Good day, ladies and gentleman, and welcome to your Quarter Two 2011 Bio-Rad Laboratories Incorporated Earnings Conference Call. My name is Denise, and I’ll be your manager today. (Operator Instructions). And now, I would like to hand the presentation over to your host for today’s call, Mr. Ron Hutton, Treasurer. Please proceed, sir.

Thank you. 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 Chief Financial Officer.

Thanks, Ron. Good afternoon, everyone, and thank you for joining us. Today, we are pleased to report quarterly net sales of $521.7 million, an increase of 11.5% on a reported basis versus the same period last year sales of $467.7 million. On a currency-neutral basis, year over year sales grew 4.2%. During the quarter, we had good growth across many of our key Diagnostic and Life Science markets. This growth was partially offset by the continued slowness in Europe. The reported gross margin for the second quarter was in line with expectations, at 56.2%, compared to 57.4% last year. Remember that during the second quarter of last year, we recorded approximately $4.5 million of one-time gross profit related to the settlement of some outstanding intellectual property disputes. Excluding these unique items, the gross margin for the second quarter of 2010 was 56.4%. The non-cash purchase accounting expense recorded in cost of goods related to the DiaMed and Biotest acquisitions was $3.8 million for the quarter. SG&A expenses for the quarter were $176.7 million, or 33.9% of sales, which compares to 33.4% of sales in the year-ago period. The current quarter SG&A spend includes approximately $15 million of additional expense due to currency translation; increased reserves for receivables in economically challenged markets, primarily in Europe; as well as costs associated with our ERP project. Also recorded in SG&A is $3.1 million for amortization of intangibles related to the Biotest and DiaMed acquisitions. Research and development expense in Q2 was 9.2% of sales, or $48.2 million, compared to $43.9 million last year and $42.7 million in the first quarter. The sequential increase in R&D spend is primarily related to our investment in new technology for the diabetes monitoring, blood virus testing and blood typing markets. Going forward, we expect R&D spend to…

(Operator Instructions) Your first question comes from the line of Paul Knight. Please proceed. Paul Knight – Credit Agricole Securities Inc.: Hi. Good evening.

Hi, Paul. Paul Knight – Credit Agricole Securities Inc.: Regarding the expression of challenges in Europe, is this academic? Is it clinical? Where do you see it?

It’s really kind of across the board, both in academic and, again, in the Diagnostics market. Paul Knight – Credit Agricole Securities Inc.: Norman, do you think that where in the European – as Europe stands now, is it reflecting austerity measures passed so are we kind of in a normal state of slow growth, or is it kind of unrolling now?

Boy, that’s kind of hard to tell. Paul Knight – Credit Agricole Securities Inc.: I guess the question would be did you see deceleration in Europe in Q2 or tone of business still all right? Or was it kind of the same is Q1?

I think it’s been about the same. There have been no dramatic changes one way or the other. Paul Knight – Credit Agricole Securities Inc.: And then how did Asia look in the quarter?

Not too bad. Paul Knight – Credit Agricole Securities Inc.: Up or down or any change, do you think?

I think it was up. Maybe the growth rate wasn’t quite as robust as we’ve seen historically, but it was still good growth given the current situation. Paul Knight – Credit Agricole Securities Inc.: And then relative to an operating margin that I think was a little lighter than we had estimated, is the 13% margin, was SG&A a little higher? Was it currency affecting that? What was the color on the items affecting the margin in the quarter?

Sure. So, I think the biggest component was SG&A was up year over year, and some of that was currency. In the prepared remarks I highlighted about $15 million of the increase year over year. And $10 million it is probably related to currency; the other $5 million is kind of split between our ERP spend and a decision that we made to increase some of the reserves on receivables for parts of Europe where the economies – I mean, you guys read about them in the newspaper every day – where some of the economies are really slowing down. Paul Knight – Credit Agricole Securities Inc.: And so that – the reserves would be in that SG&A line, Christine...

Yeah. Paul Knight – Credit Agricole Securities Inc.: ... or is it cost of goods line?

