Ladies and gentlemen, the company has asked me to address certain matters.First, ResMed does not authorize the recording of any portion of thisconference call for any purpose. Second, during the call ResMed may makeforward-looking statements such as projections of the future revenue orearnings, new product development or new markets for the company's products. These statements are made under the Safe Harbor provision of the PrivateSecurities Litigation Reform Act of 1995. Risks and uncertainties exist thatcould cause actual results to materially differ from the forward-lookingstatements. These factors are discussed in ResMed's SEC filings, such as Forms10-Q and 10-K, which you may access through the company's website at www.resmed.com. With that said, I would like it turn the call over to Dr. Peter Farrell,ResMed's Chairman and CEO. Dr. Farrell, please go ahead.

Thank you, Jeremy, very much. Let me start straight into it. Revenue for thequarter was $185.7 million, around $186 million, an increase of 14% over theyear ago quarter. Pro forma income from operations was $40.4 million, and proforma net income was $30.6 million. Pro forma diluted EPS for the quarter was $0.39, an increase of 5% comparedto the '06 September quarter. GAAP operating income was $31.8 million for thequarter, while net income was $24.1 or $0.31 per diluted share. GAAP grossmargin was $60.2 for the quarter ended September 30, '07. Let me note that the closing price on the U.S. dollar to the Aussie was$0.75 a year ago quarter and this quarter was $0.89, so there was a 19%increase due to the depreciation of the U.S. dollar and that's basicallyunprecedented. If we run that through EPS, it’s about $0.0125. So that is apretty big hit. Pro forma SG&A for the quarter was $59 million, an increase of $8.5million or 17%. Pro forma SG&A costs were 32% of revenue for this quarterjust ended, compared to 31% in the same quarter a year ago. GAAP SG&A was$62.9 million, 18% up, and in constant currency terms pro forma SG&A costsincreased by 11% compared to the same period a year ago. Again, we were a hit by the depreciating U.S. dollar, which flowed throughto, as I already mentioned to EPS, and we're looking at 11% constant currencyversus the actual number of 18%. So that's quite a hit. Pro forma R&D expenditure was $12.6 million, 7% of revenues. GAAPvirtually the same, $13 million, again 7% of revenues and this increased 20%over the year ago quarter and again U.S. depreciation, U.S. dollar depreciationwas a significant contributor to the 20% R&D expense and in constantcurrency was actually 9%. Amortization of acquired intangibles, $1.8 million, $1.2 net of…

(Operator Instructions) Your first question comes from the line of Paul Choiwith Merrill Lynch. Go ahead.

Good afternoon, Peter.

Paul, how are you?

Fine, thank you. Let me first say congratulations to you and also to Kieranon the recent announcement there, and best of luck to both of you here.

Thank you, Paul.

Thank Paul.

Okay. Maybe for my first question here, just if I could focus on the grossmargin here, historically I think in terms of your business mix we've usuallyseen an up tick in masks as a percentage of revenue here in the first quarterversus the previous quarter, which I think generally tends to help on you themargin side. But could you help us understand a little bit what effects contributed interms of your margin tick down here, and also what factor are sort of priceplayed in here in terms of the sequential gross margin decline?

Right, well the first point is, which I have are already alluded to, Paul,is that we had an unprecedented 19% increase in our costs just simply due tothe depreciation of the U.S. dollar relative to the Aussie. The closingcurrency was $0.75 U.S. to $1 Aussie dollar a year ago quarter and now it was$0.89, and I think today it has hit $0.93. So this is that's unprecedented. However, having said that, there werecertainly price pressures, ASPs, which we talked about on the previous twoearnings calls. There has been pressure due to our major competitor droppingprices significantly buy 7, get 10 type of activity, so on the lower endproducts this obviously impacted the gross margin. We think it looks as though, as best we can assess it looks as though thepricing has stabilized, and Keith you might want to make a comment on that inthe U.S. whichis where most of the price pressure was. We still are getting because of thequality of our products; we're still getting a 10% to 15% up tick in our masks.We expect that to continue. The Swift II, the Quattro and the Libertyare extremely good products. We're very happy with them. But as far as grossmargin going forward, as we look into the wild blue yonder, with the U.S.dollar as I said trading at around $0.93 to the Aussie dollar as of thismorning. We'll be looking at around a 60 to 61 mark, but probably more likely a 60 asfar as we can see. Do you to make a comment, Keith or Brett?

