Good day, ladies and gentlemen and welcome to the Q2, 2009 OSI Systems Earnings Call. May name is Shane and I’ll be your operator for today. At this time, all participants are in a listen-only mode. We will be holding a question-and-answer session towards the end of this conference. (Operator Instructions) I would now like to turn the presentation over to your host for today’s call, Mr. Alan Edrick, Chief Financial Officer. Please proceed sir.

Thank you. Good morning and thank you for joining us. I’m Alan Edrick, Executive Vice President and CFO of OSI Systems. I’m here today with Deepak Chopra, our President and CEO, Ajay Mehra, President of our Security Division, Rapiscan Systems, Victor Sze our General Counsel and Jeremy Norton, our Vice President of Investor Relations. Welcome to the 2009 Second Quarter OSI Systems Conference Call. We would like to extend a special welcome to anyone who is a first time participant on our conference calls. Please note that this presentation is being webcast and will remain on our website for approximately two weeks. Before discussing our financial and operational highlights, I’d like to read the following statement. In connection with this conference call, the Company wishes to take advantage of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995 with respect to statements that may be deemed to be forward-looking statements under the act. Such forward-looking statements could include general or specific comments by Company officials on this call about future Company performance, as well as certain responses to questions posed to Company officials about future operating matters. During today’s conference call, we may refer to both GAAP and non-GAAP financial measures of the Company’s operating and financial results. For complete information regarding non-GAAP measures, the most directly comparable GAAP measures and a reconciliation of those figures, please refer to today’s press release regarding our second quarter results. The press release will also be filed with the SEC as part of a Form 8-K. The Company wishes to caution participants on this call that numerous factors could cause actual results to differ materially from any forward-looking statements made by the Company. These factors include the risk factors set forth in the Company’s SEC filings. Any forward-looking statements…

Thank you, Alan and again, good morning and welcome to the OSI Systems second quarter and first half of fiscal 2009 earnings conference call. When we last addressed our shareholders during our first quarter earnings call in late October, we spoke of the challenging economic environment that our Healthcare division was facing in North America, due to tightening credit markets. At that time, looking, revenue was down by approximately 3%, but we prudently looked at the forward, what might happen, and took some steps that we announced at that time our intention to move proactively and aggressively to address our overall cost structure within that division. In line with the program that Alan has mentioned on every conference call for the last two years that we have undertaken to implement organizational changes all over the Company to reduce our cost structure and improve our overall operating efficiencies. We took the right steps in November and we did announce approximately the size of it, which was about $10 million. I’m pleased to announce we implemented that and it’s executed and the full impact of that will be felt in the second half of fiscal 2009. This proactive and aggressive measure, along with the continued commitment and dedication of our employees, has enabled us to achieve the following accomplishments during the second quarter and first half of fiscal 2009. I want to tell you a little bit about the accomplishments, but before that I want to make a comment that in this challenging time, we as a Company are very proud of the total team working together of what we have achieved. We significantly improved our diluted earnings per share for the second quarter and first half of fiscal 2009. Second quarter non-GAAP EPS of $0.34 versus a year ago of $0.27.…

Thank you, Deepak. We remain highly focused on driving earnings and cash flow improvement as you’ve seen. Our management has systematically executed our strategy to attain these goals since I joined the Company. These focused efforts are paying off. I’ll speak more about this shortly. But first, let me review the financial results of the second quarter. Overall, net sales for Q2 decreased 3% to $159 million in fiscal 2009. For the first half of the fiscal year, net sales increased 4% to $307 million. As the dollar has strengthened significantly, our top line has been adversely impacted. Excluding the impact of foreign exchange, sales would have increased approximately 1% in Q2 and 6% for the six months ended December 31, ‘08. On a divisional basis, our Security group reported another solid quarter with 5% sales growth it would be 12% excluding the impact of FX with a strong backlog providing excellent visibility for the near future. This was particularly impressive, as this was a difficult comparative quarter for our Security division, which posted a record Q2 in the previous fiscal year. Once again, our Opto group had a solid quarter in a challenging economic environment reporting essentially flat third party sales year-over-year as expected. However, the sales growth in these two divisions was offset by our Healthcare division, which reported a 12% sales decline driven by weak US sales as certain hospitals have delayed CapEx spending as they face an extremely difficult economic and credit environment. Based on our latest market data, we anticipate that the Healthcare markets will continue to be challenged for the remainder of our fiscal year. As a result, and as we mentioned on our last conference call, during Q2 we aggressively moved to reduce our costs in this division. With these changes, we anticipate…

