Jon Wood – Bank of America [Barry Malmed] – UBS Richard Glass – Morgan Stanley Jeff Matthews – Ram Partners

Welcome to the first quarter 2008 Bio-Rad Laboratories Incorporated earnings conference call. (Operator Instructions) I would now like to turn the presentation over to your host for today’s call, Mr. Ron Hutton, Treasurer.

Before we begin the call, I would like to caution everyone that we will be making forward-looking statements about management’s 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’d like to turn the call over to Christine Tsingos, Vice President and CFO.

Good afternoon everyone and thank you for joining us. Today we’re pleased to report quarterly net sales of $401 million, a decrease of 5% on a reported basis versus the same period last year sales of $422.2 million. However, on a currency neutral basis sales, year-over-year sales grew more than 3%. During the quarter, we had good growth across many of our key diagnostic markets as well as selected markets in life science. As is typical with our historical pattern, the first quarter generally reflects the strongest margins—both gross and operating—for the fiscal year. The reported gross margin for the first quarter of this year was even higher than expected at 57.1%, compared to 55.1% last quarter and 53.7% in the year ago period. This strong margin reflects the shift in product mix toward higher margin consumables and improved manufacturing efficiencies as well as some one-time benefits. The non-cash purchase accounting expense recorded in cost of goods related to the DiaMed acquisition was $3.4 million, a decrease of approximately $1 million from last year. SG&A expenses for the first quarter were $140.3 million, or 35% of sales, about equal to year ago dollars, but higher in margin, reflecting the currency impacted sales number. The sequential improvement versus the fourth quarter is primarily related to lower selling costs associated with the lower sales number as well as good headcount management. The current quarter SG&A expenses include $2 million for amortization of intangibles related to DiaMed. Remember that historical trends consistently reflect our lowest SG&A expend in the first quarter, and thus we anticipate these expenses to ramp up throughout the year. Research and development expense in Q1 was 9.3% of sales or $37.1 million, compared to $41 million in the fourth quarter and basically flat with the $37.5 million spent last…

(Operator Instructions) Your first question comes from Jon Wood from Bank of America. Jon Wood – Bank of America : Christine, the one-time gross margin benefit, that’s the LabCorp sale?

Yes. Jon Wood – Bank of America : So you have a gross margin on that instrument that’s higher than your core?

Typically, these instruments are placed under a reagent rental program, and in LabCorp’s case, they elected to purchase them, so under reagent rental, we get the gross margin over time, but with a purchase, we see it more upfront, so for us, it’s a matter of recognizing gross profit upfront for those units. Jon Wood – Bank of America : But it actually boosted the percentage as well, or it was just incremental dollars?

A little bit of that. Jon Wood – Bank of America : That agreement, like Quest, is it just for the ANA panel, or is there a more comprehensive set of tests within that contract now?

Yes, it’s for a more comprehensive set of panels. We’ve got the ANA in there as well as EBV. We have an opportunity for vasculitis. It’s a pretty nice placement relative to panel utilization there. Jon Wood – Bank of America : Can we just talk about the process chromatography impact you called out in the press release? Is that a function of lower process chromatography business or just a hard comp?

It is definitely just a hard comp. The business is pretty lump obviously there. It’s very large customers. If we looked at it over a 4-quarter period, the business is fine and it’s certainly growing. It’s just that the first quarter was a tough comp. Jon Wood – Bank of America : This happened in the fourth quarter. It’s safe to say that both the fourth quarter of ’07 and first quarter of ’08 both were elevated quarters, and that’s what we see in the numbers today?

In ’08 and ’09, yes, definitely that’s the case. The last two quarters certainly reflected that, and we have a fair amount of visibility to the business going forward, so we can see where that’s coming from. Jon Wood – Bank of America : So does that comp issue persist in 2Q and beyond or should that impact be largely washed through at this point?

I’d say it’s largely wash through. Jon Wood – Bank of America : It doesn’t sound like capital equipment was a drag on Life Sciences this quarter. Is that an accurate statement?

Well, it really depends on how you define capital equipment. There is a hybrid range of instruments in the $25,000-$50,000 range, and they were certainly impacted a little, but not as much. We have some new product lines in that area that did really well and actually surprisingly well, but obviously the US market for products over $50,000 really was tough. It was tough for us and as we have seen for everybody.

And I think it’s fair to say that instrument sales for Life Sciences in Q1 were lower than they were in Q4. Jon Wood – Bank of America : Without the BSE so you’re flat, and then you’ve got a process chromatography in that. Did it contribute to a negative impact on the growth rate?

On balance, no. It was actually positive. You’re correct. If you take the BSE and the process chromatography impact out, actually there was growth on a net currency basis. Jon Wood – Bank of America : Christine, you said $35 million for DiaMed in the second quarter of ’09, so the minority line on the income statement, does that go to a very low level post 2Q ’09?

