Hello and welcome to BD’s second quarter 2009 earnings call. At the request of BD today’s call is being recorded. It will be available for replay through Tuesday, May 5 on the Investors page of the bd.com website or by phone at 800-642-1687 for domestic calls and area code 706-645-9291 for international calls using conference ID 92219921. (Operator Instructions) Beginning today’s call is Miss Patricia Spinella, Director of Investor Relations. Miss Spinella, you may begin.

Good morning everyone and thank you for joining us to review our second fiscal quarter results. As a new practice and as we referenced in our news release this morning we are presenting a set of slides to accompany our remarks on this call. The slide presentation is posted on the Investor Relations page of our website at www.bd.com. During today’s call we will make some forward-looking statements and it’s possible that actual results could differ from our expectations. Factors that could cause such differences appear in our second quarter fiscal quarter press release and in the MD&A section of our recent SEC filings. We will also discuss some non-GAAP financial measures with respect to our performance. A reconciliation to GAAP measures can be found in our press release and the related financial schedules. A copy of the release, which includes the financial schedules, is also posted on our website. Leading the call this morning is Vince Forlenza, President. Also joining us are David Elkins, Executive Vice President and Chief Financial Officer, and BD Executive Vice Presidents Gary Cohen and Bill Kozy. I will now turn the call over to Vince.

Thanks Pat and good morning everyone. I assume you’ve all had time to review the earnings release and the attachments that we sent out this morning. We’d like to devote as much time as possible to answering your questions. However, I’d like to make some brief comments regarding our second quarter results and after David walks us through the financials, I will discuss our outlook for the second half. Now moving to Slide 4, Business Highlights. Before reviewing our highlights I would like to point out that as noted in our earnings release we have reached an agreement to settle the claims of the direct purchaser plaintiffs in the antitrust class action suits. Our comments today exclude the impact of the pretax $45 million charge or $0.11 diluted EPS from continuing operations relating to the settlement. Now looking at our results for the second quarter, adjusted fully diluted earnings per share of $1.18 was in line with our expectations. The economic environment is impacting our customers in certain areas of our business, in particular U.S. Biosciences and foreign currency continues to negatively impact year-on-year reported growth. The company’s cost control programs, however, continue to drive operating margin expansion. We have reaffirmed guidance for full year adjusted EPS growth of 9 to 11% in the face of approximately $500 million of projected lost gross revenues due to currency before hedges, and even though we are expecting to experience much stronger headwinds from foreign currency in the second half of the year. Now Slide 5, Financial Highlights. As you can see in Slide 5 we achieved underlying revenue growth of 3.7% in the first half. In the face of severe economic challenges we expect to achieve underlying revenue growth of 4 to 5% for full year 2009. I’ll visit this later to explain where the growth comes from. Now I’d like to turn the call over to David to cover our financials.

Thank you Vince and good morning everyone. I’d like to begin our financial review with revenue growth by segment. Medical second quarter revenues declined about 3% or about 5 percentage point unfavorable impact from foreign currency translation. On a currency neutral basis, underlying growth was about 2%. On a currency neutral basis, solid worldwide sales of medical surgical systems products were offset in part by the expected decline of sales in prefilled devices in the U.S. For the first half, underlying growth was about 2% on a currency neutral basis. Revenues in the BD Diagnostic segment grew about 2% after about a 3 percentage point unfavorable impact from foreign currency translation. On a currency neutral basis underlying growth was 5%. Solid sales of safety engineered devices, cancer diagnostic products and infectious disease testing systems were partially offset by a decline in the sales of flu testing products due to a mild flu season in the U.S. For the first half, underlying growth increased about 6%. In the Biosciences segment worldwide revenues grew about 3% in the quarter. Strong international sales growth of research instruments and reagents, primarily in Western Europe and Japan, were offset in part by slowdown in research related capital spending in the U.S., particularly in the academic and bio-tech markets. So for the first half underlying growth increased about 6%. Now moving to Slide 8, reported sales growth of our safety was 5% in the quarter to $392 million. On a currency neutral basis underlying growth was about 9%. This was comprised of a 3% growth rate in the U.S. and a strong underlying international growth rate of 19%. For the first half, underlying growth was about 8% on a currency neutral basis, which is a combination of 2% growth rate in the U.S. and an underlying…

