Welcome to AMO's Fourth Quarter Full Year 2007 Earnings Conference Call. For a copy of the press release issued this morning, call 714-247-8455 or visit www.amo-inc.com. This call is being recorded and a replay will be available at approximately noon Eastern Time today through midnight February 28. To access the replay, dial 800-642-1687 and enter pass code 31353621 or visit www.amo-inc.com. I am pleased to introduce Sheree Aronson, Corporate Vice President of Corporate Communications and Investor Relations. Ma'am you may begin your conference.

Thank you and good morning everyone. Joining me are Chairman and CEO Jim Mazzo; President and COO, Randy Meier; and CFO, Michael Lambert. After some prepared remarks, by Jim and Michael, all three gentlemen will take your questions. During the call certain statements such as forecast of financial information, guidance, financial targets and goals, strategies for growth, expected product performance and expectations for market and procedures, and the impact of a potential US economic downturn, projected regulatory approvals, benefits and launch dates of new products, expectations for the multipurpose solution re-launch and for niche initiatives to reduce cost and any other statements that refer to AMO's plans or estimated future results are forwarding looking statements. As such they reflect our current analysis of existing trends and information and represent our judgment only as the date of this call. Actual result may differ based on various factors affecting our businesses. Review today’s press release and our recent SEC filings, for more information about these risk factors, specifically the discussion under the heading "Risk Factors" and our 2006 Form 10-K and third quarter 2007s 10-Q. You'll find these and other documents in the Investors section at www.amo-inc.com or by calling us at 714-247-8455. Please note that year ago sales comparisons and the tables in today’s release do not include any IntraLase or WaveFront Sciences related sale. Since we completed these acquisitions during 2007, the pro-forma sales growth rates reflect comparisons that include the IntraLase and WaveFront Sciences performance as they see that acquisitions had occurred in all periods presented. Note also, that our adjusted EPS guidance is provided on a non-GAAP basis and excludes the impact of charges and write-offs related to acquisitions, reorganizations, and re-capitalization, unrealized gains and losses on derivative instrument and other periodic or one time charges. Refer to the Investors section of our website under historical financial for more information on our use of non-GAAP measures. With that I will pass the call to Jim.

Thanks Sheree and good morning everyone. Our fourth quarter and full year 2007 results showed a strong finish to a year marked by both exciting strategic opportunities and tough challenges. 2007 sales exceeded expectations and our adjusted loss per share was well within our guidance range. Key factors driving performance were, the timely integration of IntraLase into our laser vision correction business, which is delivering meaningful methods around the globe, rising cataracts sales across all product categories fueled primarily by our Tecnis IOL platform and WhiteStar phacoemulsification technology and our ability in our eye care business back on the growth path within disciplined implementation of a global product recall and market reaction with our Complete Easy Rub product. We approved, we could look beyond obstacles focused on our core strength and execute. And as we move into 2008, we are very confident in AMO's ability to continue to drive our strategy forward. However, 2008 also presents challenges. Mounting recession fears are heavily impacting consumer discretionary spending and in turn elective refractive procedure volumes. Today, anxiety has replaced optimism in many households. We are seeing the impact of this in our US laser vision correction business. As the breadth of the negative economic news increased throughout the first six weeks of this year, we have seen a significant slowdown in our procedure sales. This is frustrating considering that our fourth quarter volume struck pretty consistent with historical patterns and we faced 2007 with domestic procedures up over 67. Based on our outlook so far 2008 and our discussions with many corporate and surgery customers, we now expect the US excimer procedures to be down approximately 10% in 2008 versus our prior expectation of 6% growth. We are also expecting of modest rate of growth for US femto procedures as well as…

