Good day, ladies and gentlemen, and thank you for standing by. Welcome to Merit Medical's Third Quarter 2012 Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to Fred Lampropoulos, Chairman and Chief Executive Officer.

Good afternoon, ladies and gentlemen. We are delighted to have to join us. We are broadcasting from Salt Lake City where it is snowing today. And where we are getting ready for the ski season out here. We have with us assembled members of our general staff and we would like to start our meeting by having our Safe Harbor statement read by our General Counsel, Rashelle Perry. Rashelle?

Thank you, Fred. In the course of our discussion today, reference may be made to projections, anticipated events or other information which is not purely historical. Please be aware that statements made in this call which are not purely historical maybe considered forward-looking statements. We caution you that all forward-looking statements involve risks, unanticipated events and uncertainties that could cause our actual results to differ materially from those anticipated in such statements. Many of these risks are discussed in our Annual Report on Form 10-K, other reports and filings with the SEC and available on our website. To the extent any forward-looking statements are made in this call, such statements are made only as of today's date and we do not assume any obligation to update any such statements. Although Merit's financial statements are prepared in accordance with principles which are generally accepted in the United States, Merit believes that certain non-GAAP financial measures provide investors with useful information regarding the underlying business trends and performance of Merit's ongoing operations and can be useful for a period-over-period comparisons of such operation. The table included in our quarterly earnings release, which will be discussed in this call, sets forth supplemental financial data and corresponding reconciliations to GAAP financial statements. Investors should consider these non-GAAP measures in addition to financial reporting measures prepared in accordance with GAAP. These non-GAAP financial measures exclude some but not all items that affect net income. And finally, these calculations may not be comparable with similarly titled measures of other companies.

Rashelle, that was so beautifully done. Would you like to do that again? It is on the bestseller list, good. All right. Thank you, very much and we appreciate it. I think to start out with today I suppose that the theme for medical device companies today is, if we were to put out a new book it would be "The Search for Growth". What I would like to be able to do today is to talk to you about our third quarter but I think equally important is to look down the road a little bit into the fourth quarter and a little bit into next year to talk about some of the products and some of the ideas. And why we believe that the growth prospects for the company continue to be something we think will be of interest to you. As you all know and many of you followed our company for years, we almost always guide down in the third quarter. And that guide down is usually about 5%. It’s something that’s seasonal that we see because of people that simply go on vacations, people that want to forego procedures. Particularly, we see it in the international markets. We see it particularly in Europe, in Germany which is our largest market, and France, our largest markets in Europe. As well as our dealers, who just simply take time off in August and very candidly going into a little bit of September? So that’s what we saw. And we saw it down about 5% from the previous quarter. I think however if you look beyond that and then look at the financial response that we had to this, you will see that year-to-date our gross margin continue to improve. And if we look year-over-year from last year…

Well, I just wanted to add that the EndoMAXX is really added both as well as our number 4 growth product for the quarter. Adding nearly....

This is our new stent.

$600,000. And our gross margins are improving in that areas and contributing to the overall gross margin expansion for the company. So really we are seeing that which is the fundamentals I think for the future profitability for that department and contributing for overall profitability.

And let me add that I mentioned the TIO. The TIO is a three-in-one bite block that incorporates essentially a built-in tongue depressor. It has the ability to deliver oxygen as well as a bite block. We recently introduced that product at a trade show. It was one of those shows where we had a 10 foot booth and we had them lined up 4 deep and all the way across. And so this is a product that we are now building first lots to stock on the floor. We will be releasing it in the next week or so and it’s something that, when you hear comments like, "why didn’t I think of that", "this is a great idea", "why didn’t somebody else get this to us this is a long time need". Those kinds of comments are both reassuring and allow us to have great optimism for these products that’s in this division. So I don’t want to spend too much time on this but I think that we are excited about where the business is going and the contributors of growth across the planet. We also are going to -- and are showing down at the TCT this week, our 1 Snare single-loop device. We have received the CE Mark on the product. It is with the FDA and we hope that sometime before the end of the year that will be approved and we are excited about the opportunity that that creates for us to bundle the snares together. There is no doubt in my mind that a few years down the road that Merit will be the market leader across the board in snares. We are about a 30%-35% market player right now. I believe that we will be well over 50%, maybe approaching 60%…

