Do LR3.5  develop settings (xmp) transfer to LR4?

I subcontract a lot of event work. I'm still using an older MBP which is 32bit so I can't upgrade to LR4 yet which requires a 64bit processor.
The studio that contracts me is running LR4 and they don't seem to think that the develop settings I make in LR3.5 are transferring to LR4. Is this possible?
If so, what's the solution?
I'm thinking an easy work-around would be to export all the files as DNGs? This would automatically include all changes that I make wouldn't it?
Thanks,
Dennis

Yes, they are transferring to Lr4, although Lr4 has different develop tools than Lr 3.5.
Lr4 gives you a choice of updating an image to the Process Version (PV) 2012, or leave the image at PV 2010 (or even PV 2003).
When an image that has been developed in Lr 3.5 is opened in the Develop Module of Lr 4 an exclamation mark appears in the bottom right corner, see screen shot:
When you click on the exclamation mark you will be asked if you want to update this photo (or alternatively all photos in the filmstrip) to PV 2012.
If you do, the Develop Panel on the right side changes to the new version of Lr4. If you don't update the right panel presents itself in the same way it did in Lr 3.5.
I suspect that your studio did not click on the exclamation mark and did not update the image to PV 2012.
Having said that: It is by no means mandatory that you update an image to PV 2012. Some images benefit from it, with other images it will deteriorate the image. It should be decided for each image individually.
That goes only for images that have been developed in Lr 3.5. If you i mport new images in Lr4 you generally would choose PV 2012.

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    Question?
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