(Operator Instructions). Your first question comes from Brian Ruttenbur - Morgan Keegan.

Can you talk about your cuts in Healthcare and what else you can cut going forward? Have you done all the cuts that you can in the near term?

Well, as we have been saying, that North America was the area where the biggest changes happened in this environment. So, when we looked at it, we looked at across, frankly, the whole Healthcare group and also across the whole Company, including corporate. Most of the cuts primarily the cuts that took place were combining some regions. We did not touch any of our sales and marketing. We looked into manufacturing efficiency as we accelerated moving from Seattle and UK into China. We looked at some of the back office functions. We looked at how we do R&D and we looked at some service. We looked at some internal, not much in the sales and marketing, because obviously at this time, we are very sensitive to that issue. We also looked at some of the international areas, though they were doing quite well, Brian, but we looked at reorganizing that and if there was a place where we could combine and take some efficiency, we did. Frankly, we also looked at Security. We also looked at Optoelectronics. We old looked at corporate. So, basically it was a combined combination of where all we can get some synergy and leverage and make the organization stronger.

About your share repurchases, what are the plans going forward for share repurchase? What’s authorized? What’s been done so far? What are the plans?

One thing I can definitely tell you, that we’re not going to tell you our plan. Basically, it’s the opportunistic way. We thought that at the $10, $11, $12 region it made sense. We looked at our cash flow need. Alan did an analysis with all the Group Presidents’ of what the next year looked like and we decided to opportunistically take a look at it, what we want to buy from going forward, we have enough head room in the plan, maybe Victor can comment on what it is, but we plan to look at it from time-to-time. Alan, you want to add something?

No, I think that addresses it nicely. We do have 1.3 million shares available to us of which we had used 600,000, so there are additional 700,000 or so available under the current plan.

And then how did the currency exchange impact earnings? You talked about what had impacted revenue. What did it do to earnings in the quarter?

Yeah, Brian, as the dollar strengthens, clearly it impacts the top line adversely, but because we have quite a significant amount of costs in foreign jurisdictions such as the UK, throughout Europe, India and Malaysia, we actually receive a slight benefit on the bottom line. So while it negatively impacts our top line and therefore partly our margin, we do have a slight positive impact to the bottom line.

Can you tell us what your goal is in terms of operating or net margins or anything goal is in terms of operating or net margins or anything like that over the next 12 to 24 months?

I think in this current environment, while we’ve given guidance for the rest of fiscal 2009 that we feel very confident in, I think it would be a little bit premature to provide longer-term guidance until we get a little bit more clarity over the next couple of quarters.

Your next question comes from [Rick Haas] - Roth Capital Partners.

R&D spend was way down. Should we expect a healthy ramp in the second half of the year? It sounds like you still have the commitment to the R&D programs, just looking at such a drastic reduction, looking at your thoughts for the second half of the year.

Well, two things. One is obviously we’ve been very successful in getting very good, healthy grant money and we expect second half to also get a lot of government grant money. The other thing is that definitely in the second half, there would be a little bit increase in the R&D, but I would think that for the remainder of the year, if you had to model it, maybe Alan you can talk about, maybe a million or two here and there as an increase but it’s not any major difference.

So there’s no segment impact based on the R&D level for this quarter, it’s not like you’re starving one segment or another to get to the earnings?