Yes, just some of the financial highlights. The growth in top line as Fred mentioned was 6%, make that 9% for the year. It’s a little slower than we projected but it’s still strong enough that we have seen the bottom line actually we beat most of the consensus numbers by $0.03 in both the GAAP net income as well as the non-GAAP presentation for net income. As you go down through the statements, our gross margins like we said improved 190 bps from last year and they are up sequentially through the year as we are getting stronger. We have had very strong production numbers and higher -- in fact I would like to address one of the issues there, the inventory levels are higher and we have some good reasons for that. We have been transitioning some of our production from Angleton, Texas to Mexico and we have extra inventory in the raw materials, work-in-process, and in the finished good in that process.

Yes, if I could also say that there is the extra inventory that we had that we put in for safety stocks on the new -- on the Endotek product, as well as the new ones we are building as well. So that’s another factor Kent that would feed into that.

That’s right. We have got several new products that we have added inventories. The new pad from Scion, the EndoMAXX stent is up over $0.5 million, the Osteo Pro, the Blue Diamond we are putting into kits now. We have also made a strategic plan to increase our available inventory in our high-margin BioSphere products worldwide. So we added $700,000 in that area to make sure we were stocked everywhere we needed to. Another important thing coming up as we have got the Christmas shut down in the near future as well as the transition or consolidation of our facility. So we are moving much of our operations both across town and across campus into a new facility that will be much more efficient when we can get it up and running together and lowering the handling cost and lean manufacturing. But in the meantime we have to have shut down lines and move them, and so we have to have some extra inventory for that. So part of this is also a shift in some of our forecasts and some of our production levels are going to have to shift a little bit too because of changing growth rates. When we go to SG&A costs and talk about operating expenses, we have seen that as a percentage of sales equal last quarter and up still from last year. But I am proud to say sequentially we cut out $1.3 million or 4.4% in our SG&A costs sequentially. So we are seeing progress as we said earlier in the year, we could start to see leverage in that area as we got more efficient in our SG&A expenditures. We are seeing some increase in research and development. We do have 2 trials that are restarting I guess. You could say the one for the high quality study and we are preparing as we announcing that maybe Fred wants to spend more time talking about the IDE that was approved. So the other thing that I think is valuable to talk about is the tax environment. We were able to save more taxes in several areas than we had even expected. We got new research and developments in France and in the Netherlands, and our ending credit for the U.S. ended up higher than our expectations. When we went through the process of detailing out all that we can get for a credit, we got more than we had accrued for. We also were able to, this quarter, reverse -- finishing up an audit from the IRS -- we were able to pull out what's called FIN 48 reserves that were no longer needed. And so when those came rolling through, we were able to reduce our taxes considerably for the quarter as it dropped to a 20% tax rate for the quarter and 26% for year-to-date. So all-in-all we had good performance and I think you would see the expectations in most of the areas of our financial statement.

Thanks, Ken. Just a couple of other highlights and things of interest are our BasixCOMPACT which is our kind of our flagship in our inflation devices, was up 16% for the quarter, 18% so far for the year. Our EN Snare business is up 10% and we think that the growth rate for that product will go up as we bring on the 1 Snare, it won't cannibalize it, it will simply have to enhance that as Merit will be the only company with 2 different offerings. And by the way these snares are often times used for different types of procedures. So they do in fact complement each other. So we are excited about that. Our QuadraSphere business is still up 116% for the year. Our ASAP, aspiration catheters, up 71% for the year. Our radial sheath business, as you all know, there is a shift going on in the United States in which we are seeing more radial procedures, but we are seeing these worldwide. That business year-to-date is up 339%. And so we continue to believe that the radial business is a exciting place to be. In fact Merit has a new hydrophilic radial sheath which we will introduce during next year. I think -- this is kind of makes a lot of people nervous, but I believe that will double our existing volume today. So that’s how excited we are about those opportunities. It’s going to more than double. And we are talking about a business that on an annual basis is going to be doing somewhere around $5 million or $6 million and I think that first year, 18 months out, that'll add another $5 million or $6 million on top of that. It’s a very exciting opportunity. All in all, we have a lot…

[Operator Instructions] The first question is from the line of Larry Solow with CJS Securities.

