claims administration software, and integration into CareMC.

Okay. And did -- thanks for the cash flow number, by the way. Did you happen to have the D&A number, or should I wait for the K to come out?

Better wait for the K to come out, John.

Okay. All right, and just I guess on share repurchases, are you -- you kind of went back and forth a little bit about that. Are we still basically trying to build cash for that big strategic acquisition that’s coming at some point, or do you think there may be some balance of that in fiscal ’09 or sort of where are your thoughts on that today?

Well, John, you kind of took my comments and turned them into that we are actually going to buy something here. I mean, that was a pretty -- that was pretty aggressive there.

I would love to see you buy something, so --

And believe me, if we thought the opportunity was right and we have -- I think one of the things that’s interesting, John, as just a side note is we’ve actually passed on four deals -- we did two deals in the past 15 months. We passed on four others, just because we didn’t feel they were the right fit for the organization at the time. And several of those were quite large, so we’ve -- we certainly are looking all the time. We will continue to build our cash position and if the stock is at a point where we think it’s appropriate to buy, then we will. Gordon’s areas of really liking to do share repurchases are here, so Gordon, do you want to tackle that one a little bit?

Well, I would just add that I think it’s possible that we would -- we don’t like to see our shares move up and so we do try to keep track of dilution. Back on the growth question though, I would like to add that the cash at the end of the March quarter this year was I think a couple million higher than it was a year ago, even though one of the acquisitions was consummated after the end of the March quarter last year. So I think that our form of growth comes partially, as I said earlier, through our high return on equity which causes us to be so cash flow positive. So I think it’s not quite the same as other companies who might be relatively cash flow neutral or even some that have to borrow to grow. If we are growing out of our own cash flow, I think that’s a little -- it’s not true organic growth but it’s not the same as the growth through increased leverage in the business and I expect to see the company continue to be able to fund growth at higher rates than are implied by our last two or three years performance. And on the share repurchase, I think we are looking to build cash for a nice acquisition but partly because we think that’s the best use of our funds. We will continue though to be I think prudent about the dilution in our stock and if we get an opportunity to buy some stock back, that wouldn’t be outside our plans.

Okay, well, I guess the way I look at it is the company generates a tremendous amount of cash, and as you’ve said, you’ve got very high return on invested capital and if you can replicate those returns in an acquisition, I mean obviously that’s the best use of your capital and I would look forward to seeing more acquisitions. But as you said, obviously it’s got to be the right one, so in the meantime, I guess we’ll just assume that maybe the share counts stays relatively flat for ’09.

Yeah, I think that’s a reasonable forecast. One of the other strategic ideas that we do follow is to try to keep the amount of equity we have at work in a relatively small marketplace under control and I think there have been times when the companies with excellent strategies have had trouble generating EPS in our industry just because they have too much equity to apply in what’s a relatively small space.

Right. Okay, thanks again.

(Operator Instructions) You have no further questions. Mr. Stark, do you have any further comment?

I would just like to acknowledge the folks who joined the call and thank them and certainly look forward to talking to everyone again soon. Thank you.

This concludes our conference call for today. Thank you for your participation. Please disconnect at this time.