To Our Shareholders:
Cantel Medical achieved record sales and increased net income in fiscal year 2008. We completed three strategic acquisitions and continued to invest in and improve our sales and marketing infrastructure, as well as our product development initiatives across the Company.
We were pleased to report especially strong performance in the last half of the fiscal year and we continue to take steps to further improve performance. These actions include relocating our Dutch manufacturing operations to the United States, implementing price increases, reducing overhead and other expenses, securing favorable interest rates on outstanding borrowings and reducing debt.
With ever expanding focus on and demand for infection prevention and control products throughout the world, we are moving into fiscal 2009 with strong momentum. We expect to benefit from our numerous strategic and operating activities to drive greater earnings growth.

Our Results
Fiscal 2008 revenue of $249,374,000 increased by 14% over last year's revenue of $219,044,000. Organic growth was 6%. Income from continuing operations of $8,693,000, or $0.53 per diluted share, was up 7% compared with $8,104,000, or $0.50 per diluted share, in fiscal 2007.
As of July 31, 2008, the Company's balance sheet included cash and cash equivalents of $18,318,000, bank debt of $58,300,000 and stockholders' equity of $168,712,000. Our net debt of $39,982,000 at July 31, 2008 represents a 24% reduction during the second half of the fiscal year. During fiscal 2008, the Company generated cash flow from operating activities of $18,557,000, or $1.13 per diluted share. Earnings before interest, taxes, depreciation, amortization and stock-based compensation ("EBITDAS") of $31,786,000 increased 12% compared to the prior year.

Water Purification and Filtration
Water Purification and Filtration is now the Company's largest segment. There have been numerous accomplishments in this business during fiscal 2008, including substantial growth in both sales and operating income. As part of our Mar Cor Purification division, the former GE Water and Process Technologies' dialysis water business has grown by 20% since we acquired it in March 2007. Our position as the leader in medical water was solidified by a renewed contract with our major dialysis customer and enhanced by the inclusion of all our consumable products into this customer's on-line ordering system. We also had success with new applications and new customers for our unique hollow fiber filters and disinfectant lines. In one case, a major pharmaceutical company has standardized on our Actril® cold sterilant product for surface disinfection. We are actively pursuing continued growth for these products with new customers.
We are optimistic that our Mar Cor Purification division will continue to grow. The unit's focus includes new product development, expanding sales and service into new markets, and driving operating efficiencies in manufacturing and our service operations. We continue to actively explore acquisition opportunities in this segment.

Healthcare Disposables
It has been three years since the acquisition of Crosstex, and we are extremely pleased with the division's performance. The business has grown nearly 25% since we acquired it in August 2005. Strong management remains in place, we have a pristine brand, and we are well positioned in the stable dental disposables market. We are working to expand our capabilities in healthcare disposables by developing new products and product extensions, expanding sales into new markets (which we refer to as our "alternate channel" initiative) and seeking acquisitions.
During fiscal 2008, our Healthcare Disposables business was adversely affected by high oil prices and the related unprecedented increases in the costs of paper and plastics. To offset some of these raw material price increases, an across the board price increase was implemented in August 2008, and we are now seeing the benefit to our gross margins. We were pleased to see improved and growing sales performance in the second half of fiscal 2008 resulting from our proactive and significant investments in sales and marketing and product development. We have proven our ability to accelerate the financial performance of recently acquired specialty dental products and have been successful with internally driven research and development. For example, in fiscal 2008, we launched our new Sure-Check® sterilization pouch. The Sure-Check pouch is a patent pending product that utilizes a multi-parameter indicator to determine if sterilization has been achieved. Sure-Check pouches meet the Center for Disease Control (CDC) guidelines for proper sterilization.
We would like to give a special note of thanks to Richard Allen Orofino, the former President of Crosstex, who retired as planned on July 31, 2008 after fifty years at Crosstex and three years with Cantel Medical. Richard has been a tremendous leader and was instrumental in the success of Crosstex before and after it was acquired by Cantel. We are pleased to report that Richard has agreed to serve as a consultant to the Company. Gary Steinberg and Mitchell Steinberg, two other former principals of Crosstex, have been appointed CEO and President, respectively.

