So first kind of a housekeeping. So what's the interest expense forecast for 2010? I guess, could you talk about -- I think you have some converts coming up in 2011, can you just talk about the debt claim plans and what you're expectations are for the converts?

The first part of your question was the interest expense?

Yes, for 2010. I mean, another kind of pay downs of things. I'm just questioning where the expense numbers are coming out?

So the interest expense is $110 million to $120 million. And then in terms of the converts, it obviously depends on the share price, but assuming the share price continues to rise, we would expect to retire or call those converts when they're due.

And I guess I'm a little bit -- I think I'm a little bit surprised and certainly, that I think some of the investors are going to be surprised the fact that you're reporting double-digit growth in your SOLiD franchise. And I guess a couple of questions. Are you still on track throughout the SOLiD, the upgraded SOLiD, the hq, by the end of the year? Is the throughput commentary that you still have on that the same? I think it was a 200 g [ph] throughput per round there. And I guess, just where are those labs that you're placing new instruments in?

First, just to confirm, actually it was a strong double-digit growth that we experienced in the quarter and it was the best quarter ever that we've have for SOLiD. So we've got great traction in that and saw that in the overall growth, actually like sequencing brand franchise it's not only solid you see but also strong sales of CE of the 3500. It's really across a range of labs. I mean, with regard to SOLiD, as I've mentioned in the first question, the appreciation of the accuracy is there in terms of both finding these rare mutations as I've said in the quote sort of needle in the haystack that accuracy matters. And so that's very much appreciated. That also translates into lower throughput cost when you're doing how much coverage you need. So that's one thing. On the second part of your question, we're very much on track to launch the systems. We'll give much more detail about that and our plans next week at ASHG and update you on where we are both on the platforms and throughput, and very much is an upgrade of old parts for all our customers. So they're coming with us on this journey. We've made tremendous improvement in the performance of the system, and they are coming with us on this journey as we carry on and get greater performance out of the system.

And your next question comes from the line of Marshall Urist. [Morgan Stanley]

Just a big picture question on how you're kind of thinking about overall business trends. Typically, you guys talked about closing stronger sort of sequentially into the end of the year, both in terms of margin momentum and organic growth. So given the commentary that you've had, I guess, is there no change in sort of the sequential momentum that you're thinking about it purely a function of the tougher comp from last year? And I guess, on the margin side, sort of a similar question but sort of asking given some of the spending that you delayed this quarter, is some of that going to get pushed in the next quarter so we can kind of think about underlying margin momentum sort of improving sequentially, if we kind of share some of that spend between the two quarters.

Right. So really, the commentary on the fourth quarter is nothing but the comparable issue. So as you know, fourth quarter is traditionally one of the larger ones of the overall year. It continues to be. And again, it just relates to the 2009 fourth quarter comp that we have. The way you think about margins is right on. They will increase, but it will be modulated somewhat by the increased spending that we'll have in the quarter on some of these projects.

And then just one follow-up is just on the Molecular Biology Systems trends in the quarter, sort of flat organic, 4% without H1N1. Can you kind of talk about what the kind of biggest trends were there? And any sort of change from last quarter or over the first half, in terms of the sort of excluding H1N1 benefit but kind of the core business there?

I think the only commentary about that piece of the business was it was probably more than any other part of our company impacted by the information technology project we had in Asia and the overall -- a little slower growth we had in Asia in the quarter. So again, fourth quarter, we expect Asia to snap back into the high-double digits again, and you'll see that business snap back up to higher organic growth as well.

And your next question comes from the line of Charles Butler. [Barclays Capital]

Greg, a strategy question. You recently hired a medical officer to come on board. I'm curious just exactly to whom would he actually interface? Or is he just providing advice to you all in the board? And moreover, is he actually on board now? Just a very interesting decision.

Dr. Paul Billings is on board now. He interfaces with myself, with Mark, with Bernd in terms of customers and the board as well. It's the first several moves you'll see from us and that we will announce to continue to evolve the company to be not only very strong in research, but increasingly strong in medicine. As I've said in the past, all of these molecular tools are getting pulled into the medical environment, and we have to get the company ready to become more hospital oriented, more genomically medicine oriented, and this is the first of the several announcements that you'll here over the next year.

Your next question comes from the line of Jon Groberg. [Macquarie Research]

So just one quick clarification, on the FX for '11, Dave, is that a net number in terms of all the other activities you had in place in for '11 as well or is that purely an FX number, the $0.12?

Just FX, but is net of our hedges.