No, we’re really not. The benefit in the R&D line is the result of some products that have already come out through our R&D pipeline so as a result less expenditures, from foreign exchange, we do some of our R&D overseas. So, with the strengthening dollar, it results in reduced R&D costs. That’s really the main part, as well as some grants that we received as Deepak was talking about relative to the Security division that helped offset some of the R&D spending. On an absolute relative dollar basis compared to last year, our R&D spending is actually comparable to last year.

Just to add on to one more thing into it. The total number of people working in R&D has not gone down because we’re moving a lot more aggressively to R&D in both China, for our Healthcare, and in the areas of other groups, we have always had presence, a portion of R&D in India and UK.

Second question, restructuring charges, looks like 2.8 for the quarter. I think as of maybe the last call, we had discussed maybe a few more restructuring charges in the third quarter. Is that still the outlook for the fourth quarter, looks clean?

We are continuing to anticipate some further restructuring charges in Q3 as we optimize some of our efficiencies and Q4, we don’t currently have anything planned for Q4, but we’ll see as we continue to look for ways to become more efficient.

The hospital segment, the anecdotal information out there is pointing to a fairly large decline. I’ve heard anywhere from 20% to 30%. Is that what you’re seeing in the domestic market?

Firstly, our products are not the same dollar ticket item as the CT scanners and MRIs and ultrasounds, so it’s a little different marketplace, though it is capital cope and buying. We are not seeing that kind of fall. More of what we are seeing is a little bit of uncertainty. Though I can tell you right now, from what we saw in late October and November, which was just a complete shutdown, the people are now sort of looking at again to get their life started and we are seeing some regions of the US are a little bit more hit than some areas. For example, we think that in the East, especially in the Midwest, Southeast, it’s a little bit better. California as you have seen everywhere, there’s a lot of talk about the hospitals running out of and the government is running out of money. But we believe that it’s sporadic. It’s not across the board. There’s certain hospitals who already have their funding in place are doing well and some that are waiting for it, they’re basically pushing it. They’re just delaying the decision.

So the delay of the decision implies that at some point, assuming capital becomes available, that these orders would come back and then you sort of have an elastic effect where not only would you have these orders that were delayed, but then would you have obviously the orders that were required in the current cycle.

Absolutely and I think this is the point I want to emphasize that no cancellations. We have not seen a single cancellation. People have pushed it to say this quarter, give it next quarter. All people have said look I have an order for you, but I can’t give it to you yet until I can find out where I am going to get the money from. I think that one of the things we want to emphasize on the Healthcare group, we are so focused into it that as and when the market turns and there is capital available, I think confidently we can say, we will look stronger than we were. We are building towards that.

Your next question comes from Josephine Millward - Stanford Group.

Deepak since you seem to have better visibility in Healthcare and have right sized your business accordingly, can you just talk about how much do you expect Healthcare to be down for fiscal year ‘09 and when do you anticipate a recovery?

Josephine, this is Alan. As I mentioned in my opening comments, we’re anticipating that the operating income for Healthcare in fiscal 2009 will still be in the general vicinity of that 2008, despite the reductions on the top line, based upon all the significant changes that we have made in the organization.

I’m trying to get a sense of how much do you expect top line to be down, because you must have a base case in terms of what kind of downturn you’re anticipating to right-size the bottom of your business. I’m just trying to figure out what’s baked into your assumption and if you could also provide that outlook for your other business division as well, that would be very helpful.

Number one, I can tell you that if I could predict that much forward with specificity, I should work for the government. I can’t.

I know. I’m just trying to get a better sense of your assumption.