Thanks Jim and good morning everyone. I'll begin by providing a quick overview of our consolidated financial results, then I'll follow with additional details on our plan to reduce fixed costs, then I'll I provide a summary of 2008 guidance. Let's start with the P&L. In the interest of time, I will focus on the fourth quarter results and a year-over-year comparison, and refer you to this morning's press release for full year figures and comparisons, the details of which we've covered in past quarters. Sales grew 25% to 304.6 million including a 5.3% increase related to currency impacts. In terms of mix, cataract implant accounted for half of our sales compared to about 57% in the year ago period as you can see on slide 21. LVC represented 33% compared to 21% in the year ago period showing a progress in the LVC business Jim referred to, and eye care was 17% compared to 22% a year ago. The shifts reflect primarily the addition of IntraLase and declines in eye care sales due to the recall impacts. These same factors drove year over year shifts and sales by geography where sales in the Americas represented 44% of our fourth quarter total versus 46% last year while A-Pac grew to 9% from 6%. Europe, Africa, Middle East, and Japan were relatively unchanged. Gross profit was 178.3 million or 58.5% of sales and included approximately 6.4 million in recall related returns and costs. The impact of an estimated 23.2 million in recall related last sales and an $800,000 transaction related charge. In the year ago period, gross profit was 139 million or 57% of sales including approximately 19 million in recall related returns and costs. The impact of an estimated 11.7 million in the last sales and 1.2 million in charges…

Thanks Michael. Before opening the call to questions, let me summarize our key priorities for achieving our 2008 financial targets. One, advancing our complete refractory solution business model, as we manage through the current economic softness by leveraging our leadership and unique growth opportunities. Two, delivering our R&D pipeline which is in it's position since our 2002 spinoff and includes new innovations for today and the longer term. Three, continue to grow branded multipurpose share and return our eye care business to the position of sustained growth and impressively managing our cost structure in order to reduce fixed costs, enhance cash flow to facilitate that reduction. With that Randy, Michael, and myself will be happy to take your questions. Operator?

(Operator Instructions). Your first question comes from the line of Joanne Wuensch.

Thank you. Good morning.

Good morning Joanne.

Lots of information, I appreciate it. The surgical category was up nicely in the quarter. The surgical category for Alcon was up nicely in the quarter. Can you give us an idea of what's going on in that industry as it looks like the two of you are taking a fair amount of share from everybody else?

I'll take this one. I think there are a couple of points. Your first point is correct. I think that both ourselves and Alcon have continued to demonstrate the best technology in the industry and this we are growing at the expense of our competitors. Again technology drives share performance. I think number two, Joanne, is that the difference between ourselves and Alcon is that they do compete in certain geographies that we don't and so outside US growth is probably little stronger because of they are direct in some markets where we are a distributor. So for a dollar basis we are at disadvantage there. On unit basis though we continue to believe we are growing quite strongly.

Okay. When you came up with your laser vision correction procedure growth rate, could you give us an idea of how you came to these numbers and then further in the range of things you mentioned you think it maybe too conservative or you think others may think it maybe too conservative. Just give us a little bit behind it please.

Well as I said at the beginning of the year we started to see some softness and we of course having tremendous relationships across the world, especially in US with the primary care providers in the chains as well as the top physicians. We spent a considerable amount of time profiling what exactly is occurring in their offices. Of course as you know the first quarter is the largest quarter for LASIK volumes so obviously that would provide us some good headwind information because of the size of the first quarter. We felt based on some of the feedback that we have seen that it was prudent for us to relook at what we have projected which was a 6% growth for the year. And based on their feedback, as we've said we would have a reduction in our procedures of about 10% versus the market of about 15%. And as I stated again we're still in the middle of February. One does not know what the economic news and you hear all kinds of reports. You may hear everything from the different retail type of outlets who say, some of them is rebounding, you read some that say they are having a terrible quarter. So felt this was prudent for us to give this outlook.

I appreciate that. I'll get back in queue.

Thank you, Joanne.

Your next question comes from the line of Peter Bye.

Thanks guys and clearly showed a lot of progress with last quarter in the like and we always like conservative guidance. But I guess that maybe address the fact that we have often seen it has been sort of the time by some as conservative guidance in the past. And you did agree to that in the call explaining exactly and in the press release on what some of the metrics are. But I just look at maybe spending, on SG&A in the quarter maybe was a little bit higher than I you thought. How that winds down on that front. And then just maybe a followup on Joanne's question on LASIK is that what you are seeing today down 10% or is that say hey, we are looking at it and say it could get worse? If I look at pro forma Q4 it looks like it was down high single digits. So maybe you saw some softness before January on that front because you were up about 8% in Q3 trailing 12 months you are up to over 6% trailing 12 months for '07; so maybe if you could just talk about this too?

