Good day ladies and gentlemen and welcome to the Fourth Quarter 2008 Bio-Rad Laboratories Incorporated Earnings Conference Call. My name is Kamisha and I will be your operator for today. (Operator Instructions) I would now like to turn the call over to your host for today’s call, Mr. Ron Hutton, Bio-Rad’s Treasurer. Please proceed sir.

Thank you very much. Before we begin the call I would like to caution everyone that we will be making forward-looking statements about managements goals, plans, and expectations. Because our actual results may differ materially from these plans and expectations, I encourage you to review our filings with the SEC where we discuss in detail the risk factors in our business. The company does not intend to update any forward-looking statements made during the call today. With that I would like to turn the call over to Christine Tsingos, Vice President, and Chief Financial Officer.

Thanks Ron. Good afternoon everyone and thank you for joining us. Today we will review the fourth quarter and full year financial results for 2008 as well as provide some insight into our thinking for 2009. As you know, we report our financial results on a GAAP basis, which includes several one time and non-cash impacts for the fourth quarter. We will try to give you as much color as possible to help you understand the true operating achievements of 2008. Let’s start with a review of the quarterly results. Net sales for the fourth quarter of fiscal 2008 were $448 million. This represents a decrease of 2.6% versus the year ago period sales of $459.7 million. However, on a currency neutral basis sales grew 3%. This year-over-year growth was fueled by solid performance in our clinical diagnostics segment, somewhat tempered by some industry challenges and our Life Science segment. Consolidated gross margin for the quarter was a reported 55.1% up significantly versus last year’s gross margin of 50.8%. This improvement reflects a more favorable product mix as well as improved capacity utilization. During the quarter we recorded approximately $3.5 million of amortization expense and foregone profit margin as required under purchasing accounting for our DiaMed acquisition. This compares to just over $6 million of expense in the fourth quarter of 2007. SG&A expense for the fourth quarter was $154.5 million or 34.5% of sales. This improvement reflects both disciplined spending as well as some positive currency effect. During the quarter recorded in SG&A is approximately $2.3 million of amortization expense related to DiaMed, about equal to last year’s impact. Research and development expense in Q4 was 9.2% of sales or $42 million. This increase in spending, both sequentially and year-over-year is reflective of our focus on the development of…

Thank you, Christine. I think when we look past the fourth quarter impairments, 2008 was a very good year for us, not only financially, but as Christine mentioned, we also introduced a number of new products. We have been very successful so far in integrating DiaMed and generally good cash flow. I think from Christine’s comments you can get the flavor that we’re certainly approaching 2009 with some caution. I think about fundamentally the markets that we serve have not been really dramatically affected as some other industries so far. I can tell you though, that the whole management team is focused on the fast changing environment and as the year unfolds we will watch closely and make any necessary course corrections to hold us in good stead for the long term and that is really where we are today. Kamisha, with that we will open the call up for questions.

(Operator Instructions) Your first question comes from Jon Wood from BAS-ML.

Can you talk about what the capital equipment deterioration did to the growth rate for the life science business in the fourth quarter?

Well John, there is really two ways to look at it. We have capital equipment in terms of instruments and we have some instruments that are in the neighborhood of about $250,000. That certainly had an impact. But, we also have our process chromatography business which in effect is a capital instrument and certainly the kind of investment both in the hardware and media and those really did hurt us in the fourth quarter. They contributed significantly to the slow down, ultimately.

All right, so can you give us a range of impact? I mean if you exclude that hard chromatography comp and the capital quip and dislocation, I mean are we looking at low mid single digit type of growth in the Life Science?

Yes, I would say maybe mid single digits would be the impact of that. It was pretty substantial.

So think about those impacts for 2008 as a whole, what do you anticipate both the capital equipment as well as process chromatography compares to the whole year in the Life Science business.

The whole year, certainly they did have an impact, not clearly as substantial as in the fourth quarter. The main impact was in the fourth quarter. It was probably down maybe slightly, but the main part was really in the fourth quarter.