Endoscope Reprocessing
Endoscope Reprocessing was our most improved business in fiscal 2008. Following our significant investments in building a direct sales force and expanding the product portfolio, sales growth exceeded 20% and the business returned to profitability. Our success is directly related to the excellent performance of our dedicated hospital sales and service force launched two years ago to promote and service our Medivators® product line of endoscope reprocessors in the United States. We have amassed the most comprehensive and flexible range of endoscopy products to meet the needs of our customers. For example, this year we added our Intercept® line of detergent products, the Veriscan® automated leak detector and the new state-of-the-art Advantage® reprocessor. In fiscal 2009, we plan to add in North America, the Advantage Plus® reprocessor, a single-use chemistry version, together with an all new high level disinfectant.
In an effort to improve margins and achieve better control over product development and manufacturing efficiencies, we are relocating our Dutch manufacturing operations to the United States. All manufacturing activity in Holland should be concluded by December 2008 and will result in improved profitability. We will maintain our strong sales and service presence in Europe. We expect the market for our reprocessing products to grow along with the continued growth of endoscopy procedures.

Dialysis
In fiscal 2008, our Dialysis segment showed growth in both sales and operating income. We had a record year for sales of our Renatron® Dialyzer Reprocessing Equipment, and sales of Renalin® cold sterilant to our largest customer increased 8%. On a further positive note, we have recently signed a multi-year agreement with this key customer. We strongly believe that dialyzer reprocessing, commonly referred to as “reuse,” is the most cost-effective solution, as well as the environmentally responsible method to reduce bio-hazardous landfill waste. Our lower margin dialysate concentrate business declined toward the end of the year as irregular international sales were weak in the fourth quarter, and competitive market activity led to lower sales in the United States.

Other (Therapeutic Filtration and Specialty Packaging)
In fiscal 2008, this segment had modest increases in both sales and operating income. In Therapeutic Filtration, we continue to work with biotech companies to help them develop products that incorporate and significantly benefit from our hollow fiber membrane technology. This was exemplified by our significant fourth quarter sale of unique hollow fiber devices that serve as integral components of our customer's bio-artificial liver system, soon to be released in Asia. Additionally, our Specialty Packaging business experienced growth in training services and has taken on a key role in our alternate market strategy. We are actively looking for ways to grow these higher margin businesses.

Looking Forward
We believe Cantel is well positioned to continue its steady growth in sales and profits in the infection prevention and control markets in which it operates. Our markets are growing and continue to receive increasing attention worldwide. The Company also benefits from its broad range of businesses, all of which have leadership positions in their served markets.
Despite economic uncertainties, we remain focused on our strategies to grow and improve performance and are optimistic as we go into fiscal 2009. Some of our key programs include new product development, finding alternative channels for our products and focusing on higher margin product lines. We also plan to reduce overhead and other costs company-wide, to seek more synergies between businesses and to benefit from reduced interest expenses. Cantel has a strong balance sheet, good cash flow generation and borrowing capacity that will allow us to continue our search for synergistic acquisitions.
During the year, we were pleased that Mark N. Diker and George L. Fotiades became members of our Board of Directors. Mark serves as co-managing partner of a registered investment advisor that focuses on healthcare and other industries. George provides our Board with a wealth of healthcare business experience, having held a number of senior executive positions, including President and Chief Operating Officer of Cardinal Health, Inc. Their advice and counsel have been very valuable to Cantel.
We thank all of our customers, suppliers and shareholders for their continued confidence, and our Directors for support and guidance throughout the year. Most importantly, we sincerely thank all of our employees for their continued dedication and contributions to the Company's success. .

Charles M. Diker
Chairman of the Board

Andrew A. Krakauer
President

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150 Clove Road - 9th Floor, Little Falls, NJ 07424-2139
Phone: (973) 890-7220, Fax: (973) 890-7270