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#Sure, <UNK>.
I don't think we are seeing any significant different view of the Life Science Capital business than we have seen before that is order patterns have been fairly consistent and our backlogs are fairly consistent.
It is just when you look at any given quarter, any given month since it tends ---+ it is a small business that comes in relatively large chunks ---+ it tends to be a little bit lumpier than the rest of our business.
So we did have ---+ we've got a couple of nice quarters now in Life Science capital and we have been anticipating that.
We were weak six months or so ago.
People were asking us why we were weak in Life Sciences.
It is basically just the business is fairly steady and we have seen a pickup in our hydrogen peroxide product lines and so we do see that favorably and that is a good profitable product for us.
So that is part of the operating profit, operating margin improvement both the volume coming through the plants as well as the mix to that kind of product line.
But other than that, we see the same.
The other thing that comes through obviously in total in Life Sciences, the GEPCO acquisition we did and that is working just as we expected it to which we expected good performance and they are performing nicely.
So that is pretty much as anticipated as well but it is a nice pick up.
<UNK>, just on a year-to-date basis through the third quarter, Life Sciences capital is up 4%.
So as <UNK> said, we know this is a lumpy business but 4% for the year is good.
Sure.
I will start with North America since that is the one that gets the most attention I suppose.
And we have clearly seen again if you go back, we had a couple of years where we basically said it was flat and then maybe a year or so ago we said things looked like they are picking up and last quarter we said they might be picking up a little better than we thought even or a little more favorable and I think that has continued.
So we are seeing nice trends.
We are not seeing 20% improvements in I will call it long-term outlook but clearly our order rates have been quite strong last quarter quite strong.
This quarter we had a good shipment quarter and yet we still increased the backlog.
So and kind of looking out forward, it still looks pretty similar.
In terms of mix, which we are often asked about, I will call it the replacement business versus the large order business or project business that we have, we kind of saw it move back to kind of the normal levels kind of 70/30, 70% being replacement but we did have some exceptionally, some good strong orders in the month of December that are more project related so our projects were up a bit.
And I don't know the weighted average over the last six months but it had been running pretty much normally and we picked up a little bit in the month of December.
So we will see how that looks.
Looking out forward, our outlook or our pipeline looks pretty normal for us but also continues to stay at the levels that we have been seeing the last little bit so it continues to stay strong.
We do think we are doing nicely in terms of holding our fair share of the business but we also see the other people in our business, the capital business, reporting strong revenues and strong outlook so we know this is somewhat ---+ we think we are doing a nice job but we think the markets also picked up.
Outside the US, we consider EMEA, Europe and we have been weak there, Mainland Europe if you will or Europe as we normally think of it, is not strong but it has not been terrible for us.
EMEA has been very ---+ or the Middle East I should say has been very difficult for us and pretty much everybody I think.
And I think we see that continuing for a while given both the economic uncertainty with oil and then the uncertainty related to some of the geopolitical issues, we are not seeing a strong market down in that part of the world which is significant.
For us Asia-Pacific has picked up, we are less China centric than some other folks so although what China does does affect that area, Asia-Pacific has come back a bit.
So we have seen some back to our normal levels.
We were soft in Asia-Pacific.
And then Latin America conversely has been weak and we see some continued weakness there.
Again, those economies that are based on either minerals or oil are pretty tough and so Brazil, Venezuela and a number of the countries in Latin America we are seeing some weakness.
At a high level I think that is pretty much it.
We want to work on that but I would say a couple of things.
You may remember last quarter you were asking us about R&D being above normal amounts which hurt our operating income and so as we have said before, sometimes R&D comes in lumps and as you are doing a project, your building prototypes whatever, you can see $1 million or $2 million run through pretty quickly.
So some of that is just temporal but the other thing we have to consider is we are increasingly a service business and so we have that recurring revenue so when you apply our R&D spend to our total revenue, it looks much different than our R&D spend to the specific revenue the R&D is applied towards.
So as you might expect, the businesses like US endoscopy that have a high concentration of new products and are very medical device oriented and product development dependent, their R&D spending is much more like what you would see in the other device sectors, in the high single digits, sometimes in the low double-digit kind of numbers depending on what we have going on.
Whereas on the service side, it is effectively zero.
so at least at this time that is how we do it.
We actually do R&D in service but it is service R&D.
We don't capture it in that bucket and that is something actually I do want to think through some and we may be able ---+ we want to think through how we do that.
We may be able to give some guidance on that going forward, we will see.
But to the extent we do not capture it on our books as R&D, it just shows as expense.
Yes, we have forecasted $135 million for the combined company for CapEx for fiscal year 2016.
And then we will provide guidance in 2017 when we have our conference call in April or May.
Yes certainly, <UNK>.
This is Mike.
One of the issues that we definitely have is what we are comparing to.
So our year-over-year comparison as we anniversary the Synergy Health acquisition, our comparisons will get a little bit different and they will shift and as I said earlier, that will cause our revenue to be more sensitive to fluctuations in currency than we are compared to legacy STERIS but also cause our bottom-line to be less sensitive to fluctuations in currency versus legacy STERIS.
So once we get to that point we will have a shift.
That shift has already started.
It is just we don't have a comparison to measure against.
If you look at it on an actual basis, <UNK>, our exposure clearly relates to the UK pound because as we translate the pound base because our second largest operating base and revenue base is in the UK and so any fluctuations to the pound will have an effect on us.
And then the other places where we do businesses outside the US and the UK ---+ of course since we report in dollars doesn't have an effect ---+ outside the UK, the euro, would be a very strong component because we have a good size revenue base there.