Josephine, after saying that, I think it’s a fluent thing. One of the things that we pride ourselves and frankly you’re the one who asked the question the last conference call, that we were only down 3% and we said that we are looking at sizing our operation properly. We were looking at if there’s going to be headwinds. We predicted right. If I’m not mistaken, you asked the kind of cuts you’re looking for is in 800,000 region or more like the last one of about 10 million and we used the word latter. So, to answer your question, we are predicting, we have some internal plans that for competitive reasons we’re not going to share, but we are going to watch it cautiously. We are looking at every week, what the funnel activity looks like. And we see positives in some areas. We see some caution in the other area. But all I can say that to you is we will be ready and we are looking at it and we are very much focused onto it. The rest of the businesses, Security is doing very well. I think that the business internationally and domestically looks very good. Maybe Ajay can add on to it. At the same time we’re watching very carefully the stimulus going through the house and the Senate. There are a lot of opportunities. Air cargo is a great opportunity for us. We are well-positioned in the cargo, in the contract manufacturing, electronics Opto. Obviously there are some sectors, defense which is doing good, medical is a little down, some of the international areas are looking fine. So it’s a mixture and that’s the reason we gave you the guidance that we think that Healthcare will be down for the year, Security is going to be up and Alan has said that we expect the top line revenue to be comparable to 2008.

Okay. That’s helpful, Deepak. So you expect growth in Security, Healthcare is going to be down. Do you think Opto is going to be relatively flat?

I think that’s a correct assumption.

Okay. And can you just help us quantify the full year EPS impact from your restructuring and one-time charges?

The restructuring and one-time charges for the full year impact are an ongoing process, so with respect to Healthcare you can do the math from the approximately $10 million of annualized reductions, but we’re continuing that process so it will continue to be a significant contributor to the bottom line.

Okay, no, I was talking about your restructuring costs. I guess do you have a sense of what Q3 restructuring might look like to get to your full year EPS adjusted EPS guidance.

Well, the full year adjusted EPS guidance that we provide is excluding restructuring charges. So it wouldn’t be relevant.

Okay. For Q3, should we expect the same level of restructuring charges that we saw in Q2? Maybe it’s another way of asking my question.

As we mentioned to the prior analyst who said, we expect Q3 restructuring charges to be lower than Q2 and we are not expecting significant Q4 restructuring charges at this point.

Okay. That’s very helpful. Thank you. And Alan, you’ve done a great job managing the balance sheet and generating free cash flow. Do you think that the reduction in DSO is there more room to lower DSO? And do you have a target free cash flow for the year?

With respect to DSO, there certainly is room to continue to improve it. Though I would caution in this environment, in this economic climate, there are many companies who are looking to extend the payments to their vendors, which in this case would be us and others. So I think over the long term, there are opportunities to continue to improve the DSO. On the short term basis, we’ll see just how that manifests itself. From a free cash flow perspective, we expect to be positive in the second half of the year. We had a bit of a run up in AP at the end of the year as mentioned. So that contributed to some of the rate free cash flow that we have reported in the first half of the year. But overall, we expect to have a very, very strong free cash flow year as evidenced by the first six months, second six months probably won’t be as strong as the first half of the year but still strong.

Going back to Deepak, you mentioned economic stimulus package. I know there’s several hundreds of millions for cargo inspection in airport Security. How soon do you foresee that money coming down the pike for OSI?

Well, I don’t know. If you can tell me when you predict it will get passed then the money will start flowing. I don’t know. All we can tell you is that in the line items, both in the cargo and in the TSA, that is right up our alley and we are watching it very closely.

Your next question comes from Steve Emerson - Emerson Investment Group.

First of all, congratulations for your incredible performance in a very tough environment. To follow up on the possible implications of the House bill, this billion two line item, can you put that into context? How much is in the budget for these items now and to what extent does it sound like an increase and which areas? Obviously, we all know that the Senate bill has not passed conference committee but what does at least the House bill imply?

Well, firstly, the number is going to be somewhere, people are talking about between $500 billion to $1.2 billion so it’s still going through. I presume you’re still talking about TSA. It’s to do with EDS.

It’s basically the entire money basically is not there for aviation and what they’re looking at is obviously the checkpoint, which we participate in. They’re looking at possibly going at 100% of replacement of all the checkpoint machines.

How much would that be? What I’m trying to figure out is of this money, what’s currently in the budget without this bill? What is the cash requirement to accomplish the task? I’m trying to put this in context based on the limited information we all have.

