Good day ladies and gentlemen and welcome to the Fourth Quarter and Year-End 2008 ICU Medical Inc. Earnings Conference Call. My name is Melanie and I will be your coordinator for today. (Operator Instructions) I would now like to turn the call over to Dr. Lopez, President. Please proceed.

Good afternoon, everybody. Thank you for joining us today to review ICU Medical’s financial results for the fourth quarter and fiscal year ended December 31, 2008. I am Dr. Lopez, Chairman, and President of ICU Medical. With me on the call today is Scott Lamb our CFO. I will start the call by reviewing our key operating and financial achievements for the past year, and then Scott will discuss our financial results for the fourth quarter. I will wrap up the call and provide our revenue and earnings targets for fiscal 2009 and finish with the discussions of the current business trends. Then we will open up the call for questions. Before we start I want to touch upon any forward-looking statements made during this call. Please be aware that based on the best available information to management and assumptions that management believes are reasonable, such statements are not intended to be representations of future results, are subject to risks and uncertainties. Future results may differ materially from managements current expectations. We refer all of you to our SEC filings form more detailed information on the risks and uncertainties that have a direct bearing on our operating results and performance and financial conditions. With that said, let me begin. During 2008 we achieved record fourth quarter and full year results and continue to successfully execute our business strategy of developing, manufacturing, and selling the leading products designed to protect patients and healthcare workers from infectious diseases, as well as harmful chemicals encountered in every day routines at hospitals and outpatient centers. Our total annual sales were up approximately 9% to $205 million and our net income increased 5% to $24.3 million or $1.67 per diluted share. Our strong top line performance during the year was attributed to continuous improvements in…

Thank you, Doc. Before I begin, let me remind all of you that the sales numbers we are covering, as well as our financial statements, are available on the Investor portion of our website as well. Our revenue for the fourth quarter of 2008 increased 25% to $56.7 million, compared to revenue of $45.5 million for the fourth quarter a year ago. As Doc already mentioned, for the fiscal year our revenue increased 9% to $204.7 million compared to $188.1 million a year ago. Net income for the fourth quarter of 2008 increased almost 50% to $9 million or $0.61 per diluted share, compared to net income of $6 million or $0.41 per diluted share for the fourth quarter of 2007. For the fiscal year our earnings were up 5% to $24.3 million, or $1.67 per diluted share, compared to $23.1 million, or $1.51 per diluted share in 2007. Included in the 2008 earnings are discrete tax benefits of $0.14 per diluted share. Included in the 2007 earnings are legal settlements of $0.13 per diluted share. Excluding the tax benefits of $0.14, our earnings were $1.53 per diluted share for the full year of 2008, compared to 2007, excluding the legal settlement, earnings per share were $1.38. Now let me go into more details on our fourth quarter results. I will start with discussing sales by product category. Sales from CLAVES represented 41% of our fourth quarter total revenue and grew 29% from $18.2 million to $23.5 million year-over-year. We expect that in 2009, as we hire additional sales people, CLAVES sales will directly benefit from our agreement with Premier and we believe this product lines growth momentum will begin to benefit in the second half of 2009 from the new Premier agreement. We expect his product line to continue…

Thank you, Scott. Before I provide our sales and earnings targets for the new fiscal year, I would like to address the current economic environment. Although our business has experienced no affect from the current economy, it is not easy to fully estimate the magnitude the current environment will have on our customers. We expect a deepening recession will have some affect on our company’s performance in 2009 and we have tried to take that into account with our 2009 revenue and earnings estimates. Based on our current business trends, we believe our company is well positioned for continuous, strong, top line growth and we forecast our revenues for the full year 2009 to be in the range of $215 to $225 million. We expect all product lines except critical care to achieve growth in 2009 over 2008. On the operational side of our business in 2009, we will be expanding our sales force and reinvesting in our manufacturing processes as we position ourselves for continued growth and improved efficiencies for years to come. We’ll be adding at least 20 new direct sale people during the first half of 2009 and they will focus on new opportunities with Premier and new products, such as oncology, in order to leverage these opportunities over the coming years. In our industry it takes approximately nine months for new sales people to become effective. We have a positive track record of realizing a strong ROI on our direct sales expansion efforts and we are confident that even though this expansion will temporarily affect earnings in 2009, this move will favorably position us for years of growth with these new opportunities. In addition to adding new sales people, we will be investing and improving our manufacturing processes throughout 2009 to expand our capability and increase…