Just on the top line growth, it slowed a little bit. Could you maybe just discuss, was there anything geographically that stood out. And can you maybe just -- as usually you breakout those numbers. Do you have some of those breakouts?

Yes, we have broken. I mean it was a little bit slower in Europe which you would expect, we expect every year because of the summer vacations and that sort of thing. So both in the dealers and the EU direct, they were slow. But it’s not anything that we wouldn’t expect or that we didn’t guide to in the past. But now into this quarter things have picked back up, people are back to work. Procedures are starting. So I don’t think there was anything in here. And I want to again remind you Larry that with this Laureate guide wire coming back in, that adds a real boost both in terms of our presence and the ability to pull through a number of our other products.

Can you remind me, actually in the Laureate, where was the sales number when -- in the U.S. alone when it was pulled. And I believe that you know I think in outside of the U.S. it actually has passed that already right?

Yes, I think so. It was back in February. We are looking at ’11 which was the prior year. We had sold about $3.2 million that year and $2.2 of it was domestic or U.S. based.

In 2011. Okay.

So that’s a couple of million dollars. And remember that took place around in February. And people used their inventory up. But we stopped selling it right there. But we have more than exceeded that in the international markets now. And now we add this back on here. So it was unfortunate but it’s past us now. So the best things for us to do is to talk about -- on this particular case the future not the past.

And in that market place, whatever, $200 million plus I guess, right. And with Terumo basically has pretty much of the market. What prevents you guys -- I mean is $50 million a cap. I mean, what prevents you from ever taking that market?

We are mostly -- it’s a good question. Most people when I say $50 million kind of looked at me like I am lunatic. So when I get to $50 million, we will start talking $75 million. But I think we have always had our goal and our eye on the fact that we could do very well here. I think the other parts of it is in some areas, like for instance the Far East where they have a presence there, it’s going to be difficult for us to penetrate a lot of that business in Japan as an example. But we are still, by the way, our Japanese distributor is so excited about it we are still going forward to have it registered. And I think they don’t waste their time or their money. So the fact they believe that they can compete there. We have seen what we are able to do in China. And that’s kind of the fastest growing area right now where we are approved. So we are enthused about the opportunity here.

I know you discussed the uptick with Laureate in China. How about in China in general? And I may have missed it, did you talk about how it did this quarter?

Yes, China -- Ken, maybe you can help me. What do have for China?

It was 27%.

Yes, there you go. So it was up 27%, Larry. Not bad. Not bad at summer. That’s still not bad. We are happy to do that. That business, again, if we go back a few years ago, there were a few of us that doubted. You know we had to spend some money in SG&A expense to get that registered. As it all works out we have a terrific business over there. It will be $100 million business in the next 5 years or so.

And then just lastly just on the -- I know you identified this $2 million in cost of goods sold. You have talked about other cost savings. Is there anything, I think there was one other particular thing you cited or that have [Indiscernible]?

Well there is 2 of them. One is a big one of course that Ken alluded to in terms of the catheter production that we are going to do. That’s actually now starting to ramp you that we will get out of our catheters that we are making in Mexico. And then the other couple of million come from our stent manufacturing. Now let me just go on to say that every year we have a cost savings objective of at least $5 million. And these are other ongoing automation projects and in fact I think last year as we finished the year, we finished up with about $8 million worth of these cost savings. And by the way those go to offset price increases and you have oil and all those kinds of things. So if you didn’t have these programs and you weren’t paying attention to them then, you couldn’t have higher gross margins as you go along. So it’s always been something that Merit has kind of paid attention to. But particularly in this division. You know once you pull that expense out and you get the growth. We are very enthused about what that whole Endotek division can mean to the company. I mean from last year, I mean at this time through 3 months we had lost, what was it -- what was it, Greg? We had lost -- last year we had lost almost $2.8 million. This year $694,000 year-to-date in that division. But for the last 3 months it was only $86,000. So you can see where that whole thing is trending. So now with this $2 million or $500,000 a quarter, give or take if we just divided it out. You can see what that does. It brings us into profitability plus it’s still growing and last quarter grew at 31%, 32%, 33%. And we continue to believe that those growth opportunities are still there. So everything is moving in the right direction in that business.