And then everything else tends to be more from a manufacturing side of the equation, the cost side.
So we have the Canadian dollar, the Mexican peso are significant in that.
So those four currencies make up the bulk of our differential.
But as Mike said it depends on what you are comparing to.
We have that exposure and actually this has moderated our income exposures.
We are doing forecasting going forward.
When we do our forecasts, say okay, now what is the impact of a change in currencies going forward.
We are more naturally hedged now than we were and so we used to have fairly significant exposure if you will and then we were reverse of what most companies are, we tended to be positive if the dollar strengthened and negative if the dollar shrank.
But that is going to moderate on the bottom line which is the one we care the most about obviously.
<UNK>, just to help you out even further, if you look at our forecast, what we have included in our forecast is based upon forward-looking rates as of December 31, 2015.
What we have baked into our forecast is we have ---+ in the full-year the FX currency rates impact on revenue for the full year.
Year-over-year compared to legacy STERIS will be about $28 million negative to the top line but about $20 million positive to EBIT and that is where the full fiscal year 2016 compared to the full fiscal year 2015 for legacy STERIS.
Hopefully that helps.
That is correct, <UNK>.
Sure.
I will step back a little bit I guess and say you have to remember what the basis of this business is and the basis of this business is the medical device industry, specifically those who have devices that touch the bloodstream so they have to be sterile.
And what we will be doing is locating facilities and growing capacity where we believe the device industry is growing and going.
We were historically if you will unhedged for those businesses that were moving outside the United States and decided to sterilize where they manufacture.
Manufacturers have two choices.
They can manufacture one place, send it to the US and distribution facility and sterilize near the distribution facilities or they can manufacture OUS and sterilize near the manufacturing point and the reverse is true for things that are built in the US and shipped to other places.
So we will locate in or around these centers of manufacturing and/or centers of distribution around the world.
We now have a much better footprint to follow them wherever they go.
So that is number one.
Number two, in terms of technologies as you point out there are two basic technologies, gas and radiation.
We are not overwhelmingly one way or the other on gas versus sterilization.
It depends on the technologies the manufacturers need based on their design and their packaging requirements.
Although we tend to be a bit heavier on the radiation side than we are on the gas side of the equation.
So we are stronger on the radiation side.
In terms of cobalt and e-beam and potentially other forms of radiation, clearly in terms of that we will be watching that and working with the manufacturers to see what their design requirements are and how they want to process.
But it is clear that we have now a much larger footprint in the e-beam side of the business and that was purposeful.
We have grown our footprint in e-beam.
As you know, now we have two new factories that are coming up here in the next few months in the US that have significant e-beam capacity so we are growing our e-beam capacity.
Synergy also has e-beam capacity around the world so STERIS in total now is again much more hedged to cobalt, e-Beam than we were before whereas STERIS was historically almost completely cobalt.
In terms of cobalt supply and pricing as you know, we have intermediate to long-term contracts depending on what you think the long-term is.
Not 30-year contracts but not one-year contracts, for our cobalt supply.
We at this point although we have effectively two potential sources of supply in the world, we are not concerned about our source of supply at this point.
I guess I've got ask a question.
Are you talking mainly about the ST side or mainly about the healthcare side.
I should have just answered one and gone with it.
Just kidding.
On the ST side, it is ---+ we were very strong as was Synergy with the multinationals in this space.
It does give them more opportunity to think about working with us in a more seamless fashion.
So they are happy with that.
We pretty much cover North American and they pretty much covered Europe and Asia so we don't see a requirement for expansion of salesforce based on that.
We think we are well covered.
If anything there might be some modest synergies there but not big numbers, you would never notice either direction.
On the Healthcare side of the business, it is somewhat similar in that Synergy was clearly stronger in the UK market and other places in Europe and they had developed and were developing a sales force in the United States.
We clearly have seen as I mentioned we also as you may recall, IMS had a portion of its business that was also into the sterilization outsourcing of CSDs and so we have been able to put those two groups together as I mentioned and we have seen a reduction in those costs.
We will see an ongoing reduction in those costs and we believe we will be able to do that.
We will be adding in that space but we will be able to do it more efficiently working as one unit than we would have as two.
So we do think there are efficiencies there.
Sure.
I will go back to the S4 and there might be some minor variations but we had a couple of million dollars as I recall buried in the AST business, a little bit more, $4 million, $5 million in HSS business as we now call it or Health Service business as we now call it of cost synergies.
The balance was in for lack of better terms, corporate and back office.
Corporate is a pretty big piece, a CFO, CEO and a couple of senior type executives go a long way on those kind of numbers and then the balance is back office.
The back office will take longer than the others so it has a longer runway.
But that is generally where it is.
Now if I were a betting man, if I look at our history in doing these things, we always have surprises both ways.
Where we I think if anything were probably conservative, would be in the businesses themselves.
If I were a betting man I would bet the businesses outperform.
And sometimes the way we split it in the S4 if we don't know exactly which business it goes into, we leave it in corporate so if I were a betting man, we will see more inside the businesses when we report them out over time either because we didn't know exactly where to put it or because they outperform the numbers that would be our experience from past times.
And then if I were a betting man, the back office ones are always the hardest to get.
We will get them, not hardest difficult, hardest in time because oftentimes we have to change information systems, we have to do things to lean out the processes before we get the benefits of that and so if I were a betting person on balance, we will get whatever we thought we were going to get there but if it were going to be faster or slower I would bet on slower.
In total, I'm very comfortable with what we have out in place.