Actually, this is Kieran. Let me just add one thing to that. We have notbeen, as you're suggesting, we have not seen in the United States and some ofthe other, actually some of the European countries, we have not seen prices gobelow where we saw them, sort of the most aggressive deals several months ago. What we are seeing is it is sort of going across the market now, and you'reseeing more customers getting those similar prices. So the positive sign hereis it appears that there’s a floor that has been established here for a numberof months, and the market dynamic is that we'll see those prices go to abroader range of customers over time. So pretty much what we expected to see is it is pretty much what we've beensaying here the last three, four months that we expected to see throughout thisyear, and I don't think there’s any change in that dynamic at that point.

Okay.

Okay. Then in just maybe as my follow-up, the international growth up tickeda little bit here, it looks like to rates we haven't seen here in a couple ofquarters. Can you help us sort of parse out maybe what the currency benefit wasor are we starting to see deeper penetration overseas?

Yes, I think, with the exception of Germany, we had extremely strong growth.And Germany, we're through that, unfortunately, Lasse Beijer is traveling,arrives in Australia later today, but Germany is softer than we would like. We've done what we believe we need to do in Germany.It is a work in progress, but even given Germanybeing weaker than we would like, the results were pretty good, and the constantcurrency figures, Brett, do you have that in front of you?

Yes. It conceptually the impact on revenues of the appreciating Euro andAussie pretty much added around $6 million to the revenue number for thisquarter.

Okay. Great, thank you very much.

And your next question is from the line of Tim Lee with Caris & Company.You may proceed. Tim Lee - Caris & Company: Good afternoon, gentlemen.

How are you, Tim? Tim Lee - Caris & Company: Just in the U.S.,with pricing somewhat stabilizing, are we turning the corner and we can kind ofthink of this quarter as the low water mark and we can move up here from growthhere on a going-forward basis?

Well, Tim, I think we flagged last earnings call, in fact, I know we did.The first two quarters of '08 were going to be a struggle, and that's mainlybecause of the comparables, I mean we have got the ResMed motor technologieswhich we talked about on the last couple of calls. We've still got a couple of million there, and as you know, the sales therehave basically gone very far south. So we still got top comparables for Q2 '08,and I think as we look into the future, Q3 and Q4 look pretty comfortable forus. Tim Lee - Caris & Company: And just in terms, one quick follow-up on the international side again. The18% growth, I mean that's not a blended number, so what is the internationalgrowth ex-Germany, so give us a sense of what growth could get to once Germanygets back on track.

Love to answer that, Tim, but that's not on the agenda. Tim Lee - Caris & Company: Thought I'd try.

But thanks for the question. Tim Lee - Caris & Company: All right, I'll get back in queue. Thank you.

Okay.

And your next question is from the line of Ben Andrew with William Blair.

Good afternoon, Peter.

How are you, Ben?

Very well, thanks.

Good.

And just maybe being a bit more specific on some of the P&L items, ifyou back out currency completely from the equation, what is the overall impacton EPS, by your calculations?

I will throw that to Brett. My rough calculation is $0.015. Brett?

Yeah, if you roll it through and watch all accounting impact through and tryand model that, Ben, when we had a look at it, I think it is in the order of$0.01 to $0.015 for EPS, so the previous number there is pretty much spot-on asyou roll it through. That's the sort of impact. If you look at that against overall net income,you're looking at about a 4%, roughly that sort of number, impact fromcurrency. You can't be levels stay as they are, and that’s probably what willend up washing through the course of '08. So that's pretty much the impact aswe see it at the moment.

The bottom line, Ben, is that it is not fair.

Let's call the Fed and tell them to start raising rates.

Yeah, well, somebody has got to help.