(Operator Instructions) Your first question comes from Mitra Ramgopal with Sidoti & Company. Mitra Ramgopal - Sidoti & Company, LLC : First if you can just sort of help me with the CLAVE sales. It was a lot stronger than I was expecting. I don’t know if there is anything in there that was driving it.

Well as we mentioned earlier on, in the beginning of 2008, Hospira’s HPG and HGA contract, we certainly started to see those conversions start to take place in the second half of the year and those continued into the fourth quarter. Mitra Ramgopal - Sidoti & Company, LLC : Okay and again, if you look at the, I think you mentioned you want to increase the sales force. If you can give us a sense of where you are today with the sales people you have and you’re adding 20 in the first half. Is the plan to keep going or would that kind of get you to where you need to be?

We think that is enough, Mitra. Twenty people are enough to cover. We need to cover the Premier accounts because it is an open opportunity for us to take advantage of. Of the 20 at least 12 of them have already been hired and are being trained, as we speak, in Florida. Mitra Ramgopal - Sidoti & Company, LLC : Okay and would any of these sales people also be working on selling the critical care products or just strictly um?

No. The main focus is oncology. Mitra Ramgopal - Sidoti & Company, LLC : Okay and with regards to both Premier and MedAssets, as you sort of look to provide the guidance. I know it is a little early yet in the game, but what are your expectations really? How much are you sort of building in, in that guidance? Are you being pretty conservative?

[Interposing] the sales and the bottom 9 to 12 months to become productive we are going to do what we have done in the past and we are going to say that the first two quarters, very little new business. Second, third and fourth quarters are where all the business will come in.

And that is baked into the guidance that we gave, heavily loaded third and fourth quarters. Mitra Ramgopal - Sidoti & Company, LLC : Okay so it will be sort of a little like the last year or where we saw the first half barely accelerating in the second?

Yes and it came out to be so. Mitra Ramgopal - Sidoti & Company, LLC : Okay and on the international front, clearly you are picking up more business there. I don’t know if you could sort of give us some color. You know, what is left of that?

Oncology, it is all oncology and CLAVE but mainly oncology. CLAVE used on oncology custom sets. Mitra Ramgopal - Sidoti & Company, LLC : And with regards to the gross margin, again, the guidance seems to suggest almost a flat gross margin for ’09. With the increase in terms of the oncology, or the higher margin products increased efficiencies etc… are you being a little conservative there?

No, I don’t think so. I think the first quarter was up and then it dropped a couple 200 basis points because of the shut down for Christmas for maintenance and repair in early January, so we lose a few weeks there. That is a definite. But, we don’t think we are being too conservative, because the only thing, Mitra, that can stop us now, the only thing that can stop us from becoming a large company in my opinion is a quality problem. So we are investing heavily in our manufacturing processes, we call IPS and that will have an affect on our margins. Then we believe the margins will continue to go up after that. Up to where we think they always should be, above 50%. Mitra Ramgopal - Sidoti & Company, LLC : Okay and I noticed DSO’s spiked up a little at the end of the year. Should we expect that to start coming back down in the first quarter?

Yes, as I mentioned you will see a couple hundred basis point reduction from the 43% to 44% range that we gave for the entire year. Yes, we should see those start to come back down some, especially in the first half of the year.

Your next question comes from Junaid Husain with Soleil Securities.

Scott in terms of the plant shut downs you had in the fourth quarter, was the shut down only in Salt Lake City, or did it include Mexico as well?