Okay, thanks Peter. Let me do the LASIK and then I'll turn it over to Michael to talk to you about the spending. A couple of questions there, so let me track it. As we looked at our Q4, and as you saw from the result, we really saw nothing different. October came to be the lowest month of the quarter for the year for many reasons. November then trailed back up and December actually continued to perform to the level that we have seen in previous years. So, there is really nothing there other than what we constantly read and talked to practitioners and things of that nature. When we started to experience January, and as you know Peter, January is the biggest quarter because they tend to have the flex benefits opening up. So they are looking at it. What we saw and what we heard from practitioners is that the calls into the office were greatly reduced. The good news is when they came into the office the conversion rates are higher than normal. I believe that's because they are spending more time and they are also moving to a custom as well as an IntraLase, because of the profit per patient that they are going to require based on the reduced amount. But then with reduction in the amount of people coming in the office that obviously caused some concerns for us. It is very difficult to predict the full year, as you can imagine especially in the US.

I appreciate that, it definitely is.

So, what we are trying to do is give our best guess, you know, we had LTA earlier this, as we week talk about it, we obviously with talked TLC and others. This is what we believe is prudent and our best guess. And as I said you know as the quarters roll out, we will be more than happy to update where we believe this is coming up. But we felt it was prudent at this time to give that type of an outlook and again the first quarter being our largest quarter. Now I will say outside the US we continue to perform extremely well. And as I said the other point, Peter, is custom converging continues to go well, as well as femtosecond penetration. So my comment of having multiple things to absorb, issues such as the downtrend in the US market continues to allow us to manage this business for extreme profitability and growth. With that let Michael talk about the SG&A comment.

Yea, Peter on the SG&A side to your question, you know, I think the way I would describe it is in any 90 day period, meaning last quarter, its hard to change the spending patterns. And so those types of changes certainly do take some time to put together. Part of that is what you saw with today’s announcement. Today’s announcement focussed on some targeted reductions in SG&A across the board, some people related and also as we head in to 2008 some discretionary spending related. In order to make and drive to the plan and the guidances, you know, I think you all understand that will be a significant reduction in year-after-year spending and you should start to see that as we head into 2008. It is something that as a leadership team we are monitoring obviously very closely.

Okay. And just a followup, there is a lot more focus on cash flow, it seems to me your commenced then we see in the past is there a reason why we cannot just take your GAAP EPS guidance, the additional charges we saw add back the amortization and stocking, and I think your CapEx guidance before was roughly around $60 million and that is a sort of a free cash flow number or there is something else may be going on the working capital that will help or hurt that number?

Repeat the question for me, Peter, please.

Yes. If I look at free cash flow generation this year, is there a reason why you can't just take your GAAP number for 2008 your guidance, take out the $20-30 million in charges, add back amortization, and stock pays, which is non-cash and say hey, you know, obviously take out CapEx too, which I think is $60 million this year. And is that going to be a rough approximation for free cash flow this year or is there something else going on working capital that will help or hurt it?

Yeah, remember our guidance is not GAAP, our guidance…

I know the additional charges you announced today.

Yeah, I mean if you think about backing into and adjust the EBITDA number as an example off of the guidance, you know, that obviously drive very significant EBITDA dollar levels. And when we think about free cash flow, by and large you could think about it, and you go back and look at the historical trend, I think 2006 was our peak, we were running at free cash flow levels in $80 plus million range, and that was net of a $100 million favorable legal settlement that I mentioned above. We have acquired IntraLase since then and so, from a general perspective I will be looking at the business and we will be looking at ourselves as the leadership team to obviously do better than that. If you look the cash flow from operating activities number just in Q4 about 50 million that is not bad progress heading along the way, especially not bad progress considering what happened in the recall and all the spending that got eaten up in 2007. So I think through the guidance on the adjusted EPS side and some of the measures that you are talking about and thinking about the CapEx number for 2008 you can start to back into it but for us, for me, the first focus is to get the cash flow from operating activities back to 2006 levels and as we get it back to that level, we will worry about pushing it beyond.