My follow-up question then is, as you think about the sheer magnitude of newproducts that you've got flowing through, Peter, why aren't we seeing bettertraction in sales? I mean, is price just that flat-out important to people but with salesgrowth, I should say, with the Quattro, the Liberty, all the different thingscoming through, why isn't that having a bigger impact?

Well again, Kieran referred to the price spread, and that's just somethingthat's happened. It is hard to get an actual, definite figure, how many of thecustomers does it flow through to, but I suspect we're through all of that. Myguess would be 90%. So, you’ve got those lower prices. Now it is mainly impacting the S8 Escape,the Tango, that lower end that 25% issue of the market. We've been able to maintain, as I already indicated, 10% to 15% higherprices for the masked products, and we're doing extremely well with theorder-setting products, and of course the VPAP Adapt SV, I mean, Respironics havecome out with their competitive product, and they're hammering that prettywell. We're very confident that as people get exposed to our algorithm, with the Easy-Breathetechnology and the much easier ease of use of our products, and they'repre-emptive. That is and we've had a couple of cases where patients just have not donewell on the competitive product, and have switched to the VPAP Adapt SV, or theACS II as it is outside the U.S. It’s just avery robust unit. Now, there is a lot of stuff that's got to wash through, but we are very,very happy with the Swift II, the Quattro, and the Liberty. Traditionally, you do see an up tick when we come out with new products, andwe are doing well with them, but it is a balance between the price pressuresand, as Kieran mentioned, flowing through particularly the U.S. market, whichis 53% of our total revenues of the Americas, and it just is what it is. I mean it is sort of inexplicable. We looked at some of those actions, andit’s not exactly logical to us. Maybe it is a game plan there. But since there were no real price pressures coming from the customers, theDME’s and the HME’s, it was just a grab for market share, and we just didn'tjump over the cliff.

But, is it fair to say that unit volumes you would normally expect with anew product cycle are coming through but they're being partially offset byprice?

Correct.

So you are not saying…

You should have answered my questions; you should have answered yourquestion.

I am just trying to get…

That's it in a nutshell.

You're not disappointed by the unit volume on the new products, though?

No.

Not at all, the new products are doing very, very well. The challenge reallycomes down to on some of the existing products where we have premiums thatstart to, the delta in pricing between our closest competitors start to getabove that 10% to 15% range, when they start to get to 20% to 25%, there isvolume implications on that.

Right, but the…

But the new products are doing great.

But your unit volume growth overall for the masks and generators issatisfying, but it is being partially offset by price.

Right, now, look, you can always if you look at individual products, and yousay well, why that isn’t doing better, et cetera. I think we talked about theTango, and it’s a terrific unit, but it is in fact D featured. I mean in terms of its characteristics, operating characteristics, noise, etcetera, you can tick all the boxes, but it doesn't have EPR on it, and we'veseen that our guys are just not as good as selling into that low or essentialcare model as Apria calls it, selling into thatspace. So that hasn't gone as well as we would have liked. I might say that it'simproved, and there was the distraction of the recall, that's where we'reworking through that, but we're going to have to live with that through to theend of fiscal year, but it is much less frenetic. I mean, it's down from spending a quarter's of the guy's times on theaverage to around 10% to 15%, that did still having a small impact, but againas I said, it is fading. But yeah, at the lower end there which is, call it 25% to 30% of the market,and the price pressures are pretty significant, and the competition has beendropping their prices in their featured units, and that makes it a difficult spaceto operate in.

Okay. Thank you.

Keith, I don't know if you want to add anything to that.

No, Peter, I think you did a fine job with that.

And gentlemen, your next question comes from the line of Glenn Navarro withBanc of America Securities. Go ahead.

Thanks. Good afternoon, guys. Peter, on your guidance for the second half,you commented that you expected growth to get back to more market-like growth,and I am assuming you're referring to top line.

Yes.

So a couple of questions, do you view market growth as 15% or closer to 20%,and just to piggyback off of Ben's questions, are you referring to unit growthbeing back to market because I would imagine you're still going to face somepricing pressures on a year-over-year basis in the back end of the year? So that's a question one. If you can answer, and then you didn't mentionanything about the SA recall. Should we assume at this point it is completelybehind you? Thanks.