Our next question is from the line of Brooks West of Piper Jaffray.

It’s Dan Garofalo for Brooks. Congrats on the quarter, particularly the operating leverage. Your last couple of quarters have been right around 10% range in terms of operating margins. So I was just wondering if that’s a fair level for us to expect moving forward, kind of where you see that trending overtime.

Well, go ahead Kent.

I believe that we can see growth in that. I think it is going to be gradual and steady. I think we can pick up some bps on the SG&A line. I think we can pick up some bps on the -- I mean on the gross margin line. And then the one challenge we will have to that is R&D is picking up in part because of trials we are going to experience next year. So the clinical trials are sort of a new thing that we are adding into our operating expenses that will counter that somewhat. But those are the emphasis we are having is continuing improving gross margins through mostly mix, and that was a big part of this quarter. So we are selling higher margin products. Many of the ones Fred talked about, such as the QuadraSphere, such as the stent. And some of the new other new products are adding to the average gross margins. And then when we continue to push back against price decreases and inflation through efficiencies and cost savings programs we have been discussing than that I think keeps us moving forward on the gross margin line. I think we will continue to be more efficient particularly in these foreign markets we have made investments as they start picking up India, Brazil, Russia. Some of these places will start returning those investment even though there are still more to make. I think we are going to see improvements the SG&A.

Yes, let me just jump in there just quickly. Because you mentioned India. I mean our sales in India this year are going to grow at 300% over where they have been on average for the last 3 year. So we will do more this year in India then we have done the last 3 years combined. And India is a challenging market but as we move forward in that market, we are going to see the kind of results percentage wise from the base that we have seen in China. It’s not going to be $100 million business there but could very easily reach $20 million to $30 million over the next 7 years. So these international investments that we have made in the past are going to help us a lot.

And then, that’s a good segue. Just a follow-up, I wanted to drill down a little more on the geographic mix in the quarter. I guess what was the breakdown between U.S. and O-U.S. and I think you had provided that. And then just the respective growth in either category.

Yes, the mix is now 38%, it’s up 1% from last quarter in international, so 62% domestic. And we had -- I don’t know if you want me to give you more information, I mean like the China was 27%, worldwide distributors were 26% growth rate.

That would be Central and South America.

Those were some of the highlights. And Southeast Asia and all those dealers in the Pacific were combined in that group.

Okay. And then what was the, I guess constant currency growth of the international segment?

That’s a good question. We had about a $1 million in reduction compared to last year were 1%, and this is overall. So our revenues were hit about $1 million or 1%. Among the other side our cost of sales were reduced by that currency effect of $1.2 million. It actually helped our gross margins by about 45 bps.

Yes. But this goes to the comment that we said that kind of this natural hedge in place. Because we have labor cost over there. But then we have the advantage of the currency that we can translate. So I think all-in-all in terms of currencies we do a pretty good job. I was looking at some other folks that had substantially larger hits.

So I don’t have 4% and 5% hits. Ours is 1%. And then we have more than that. It actually helps us in the bottom line.

Got it. So international growth was, constant currency international growth was...?

I don’t have a percentage of that, well, no that’s the mix. He is asking what the growth rate was. So I have to calculate that for you, I can do I before we get off.

Okay. How about the U.S. growth?

U.S. growth direct was 3.8%, if you want to know that number. There is other part that are domestic and OEM and stuff. But that was the direct sales.

Yes. And I think that’s what I alluded to, that the U.S. market is the slowest part of what's going on right now. And not unexpected. However, what is interesting in some of these products that we have and you put the Laureate back there, you are going to see the growth in U.S. accelerate pretty substantially. And we also had one fewer sales day for the quarter, that’s not a big deal but I mean it is a factor. But I think going forward with the Laureate and the BowTie and a number of these other products, that we will see those sales substantially higher as a percentage going forward. Particularly as we pick up that business that we lost with the pull out or call it whatever you want to call that little issue with the FDA.

Okay, Dan, I will tell you this, I calculated. 12% was the overall growth rate for international for the quarter.

Our next question is from the line of Jayson Bedford with Raymond James.