Right, but not the buybacks, before you gave the number kind of bracket around some other things. So just FX right now is $0.12?

Correct, I understand your question. No, it does not include any buybacks, that's just foreign currency.

And then, Greg, how are you going to go about evaluating the R&D that you've been spending and the money that you spent on Ion Torrent. Can you maybe just talk about one, obviously, there are a lot of new technologies that are percolating out there, companies trying to go public, a lot of people involved in the space. Can you maybe talk about one, how it is that you decided on Ion Torrent. And two, how you're going to kind of evaluate all of the spend that's been going on in the sequencing business, going forward?

Well, John, we have been evaluating the technologies associated with sequencing for the last several years. We've had, and we still have, a standing team that is fully 100% dedicated to that effort. And our major requirement for sequencing to really explode the market was a turnaround time, the ability to get fast results. And as we looked at that, we just really came to the conclusion that the current generations of technology wouldn't get you to the measurement of hours in that regard versus the current days. And so Ion Torrent, as we got to understand it better, tested better, understand where it was going, really presented to us the technology that would enable this technology to move into the clinical realm, and that's why we made the acquisition of Ion Torrent. We continue to monitor all sorts of different paths to read the genome. But again, we're quite bullish that we have the right platform here to complement the very high accuracy -- even higher accuracy than it's even known today that Mark will talk about this next week of SOLiD. And yet, get to this turnaround time that I think will become quite essential to really unlock the big diagnostic markets. So that's why we did Ion Torrent. And, yet, I would just finish that we're not resting. We continue to monitor and watch, but we feel very confident that we have a great set of technologies here.

And your final question comes from the line of Isaac Ro. [Goldman Sachs]

I want to ask some question about NIH funding. I understand the outlook here at a macroeconomic environment level is somewhat uncertain, but I'm just wondering what you guys are assuming for NIH funding growth over the next three to five years?

Isaac, next year should be pretty good. We think it'll go up a couple of percentage points, and the stimulus continues to meander along through the course of the next several quarters, which will be okay. So I would tell investors the next year should be fine. As we look to 2012 and beyond, those are the conversations that are taking place today. But as I've said in other settings, I'm actually hopeful that it will be okay. And I think it pertains back to an innovation agenda that a lot of our political leaders see is needed by the United States. And so there's not going to be a mad rush to balance the budget on the backs of the NIH. I mean, quite frankly, that's not where our overspending has been. And so the more of that message, I think, is appreciated and shared by more and more folks, the more I feel better about that NIH will come through this pretty well okay. So that's kind of our current outlook right now.

Second one would be on the PCR business, maybe, David, if you could outline sort of the kind of growth you've seen in that business year-to-date. And then you said switch pricing in PCR has helped drive that growth?

Well, maybe Mark...

Yes, I mean, we still see good growth overall in that qPCR market. It's really a breadth of portfolios. So now as we've introduced the ViiA 7, we have a refresh of the high end of our price points in the instrument side and all the way down to the lower price points on that system. And going forward, evermore, we're reinventing that game in terms of how we think about qPCR, both in terms of what you've seen us do in a couple of acquisitions in getting to higher throughput and also moving into the world of digital PCR, which we think is going to be really big going forward here.

Great. This concludes our third quarter earnings conference call. If there are any additional questions, please feel free to contact me. The webcast will be a available via a replay on our website for three weeks. Thank you, again, for joining us this afternoon.

Thank you for your participation in today's presentation. You may now disconnect. Good day.

Good day, ladies and gentlemen, and welcome to the Life Technologies Third Quarter Earnings Conference Call. My name is Tony, and I'll be your coordinator for today. [Operator Instructions] I would now like to hand the call over to your host for today, Ms. Eileen Pattinson, Head of Investor Relations. Please proceed.

Thank you, Tony, and good afternoon, everyone. Welcome to Life Technologies' Third Quarter Earnings Conference Call. Joining me on the call today are Greg Lucier, our Chairman and CEO; and David Hoffmeister, Chief Financial Officer. In addition, Mark Stevenson, our Chief Operating Officer; and Bernd Brust, our Chief Commercial Officer, will be available during the Q&A portion of the call. If you haven't received a copy of today's press release, you may obtain one from our website at lifetechnologies.com. I want to remind our listeners that our discussion today will include forward-looking statements, including, but not limited to, statements about future expectations, plans and prospects for the company. We believe these statements are based on reasonable assumptions, but actual results may differ materially from those indicated. It is our intent that these forward-looking statements be protected under the Safe Harbor created by the Private Securities Litigation Reform Act of 1995. Additionally, we will be discussing GAAP and non-GAAP measures. A full reconciliation of the non-GAAP measures to GAAP can be found in today's press release or on our website. I'll now hand the call over to Greg Lucier.