I guess a better way to ask that is if you look at 2009, I’m trying to get a sense for how difficult or easy the comp is in the capital equipment side. So, do you expect significant incremental deterioration in 2009 over 2008 and particularly the capital equipment side?

There is clearly a lot of uncertainty in the markets today, especially the US market. Essentially, I you look at the process chromatography business, I have a lot of visibility on those orders and I don’t see that as deteriorating or having a significantly negative impact as far as some of our capital instruments. And, now we’re talking about a relatively small number as a percentage, but that’s still in flux. If I look at the overall number I don’t see that as having a huge impact and obviously that’s been reflected in Christine’s projection.

Okay and then so, Christine, at current rates, what do your forecasts tell you for the FX on the top line in ’09?

That’s a $64,000 question. When we do our planning and actually how we run our business, we do it on a local currency basis. So, when we roll up our goals for ’09 we are looking for that low to mid single digit growth on both the top line and operating income. Currency is the wild card and we can look at rates at 12/31 we can look at rates at 1/31 and we’ve seen some of the biggest swings that have been generated in a number of years, so it’s hard to project. I mean, if I take current rates we could be low to mid single digit decline on a reported basis, but who knows what currency is going to do.

Okay so just so I’m clear, the low to mid single digit operating income growth that’s excluding currency totally?

Yes and I also took out the $28.8 million of the one time impairment above the operating income line in ’08 just to be fair, to make it true operating to operating.

Okay, but that is an organic number and so from there we have to take [interposing].

You’re right, the reported number will be likely lower than that because of currency and the impact on the operating income line is greater than the impact on the sales line when currencies are going in this direction, because the majority of our spend is dollar based.

Okay, that makes sense. In the fourth quarter, can you give us the placement for the Bio-Plex® 2200? Was it six placements, because I have written down on the third quarter call it was about 80 instruments at the end of the third quarter?

We said nearly 80, so I think it was probably 8 or 9 placements in the fourth quarter.

What is left to consolidate on the DiaMed side? When you do an acquisition of a distributor is that separate from buying out the minority shareholders?

Yes. I mean although some of the distributors are also minority shareholders, but we won’t go down that slippery slope. There is a couple of things that are going on. One is we said from the beginning we’d like to acquire some of these DiaMed distributors to bring those sales direct, which is more in line with our traditional business model It obviously means we get the benefit of 100% of the end user sales and the profits as well. So, we are going to continue to pursue selectively picking up some of these distributors and bringing them directly into our business. Separate from that, we still have the need, the requirement to purchase the remaining minority shares of DiaMed holding. We did pick up some more during the quarter, but we have about 6% of the outstanding shares, which I’m guessing is around $38 million, which we do plan to acquire hopefully in the first half of ’09. We will continue to have a minority interest line on the P&L because there continue to be minority shareholders of DiaMed holding, but more importantly the biggest chunk of that minority interest line relates to some key subsidiaries where we don’t own 100% of the stock. At some point in the future we may look to buy the other half of the stocks that we don’t own and that could bring that minority interest line down.

Brad, could you perhaps give us some qualitative comments around what the NIH budget boost here, the stimulus boost, how quickly can you see that and how material could that be given the numbers you’ve seen out there?

That’s a very good question and I think it’s something that’s really shaping up almost on a daily basis. We certainly know that our customers are beginning to get some feedback into the granting committees and how that money is going to be spent. We are certainly optimistic, because if you look at a lot of the money is dedicated for instruments under $50,000 into existing grant holders with the caveat that it be spent this year. So we see that as a potential upside given our product line of real time thermocyclers, there are things like Bio-Plex systems and then of course the suite of laboratory apparatus we have. The question is really timing and how these granting committees are ultimately going to push this through. We would expect to probably, again this is our certain guess, to see a real positive impact of that starting in the second half of the year, but it seems substantial. With that being said, and we saw some of this in the fourth quarter, is that people are generally conservative. Their own personal finances, their own 401-K, their own view of the economy, causes them to be a little bit more conservative with their budgets, even though in a lot of cases an NIH budget you can’t save it year-over-year. So things have changed appreciably really in the last ten days on this.