It includes Mexico as well.

So obviously this shut down has bled into the first quarter. By how many days did it bleed into the first quarter and if you compare it to last year how would it compare?

I think the best way to look at it is we shut down the plant for less period of time this year than we did the previous year and so that is why diluted last year had about a 300 basis point drop on it; this year we expect about a 200 basis point drop.

Gotcha and then maybe a question for Doc, could you give us a sense of the comfort level you have with Hospira and their infusion pump business relative to consumable sales for clave and custom sets? The challenges that hospitals are having relative to CapEx this year, I think is fairly well known, but I was wondering if there might be a trickle down effect on your CLAVE business, certainly we didn’t see it this quarter. Do you expect any out quarters that this is something that could be impactful?

I really shouldn’t comment on Hospira’s business, but as a general rule in the environment we are in I expect hospitals will delay purchases of durable medical equipment, because if they already have existing pumps and MRIs they can delay those decisions to upgrade. The general rule, I think that is true. What effect it is going to have on Hospira? Hospira has got a very good pump. I really don’t have anything else to say other than that.

Well I was just asking the trickle down effect to you guys in terms of how it could affect CLAVE and customs.

So much of our business is custom business now. So much of it is custom and those all incorporate CLAVEs or other connectors that we make. We don’t expect much of an effect. With all of the new business coming on in Premier and so far what we have seen is HBG contracts have done nothing but generate more business. In our model we don’t expect any significant changes.

Okay fair enough. Then any updates to report on your case with Medegen? I realize that it has been remanded to the District Courts, but is there anything else to report here?

There is really nothing more to report. It is really an immaterial case.

Then Scott, could you remind me what your total legal expenses were in ’08 and then maybe moving forward in ’09 what would you expect legal expenses to be?

Legal expenses were down in ’08 versus ’07, although still higher than we would like, but going forward there is somewhat of a variable. It is just depending on how the cases are going. That has always been sort of a variable number for us.

Do you need a number to build into your model?

Yes, that would be helpful.

I can’t tell you that exact number right now.

We will get back to you.

Okay, sure.

Your next question is a follow up from Mitra Ramgopal. Mitra Ramgopal - Sidoti & Company, LLC : Yes, just going back on the share buy back this last quarter, it is an open authorization you have right?

Right. Mitra Ramgopal - Sidoti & Company, LLC : Okay and I guess given the cash you continue to build, do you have any plans on doing something on the acquisition front?

Well we are definitely going to be buying back stock. Like all CEOs we think it is under priced, but we will definitely be buying back stock. We are also going to keep our eyes open for companies that leverage themselves, good companies that leverage themselves in our field. That opportunity might come up, we don’t know, but those are the only two options that we have for our cash. Mitra Ramgopal - Sidoti & Company, LLC : Okay and then finally on R&D, I believe you said it is going to be about 1% to 2% of revenue for ’09. Is that a case where you pretty much have enough products to sort of work with and this is something that you just aren’t going to invest as much in until maybe down the road?

Well traditionally, Mitra, of note is we’ve actually got more products in the pipeline. We have two new big products in the pipeline. But, it is just that traditionally we don’t spend a lot on R&D. I keep saying the reason why is because we seem to have the right instincts for what product the customers want before they even ask for it. We have never launched a product ever that we have spent any money in R&D on that didn’t make us millions of dollars. Not one. That has been over a 20-year span. So it is just that we are just efficient with our dollars. I think every company has to have big R&D departments because they don’t know what the customers want. I think we have more, we are lucky and seem to have more of an instinct in terms of what their customers want, especially in empty markets where there is no product to fill that market yet. So, I think you can expect R&D to stay traditionally very, very low as a percentage of our gross income, but very effective.

I show no further questions in queue.

Okay thank you very much. We’ll see you in the next quarter earnings call.

Ladies and gentlemen, thank you for your participation in today’s conference. That does conclude the presentation.