All right, great. Just one last question, just on the bond covenants, you did do restructuring with the bondholders I think last fall. I didn’t do the mass is there need have to do that again given some additional charges or is the coverage fine anything like that on its front?

Actually, I will have Randy answer the first part of the question. I think he had…

This is Randy, just to clarify, we did not do our restructuring of our bond covenants, we were never in default either of our bank facility or our bond covenants. What we did is, we obtained a waver from our banks based on the bond covenants and then basically got adjustments basically two covenants we have, so that we have ample room going forward to work now with our banks, but does not bond covenants you have any issue with.

Okay, great. I appreciate. There won’t be any need an additional waiver in this year.

In 2007, there is no need for any waivers and we do not believe based on the current projections that we any issues with either our banks and certainly not on bond covenants.

Okay, great. I appreciate that and congratulations again.

Thanks Peter.

Your next question comes from line of Gerard Hope.

Thanks a lot. Good Morning.

Hi Gerard.

In the past, you mentioned that there is not or has not been strong correlation between the economy and the iLASIK market and you know now clearly there seems to be you know there is, so can you explain the disconnect is it more that you know in the past we have not seen the correlation because the LASIK market was not nearly as matured as it is now is that the main reason?

No not really. What is the difference that the grasp of the impact of the economy in the past you know weeks has just been upon extrapolated upon the press. You know, you can go back last couple of years an oil prices have been high and economic news from retailers has been evident. It did really overall impact the iLASIK market, but you can pickup a paper today. You know people who have been in the past really never really concerned about it and if you look at LCA of the world have been discussing. You can see that what happening is just the sheer number of people are not coming in to have LASIK. Before, there were not any bad economy, they came in, but then they opted not that happen. So, Gerard what’s really happened is that the breadth of this news has just been much larger of an impact than ever before. So, my point is the economy really does not have an overall impact with the extent that we are reading about that has been greater felt in these change in independent doctors than in the past.

Got you, okay. And then you reiterated the lens care market share guidance of 16% to 18% on a global basis. Do you think that your new EPS guidance is you know flexible enough that if you do not get there you can still hit the bottom into the range or is it you know is that a concern?

While, we really talk little about the eye care performance, because we are really pleased with that. I think again what we have given you a range that allows us to have the flexibility to manage upsides as well as downsides. That is what I think we have done this year and today because there is lot of upsides and downsides that we face across most of our businesses. And remember that 16% to 18% is as we exit '08. Randy you want to give you a little update on what you are saying up there with eye care.

Yeah. We are really excited about the eye care business and in the year with 7% market share in the US little over 11% over in Japan. We do not get it accurate market data in Europe just because the number of market it is a little more of a lag time in that and certainly Asia pacific are back in all of our markets, so the eye care business continues to do very well. We have a number of promotional programs that will be running throughout the first half of this year. So, again we are very confident that we can reach our targeted share goals and again as James indicated those targets are exiting the year and getting where we are in terms of the overall revenue exiting 2007. We remained fairly confident that we can certainly achieve those goals. We also executed the launch of our oblique product it is actually in the market right now and hit on-store shelves in Wal-Mart and Walgreens. A number of folks come up and speak to me about seeing the product on the shelves around the country, so we are excited about that and we will be beginning our sampling program in early March. With regard to our eye care, we still remained fairly confident in achieving our goals and don’t believe it is an aggressive target for us. So again I think we have got ample room in our overall guidance to manage the eye care business.

All right, s excellent. Just one last one on the absolute databases of your pro procedure revenue for the eczema business, is that a risk to decline in 2008 or could the pro procedure offset the market deceleration.

Actually, it is interesting again, did you have listened to the LCA. What has occurred is actually a greater move to cut the manipulate technology, because as I said earlier what doctors must do is with fewer patients coming in the office, they must get the same amount of profit and so the best profit per patient is a custom IntraLase, it has the best results as well as the best profit per patient, so we did get a very interesting rate as well as the drive our custom procedure.

Okay. Thanks a lot guys.

Okay. Our next question comes from in the line of Mark Goodman.