Okay, thank you very much.

Your next question comes from Amy Wilson from Ramsey Asset Management.

I was wondering what the quarter-by-quarter placements were in 2008 for the Bio-Plex?

We don’t really have that number on hand.

I guess you’ve mentioned it on previous calls so I can just look there. My second question would be, just looking back at inventory levels in the fourth quarter of 2007 versus the fourth quarter in 2008, it was quite low in 2007 and then spiked up through the rest of 2008. What can we attribute that to?

Well you are correct that we have been building inventory and it was extraordinarily low in 2007, in fact we got caught with some back orders and things like that; so, we did build inventory during ’08. We also have several new products that we are ramping up for launch in ’08 as well.

How much of the gross margin improvement that we saw year-over-year can we attribute to the higher inventory levels?

We don’t have that well quantified, but I think it’s probably fairly low. I know where you’re going, but I don’ think that’s a big factor. We’ve been actually watching that fairly closely, because otherwise you build a kind of ticking time bomb and certainly we don’t want to do that. We’re trying to balance between keeping the inventories under control, but serving the customer; so that’s a balance we’re striking.

The other thing you can see, in my comments in the reported numbers Amy that’s important to see. A lot of the gross margin improvement is actually on the Life Science side of our business where this is real sustainable achievement on their part. Manufacturing has been moved, some of the product lines to Singapore. They’ve reengineered some of the products that are actually being produced at a lower cost. These are real improvements that are sustainable, whereas a lot of the inventory build is associated on the diagnostic side of the house where we are building for future orders and we build whole lots at a time. Our quality controls group did very well during the year and in that case we build multi-year lots and hold them on behalf of the customer. Then of course not all of our inventory is held in the United States, so currency can sometimes have an impact on the value.

Okay thank you very much.

Your next question comes from Steven Gellman an Investor.

My first question is the Sartorius investment if that was included as part of the $28 million write down or if that is independent and doesn’t have to be mark-to-market? My second question and I caught the conference call late, so excuse me if you’ve already gone over it, but are you planning to do any lay offs or have other reductions to increase the profitability?

We’re not really planning other kind of lay offs at this point. As we said in the conference call, we’ve instituted a kind of head count stabilization, so we’re basically trying to stay with our same headcount as we had at the end of ’08. So, that is kind of where we are.

Having said that, part of our being diligent about the business is looking at each of the product areas that we operate in to make sure that they’re appropriate for our long-term growth. In terms of the impairment it didn’t have anything to do with Sartorius what so ever. It was related to assets that were acquired as part of the acquisition of Pasteur Sanofi Diagnostics in ’99, assets that related to the food testing business, primarily the BFE testing business, which has lost value over the last several years as that business has declined.

The Sartorius investment is a huge investment, so I don’t know if you can comment about that?

It’s still an investment on our books. You can see on our financial statements that the majority of our investment is in the form of voting shares, what they call ordinary shares and those are held on our books at cost. So it’s in a different category than we would look at on some of these other actions.

Okay thank you very much.

Your next question comes from [Karthic Karshnan] from RNG. [Karthic Karshnan] - RNG: I was just wondering if you can comment on how the first two months of the year are looking in terms of the general business conditions.

Well were still in business! I think one month doesn’t make the quarter and the business still seems to be ticking over at a pretty reasonable rate and we’ll be back in a little while with the first quarter and tell you how it’s going.

I think currency is going to have the biggest play in the year-over-year comparisons. [Karthic Karshnan] – RNG: My next question is in regards to the operating line item. Should I look for a step function decrease in the first quarter and then possible improvements from that point onward or do you think it’s going to be a gradual impact to the operating margin compression this year?

We generally don’t give quarterly guidance, or look at that level, or discuss that level of granularity externally. I think that it’s safe to say that the comparisons will be much tougher at the beginning of the year than they will be at the end of the year. But, again, who knows what currency is going to do to the operating result, so I think we’re just going to stick with giving high level guidance for the full year. [Karthic Karshnan] – RNG: Okay, are there any changes in terms of your hedging programs for the dollar?