Before we open the call to questions, I’d like to review the currency neutral growth outlook for each of our segments in the second half. It’s on Slide 20. BD Medical’s growth rate is expected to improve from 1.9% in the first half to approximately 4% for the full year, which implies a 6% growth rate in the second half. All Medical business units are expected to improve in the second half. In particular, Pharmaceutical Systems is expected to show strong revenue growth in the fourth quarter and Diabetes Care is expected to return to its normalized growth rate having absorbed inventory reductions and distributor destocking in the second quarter. Diagnostics growth rate is expected to show slight improvement from 5.6% in the first half to 6% for the full year, reflecting a 6 to 7% growth rate in the second half of the year, absent the negative impact of a light flu season and weaker than anticipated sales of the new BACTEC system in the first half. Since I know you’re going to ask, genome revenues increased to $14 million in the quarter and TriPath revenues increased about 9% on a reported basis and include the first installations of the FocalPoint GS in the U.S. We are reaffirming revenue guidance for both genome and TriPath. Moving on, our Bioscience segment is expected to face continuing challenges in the U.S. in FY ’09. The U.S. academic market has been hit by endowment funds that have on average declined 40%. We’re seeing a large increase of biotech companies with less than six months of cash, and the clinical market is economizing on their use of reagents. While we are seeing a large increase of requests for quotations for our instruments, we are not forecasting a positive impact from the stimulus package…

(Operator Instructions) Your first question comes from David Lewis - Morgan Stanley.

Vince, given your comments on sort of the second half of your outlook and obviously how critical it is to guidance, I wonder if you’d give us some more clarity on a few specific buckets. I guess number one looking at the prefilled business, obviously given what we saw from GARDASIL and Enbrel in the quarter I wonder if you could comment on outlook there, as well as emerging market weakness off of last quarter and sort of your confidence in the outlook in emerging markets? And then lastly on destocking and your comfortability that your inventory levels are set at manageable points. I’ll give you those issues on outlook and I have a follow up.

Okay. So David I’ll make a brief introductory comment and then I’m going to ask Bill Kozy to talk a little bit more about the Medical business and in particular Pharm Systems. Gary will pick up the emerging market piece of the question. As I mentioned, we are expecting a higher growth rate in Medical in the second half, and all of the businesses are going to participate. And Bill can give you a little bit more color there. But to remind you specifically on Pharm Systems, if you went back and you looked at last year in Pharm Systems the growth was very heavily skewed to the front half of the year as we had launches with a couple of new major products by our pharmaceutical partners. And then we actually had a significant decrease in the second half of the year. So in terms of the comps, they’re completely flipping around from the first half of the year to second half of the year. And Bill and the team have been analyzing, you know, the orders coming in for the second half of the year and I think they have a high degree of confidence of what’s going on there. So maybe I’ll ask Bill to make a few more comments on that and then we’ll go to Gary on emerging markets.

Sure. As Vince mentioned we’re guiding for the total year on Pharm Systems on a FX neutral basis at about 5%. The U.S. decline continues and for the year we’ll think that it’ll be down about 8% but we’re expecting international growth in the 8 to 9% range, driven by some contribution from Western Europe probably in the 9% range. And then on some smaller geographic basis, some solid growth in Asia-Pacific and Latin America both well into double digits over the second half of the year. In terms of the timing of the growth, Pharm Systems business in the third quarter will look relatively flat and that reflects a pretty tough comp we’ve got to a real strong FY ’08 where we had international growth well above 20%. Fourth quarter though will be about the same in dollar terms as third quarter but we’re up against a weaker comp in that fourth quarter and we are anticipating growth right around 20% for the worldwide business as we start to see both the U.S. and the international pieces grow as compared to a FY ’08 Q4 that decreased. Now in terms of order management, as you know with Big PhRMA we get projections that tend to run in the five to six months advance notification of pending order. Those orders get confirmed in the two to three month period prior. Based on our work with our major PhRMA customers that’s kind of the basis for these projections that we’re discussing today.

Great. Gary?