Couple of questions. First of all, the cataract business in Europe had a really big numbers, if you just go into that a little bit. Second of all, you know what you thoughts on this iLASIK campaign just given what is going on in the market place, obviously this is a relatively new campaign. Whether you decided that you are going to spend the same amount of promotional dollars in a way as you are thinking six months ago. Just give us a flavor for that and on the third question is, just give us the OUS LASIK business, what was the procedure growth just in 2007 and in the market place and how you did as far as share and what you are thinking about for 2008.

Let me handle the LASIK one, I will turn over to cataract for Randy. I mean iLASIK first off has been is within our guidance, the positive news around iLASIK is again this goes through the doctors and it is a viral campaign, so there is not TV advertising or things of that nature. I will say Mark that actually based even on what Gerard was asking earlier. Is that as you saw I think we have about 450 accounts. They are jumping to a quicker because they need something to be able to promote to the patient that why have LASIK and custom monovision, iLASIK provide these medium. They need to drive patients into the offices especially during the time when less patients are coming in. And as you saw that Gen-Y is really responding quite well, so we already have 450 doctors already signed up for our iLASIK, which is little ahead what we had anticipated. So the iLASIK campaign has been well received and actually you also saw our crossover now is I think is around 40 odd percent between our IntraLase business and our excimer business. I would tell that it is the iLASIK campaign help drive some of that because in order to get our iLASIK you have to have book. Now, carrying OUS, we continue to be very pleased. There is multiple drives out there. It is fairly instinct. We think now you are starting to see obviously more procedures grow because you have things such as Optical Express, which continues to grow very well in Europe and Europe again they are number one provider. As you saw, I said that we had some very strong growth in other markets where we used distributors such as Asia-Pacific and I have to say that Japan is doing extremely well. And again why Japan is doing well is that they actually identified Gen-Y while a lot earlier than most other markets and with a myopic population there this has been very aggressive and with a change domination there which we control, we do a very good job with regards to femto and excimer. Procedures are stopped, because they say procedure we have to look at custom capabilities, because that would drive our revenue. We do not again push standards, so we would like to look at custom capability and we believe now were some between 70% to 80% custom capable and that is what is going to drive our revenue, not just procedures because as you remember in the past, most manufactures were just pushing standard, but not doing anything from getting key card. So, I will look at custom capability in IntraLase and that is what gives me and we believe that when we started this it was about 10% custom penetration we believe we are now in a market where we go is about 20%. With that Randy you want to give a cataract Europe.

Sure. Hi Mark how are you doing? The cataract in the fourth quarter had some pretty nice revenue generation, primarily due to some launches and some introduction of the new products. You know, we started the quarter with a pretty strong showing at ESCRS and the launch of techniques 1. Over there, you continue to see the impact of having another new signature wipe start system, continue to fall through in that part of the world as well and we had relatively strong quarter in terms of our OVD result. I think it is just another indication as we bring new technologies to market that you know we have over Europe. Protective somewhat will be coming in United States and hopefully some foreshadowing of things to come around the world as we continue to upgrade our overall portfolio and broaden it within our eye care portfolio. I think it is just continuation of what we have been doing for a while and then again as well we had benefits of currency in Europe in the fourth quarter as well.

Thanks.

And your next question comes from the line of Larry Singleton.

Thanks for taking my question.

Hi Larry.

Hi. Just a couple for Michael. Guidance on the top line has reduced by $10 million but the EPS by 30 cents and change in sales guidance resulted in probably less than 10 cents in EPS if I assume a high margin for this sales. Can you talk about what else is driving the reduction in the guidance and just a couple more few Michael. Earn the tax credit is year 2008 guidance and then lastly, can you give us a little bit more details on the cost cutting. You know, which businesses will be impacted in the breakdown covered by line item on PNO and the timing throughout the year? Thanks.