No, it’d be in the SG&A line. Paul Knight – Credit Agricole Securities Inc.: Okay. Thank you.

And your next question comes from the line of Junaid Husain. Please proceed. Junaid Husain – Ticonderoga Securities, LLC: Good afternoon, everyone.

Hi, Junaid. Junaid Husain – Ticonderoga Securities, LLC: I don’t know if John is on the line?

He is. Junaid Husain – Ticonderoga Securities, LLC: John, I’ve got my quarterly obligatory hospital CapEx question for you. As we’ve been doing our checks with hospitals, especially in this CapEx environment, my sense is that the for-profit hospitals have the money and the not-for-profit hospitals are the ones that are struggling to do any capital investments. Is that your sense as well?

Yes, it is. We see more and more of our instrument placements actually being reagent rental than we have in, let’s say, prior periods. And I would say that kind of reflects that situation. Junaid Husain – Ticonderoga Securities, LLC: Yes. And then can you tell me, in any given quarter, in the U.S., what is your mix of for-profit and not-for-profit customers who are purchasing your high-end clinical diagnostic systems?

We don’t have that breakout. Generally, for us, a customer is a customer. And when they buy something from us, they get our full service regardless. So we don’t really look at it in that way. Junaid Husain – Ticonderoga Securities, LLC: Got you. And then if Brad is on the line?

Yes. Junaid Husain – Ticonderoga Securities, LLC: I guess, Brad, in a post-debt ceiling world, my sense is that there’s going to be less appetite for expanding out the NIH budgets and if anything, we could see a contraction. From years past, when you’ve seen either flat to lower NIH budgets, what’s the trickle-down impact to the Life Sciences business?

Well, that’s only – yeah, we’re trying to get that too. In the end, we have a broad product line, which helps us. And certain of the – there was a while where there were certain sequencing product lines and there was things in demand on maybe mass spec that really drove a lot of that growth and benefited from some increased budgets. Like, we have a very broad appeal of products. And even in this quarter, we’ve seen a really good impact from our imaging and electrophoresis lines, which really kind of fly a little bit below the budget ceiling. So I think we, kind of, balance it a little bit. Junaid Husain – Ticonderoga Securities, LLC: Got you. Got you. And then, Christine or Norman, if you could help me a little bit on pricing for your products more at the aggregate level in terms of the impact on overall corporate margins. How has, first, pricing held in relative to the overall portfolio? Was it up, down or net neutral?

I think it’s probably net neutral when we think about it. I mean, obviously, there continue to be pressures on pricing all the way around, with the constrained budgets in life science and certainly with the pressure on healthcare costs. I think both of those are something that we feel. But I don’t think it’s any worse this quarter than it has been. Junaid Husain – Ticonderoga Securities, LLC: All right. Got it. And, Christine, last question for you. Relative to your European implementation, could you remind me of the incremental expenses associated with the implementation; maybe any incremental operating expenses versus the capitalized expenses for the software?

Sure. So I think this year we were expecting ERP spend to kind of be in the $15 million-plus range on the expense side, and something equal to that, if not a little higher, on the capital side. We’re now starting to ramp up the services of outside professionals more. So that will continue to increase the capital spend. Overall, for the entire project, we’ve talked about this being in $100 million to $150 million-plus range over many, many years – four years or so. And our best estimate at this point is, of the $150 million, maybe two-thirds of that ends up being more capital and then the other third is expense. And the next couple of years will be the highest spending in both buckets, I think. Junaid Husain – Ticonderoga Securities, LLC: Great. And then as a follow-up to that, I’ve noticed with other companies that have gone through major ERP implementations, you do see some efficiencies, as employees plow through the integration. As you look at the timeline, where would you expect to see, perhaps, a negative impact from the implementation and how material would you expect it to be to your business?