Steve, I think there’s too many moving parts right now into it. But if you want to put it in the right context, I’m going by memory. After 9/11, the number was $1 and this looks like, if 1.2 passes, bigger than post 9/11. I’m going by memory Steve. I think the important thing to look at it is that the government is pushing very hard that there’s very few if I remember, only 20 airports in America have all the checked baggage screening equipment. In all the terminals, 34 of the airports only have it in some terminals and this money will not get to the total, but it will get started to go back and line up the top airports and put a checkpoint area. The way we look at it is that A; there is enough money in there for the checkpoint upgrade in which we will participate and we are very well-positioned as you know. In the checked baggage area, we don’t have any presence yet, but we have $6 million, approximately, that we got, was a great validation of our technology and I mentioned on my presentation that we are very happy to announce the milestone that we’ve been saying that in this fiscal year, that we will have the unit out there, collecting data. And we are happy to announce it is happening as we speak. So that starts getting more possibility and opportunity for what we call, for us is ground zero, for checked baggage participation. And that number could be very big. And we think that and we are hoping for that our technology is validated and we get to play in that market. Ajay.

I think you put it very well. At the end of the day, I think it’s a very fluid situation. It’s a positive situation, obviously, from what we think in terms of what money’s getting spent. But there will be more clarity over the next 60 to 90 days.

Steve, just want to add onto it, we think this is a very good opportunity for new technology. There is a lot of focus on in the checked baggage arena to look at new technology and that’s what we are excited about.

Sounds excellent. What is the market for all checked gates, if some of this money goes to the program you’re already supplying, the new gate scanning equipment that you and Smith provide?

I’m not sure the exact number of machines out there, but it’s probably in the 2,000 plus or minus range.

Okay. And that was what 60 grand a machine?

I don’t know the exact numbers but they vary between us and Smith’s.

Okay. Thank you and happy hunting with TSA.

Your next question comes from Tim Quillin – Stephens Incorporated. Tim Quillin – Stephens Incorporated : Great quarter and in a lot of different ways. Remind me if there was any restructuring charges in the Healthcare business in fiscal ‘08?

Yes, there were, Tim. Tim Quillin – Stephens Incorporated : Do you happen to know how much of the restructuring charge from fiscal ‘08 related to the Healthcare business? I’m just trying to get to the pro forma profit guidance that you talked about.

Very little actually, in the first six months it was roughly $200,000, though that number was higher in the last six months of the year. I don’t have that number handy Tim, but I’d be happy to get it to you offline. Tim Quillin – Stephens Incorporated : And then in terms of just to kind of recap the AT x-ray opportunity specifically, are you shipping AT x-rays right now? What kind of revenue are you seeing right now for that product line?

You know, we’re shipping AT x-rays as we speak. In terms of specifically what kind of revenues we’re seeing, I really don’t want to go into that for competitive reasons, what our pricing, et cetera, is, but we are shipping as we speak, yes.

And just want to add on to it what Ajay was saying. One thing maybe Ajay you want to clarify that AT revenue in today’s terms and forward expectations is not in the overall picture, is not a big number in the Rapiscan. Is that a true statement?

It’s not overly significant, no.

That’s the beauty of our broad product line. Tim Quillin – Stephens Incorporated : No, absolutely. How about on the RTT, did I hear you right saying that you’re going to start testing a unit at an international airport and if so, do you need to test one in a US airport as well?

The answer to the first one is yes, it is in the international arena and the answer to the second question is yes, ultimately it will be in the US airport too. Tim Quillin – Stephens Incorporated : Are you going to be able to get that done before this potential wave of funding comes?

Well, we are hoping for it. Tim Quillin – Stephens Incorporated : I guess is there any near term prospects of getting a field test started?

I think we said enough and I don’t mean to be coy there, but obviously we want to keep it pretty cheese to what we’re doing from a competitive standpoint.