Thanks, Eileen, and thank you all for joining us. I hope you had a chance to review the press release that we issued earlier today. As you can see from our results, we delivered another quarter of strong top and bottom line growth. Revenue grew 6% organically to $869 million. And excluding the impact from the H1N1 pandemic, as well as the very large forensics deal for the Japanese police, organic revenue grew 9% for the quarter, driven by strong demand for both instruments and consumables across all of our customer end markets. Operating margins expanded by 170 basis points to reach 29%, and earnings per share grew 19% to $0.87 for the quarter. On a year-to-date basis, organic revenue has grown 7.5% over prior year, 9.5% excluding H1N1 and that Japanese police forensics deal. Operating margins have expanded by 270 basis points. These are terrific results for the third quarter and for the year-to-date and is a testament to the execution mindset of our teams from around the world. Now this quarter marks the 16th quarter in a row that we have exceeded expectations on both the top and bottom line. I'm particularly proud of this achievement as it demonstrates ability and commitment to deliver consistent, strong financial results to our shareholders. Since 2007, EPS has grown at a compounded annual rate of 19% from $2.03 to the current consensus of $3.43, and free cash flow has more than doubled. Looking forward, you can expect the same focus on execution and commitment to great results as you've seen in the past. This management team has built an incredibly unique business that is proven to be resilient enough to manage through the ups and the downs of the market that naturally occur over the years. With opportunities for both revenue…

Thanks, Greg. This quarter, revenue grew 8% to $869 million. Currency had a positive 0.5 impact on reported revenue growth, and acquisitions added 1.5 points. Excluding the impact from currency, acquisitions and divestitures, revenue grew 6%, and grew 9% also excluding the impact of H1N1 and the Japanese police deal. Moving on to the divisional results, the Genetic Systems division had revenues of $227 million, representing 12% organic growth. Overall, sales of CE instruments and consumables grew 5% for the quarter, driven by high-single digit growth in consumables and continued strong demand for our recently launched 3500 Genetic Analyzer. Growth in this business was negatively impacted by a difficult year-over-year comparison, resulting from last year's Japanese police order. Excluding the impact of this order, overall sales of CE instruments and consumables grew 9% for the quarter. The CE business has proven to be incredibly resilient and continues to be the gold standard for many sequencing applications, not only in research, but increasingly in forensics and other applied markets. Sales of CE consumables and instruments into hospital clinics and labs for diagnostic testing are particularly strong and have been a major driver of growth for the 3500 instrument. Lastly, the Next Generation Sequencing business demonstrated very strong double-digit growth during the quarter, driven by record sales of the SOLiD 4 system. Molecular Biology Systems had revenue of $415 million, flat to last year. However, excluding H1N1-related revenue, organic growth was approximately 4%, driven by strong demand for Genomic Assays and the recently launched ViiA 7 PCR instrument. Customer reaction to the ViiA 7 has been very positive, and this is the first of several innovations that will refresh our entire qPCR franchise. Shelf systems had revenue of $221 million, representing 15% organic growth. Growth was driven by strong demand across the…

Thanks, David. We have about 20 minutes for Q&A, so I'd like everyone to limit themselves to one question and one follow-up question. If you have additional questions after that, please get back in the queueu. Tony, we are now ready for the Q&A portion of the call.

[Operator Instructions] And your first question comes from the line of Quintin Lai. [Robert W. Baird]

Looks like that it did get a little better from you from last quarter. So kindly give us a little color on what you're seeing now in terms of the market demand, given what you saw in Q2? And then as a quick follow-up, you put out a press release earlier this morning about the single-read accuracy for the SOLiD. Could you give us a little update or maybe a preview of what you're going to show next week?

Yes, Quintin, we actually missed the first part of your question. Could you repeat the first part of that?

No problem. So the first part was really just Europe, that was one of the issues that came up on the last call. It looks like they may have been trailing down. And then this quarter, it looked like that you got back on schedule with 5% growth and then 6% excluding H1N1. So just kind of a discussion of just how the trends have been going in Europe.

This is Bernd. On the European market, as we shared in our last earnings call, we saw some changes in buying behavior. We also thought they were fairly short term, funding already at that point have stabilized in two to three core markets, being Germany and France. Now with the U.K. funding announcement from lastly, I think we have the full picture in place again. So when you look at the European market, I think our outlook of low to mid-single digit growth, the execution is good. The portfolio is holding up against that well. The performance is there, and we see no change in that performance coming in the next foreseeable future.