And to comment on emerging markets, you know I know that in the last call we talked a little bit about the issues that we had experienced in Russia and a little bit about Africa and I’ll mention those again, but I also want to share the broader picture that broadly in emerging markets when you look at markets like China and India in particular, we’re doing extremely well and it has a very different feel. You don’t think you’re in an economic crisis when you visit those regions. We’re getting very strong double digit growth in China, better than teens growth in China and we’re expecting that to continue in the second half as well as strong double digit growth in India. In Russia the negative impact was really confined to two businesses, Medical Surgical and PAS, both of which were using a large part of the distribution is coming from outside Russia into Russia, so the distributors are paying in dollars and reselling in rubles, and that was the source of the impact there. And we couldn’t just place some response program to price more competitively to enable them to restore some of that business. And in Africa, where totally out of our control India had pulled out of UNICEF’s tendering process for immunization syringes, that and a little bit of a slowdown in the CD4 business particularly in western Africa. But the overall picture for the emerging markets is a very positive one and just looking broadly for the moment international, Europe is growing solidly, [E and A] which is eastern Europe, Italy, and Africa we expect to recover in the back half based on the items I just mentioned, and a lessening of the effect from Russia and Africa. Asia-Pacific is growing in double digits. The northern part of Latin America is growing in double digits, and we’re also getting good growth in southern Latin America. So the overall feel is very good in the international markets and including the emerging markets.

David, the last part of your question was around distributor destocking and that was primarily in Diabetes Care and we’ve already seen that stabilize.

I’ll ask two more quick ones then I’ll jump back in queue. The first was if someone could just comment on you said flu weakness this quarter, obviously we’re obviously concerned about global pandemic swine flu, maybe your outlook there or expectations there. And then secondarily for David in terms of margins hitting in this year, obviously top line’s proven to be weaker than we expected. If you look at the things that are going to drive positive margin expansion this year, largely lower input costs, cost cutting can you just basically describe to us maybe just on a qualitative basis whether you’re – how far we’ve had to cut into that cushion this year already and is there still further cushion to go? Or are we starting to get a little maxed out? Thank you.

Well let’s take the question on the flu first. We were talking about the fact that there was virtually no flu in the United States during this quarter and obviously there’s major concern about what might happen with the flu going forward. It’s too early to really predict where that may go but I’ll turn it over to Gary to make a couple comments who has been very involved in our own pandemic planning.

So just to reinforce, Vince’s comments were referring to the non-pandemic, non-outbreak season that we’d experienced prior to the more recent news starting in Mexico and which has now spread to most regions of the world. And I’m sure you’re following the news as we are that there’s over 150 deaths reported in Mexico. The strain seems to be less severe in other parts of the world, but it’s spreading very rapidly. We’ve been planning around pandemic, more so based on H5N1 avian strain but it applies here as well over the past 18 months for this type of occurrence as part of our enterprise risk management process. And associated with that, there were two main constructs. One is internal planning around workforce policies and how we respond and insure continuing operations but the other part was to insure that we would be able to produce in equivalent or larger quantities the product that may be most in demand during a flu outbreak. So those activities are now engaged. They’re engaged in a very serious way in Mexico which we would consider to be in a serious situation and we have two significant facilities there. And as well we’re engaging to a lesser degree around the world. We have coordinators located in every location of the world that have been assigned over the past 18 months for an event such as this. The type of products that you can expect to be potentially in higher demand, although we’re not necessarily seeing much of it yet, would be rapid flu tests where there’s already an increased demand as you might expect from Mexico. That’s not a large business for us but the demand is already going up. And also immunization devices that would accompany either injectable anti-virals or immunizations for the flu strain as injectables are developed, as flu vaccine is developed around these strains. So we’re very well prepared for this and now all the planning that’s been put into place is being put to good use. Now we should know soon whether it has any impact on product demands.

Okay. So David’s going to handle the gross margin question.

So David on the gross margin if you remember on Slide 16, year-to-date we’re sitting at about 52.7 and what we’re guiding for the full year is 52.5 to 53. So you know there’s a lot of moving parts in there as we talked about before between mix, start up, purchase price variances and when you put all those things together we think that guidance is really our best view at this point in time. So I wouldn’t articulate it as cushion. I’d say what we’re giving you is our best view of where we think we’ll land for the full year.

Your next question comes from Jon Wood - BAS-ML.