I think one of the things that I want to add on to it, without A; we are very cautious and this is a new thing for us. But I think if you really have to read it, what we are saying, we always said that we would start the trials and the testing in an international airport before this fiscal year ends. And that ending is June. So if we are saying end of January that we are putting a unit out there, obviously we want to get there as fast as possible. Tim Quillin – Stephens Incorporated : And the Opto business, I think you’re still shipping a significant chunk of components for your bomb jammer customer. How should we think about fiscal ‘10? Do you still have opportunities in the pipeline that can offset any lost revenue there and we can think about a flat or up year in fiscal ‘10?

Firstly, you’re very astute. We are shipping. Definitely, 2010 the shipment to the jammer program will be less than this year. Do we have opportunities of filling that gap with other alternates, absolutely and at the same time, 2010 hopefully everybody’s predicting as the economy improves, keep in mind that our other business, Opto business, is tied up to a lot of different industrial codes. So that more than adequately can offset it and those products tend to have a higher gross margin than the jammer program. Tim Quillin – Stephens Incorporated : Okay. The cash flows over the past several quarters have been just fabulous. Alan, you talked about free cash flow for the rest of the year being good. I guess that implies that you’ll continue to have positive free cash flow for the next couple quarters?

Yeah, we certainly expect to have positive free cash flow for the second half of the year. A little bit more difficult to go from a quarter-to-quarter perspective. But we do expect to have positive cash flow for the second half of the year and end the year for fiscal ‘09 with a very significant free cash flow number.

I just want to caution you with that, it’s a double edged sword. On the other hand, we are actively aggressively pursuing a lot more US Government business in the Security area and if we land a lot of business in especially US Government, Cargo and CBP and other things, it’s going to consume some cash. Tim Quillin – Stephens Incorporated : Yeah, that’s a good problem, though. And you have a pretty big cash balance right now and is there any thought to paying down debt and what kind of interest are you getting, interest rate are you getting, paying now on your debt?

Sure, Tim. We’re paying LIBOR plus 2%, so very attractive and a portion of that we’ve locked up into some long-term rates as well. The $34 million in cash that we reported at quarter-end is a bit of an anomaly. We don’t normally maintain that level of cash. It’s really a point in time, when we have excess cash; we clearly pay down our lines of credit. As you see, as we report the end of March, you probably wouldn’t see that same level of cash. It was just a bunch of cash that came in right at the last few days of the calendar year.

Your next question comes from Michael Kim - Imperial Capital.

Just touching on the Security side, can you provide a little more detail on the mix of revenues in the quarter, specifically what the contribution was from cargo? Is it something like about a third versus two-thirds?

Sure, be happy to. If we’re looking at cargo for the quarter, it represented about a third of our sales and what we call our conventional business represented about two-thirds of our sales that changes from time-to-time from a quarter-to-quarter perspective really based upon the timing. Clearly, if you looked at the first quarter, cargo was more significant, compared to conventional. As we look out, at the way our backlog is, cargo is continuing to grow at a very robust rate.

Just touching on that side, I think you mentioned that quotation activity was pretty strong. Was that mostly on the cargo side or also in conventional?

Quotation activity remains strong on all ends, on all product lines, not just in cargo, on the conventional side as well, both domestically and internationally.

Okay. I think just on the international side, are you seeing similar levels as in the US or is it on the cargo side or where are you seeing any particular hot spots for you?

All of the above, for competitive reasons, it is very difficult to break it down, the next level down.

Okay. Fair enough. And then just on the operating margin side, I think you talked a little bit about some continued improvements. What are your goals for your operating margins? Are you looking at somewhere in the upper single-digit range, double-digit range? Maybe if you could provide some framework to think about.

Especially my good friend Tim Quillin, I’m sure you would like us to say that and I’ve said it before. I mean, every Company’s goal is long-term, to get to that 9%, 10% operating income level and we have that goal too. But in these challenging times, it’s difficult to pin down a goal that far out. All I can tell you is that if you look at the results, both in the Security and the emphasis is, if it’s a 12% reduction in the top line in Healthcare, not bad. It depends a lot on the top line for the second half and what happens in 2010, but I think I can say it very confidently, with the changes we have made and the way we are running the operation, when the economy does bounce back in 2010, those kind of high single digit and 10% is not out of line to model.