Couple of questions. On the guidance, it implies that growth snaps back and kind of accelerates in the fourth quarter. Is that largely the impact of the Laureate coming back on or are you seeing a pickup here in the base business ex the Laureate?

No, no. I think you are right. I think part of it is the Laureate. I think part of it is our OEM business. I think it’s our international business as well. I mean I will give you an example that just in the last couple of days we have received orders, and this is singularly material, but over a million dollars in orders that we had not expected. That come in just in last 2 or 3 days. Some from OEM, some from international markets. So I think we expected all these things to snap back. But the Laureate is a part of it. I mean of course it is. But not all of it, Jayson, not all of it. And by the way, if I could, just add a little more color. If there was a product I wanted to snap back, that’s the one. Because that’s the one that has the largest, probably upside potential of any product. Right at this time.

Switching on the cost to goods line. Have you seen an impact from the change in stent manufacturing or is that along the comp?

No, I think what we said was this. We have about 90 days of inventory of the old product now that will move out. The other inventory is going on the shelf and so there is 2 sides to that. One, we have a little bit more inventory because we have to cover both of them and to make sure that we had them in place. And so we have not seen the effect of that but it is on the shelf. And we will finish this out. I think one of our guys who was telling probably in January. So we will substantial improvement in the gross margins in the business and profitability in that division will come from this, along this as I had pointed out earlier, the growth as seen for the quarter I think was up over 30%.

So you will see the gross margin impact in the first quarter of ’13?

We will see some of it then, Yes. And by the way I want to go back to your question about it snapping back. That’s the other thing. The growth that we are going to see with the TIO and a number of other products in our endoscopy business, are also going to be one of the things that propel our growth going forward as well. That business is starting to perform much better and again like I said, even the summer quarter was up over 30%.

Okay. And then I don’t know if you can comment, since the deal hasn’t closed yet, but what are you paying for Medigroup and then how many sales folks do they have generating that $2 million?

You know, Jayson, we are not going to disclose the sales price per our agreement. But let me just say that I think the real value to Merit, I will say that we expect to get about a 25% return on our capital, which is, if you take a look at our return equity you will see that that’s substantially higher. And the good news about this business is that they had worked through sales reps and so they do, they hold all the inventory they ship and they collect to the hospital. And so we will just crossover all of those accounts and we will pick up that business immediately, we will continue to ship to those accounts. But another part of this was that they have an absence of coverage. For instance, if you look at the entire Northeast, there is an absence of coverage there. If you look at the Northwest, an absence of coverage in entire Northwest, as well as pockets in the Midwest and internationally. So that’s where we think there is an awful lot of opportunity and you may have missed this. But we received a bit over the weekend or a bid request for quotation for over 11,000 catheters in 1 middle eastern country, which would be almost an order of magnitude greater than what they sold last year. This is one country and we have a very strong business in that country and it would be a great opportunity for us. So peritoneal dialysis is something that’s not well known in the United States. It is growing at around 6% to 8%. But it is a business that we think is one we want to be in for the long haul, particularly in our international markets, and as you know we have a lot of strength in those markets.

He was wondering how many sales people they had?

They had one sales person. They have a Vice President of Sales and Marketing, who does all.

Independent reps were what?

They had 4, 5 independent reps but they are all paid on commission and the bottom line is we will integrate this immediately in to our business.

So I think it was 7, Jayson, you were wondering how many it took to get that $2 million. I think that’s what they were working with mostly.

So the basic strategy is, you like the product that expands the portfolio and you have got a lot of fire power, much broader distribution that you hope can accelerate sales? Is that kind of the cadence of the deal?

That’s -- it’s great gross margins, 75% gross margins, and a great patent portfolio as well. So it’s not just a "me too" product. There is a great patent portfolio here. And these folks that are selling us the business have a great reputation for their products. They just simply didn’t have the depth of distribution. They also have a lot of great ideas and stuff going forward. So there is a lot of new things that will come out of this as well. And we are going to keep them on as advisors and they have some skin in the game going forward as well but it’s really based on performance.

Okay. And did I hear you right, you said you had one less selling day this quarter than last, is that right?

It’s correct.