Okay. On the first question Larry, the $10 million top line, roughly 30 cents per share bottom line that your referenced. You know, that for us really reflects our expectation for decline in the US excimer procedure as Jim talked about earlier. In a way to think about that, it has a got very direct and very significant impact on the bottom line and procedures stop flows essentially straight through or almost straight through. Now even if that set of changes was happening, we are also expecting in shifting getting some top line benefit from currency and we are also anticipating getting some top line benefit from higher equipment sales. These at least our partial offsets on the revenue line. Where as you can imagine given the high margin and flow through on the procedures both the currency where we have a natural hedge, because we have got lot of cost paid out in foreign currencies as well as the equipment sales we were driven to own the real estate. Those items have a very for or less significant bottom line impact and so what you’re seeing in the guidance is really some of that shifting. I think the other thing to remember on that is that guidance that we have out there was essentially probably almost a year old and a lot happens over the course of the year, but the things I just mentioned was the prime drivers. Your second question on the R&D tax credit. You know the issue they are only really applies to US taxes of course we have a global tax strategy in place and so issues or impacts would obviously be mitigated for us some, but things you understand about that is you cannot run through your provision and estimated assumption that R&D tax credit gets extended. You essentially the way you run your math and you do your financials you have got assume it and does not until congress acts. And so we have adjusted that thinking into what was provided. Your third question. Jim is going to time in on and then I will jump into.

Really, as we discussed on the call it was more associated with as I call behind the window type of areas, where we reduced the head count. There was no business targeted other than where we could improve our efficiency to help accelerate our businesses. Reduction is some manufacturing headcount as well as reduction in some of the (G&A) areas with the primary focus of this. But again, it was not at the certain target of any business for say as more insight the window and it was really spread across most of the functional areas.

Let me also just jump on top of that mention the timing, the people related impacts will happen obviously over the quarters of this year, most of that right now and then from the facility standpoint, the facilities piece happens over the course of the next several years essentially at least in terms of restructuring piece of itself. The charge will be taken upfront, but the cash won't flow out for several years.

And how should we think about SG&A, you know COGS, I think it like spread across, COGS, SG&A and R&Ds, is that fair?.

When you say cost cuts?

Because it is manufacturing G&A related so SG&A and COGS,

Yeah, the savings yes.

Primarily yes.

Yeah. Thank you.

Operator.

Your next question comes from the line of Steve Willoughby

Good morning Steve.

Good Morning. How are you?

Fine, thank you.

Question regarding your previous guidance and R&D, your previously guided R&D expense to be about 6% of revenue given the restructuring. Should this percentage really change at all?

No. It's still. The relative impact of R&D is fairly minimus. It’s really always been a goal of our between announcement reading, I've discussing R&D and with (inaudible) running R&D, it's always been between 6 and 6.5%, really this has been more of a focus to accelerate the projects and focus on one that are going to give us the greatest return, so minimus that area.

Okay and then just one follow up on that. I think you mentioned that your CapEx guidance for this year is 45-55 million

That's right.

That's may be down about 10 million from previous guidance. Is there anything in particular whether that reduction is targeted toward or that's just kind of all inclusive with the restructuring announcement

By and large, what they really relates to that shift you are talking about, we associated with our (inaudible) manufacturing facility and the move from Santa Clara to their and (inaudible) Up North. We got some of the outstanding in two Q4, so it came in ahead and so as we saw that CapEx spending happen, we have adjusted the 08 downslide.

Perfect. Thank you.

Thank you.

Your next question comes from the line of Larry Bruce.

Hi. Good Morning

Good Morning Larry.

Couple of question, may be just starting with you James first, just philosophically as you guys think about it, in the past, I think might brought Mike brought this up earlier, which is 08 guidance had been pretty stable I think that was put out there in the quarter, I believe, of '07. Are you thinking now as you provide guidance that you are going to do this only one year ahead and you obviously refresh that perhaps in a more consistent fashion, if need be

I mean again remember why we had two factors last year that caused this to have to put guidance out earlier one was the IntraLase acquisition, which is about a year ago, and then we have to recall, which obviously required us to update the guidance, so our philosophy very similar to most public companies that this would have been the quarter that they would release so that is our plan, because it allows you to have the latest and greatest information especially when you are facing some of the opportunities and challenges we have, so the answer is theosophically yes.

Okay, terrific and then I was hoping may be again as we think about the charges, two financial questions here. On the charge side and the savings that you anticipate so would you anticipate the running at your full annualized savings in 2009 is question one or does that hang out a little bit longer given some of the comments that you made relative to the consolidation

Relative to the people related site, absolutely; relative to the facilities relates site, no the facilities related piece which is the smallest piece actually started to take shape and affect post 2009, so we sort of attempt 2010, 2011, 2012 phenomenon.