That’s a good question. Obviously, it’s dependent on the profitability of DiaMed in any given quarter, but I would think our best estimate right now is that $1.7 million that we posted this quarter probably goes down to about $1.25 because remember we still have 51% subsidiaries that are accounted for under this method. It’s not just about the minority shareholders of DiaMed Holding.

Your next question comes from the line of [Barry Malmed] of UBS Barry Malmed – UBS : On your earnings release, on page 3, when you present the balance sheet, are you sure you’re referring to the December 31, 2008, balance sheet, or is that really the March 31, 2008, balance sheet? The reason I say that is your $30 million first quarter in shareholders equity is down. Is that possible? That doesn’t seem possible to me.

We have several items that go through the equity section. The currency translation adjustment on all our foreign owned and foreign currency denominated assets and liabilities also go through there. So you can earn $30 million in profit and have a $70 million change for example in net assets. Barry Malmed – UBS : That I understand, but how about in shareholders equity?

That’s where the CTA account goes through. The currency translation adjustment does go through the retained earnings and shareholders equity account. Barry Malmed – UBS : Thanks for the education.

Your next question comes from the line of Richard Glass of Morgan Stanley. Richard Glass – Morgan Stanley: Can you tell us about any progress you’ve made on getting panels approved or individual assays or whichever you want to address, and can you also talk about any geographic differences between your businesses?

I’ll speak to the panel question. We’ve had a panel approved just within the last 45 days, and we have planned three more between now and the end of the year, and these will be for a total of about 9 assays altogether, so by the end of the year, we should have a total somewhere around 33 assays on the system. Richard Glass – Morgan Stanley: What are those four that you just got approved or are working on?

We had a panel for TORCH IgG and then in the hopper we have a TORCH IgM; a measles, mumps, rubella; and herpes simplex. They’re all in the area of autoimmune and serology testing. Richard Glass – Morgan Stanley: No swine flu in there?

No. We have other tests for that, but they’re out in the European market. Richard Glass – Morgan Stanley: On the geographic question?

As I talked about a little on the script, I think you have to look at it group by group because for the developed market—the US and Europe—it’s been pretty tough for the Life Science products, and I don’t know that we are alone in this. I think the whole industry is feeling that, and it’s a significant portion of our Life Science business, and yet the emerging markets are still growing very strong for Life Science. If you look at diagnostics especially in the first quarter, US was very strong for the diagnostic group and part of that is the BioPlex and the placements there and the sales to LabCorp, but also Quality Control did well, and we continue to gain share in blood virus in US, so it’s hard to say Bio-Rad as a whole here is the geographic impact when it’s a little different for each of the groups, and then emerging markets, Latin America and places like that continue to do well for almost the entire product line.

Your next question comes from the line of Jeff Matthews with Ram Partners. Jeff Matthews – Ram Partners: First, the LabCorp placements, presumably that would have occurred regardless of how you book the sales whether it was reagent release type thing or whether it was actual follow-on sale, and I’m just wondering if there is any particular reason in terms of capital markets or credit availability that made the deal happen the way it did or not.

Yes. I asked that same question because typically these instruments are placed under reagent rental, and I think we would anticipate that in the future as well. Our folks who have been good partners with LabCorp for a number of years believe that this is their general preference. They generally tend to buy instruments, not just from Bio-Rad but from other vendors as the matter of course. Jeff Matthews – Ram Partners: I’m just wondering what exactly it is that LabCorp for example or this could be any customer of yours would be doing with a BioPlex. What were they doing before the Bio-Plex? What is this replacing?

Generally speaking, these assays are done one at a time and in many times on a distributed instrument base within the laboratory. What we are offering here is the opportunity for them in the laboratory to consolidate at least 11 assays in a single tube and do it in a highly automated random access format, so they can immediately reduce the footprint of the testing platforms that they have in the laboratories, and the other incredibly compelling selling point of this system is the labor savings that are involved when you highly automate a panel of assays, so you throw on top of that the ability to screen and measure your reflex test all at the same time and then release those reflex tests based on a doctor’s order at a later time without having to redraw the patient, so therein lies a lot of economic upside for the laboratory. Jeff Matthews – Ram Partners: I’m wondering if this is a good time or not with credit markets loosening up and interest rates extremely low historically for Bio-Rad to raise capital in the debt market as you tended to do because perhaps there are acquisition opportunities at prices that are interesting to you or not?

There are two parts to that. I think certainly in the last few weeks, we’ve seen the debt markets have improved quite a bit. Still the borrowing costs are higher than the two issues that we have outstanding that we did a couple of years ago, but I think it’s fair to say that the rates are coming in line, and it could be an opportunity for us to do that. In terms of acquisitions, I think that we would have expected more opportunities to be available than there are. It does seem to a little quiet on the acquisition front or the opportunities front for acquisition, so we’ll see as we go forward.

There are no further questions in the queue at this time. This concludes the presentation. Thank you for your participation in today’s conference.