That’s correct. So that alone would add about $1.5 so that’s -- you can do that [Indiscernible] another percent and a half, Yes.

Our next question is from the line of Jim Sidoti with Sidoti & Company.

So just some of the boring stuff. You reiterated the top line guidance which implies a rebound in sales growth in the fourth quarter. How about on the bottom line? I think earlier you said -- in the year you had said that $0.55 to $0.60, it doesn’t seem like you should have any problem with hitting that number?

Again, as you know we don’t update the growth and I don’t mean to bore you to death, but we feel comfortable with all the numbers going forward. And we will meet or exceed all of our numbers Jim.

So we are ahead of the game on those bottom line range that we gave you.

Yes. I just want to make sure that’s still the situation. How about the plant in Ireland? You talked a lot about that on previous call and ramping up production there? Has that started?

Yes. We opened the plant up about a month ago. Of course there is people moving in, there is production starting up. But Ireland is very, very busy. We are thrilled with our operation in Ireland. They are a great contributor. And we have a number of new things that will be coming out of there including this stent, some new inflation devices, some hemostatic valve, some other products out of our technology company. So we are thrilled with what's going on but it will take some time, Jim, to fill it up. That’s just nature of the beast. But am sure glad we have it. We built it at the right time, we built it when it was reasonably priced to build a product. And then we have the opportunity because -- particularly with the Laureate back online. Have we not done this and we start to move towards those higher numbers, have we not build this thing, we simply wouldn’t be able to respond to this opportunity in the future. So it was something that we needed to do.

All right. Now that that’s up and running, Kent, will the CapEx number start coming down and what was CapEx in the quarter?

I know it’s $48 million for the year-to-date, I am trying to remember what it was before. It was at 20-something, around there, let me find out, I will subtract the second quarter from it. Anyway you are $48 million year-to-date on CapEx And, yes, it’s still going to continue to high level in the first quarter because we are finishing this major facility on this campus here. And we are also beginning one in Texas that will take a year or so to build. So those CapExs will carry heavy in the fourth quarter, they will start coming down in the first quarter as we finish paying off the final invoices and retentions and things from the Utah facility. And then there will be some facility cost through the rest of the year at a smaller level for Texas.

All right. And then on the income there was impressive R&D charge and you said you hadn’t closed the dialysis deal yet. So what was that for?

The dialysis has no R&D charges associated with it, didn’t expect it to. So that was a product we bought that’s in a prototype stage and we have -- we have to do an expense of the cost of that because it’s under development still. It’s an R&D project.

Jim, specifically, it was a device that a group of guys have that is patentable. It was relatively inexpensive and we think it fits very nicely into our product line. But because of their requirements, it requires an in-process research and development expense. So [Indiscernible]....

What was that device for, can you tell us or is that something you want to keep under wraps for a while.

No, you will be hearing about it in the near future. I am not going to reveal it now but I will say this, I just came back from TCT yesterday. And if you walk out on that floor, about 80% of the companies there use one product or another of Merit on an OEM basis. This is a product that is proprietary. It’s the kind of product that produces $4 million $5 million a year in revenues. And for $250,000 plus the development cost which should probably be $750,000, we get the kind of returns. That’s a nice little product. It’s a terrific product but it’s not time to. But for that price, it’s a nice price to get all the intellectual property and all the engineering. Not all the engineering work but it’s a nice product again.

All right. And then just 2 more. Accounts receivable jumped up a little bit in the quarter, is that just because of summer time or was this [Indiscernible]?

No, it was heavily late. We had a lot of shipments the last week or so. I can tell you that the average days receivables is still 42. Very respectable and consistent with our other periods. So we aren’t seeing that, there is not a big rise in risk there if that’s what you are worried about. It ebbs and flows to the timing of invoicing and shipping which tends to be heavy right at the end of the quarter frankly.

Yes. And Jim just as to remind, as you know on our Chinese business everything is COD. And much of our business in various dealerships, they also have to pay in advance. So I think for the kind of the growth and the international exposure, 42 days is I would put that up against anybody.

All right. And then the last question. On the device tax, Kent, do you have any idea how you are going to account for it on your P&L. Is it going to be above the operating line or is it going to be below the operating line. Where will you book it?