Not even sure how to answer that. It’s a good question. I don’t disagree with you that many companies, when you look at them going through these programs, they’re costly. They can be disruptive. I think we’re trying to be very diligent and deliver it in how we manage this project, which is partially why we’ve chosen to do it over a number of years rather than very quickly, big bang, where you increase the opportunity for a disruption. Having said that, I think there are always blips in the road. Our goal is to try and not have it be a significant financial blip or impact on our business. In the short term, we’re putting some of our best folks on the project, and those positions need to be backfilled. And that always takes a little bit of time. But while we can’t guarantee no blips along the way, we’re going to be as diligent and prescriptive as possible in running a successful project. Junaid Husain – Ticonderoga Securities, LLC: All right. Good enough. Thanks, guys. That’s all I’ve got.

And your next question comes from the line of Jeff Matthews. Please proceed. Jeffrey Matthews – RAM Partners LP: Hi. Can you hear me?

Yes, we can. Jeffrey Matthews – RAM Partners LP: Great. Thanks. First of all, the 2.8% same-store organic growth in Diagnostics is a pretty big slowdown if I recall. And you highlighted growth in emerging markets and also Japan, so I’m wondering what happened in the U.S. and Europe in Clinical Diagnostics. And obviously, you didn’t highlight blood typing, so I wonder if there was any change in that side of the business.

Yes, Jeff, this is John. Just a couple of points of explanation there. Our blood virus business really has been a little lackluster, particularly in second quarter. I’m saying blood virus. And in this particular case, we’ve been presented with some tender opportunities where pricing, quite frankly, is not really that interesting. So we’ve kind of held the line on some of those and in some of those cases we’ve lost tenders, which I am not too broken up about that. Profitability with that business is still performing well, so I think that’s been one contributor to that slower... Jeffrey Matthews – RAM Partners LP: And that’s in the U.S., John?

I’m sorry? Jeffrey Matthews – RAM Partners LP: That’s in the U.S.?

That’s actually in the U.S. and in European emerging markets. Jeffrey Matthews – RAM Partners LP: Okay.

And then in the blood typing part of the business, I think I mentioned earlier that we do see more of our customers, at least in this recent period, opting for reagent rental deals as opposed to cash sales for instruments. So when you start to get into a little comparison there, there is a little bit of a downward swing there. However, I will say that the units of placement and reagent sales in those businesses are continuing to grow very nicely. Jeffrey Matthews – RAM Partners LP: Okay. And then my second question. Christine called out reserves for receivables in some of the weaker European economies. I don’t even remember you guys doing that during the crisis. Am I wrong? I mean, it sounds like it’s hit a level that it didn’t even hit in the crisis of significance. I’m wondering if, (a), that’s true, and (b), is this a matter of your systems catching up with bad receivables that have been around for a long time, or is this something materially worse in part of your European customer base, which wouldn’t be a surprise given the headlines?

No, Jeff, I wouldn’t read that into it. You’re right. It’s probably not something that we’ve called out before, and maybe we didn’t even need to call it out this time. We have always done what is appropriate around the world and I don’t know that this would signal something very different specifically within our own business. It’s more reflective of what truly is going on in that region, and given the debt situation, et cetera, it just seems to be appropriate and a trend among those of us who are GAAP reporting companies. But I wouldn’t read anything into it that something had specifically changed in our business. Jeffrey Matthews – RAM Partners LP: Sure. And then if I could just follow up on that, along that line, I wonder if Norman might speak for this maybe, or John. In terms of Europe, which has always been very big for Bio-Rad, disproportionately big relative to I think your size, there is a lot of dust in the air, not only from the headlines that we see today, but the UK pressuring the National Health Service spending. Could you kind of take us around Europe and kind of what the outlook might be over the next 12 months in general?

Well, I think the outlook is probably – for my guess is kind of more of the same. We’re going to continue to see those pressures. And I think that’s about it. I don’t think there’s any place – obviously, places like the UK have announced measures and probably they have been a little more affected, although you’ve got other regions that are also – I guess of all the ones, Germany continues to kind of be the brighter star in Europe. They seem to be the healthiest of the bunch. But I think that’s about the picture.