Okay. Let me take your first question, Glenn. We are talking unit growth. Infact, we were at a conference yesterday and there was a big discussion. There was a panel discussion where people from the U.S.were hooked in and so on and so forth. I am in Sydney. And the general consensus, and there is a bit of an echo chamber to thissort of thing, like you start believing your own echoes a little bit, but westill believe that outside the U.S. it is around 15%, and that's ROW ingeneral, and in the U.S. it’s around 20%, and we are indeed talking aboutvolumes of devices. Now, you can picture some scenarios where you can get an up tick goingforward, as we penetrate into some of the areas we're focusing on likeoccupational health and safety, for example. We are sort of optimistic, but at the moment as we look out there, I thinkyou can almost put the better volume growth of the order of 15% ROW and 20% inthe U.S. And again, you're quite right. The pricing pressures, the prices, theprices, they're not going to go away unless you innovate, and you've gotfeatures where people say, my God, I have always wanted one of those, whateverit is. We know that you can ask for and get higher prices. We are optimistic onsome of that stuff, but we can't talk about that specifically at the moment.

Just from a modeling point of view, in our reported revenue numbers in ourmodels we should be a touch below that 15% to 20%, which would reflect some of thepricing pressures you'd still face on a year-over-year basis.

Or I think that's fair. I think that’s fair. Now, on your second question,the recall, our estimate is that we're 30% to 40% through it, but the thing nowis it's going reasonably smoothly. I mean as well as these things can go thestuff that we do ourselves where we're well and truly on top of it andobviously we’re using Stericycle. And when it is once removed from your control, you do tend to have thingsnot run at quite as smoothly, but I think on the average, and I will get Keithto comment on this, on the average I think we're fairly satisfied. We're satisfied with the amount of provisioning we made. We're satisfied, ifyou looked into the wild blue yonder and said we're a shade under 40% of theunits back, you'd say, well, we would like a higher number, but it is what itis. It is like you take your car in, and you get something in the mail, and yourMercedes, something wrong with the brakes, and I don't know what you do, but Iwait until my next service. So, there is a bit of that going on but, Keith, doyou want to add anything?

Peter, I believe that you've answered that adequately as well.

Okay, well, thank you.

We have the inventory under control, Stericycle has the process undercontrol, the start-up issues that you'd have anytime you go through somethingthis large are for the most part behind us, and I think we're gatheringmomentum with this very nicely, but it will be with us for the balance of thiscalendar year, as we said all along.

Is it by any chance, again a piggybacking off of one of Ben's questions, asto why maybe you're not doing a little bit better with these launches becauseusually you do very well with a new product launch? Do you think, is there any more sales force distraction out there or is thatbehind us?

Glenn, what Peter had mentioned earlier on is that we still are getting somelevel of sales force distraction, hard to quantify it in specific terms. We estimate it to be in the 10% to 15% kind of a range, which means it hassome impact, but not much, certainly not like it was in the first quarter andactually at a declining rate as we move forward. And I would imagine that, as we get closer and closer to the end of thisthat any commitments of the sales force time on this will continue to getsmaller.

Okay, great. Thanks for taking my questions.

And, Keith, I just listening to your answers, there I just wish you were onthe compensation committee.

Sir, your next question comes from the line of Mike Madsen with Wachovia.

Thanks for taking my call.

Hi, Mike.

I guess first of all, just I know about this time last year, you all hadimplemented your internet policy, and I know it is a very small percentage ofyour sales, but I guess I believe that you're going to be lapping that startingin the December quarter, so that may give you a slight boost to your revenuegrowth. Is that a fair assessment?

Yes, I think it is. Keith is very close to the internet policy, and I thinkin fact Keith was the person who was most adamant that we really needed to putour foot down concerning internet sales. And just to reiterate what we said before, that is because guys that areselling on the Internet feel no responsibility, at least a lot of them thatdon't have DME attached to it or an HME; they don't feel any responsibility tocall the patient because they don't get paid for it. So, we just think its bad medicine, but Keith, why don't you give us anupdate.