I would like to tell you where to book it. But no, it’s going to be cost to sale. So it’s past the way that industry tends to dictate I think the accounting profession is telling us. It’s going to be part of the next. It’s a manufacturers excise tax, I guess the definition of it. So it’s in the cost of goods.

Okay. And you will not be putting a line for it on an invoice to a customer then?

We are not going to comment there.

I don’t believe we will be doing it.

We are not going to comment on that. We have lots of plans and things but we are not discussing that. But we will shortly but not today.

[Operator Instructions] The next question is from the line of Jack Van Rye [ph], a private investor.

Enjoyed listening to the commentary, Fred, and the progress that the company is making. I just read recently an article by an esteemed international investor who is discussing the condition of the economy come January 1 of 2013. He says it will make little difference, the change in the Presidency as far as business operations go in this country. What's your response to that?

Well, Jack, first of all thanks for the question. Listen, I have just come back from the TCT. I am around business people almost every minute of the day. And there is no doubt that there is a concern in this country about what the policies will be and where things are going and people are just simply holding on to their pocketbooks until after the elections. I have no doubt in my mind if there a change in administration that you will see a substantial increase in capital good expenditures, you will see a research and development resurgence and expenditures in the United States in the capital goods. That’s my view and I think that’s shared by at least almost everybody every CEO that I talked to in the medical device area. So on the other hand with all of these other issues going forward in the year, I think that we are very likely CEOs and Chief Financial Officers continue to hold on to those strings very carefully. And I will tell you both, whether it be Mr. Cook or not Mr. Cook but Cook medical will pull back. That we will take a much harder look at where our expenses are and where our investment are in the future depending on the outcome of this election. So it’s a very big election and I know everybody says that this is the election of a lifetime and all this. And I can tell you for a medical device company, any medical device company, it certainly is. It absolutely is the most important election. In my lifetime as it pertains to be a Chief Executive for over 35 years in the medical device business.

One last question. It’s a little specific. What is the situation with MCTec in that wonderful little city of...?

Venlo, The Netherlands. Listen, they are growing at about 10%. They have done a very, very nice job. It is now called Merit Codings. It’s part of our technology group that’s run by Joe Wright. It’s a nice business and again one of the things in that business Joe whether be our sensors, our OEM or our technology companies, is they add a lot of diversity. And I think it takes some of the risk out of the device side of things by some of the technology that we have. So we have been very pleased with that. It’s very profitable and we enjoy and believe that if we go back and look at it I think we have owned it now 7 or 8 years so. It’s been a great contributor. So we will look after the Dutch for you, Mr. Van Rye. We will look after all those good folks over the Netherlands for you.

Thank you. And at this time there are no further questions. I would like to pass the call back to Mr. Lampropoulos for closing remarks.

Well, Angelo, thank you very much. So ladies and gentlemen, we appreciate your interest today and the time you have taken. I think it was said several times during the call that we expect to snap back and I don’t know that I would necessarily use that word. I will say that we are comfortable with the projections that we gave and hopefully we will have an opportunity to see those. I think we are excited about our business, about the strategies that we have put in place both in terms of the divisions, the products, and the geography. So we have a full pipeline. We have some exciting little tuck-ins that we think will work very nicely. We are very excited about Medigroup. We think it’s -- although it might not excite some of you, we think what it does to our dialysis franchise and what it does to our international markets is very, very helpful. And let's not speak any less of those 75% gross margins which we will also appreciate. So we again appreciate your interest. We appreciate your support. Kent and I will be here for the next couple of hours. If you would like to call in we can maybe answer some questions on the balance sheet and income statement. So again, thank you very much. It is now clear -- no, it hasn’t. I was going to say it’s cleared up in Salt Lake. Come to Utah please. Reservations are available. We would love to have you out here to go skiing and to enjoy this winter wonderland. Best wishes to all of you and make sure you vote. It’s important that you vote, no matter which party. Please get out there and vote and we will look forward to the results in about 10 days. Now I am signing off here from Salt Lake City, wishing you a very nice evening. Good night.

Ladies and gentlemen, this concludes the Merit Medical’s third quarter 2012 earnings conference call. We would like to thank you for your participation, you may now disconnect.