For Bill Kozy if I look at the cell analysis business down 8%, U.S. cell analysis down 8% in the quarter first of all what did the instrumentation do versus the consumables?

Well this is Vince Forlenza. Bill’s got Medical now so let me just talk a little bit about the business. There was declines in both the consumables and the instrumentation piece and with both being off somewhat. And let me just take a quick look for you. In the quarter, the [Pharmagen] piece was down on a performance basis about 7% and the overall IS business, the flow cytometry business was about 8, down 8%. Both of those are U.S. numbers and that’s where we saw the decrease. The international piece as we mentioned for Biosciences was up 11% in the second quarter.

And by customer group, just the breakout I guess qualitatively between commercial R&D, academic government and then clinical? Were there any disparities between those three customer groups?

Well we did see growth go down in the research market to the greatest extent, but both research and PhRMA were off more than the clinical marketplace. The clinical market was down slightly as well so you saw it in all three segments and you’d say well why in the clinical marketplace? Well in the clinical we’ve had very aggressive growth in some of the developing world countries, and while they still grew they did not grow as fast and then some of the large labs economized on some reagents. But you know as a percentage drop the biggest was in biotech where I mentioned in my comments the number of companies with less than six months of cash.

And then just given the level of quoting activity I’d imagine a lot of the government academic was just a deferral because of the stimulus coming down the pipe. Is it just a timing of when you think those grants are released or not hitting your fiscal year but I’m trying to understand why you don’t anticipate more of a rebound in the back half in Biosciences.

Well here’s our understanding of the grant process because we do expect to see a benefit from it but we expect that to occur starting in the first quarter of FY ’10. In the grants there’s a challenge grant program out there and the money is going to be allocated or the grant’s going to be decided upon in September, which of course is right at the end of our fiscal year. And to your point we are seeing a very large increase in the request for quotations so we do think that people are putting off their orders and there is a significant timing issue going on here.

Last one for David, can you just comment broadly on M&A pipeline if the conditions, valuation or size have changed at all in the last three months?

I think generally speaking, you know, it toughened with valuations. I think there could be opportunities as we talked about before, if people become cash constrained and we see new technologies better aligned with our strategic drivers we’re going to capitalize on that. We continue to actively look in the marketplace for those opportunities so we’ll keep you guys abreast if anything comes about.

Your next question comes from Bruce Cranna - Leerink Swann LLC.

Just on Diagnostics can you guys give us actual or quantify the flu impact on a dollar basis in the quarter?

$4 to $5 million, 1%.

And you mentioned BACTEC maybe just not meeting your expectations. Any color there? Is it just hospitals being a little tighter on the purse strings or are you guys seeing other issues?

No, we saw a longer selling process. As this hit we were getting a lot of requests for quotations and the process took longer and the sales didn’t start to come in until March. And so that was very back end loaded. That was what the issue was.

And then you guys were talking about Bioscience, I guess in OUS trends versus U.S. I’m curious just looking at the numbers OUS clearly there’s no FX going on here. Is that just overwhelmingly the effect of sales into China or what’s going on such that reported growth is a point above FX neutral?

The growth is fairly strong across the board in Biosciences internationally, with just a couple of very minor exceptions. But are you asking an FX question?

Well I’m just looking at by segment, yes, if you look at the international business obviously you’re losing 6 or 7 points of top line in Medical and Diagnostics yet and in Bioscience you’re actually picking up some growth. So I’m trying to figure out from a currency – you know, where geographically are you so strong that you’re not being affected by euro and yen?

Bruce this is David. You know this phenomena happened last quarter as well and you’re talking to the Biosciences business international, correct?

Yes.

And why you’re not seeing the comparable impact of the foreign currency?

Yes.

The reason for that is our hedge, and it’s the way from an accounting perspective that our hedge has to be allocated and then the hedge in order to be accounted the way we’re accounting for it, you have to – it’s on U.S. based sales abroad. So in almost 100% of our international sales within the Biosciences business is from the U.S. so therefore a greater portion of the hedge gets applied to the Biosciences business. There’s nothing unique about the Biosciences business from where the product is sold.