Okay. So we should be thinking about these fully realized savings, still couple of years out.

Again the head count side full annualized effect in 08. I am sorry in 09.

Right.

But the facilities piece beyond 09.

Majority of the savings is from head count Larry.

Got you. And then I am wondering, if you could just provide us any thought you sort of talked about on these 6% or 6.5% of sales. I wanted to just sort give a thoughts and how you are thinking in '08 about where your gross margin may be or your SG&A spending.

On SGNA side, on all these things, I think you need to think about as medium to long-term targets right. So, on the SGNA side, high 30s give or take and on the gross margins side, you know, we believe on our migration path to eventually land up towards the mid 60 somewhere.

Okay. But again, your comments on these line items are again we should be thinking mid to longer term, not await specifically.

Yeah. I mean what I was trying to do is get everybody focused on what are the business model operating target we expected to drive on to medium term to long-term and you know we have not been there as a business, but we certainly expect to migrate there.

Got you. Last question, just Jim or Randy just thinking about contact lens solutions. Do you have any update as to kind of where the FDA is thinking about the requirement for new solutions and any update as to where you guys stand with your next generation solution.

Right now, that information is that the FDA continues to think about what we are going to moving towards in terms of the hurdles for approval. To our understanding towards the end of the first quarter, they will be convening a public panel in terms of a discussion about you know where contact lens solutions are going to be, so I am sure that is going to be a very interesting conversation. In terms of our other solutions, we continue to look at variety of different formulation on a potential of our next formulation that we want to put out in the market place. We are going through some feasibility studies right now and over the course of the next year, we will get back to you in terms of timing of that, but obviously until real turtle is set and target set, it is going to challenging to come up with a new formulation.

Okay. Thanks for that clarification Randy. Thank you, guys.

Thank you. Operator.

Yes. Your next question comes from the line of Mark Mollicken.

Hi Mark.

Mark withdrew his question. And your next question comes from the line of Frank Pinkelton.

Good morning Frank.

Good morning guys. It’s a (Inaudible) Just a question about the cataract franchise. Just in general, could you talk a little bit more about what types of opportunities you see for the business in some of the emerging market throughout the world? And then kind of concurrently with regards to Japan and Asia-Pacific region, you know what types of things are you doing to restore growth in some of those franchises where you are seeing kind of flatter growth rate to than some of other areas of the business? Thanks.

I think in terms of emerging markets, we operate in a little over 60 markets around the world and we are direct in about 23 to 25 markets around the world. We continue to explore opportunities throughout the world you know through distributor market. So, we think there is tremendous opportunity throughout incremental growth to the overall cataract franchises. I think our current portfolio certainly coalesce to do that. I think the evidence of that in the Asia Pacific market last year, while we saw some gravity declines, we saw significant improvement in terms of profitability over the year, as we migrated to product line to our existing product line away from some of the significantly older technology that we had been selling at the time of the (spread), which gave us some tremendous amount of confidence and ability to go to other emerging market and developing market throughout the world. So we are very confident that we can continue to expand the cataract franchise around the world. With regard to Japan, in terms of restoring growth, you know that has been a challenging market as you know with all medical devices with a fairly long lead time that introducing these products there. So I think it will continue to be interesting market for us. Although we continue to believe it is a very viable market for us, you know, the market is kind of getting some of the reimbursement of our straightened out over there. So we think the stability and pricing over there should begin to improve, which will allow us to continue to be competitive. But again we think that the global markets for cataract franchise is an excellent opportunity for growth. And certainly Japan and Asia Pacific as well as some of the emerging markets in the Eastern Europe and other Eastern Asia markets should provide a tremendous opportunity for us in the future.

And another thing I would add to that is the OUS a large word. There are many markets where we have had a strong presence since this spin and continue to do very well, especially where we are direct. With that, I would like to thank you all for your attention and information today and we look forward to talking to you over the next several days. Thank you very much.

This concludes today’s conference call. You may now disconnect.