Not significantly. It’s interesting; one of the currencies that had a big contribution to this unusual loss in the fourth quarter was the Brazilian real which traditionally is a currency we haven’t hedged, because it was just exorbitantly expensive to hedge. But, the devaluation moves in Brazil that caused the big swings had the silver lining impact to make the cost of hedging much less expensive than it ever has been in the past that I’ve seen. So that’s one change we may make. But, generally we cover our exposure and not try and predict movements one way or another. [Karthic Karshnan] – RNG: Okay, thank you for that.

Your next question comes from Doug Fisher from Kennedy Capital.

You talked about the process chromatography business thing impact on the fourth quarter. Can you give me some deal to frog brush how large that business is for you guys?

Again, we don’t report our divisions and operating results by division publicly, but certainly the year-over-year decline in the process orders was enough to make a good impact on Life Science sales for the quarter.

If you took that and you took the true capital equipment part of the business or the more traditional equipment part of the business, of those two impacts on the fourth quarter which one was larger would you say?

The process order was larger.

Okay that’s helpful. Can you just remind me on the Life Science side what percentage of the business is tied to kind of government and academic customers roughly?

You know we try to look at it as, on a worldwide basis it’s about at 65% or 70% of our business is tied specifically to government sponsored research and then the rest would be in a for profit sector whether its pharmaceutical, food, diagnostic, other areas.

Okay and on BSE testing another decline there. We kind of had hoped that business was going to flatten out in ’08. When you think about ’09 what have you embedded in your expectations? I do realize it’s getting to be a less and less important part of the overall business, but I just want to get a feel for what the impact is going to be on the Life Science growth in ’09.

Yes well, I was hoping too. It was a lot more fun on the way up. The reality of it is that yes it is still going to have an impact. One of the things that happened at the later part of this year is that they changed the age of testing, so the market’s going to reduce even further on almost a stepwise function. Frankly, the numbers had begun to stabilize a little bit, because obviously the proportionality is working to our advantage. But, the stepwise function we see in Europe is going to have an other impact. Really no appreciable change to our market share, but again the overall market is just going to get that much smaller.

Can you give me any feel in terms of either growth rate or reduction or size, dollar value size, some idea of what the impact is going to be in the year?

We have talked about that in ’08 we’re expecting that business to go down to about a $40 or $45 million a year business and that’s probably not too far off. In terms of what will happen in ’09, it could be another incremental double-digit decline with this change in age of testing across the entire EU community. The good news is at some point here soon; hopefully the fabulous growth in the traditional food safety, food pathogen, testing business will out strip the decline of the BSE business.

I am looking at those numbers, or what I think they are. Maybe by 2010 given the trajectories of the two businesses they get to be the same size?

Yes, maybe even late this year. We’ll see. I mean it just depends on the growth of the one and the decline of the other, obviously, so 2010 is certainly reasonable.

In terms of Bio-Plex how should we think about the placements? I know it’s impossible to have real clarity or visibility on that, but if we look at the fourth quarter placement rate, did we think about that kind of a run rate going into ’09, or how should we think about it?

I think as we go into 2009 we’re going to have more panels that get approved and are on the system and that should kind of enhance the placement rate in 2009. So the thought is that that will pick up a little bit in 2009.

Okay, thanks for the feedback.

Your next question comes from John Gibbons from Odeon Partners.

I just want to say I love your website, but do you know your website has not updated the results that you have reported?

I did not know that John. Thanks for pointing that out. If you love our website now just wait until we launch the new one.

I love it, it’s got a lot on it, but I was so surprised that they never updated the results.

Yes, thanks for that tip.

At this time there are no questions in queue.

Okay well thank you all for joining us today. We appreciate all your continued interest and we look forward to seeing you on the next conference call.

Thank you for your participation in today’s conference. This concludes your presentation.