Okay. Fair enough. Just going back to the R&D line, I want to just confirm that the product pipeline or the development pipeline is intact and to the extent you can, can you talk a little about the road map that you have in that pipeline?

Well, we can assure you, we’re a high tech Company. And again, I would “Tim that for a long time, we spent a lot of money in R&D, we are a very high-tech company, we look at products and we have a great, robust pipeline”. The important thing is, one of the reasons we broke down this time, we booked $10 million in grant money in the Security area in this first half. And that’s very positive and we expect more. So our commitment to new products is very strong. We have a whole slew of product introductions going through and more than that I don’t know what else to tell you.

Your next question comes from Beth Lilly - Gabelli.

I wanted to just talk a little bit about the cargo business in the sense of there’s some new regulations that have been put in place that 50% of cargo needs to be inspected before loading the plane. Is that correct? Is that February or March?

By February of this year, I think the real mark is by August of 2010, 100% of air cargo has to be screened going onto passenger jets.

Just to add up to what Ajay said, you’re absolutely right, there are some new regulations and what Ajay said is February 2009, which is maybe end of that is 20 days, 28 days from us, but that regulation, though important, has some [inaudible] how it can be inspected, the real deadline, the [foreign] deadline that everybody is trying to get to is the 100% inspection by 2010 and the answer to that question is one thing we are very excited about it is that we have developed a whole broad product portfolio of cost versus tunnel size versus price performance and we are on the buying list, approved by the TSA Ajay?

Right. And we’re seeing a lot of activity in that area and as we speak, that activity keeps on going. Because obviously deadlines have to be met and really 2010, August is not that far off.

And that’s a good growth projection for the second half and 2010 for us. We are well-placed and like I said, we have the broadest product line with model numbers of different sizes and price range compared to any of our competitors in that market.

And so the February 2009 I mean, it probably, what, put that regulation in place in order to do phasing and now people are really, you don’t have to adhere to it; correct?

No, no, you have to adhere to it, but there’s different ways you can do it. It’s 50%.

I think it’s being adhered to. Obviously that’s something the TSA and other people are looking at. I think as you look at it over the next year, year and-a-half as you go to 100%, hopefully we’ll be able to get more efficient solutions and longer term solutions and that’s what the hope is to do over the next year and-a-half.

Just to add to what Ajay was saying, there are pilot programs, funded by TSA, for various carriers in that and in which we are participating quite well and what we meant was that 50% inspection is just a start. The real run to the end race is going to happen between now and the 2010 deadline and the pilot programs, which is funded by the TSA will expand on the other hand, pilot programs are such that it’s just a trial kind of a thing and after that the various carriers have to have their own equipment and find their own financial models, how they want to buy and how they want to pass the buck over to the shippers.

And the other issue is what, who’s going to pay for it; right?

That’s true. Ultimately, it’s going to get down to the cost of shipping it, some of the rest of the world, especially Heathrow already has it. You see a package coming from that side or from Spain and it will have a £5, £6, £8, £12 charge, depending on the size of it of x-ray inspection.

I would now like to turn the call over to Mr. Deepak Chopra for closing remarks.

Thank you very much for your time today. In closing, I would just like to reiterate the positive results we were able to achieve in the second quarter and first half of the fiscal year. One thing, before I just end the discussion up and give you the four closing points, I want to thank all the employees. This has been a challenging time and we as a group have worked very well together. The four bullets I want you to look at, after you close the phone down, second quarter and first half we have significantly improved our earnings per share. We continue to improve our operating cash flows. December 31, 2008, our backlog is at a record level of $239 million. Quotation activity levels for Security products has never been stronger. And we are well-sized and looking very cautiously and as the economy improves in Healthcare, we would come out of it even stronger than what we were. Thank you very much.

Thank you for your participation in today’s conference. This concludes the presentation. You may now disconnect. Have a good day.