And just a follow up, Quintin, it's Mark here. on the second part of your question. So yes, we're very excited. As David mentioned, we had a record quarter with SOLiD. A lot of that traction was in contour applications where it matters with the accuracy. And so what we've made a great improvement of the level of accuracy to get [4,9] accuracy in a single-read, with new modification to our ligation chemistry and we're showing that data next week at the SHD [ph] meeting.

And is that something that can be immediately implementable now on SOLiD?

That will be implemented on SOLiD and we'll start shipping that new Chemistry with the systems, and we'll talk more about that at ASHG.

And your next question comes from the line of Doug Schenkel. [Cowen and Company]

You guided operating margin flat year-over-year in Q3, I think, to about 27.3%. You came in at 29%. I was just hoping you would be willing to tease out really what changed. Was it better than you expected and maybe how much of it is attributable to some of the projects that you referred to as being delayed? And then I guess the second question, kind of building off of a bit, my recollection is you talked about Q4 margin and growth being better than Q3. It sounds like that's no longer the case. So I was just hoping you can maybe explain what's changed.

Let me start, Doug, this is David. You're right about Q3. I think in terms of our guidance on Q3, I think what changed is it goes back to Quintin's question. When we look at Q3 at the end of Q2, there were some concerns about weakness in Europe, what the impact would be in terms of sales elsewhere around the world. So we were cautious in terms of what our spending was. And we actually put some of the projects that we intended to begin on hold to get a better idea of what the revenue outlook was going to be. Good news is that revenues came in as we expected or better. And that, combined with lower spending, drove up our margins. What we're saying about Q4 is we're pretty confident in the outlook at this point. I think the markets and the funding around the world has stabilized from what it was at the end of Q2. And we plan to ramp back up some of those programs, particularly, some of the spending in commercial areas and on the web in emerging markets.

Your next question comes from the line of Tycho Peterson. [JPMorgan]

Maybe I just want to jump in with a question on Ion Torrent since this is the first call you've done since you've announced the deal. Can you just talk a little bit about the go-to-market strategy here for the Personal Genome Machine, how we think about early access customers, if there are technical milestones that you'll be announcing along the way? And then are you to targeting kind of a mix at genome centers and in clinical markets initially or how do we think about the initial rollout?

Tycho, this is Greg, and I'll have Mark follow up my point. As you know, we will be launching the Personal Genome Machine here in the fourth quarter. It has been in the hands of early access customers, working through the overall workflow and finishing up the refinement of that. And that particular platform has lots of multi-generational growth in it as well. So it will be launched at a certain throughput, and then it will go up over time in basically the same box. In terms of the target customers, Mark, I'll let you give some a color commentary on how we see it being introduced in the market.

Yes, so we really see, across that range of customers, the applications fit. So I think some of the genome centers are certainly seeing interest to QC some of their application work and do some smaller genomes with it. We'll certainly see it in the decentralized application and some of the smaller genome centers or hospitals and application there is that will light the turnaround time and speech, just a number of experiments that you can do. And so really be quite a broad go-to-market approach for us. We're initially starting, we started taking orders across that breadth of customer base. And we'll be talking more again next week during SHD with that customer set and also at the Association Molecular Pathology meeting, one of the early access customers who we're presenting some data. So we'll begin to see more data here as we start shipping units at the end of December.

And your next question will come from the line of John Wood. [Jefferies & Company]

I think just probably for Mark. This might be too early as well, but talking to your customers last couple of weeks since the Europe budgets were announced. Is there a sense of relief or incremental concern versus their expectations going into those budgets.

John, it's Bernd. No, I think to the sense of relief, obviously the only new one in recent history is the U.K. They both, Germany and France, they have announced some time ago in the U.K. the doomsday numbers were significantly worsened. I think, actually it was the best case scenario that was announced. And so I think in general, there's relief and people are feeling good about what the next few years hold from a research funding point of view.

And Bernd, do you think that there's been any pent-up demand just as people kind of held back in front of those numbers or is that a stretch at this point?

I think it's been a stretch. I think, materially, there won't be much change there. I think what you will see is much more consistency, right, as we saw in Q2 last time, a result in changes in volume toward the end of the quarter and I think you're going to see that balance out more now.

And your next question comes from the line of Derik De Bruin. [UBS Investment Bank]