Jeff, I think one of the things about our market is that we do make products that are needed. At the end of the day, when people come to their position and present themselves at hospitals and have operations, the products that we market and sell are needed and will be consumed. I guess the question will be, will those governments be able to pay their bills. But at the end of the day, I really do see a fairly insular effect based on the product lines that we sell. Jeffrey Matthews – RAM Partners LP: Understood. And then I’d like to just follow up once more, and I’m not a big quarterly EPS guy, as you know, but just in terms of the Diagnostics business, if you’re up a couple, 2%, 2.8%, or whatever the organic number was, you highlighted growth in developing markets as opposed to the U.S. and Europe. Does that mean U.S. and Europe were flat to down, and is that meaningful?

Yeah, I would say, yes. I mean I would say they’re flat to slightly up, it’s not flat to down. Jeffrey Matthews – RAM Partners LP: Okay. All right. Thanks very much.

(Operator Instructions) Your next question comes from the line of Jon Wood. Please proceed. Jon Wood – Jefferies & Co., Inc.: Hi, thanks a lot. This is for Brad so can you call it – Brad, I know you had a weak comp in the second quarter of ‘10 on the Process Chromatography side and I think at that time, we called it out as being $7 million year over year. Can you just comment on the effect of the process chromatography business in the second quarter of ‘11?

Yes, you’re very correct. And there was – although we had very good growth kind of on the broad appeal of – across our broad product line, process did help in the second quarter. I can’t give you the exact number, but it did have an impact. Jon Wood – Jefferies & Co., Inc.: And maybe even if – I guess what I’m getting at here, Brad, is even if I adjust for that kind of fluctuation in 2010, for second quarter of ‘10, it still looks like your life science business has stepped up quite a bit from kind of s ongoing core growth perspective, so despite your comments on Europe on austerity and the like. So what is driving this kind of better trend, this accelerating trend in the underlying business at this point?

Well, we launched a lot of new products. And in a lot of cases, we are taking market share. And I think certainly in North America, we have done very well., the general business climate – and again it’s the broad range of products that we offer that have to do with really how the average lab runs. And coming out of the stimulus program where a lot of people were hired, facilities were staffed, that has really helped us well. And in kind of our core franchise of electrophoresis, plotting and imaging, we’ve looked very hard over the last couple of years to effectively redo that line and kind of change some of the paradigms in the marketplace and we’ve been successful. And that’s helped us a lot. We still have a very strong PCR product line, and we continue to take market share in that area as well. So overall, we’ve done well and we’d certainly like to do better, and would like to keep consistent in this way, but overall the product line’s up. Jon Wood – Jefferies & Co., Inc.: Understood. Okay, great. Norman or Christine, just any comments you can share on kind of the M&A backdrop, the cash level here continues to build to astronomic levels. Any itchy fingers lately on the M&A side? And if you will comment, just parse out the Clinical Diagnostics versus Life Science picture there.

Well, okay. So while we have these astronomical balances as you call them, so do some others. And the market continued to be pretty competitive and as you know, a lot of these assets have gotten bid up recently. I would say that there still continue to be a number of opportunities. It seems like kind of more of these are presenting themselves on both the Life Science and the Diagnostics side. And we currently have a couple on our radar screen. Jon Wood – Jefferies & Co., Inc.: Okay, great. Last one for Christine is on the ERP side. So you kind of called out about a $5 million delta between reserves and ERP. So my question is do we still have another step up in the third quarter in terms of the expense side, or are we at a run rate for ERP that will be pretty consistent in the back half of the year?

No, I think we probably continue to step up through this year, as we build the team and go through our global design process. And then it should start to be a little more consistent on the expense side. And of course over time the capital side will continue to rise. Jon Wood – Jefferies & Co., Inc.: Okay. Okay. Thanks a lot.

At this time we have no further questions in the queue.

Okay. Great. Well, thank you, everyone, for joining us today. We appreciate your interest and look forward to speaking with you soon. Bye-bye.

Thank you for your participation in today’s conference. This concludes the presentation. You may now disconnect. Have a great day.