I just got a message from one of our Vice Presidents of Sales this morningthat told me about two customers in the northeastern part of the United States that had made a decision within thelast two days to switch over all of their business to ResMed because we are theonly one with an internet policy. And we are getting more stories like that as people do understand what ourmessaging has been. They do understand the impact on patient care and theimpact on the DME service model, and are now beginning to take action on justhow they're directing their business. So, Mike, in answer to your question about whether we measure anything inrelationship to the anniversary date of our internet policy, I don't thinkwe've got it quantified like that in any way, shape or form. It is more of a gut-level check from what we're hearing from the sales forceas our customers understand the messaging that we've been trying to get acrossand are now taking action on that messaging. We remain very pleased with ourinternet policy, and we remain very committed to our internet policy.

All right.

I think what we actually would like is for some of our competitors, one inparticular, to follow suit. We just think it is just better medicine. If youdon't get compliance, everybody loses.

It is understandable, let's see. Just on competitive bidding, and Iapologize if this question has come up, I was on another conference call, butjust what are you hearing from the HMEs in the initial areas? I realize it’s a very small portion of your revenues at this point, but justtrying to understand maybe what the longer-term impact of that will be? Do youhave any kind of sense of where the bids are ending up or anything along thoselines?

I am going to try that. You're quite right. It’s not right in our sweet spotthere in terms of concerns. I am going to throw that again to Keith.

So we don't know where the bids are coming in yet. We, know just as you do,Mike, when the bids are coming in, and supposed to be sorted out. The long-termimpact of that, who knows? It is really interesting to us that it seems that more of the bidders withina given marketplace seem to be not from that given marketplace, that we've gotpeople who haven't done business in a given market are now using this as anopportunity to try to expand their business models into a differentgeographical area. But in terms of, it basically is a discussion point for people in theindustry. It is a worry point for what the long range implications are, but youstill have a lot of people that wondering whether they will ever be able topull it off and go from the first ten MSAs to the second level with this. And once again as you heard us discuss many times before, it is still at theend of the day such a relatively small part of our business that we don't thinkit is going to have a material effect on our business.

Okay. And then just, can you provide an update on your sales forcestructure, just how much are they focusing on the sleep labs versus HME’s,because I guess it seems like in the past I know I guess Respironics had mademore of a push into the sleep labs, and I know you guys probably had a presencein both, but just wondering if you can give us an update there?

Are you asking me to answer that question for the U.S.market, Mike?

More U.S.focused I guess, to be honest.

Okay. So we have for the last several years had an increased level of focuson the sleep lab with our sales reps as well as with our clinical team. Thatcontinues. We view the sleep labs as an incredibly important call point for us,both from a standpoint of the scripting that they do as well as from the increasinglevel of vertical integration with the sleep labs dispensing therapy. So our call pattern has not changed much over the last two years. Wecontinue to market our technology to the sleep labs, and our Adapt SV, and thesuccess we've had with that, kind of speaks to the presence that we've had inthe sleep labs. It remains high, will remain high.

Okay. That's all I've got. Thanks a lot.

And your next question is from the line of Joanne Wuensch with BMO CapitalMarkets. Go ahead.

Thank you for taking my question.

Hi, Joanne.

Hi. Can you give us a breakout between masks and flow generators in thequarter?

Yes, we can certainly attempt to do that. Give me two seconds here. Okay. Iwill give you a geographic mix which is 53%, in fact, that's almost identicalto the last few quarters. But 53% for the Americas,39% was Europe, and 8% was Asia Pac. In looking to flow generators, and masks and accessories, the flowgenerators were 14% increase. The masks and accessories were 13% increase, andthe overall was 14%. So they are pretty in line. But you asked for the split. And I think Joanne; you wanted the split between the sales. What percentagewas masks and accessories, right?

And what percentage of them came from what markets?

So the Americas versus ROW, do you want me to give those, Peter?