And lastly for me on genome, Vince thanks for the dollar number there, and I’m kind of curious listening to your competitor talk about this space they claim to be taking share, etc., and I look at your quarter and the $14 million number doesn’t seem to really jive with that kind of commentary. So I’m curious, do you think that it’s such that the market’s growing faster that you can lose accounts and still show this kind of growth? Or would you say that their commentary that they’re taking accounts [muse] is inaccurate?

Well I think a couple things. One is that there is a royalty payment in our sales for this quarter of $2 million. So you have to look at it on a continuing basis as 12. That’s the first thing. The second thing is we are continuing to increase the number of our accounts, so I don’t think they are taking our accounts. That’s not what’s going on, but I think if you look at market share from a dollar value they are now slightly ahead of us.

Your next question comes from Sara Michelmore - Cowen and Company.

Just a question back on Pharmaceutical Systems, I know it’s a bit early to talk about fiscal 2010 but kind of just curious here if we’ve gotten most of the negative comparisons at least behind us and should we think about this being a growth business in fiscal 2010? If you can comment there. Thanks.

Sure. We’re not going to guide for the business yet for 2010. You know, we’re going to see how the balance of this year goes. You know we’re confident we’re seeing returning growth in this business in the second half of the year and as that unfolds then we’ll get back to you later in the year with that.

But maybe just on the pipeline there, this growth rates that you’re talking about for the second half of the year you’re not depending on any kind of new products or anything like that to hit those numbers? Is that correct?

These are core customer, core product areas.

And can we get just a quick update on Protec in Phoenix?

Sure. So Phoenix on a performance basis was up just about 10% versus for the first half – I’m sorry. One second. Year-to-date it’s up 18% and 10% for the quarter. I was right. Okay? And you want also Protec?

Yes.

So Protec was up – the molecular business was up 10.8%.

Your next question comes from [Kay Neki] – Collins Stewart. Kay Neki – Collins Stewart: Would you speak to the wholesaler destocking in diabetes, is that more specific to a strategy of a specific distributor and why should we think that you’re not vulnerable to destocking either by wholesalers or by hospitals in other product categories?

Okay, so I’ll make a first overall comment. You know, as the last couple of quarters have unfolded we have seen destocking in other businesses during the last six months or so and we have seen that stabilize in the other businesses. So as we track the number of inventory days we see out there, it gets to the point where they start to have service problems and then they start to back away from that. So that’s the overall trend that we’re seeing. I’ll ask Bill to make a comment on the diabetes care situation.

I think that covers the primary message. The second message as it relates to the timing of the second quarter is that we did have some large restocking orders that took place in the second quarter of ’08 that created an inventory unfavorable comp. And they were at one of the major U.S. chains and also there was a home healthcare loss that took place. So those were also factors in the timing of the second quarter. Kay Neki – Collins Stewart: With respect to SSG&A you’ve demonstrated good expense management. As we think about the longer term moving into next year, you talked about pulling back some incentive comp so as we think about that longer term where you might reinstitute that do you have other specific initiatives that could offset that so we could see continued expense management and de-leverage from that?

Yes we do. We think that we have multiple levers that we can follow in terms of expense management and compensation is at the core of our strategy. You know, we have a number of programs that we have started looking for leverage across our expense base. And I can point to such areas such as our transportation networks and rationalizing them. We can look at such things as shared services. And we look at shared services in G&A. We look at our functions and how they are delivering those services and what we can do to share on a worldwide basis. So we’ll go way after reducing overhead. In the meantime we’ve started an upgrade of our ERP system and this is going to enable a lot of this sort of work where we can get this leverage. So it’s not primarily a compensation driven strategy.

Your next question comes from Michael Weinstein - J.P. Morgan.

If we can let’s circle back to the Biosciences and if we looked at the first quarter the flow business loop was very very strong and on the first quarter call the confidence level that Bill had had at the time in terms of the sustainability of the business seemed high. And now we fast forward to a quarter later and obviously it was a very weak quarter given what’s happening with your customer base. So let’s talk about the dynamic of how quickly the business turned over the course of this quarter, your visibility into this business. A quarter ago your guidance moved to 9% growth for Biosciences [cost occurrences], now you’re at 3%. Obviously there’s a huge change in the dynamics for that segment of the company. Talk about how quickly it changed, what your visibility is from here and then we’ll follow up with just getting into a little bit more on your customer base. Thanks.