Yes, why don't you do that Chris?

Kieran, here.

Yes.

Hasn't done this for about 15 years, but that's all right.

The Americas, let me just do the normal breakout, in the Americas flowgenerators were up 12%, masks and accessories were up 7%, for a total of 9%.

Bear in mind the total increase was 11% because that's messed up a littlebit by ResMed Motor Technologies, so the overall was bottom was 11% if we're…

And if we back out RMT, the flow generators were 12% and masks andaccessories 11%.

12% and 11% is closer to the truth. The 7% reflects that impact of our lossof external business for RMT.

On the ROW side, flow generators were up 16%, masks and accessories were up25%, for a total of 19%, and then again that puts down to the 14% totalbusiness.

Okay. And if I did my math right, it looks like you had a lower tax ratethis quarter, in the 28% range. Can you comment on that and tell me what weshould be thinking about on a go-forward basis?

Joanne, it is Brett. That's right. That tax rate for this quarter is alittle lower. In Germany they actually reduced their corporate tax rate byaround 10%, so we did have a one-off benefit around $700,000. And we restated some of our deferred tax balances over there, so if you backthat out, we're back to more like a 30.8% effective tax rate, and I think goingforward it should be sort of around that sort of level, certainly won'tcontinue at that low tax rate for Q1, but around sort of 30.8% mark.

Okay. And then, can you comment on where you think diagnosis is going tocome out?

Yeah. Again, there was a discussion, a panel yesterday, and I don't want togive any investment bank a free kick, but the consensus was that it willhappen. And if you ask me, I am saying it’s about 75% sure. Why do I say that? First of all it’s you have the rumor mill, which is neververy accurate. But second, when NCD’s are looked at and normally when CMS makesa decision, they rarely reconsider it within a five-year period at least that'swhat we've been told. This is about two years and it would seem that there issome feeling within CMS that portal monitoring is a sensible way to go. Now, if you look at the prevalence of sleep disorder breathing versus, say,type-2 diabetes or asthma. And if you use that as kind of a model, you cannoteven imagine a circumstance, where every asthmatic patient for a Ventolin dosehad to go and see a pulmonologist or a respirologist, I mean the system wouldjust collapse. And the same is also true, if one looks at diabetes. I mean management ofdiabetes is really mostly primarily care physicians, internists, and so forth.The specialists see the acute exacerbations, so when the dam actually breaksand the sleep market starts to mature, people will be begging for portablemonitoring. And we see the growth potential beyond the current structure, where you havethe structure of DME’s and HME’s, they'll still be very important goingforward, but we see that that paradigm has to change really because it is justnot set up for scalability. And portal monitoring will become part of it and Iam pretty sure we're on the right tack there. When are these things going to happen? Obviously a favorable NCD ruling isgoing to be right in the sweet spot. The question is, how prescriptive orrestrictive will that be? And…

Thank you very much.

Thank you.

Then your next questions from the line of Joshua Zable of Natixis, go ahead.

Hey, guys. Thanks for taking my question.

Hi, Joshua.

Just wanted to get some more color on S8 II. I know I am surprised no oneelse asked this earlier. I know you went into a little detail about thetechnology. I am trying to understand. The nameobviously of the S8 II would indicate that is in the same footprint as the S8but the name changed as opposed to one of those fancy names you usually giveit, maybe it's more than that, it’s just not technology, I don't know. Can yougive me a little bit more color on it?

Yes. The naming is always one of these things, you know, why isn't it an S9and so on, but it is the same footprint, and I guess that's what reallydetermined in most people's minds, the consensus if you like, to call it an S8.But it is a really completely redesigned motor. I mean I was in Europe and Sweden for the European Respiratory Societymeeting towards the end of September, and we had the guys there had done somedemonstrations in Switzerland and Austria. And two sleep physicians, our salesguys, and the reports back were just incredibly encouraging. This is one quiet unit, but in addition to that, with the redesign of theinternal, in particular the motor, the breathing characteristics are justabsolutely stunning. You know, breathing in and out, there is virtually nochange at all in the pressure. In other words, some devices, you go back years ago, you get swings of 4 to 5 centimeters breathing in andbreathing out. It was just awful impedance. This thing is almost zeroimpedance. It is quiet as a mouse. I mean, you can believe your own dreams to acertain extent, but I talked to the Austrian and Swiss guys who did thedemonstration. And this is a great product.

I guess what I am trying to understand is the way to think about it, sort ofas the highest end of the S8 family or is this going to be, even though it’sthe same footprint. Is this going to replace the S8 and sort of the same waythe S8 took over for the S7, the S8 II in a similar footprint but now you getall the different features of the various S8 models but on a much quieter model?

Listen, Joshua, if you want to buy quite a few of the older versions, we canprobably help you out. Yes. The characteristics will flow through all of the S8family, and we think it is going to be, it is going to be really well receivedas I said, so yes, it is going to flow through all the family. And franklywe're excited about it.

And this is Kieran, just to add a little bit to Peter's comments, when yousay substantially the same, Josh, this is actually the same. So, from theoutside of the box, you're not going see a difference other than some of thelabeling. We're using the same box so that we can get scale opportunities onthat. So, you can use the same accessories. It is seamless from a customer perspective, but it’s got a totally newengine in it. And the second thing to note is it hasn't been released yet, inthe U.S. or inthe Americas.It doesn't come until later in the fiscal year. So, we'll see that impact lateron. This product is absolutely incredible. The engine, as Peter was noting, isquiet. It is capable, and it allows an increase in functionality.

In fact, the breathing characteristics, just to follow on from Kieran'scomments there, are just so much better even though, the S8 is a great product,the breathing characteristics on this just kind of knock your socks off. It isa bit like getting a Porsche Turbo and putting a chip in it, and going from450-horsepower to 600-horsepower. This is really a swish unit.

Great, and then just on Saime, can we get anupdate? I know I usually ask this once a quarter.

We'll have to wait until Elisee comes. Thewrinkles are out of the VS Series, the Ultra, the Integra, etcetera, that iscoming off the blocks very nicely. We're happy with that. Still, some work todo on the 150, 250 and 350 Elisee. Every thing is moving in the rightdirection. Kieran, you might want to comment because you just were over withthe European leadership team, but it was the same was a good buy. We did get a few more surprises than we anticipated. We were locked in, aswe said in previous conference calls, to not expanding the customer base, andwe're getting ready now to go beyond that. Kieran, you might want to say a fewwords.

Yes, I think what you said is right on target. We're making very goodprogress on the quality side. We're moving a substantial portion, in fact allof it by the end of the year of the VS production down to our plant in Sydney,because the technology has stabilized to the point. And the quality levels haverisen to the point, where we have the ability to do that. So, it is a very encouraging sign from both quality and from the ability toincrease capacity. And quality levels of Elisee, particularly the Elisee 150have increased dramatically. So, the team is making very, very good progress onit. The business itself has grown in double-digits. So, we're quite pleasedwith it.

And just to add one more thing there, the 150 is obviously the main lineproduct. The 250’s and 350’s are more your hospital-based products, so the 150as a portable ventilator is where we want to be with a nice big screen, verycustomer friendly. If the thing works the way it is supposed to work.

Great.

That's the more important one.

Thanks, guys.

And your next question is from the line of Andrew Goodsall of UBS. You mayproceed.

Good morning, team. I just wanted to get an indication…

Good meeting yesterday, Andrew.

Yes, great, glad you came along. We really appreciated it. Try to give me abit of information on what sort of contribution Adapt SV had made to thisresult.

Yes, we’re seeing. We don't breakdown products into how is X, Y and Z going,but it is double-digit growth.

Okay. Great, thanks very much.

All right, Andrew.

And there are no further questions at this time.

Excellent, thanks.

All right, so, why don't we wrap up the call? Peter, do you want to do thewrap-up?

I think we've probably exhausted everything, Kieran, unless you want to saygoodbye to everybody. I am happy to say goodbye.

Sounds like a good idea. Thank you for all your interest today.

Thanks very much, guys.