It changed very very rapidly so as you mentioned we had a very strong first quarter, and we had a nice backlog of orders going into the second quarter and then as the stock market went down and we saw these endowments decrease, you know what we saw happening with both hospitals but even more so academic centers, even if they had a grant putting their order on hold. So it changed very very rapidly. We still continued to get some requests for quotations but they were not moving through the system. And then what we did see was after the Obama stimulus plan was announced and they started to figure out how they would spend the money towards the second half of the second quarter, we saw requests for quotations moving up. So it was a significant difference. You know, the U.S. of course is where that significant difference was. You know, in the first quarter it was up 10% and then down 9 in the second quarter. So those kinds of swings are unprecedented. So what we’re looking at, we’ve taken that into account and as I said we’re being conservative. We’re seeing a large increase request for quotation and we’re not building them into our guidance for the year. We’re assuming that that’s going to hit in 2010.

Vince, when I think about the business I always think of the flow business as being about two-thirds research and is that the right mix in your customer base?

Yes.

And if I think about the different issues that your customers are facing, can you just separate the research – the issues that your research customers are seeing from – I want to separate out the biotech issue of emerging biotech not having funding because that’s been an issue, but that probably doesn’t get better in the short term. If we separate out that, the rest of the business is where you’re seeing the “pick up” if you would? I assume you’re not seeing it from the biotech side.

Yes, it’s coming from the research side. I’ll be real precise. The research piece of the business was about 75% in the second quarter, 21% was clinical and about 4% was other. The research would include the biotech guys. Now part of that U.S. downturn was not in the flow cytometry business. It was actually in the labware and it was a $3 million decrease in advanced bioprocessing. And what happened there was we had a large customer, which I will not name, but who had a large drug where they changed the dosing regimen. And they changed it down. And that left us and the customer with a large amount of inventory that was going to take them the entire year to work off of. So if you look at about a $10 million decrease in the U.S., $3 of it about 30% was that specific issue. And then in terms of softening from quarter to quarter, you know, the growth went down in the research segment by about $10 million worldwide.

But just for that one time, that one time specific customer should have labware down to [inaudible] next quarter?

Hang on one second. No, it’s spread over. It’s spread over the – it’s going to continue in the second half of the year and not bounce back until ’10.

Last question is a financial question. We just want to make sure that we’re understanding the hedging programs that the company has in place, because I think it’s the first time where we’ve seen the hedges had an impact on the sales line so what looked like the currency impact that we would have seen this quarter was different, just optically on the sales line because of the hedges. And want to make sure we’re thinking about it right for the back half of the year. So in this quarter in particular why did you have that hedging offset on the sales line but you won’t have it in the third and fourth quarters just based on your guidance? I just want to understand the mechanics a little better. Thanks.

The hedging impact on the sales line was the same in the first quarter as well as in the second quarter. It was around $35 million.

So the hedge impact from the hedges you’re saying was $35 in the first quarter, $35 in the second quarter and then for the back half of the year what is it supposed to be?

It’ll be roughly the same. It will fluctuate based upon actual currency movements.

But as of right now you’re saying the same for the back half of the year?

Yes that’s correct.

Your next question comes from Kristen Stewart - Credit Suisse.

I was just wondering with Bioscience obviously the outside the U.S. business has held up real nicely. I guess, what gives you confidence that we can see a potential slowdown in international markets within this emphasis?

Okay, so there’s really two pieces, one of which is let’s call it the research market and what the organization is telling us that they see the funds already allocated for these instruments. You know, they were in the budgets as they were put together going into this fiscal year. And then they are taking into account some risk in the emerging markets. They saw a little bit of that in the first half. I guess if there was any more exposure it would be if any of those government programs slow down. Gary, do you have anything else to add to that?

I would add that you have the growth in the clinical side of Biosciences continuing in the emerging markets. You know China is expanding its health programs. They recently made an announcement that they’re planning to expand health access to 90% of the population including rural populations over the next three years. They’re investing over the next three years the equivalent of a full year’s additional investment in the health system to allow for that access. And as that expands, particularly around areas like HIV also areas outside of Biosciences like TB, you know we’re in a position to benefit from those investments. We’re also getting very good growth in Biosciences in Latin America and again a lot of that is clinical applications which are less prone to the funding factors that would impact the research applications.

Well in Preanalytical during the quarter we did initially see some destocking but it was a mistake by the distributor and it bounced back, so it neutralized itself in the quarter. But other than that, one second, Bill’s got a comment.

In Medical it was a Q1 impact, less of an impact in the medical surgical business but medical surgical impacted in Q1.

And we have seen some in microbiology in Q1 as well.

And then I guess just on the gross margin would you help us just kind of understand the year to year change, just specifically what would you allocate toward the impact of foreign currency? What was kind of raw material cost plus or minus in the quarter? And kind of how should we think about raw material costs for the balance of the year?

Yes I think Kristen the best way to think about that is for the half year there was about 230 basis points improvement based upon FX, the hedge and the FX translation that we had in the first quarter that inventory impact I talked about in the first quarter. That was set off in the first half by raw materials, some writedowns and some start up costs that we had as well as product mix. And within that is productivity improvements. So that gets you to the 150 basis point change in the first half results. What we’re saying going into the second half is that that 52.7 that we gave a range of where we think we’ll be in the second half of the year, and as I said earlier there’s going to be more of the currency impact in the second half of the year. So there’ll be less favorability there but as we look at purchase price variances and our continued productivity improvements, that’s what we have confidence in the gross margin that we guided on.

And were raw materials positive or negative this quarter compared to –

Raw materials were slightly negative when you threw everything in.

And then anything else with other expenses? Can you break that out a little bit?

Any other expenses in margin or?

Any other expense line item?

In other income?

Yes.

Yes, the other interest income I think there’s really no major movement year-on-year. For the full year, sorry for the half year results the biggest driver there is our executive deferred compensation which has an offset up in SSG&A which we talked about in the previous quarter. And you know other expenses, there wasn’t much movement there.

Your next question comes from Peter Lawson - Thomas Weisel Partners.

On the molecular Diagnostic business, I wonder if you’d give us an indication of the traction of [inaudible] and the appetite for capital spending in that environment?

Sure. So [c-defaseal] we had our first orders in this quarter. We are running quite a few evaluations at this point in time and the way those evaluations work is that they compare to the traditional methodology, the EIA. They run the molecular and then they run a gold standard and look for where you get discordant results and we are seeing excellent performance out of the c-defaseal product and we’re seeing a lot of enthusiasm for the customer, so we’re very encouraged with what we’re seeing out of these evaluations. So it’s kind of a typical procedure for a lab to go through.

And then on the appetite for capital spending?

Oh, on the appetite for capital spending. Well what we’ve seen is while we only had a small amount of instruments that were being sold, everything’s moved to reagent rental in that segment of the marketplace. A highly reagent rental at this point in time. So backed away from just buying it themselves.

And then into TriPath, what’s the traction for that and testing volume and any changes in competitive dynamics?

No changes in competitive dynamics. We’ve – it grew about the same as it did in the first quarter so really not much else to say about it at this point in time. So we’ll take on more question.

Your last question comes from James Baker - Neuberger Berman.

I wanted to repeat that question on other expenses because that was negative $5.7 million in this quarter which is actually the largest other expense item for a quarter we’ve seen in many years, so could you give us some color on that?

Yes, I think the biggest thing there is the lack of $3 million from geno last year in 2008, so it’s a year-on-year comparison versus last year.

But I mean sequentially – I mean, in general was there a write off of an investment? Was there a write off of something or other? Because that’s very very rare that it’s that large.

Interest income on the genome [asker].

Well interest income isn’t accounted for in interest income? It’s in other expense? Is that what you’re saying?

Yes. Yes, for that transaction it was.

But normally it isn’t a big negative number. That’s what I’m trying to drive at here.

James, what I can do is I can go through that one. I mean, it’s such a small number in overall things, I’ll follow up with you in detail after the call.

But that would not recur in future quarters. Is that what you’re saying? We don’t expect to see –

No, that’s correct. You will not see that in future quarters.

All right. Well thank you all very much for joining the call and we’ll talk to you again soon.

Thank you. This does conclude today’s teleconference. Please disconnect your lines at this time and have a wonderful day.