Good day, ladies and gentlemen. And welcome to the BrukerBioScience's Third Quarter Earnings Call. My name is Erik, and I'll be yourcoordinator for today. At this time, all participants are in a listen only mode. Wewill be facilitating a question-and-answer session towards the end of theconference (Operator Instructions). I would now like to turn your presentation over to your hostfor today's call, Mr. Bill Knight, Chief Financial Officer. Please proceed.

Thank you, Erik. Good morning, and welcome to our BrukerBioScience's third quarter 2007 financial results conference call. With me ontoday's call are Frank Laukien, the President and CEO of Bruker BioScience's,and Brian Monahan, our Corporate Controller. During the call today, Frank will provide an overview of ourresults for the third quarter and nine months ended September 30th, 2007. I'll follow up with a moredetailed discussion of our financial results, and then we will open up the linefor your questions. Before getting started, I would like to read our Safe HarborStatement. This discussion will include forward-looking statements. Thesestatements are based on current expectations but are subject to risks and uncertaintiesthat could cause actual results to differ materially from those projected,including but not limited to risks and uncertainties relating to theintegration of businesses we have acquired or may acquire in the future,changing technologies, product development, market acceptance of our products,the cost and pricing of our products, manufacturing, competition, dependence oncollaborative partners and key suppliers, capital spending, and governmentfunding policies, changes in governmental regulations, intellectual propertyright, litigation, exposure to foreign currency fluctuation and other risksfactors discussed from time to time in our filings with the Securities andExchange Commission. We expressly disclaim any intent or obligation to update anyforward-looking statement other than as required by law. During this call, wemay refer to certain financial measures that are not in accordance withGenerally Accepted Accounting Principles or GAAP such as one time tax benefitsassociated with a recent corporate income tax law change in Germanyand the charges incurred in 2006 associated with our acquisition of BrukerOptics. Non-GAAP financial measures are not meant to be a betterpresentation or a substitute for results of operations prepared in accordancewith U.S. GAAP. We believe that discussing these measures helps investors togain a better understanding of our core operating results and future prospectsconsistent with how management measures and forecasts the Company'sperformance, especially when comparing such results to previous periods orforecasts. I'll now turn the call over to our President and CEO, FrankLaukien.

Thank you, Bill, and good morning everyone. We appreciateyou joining us today. So how about those Red Sox, but back to our financials.During the third quarter, we continued our solid top line growth and steadyimprovement in profitability, and we are on track to meet or exceed our statedfinancial goals for 2007. I am particularly pleased with our top line performance inthe third quarter with all three operating divisions delivering double-digitgrowth year-over-year. Our net income in the third quarter of 2007 was $8.7million or 8 pennies per diluted share compared to net income of $3.0 millionor 3 pennies per diluted share in the third quarter of 2006. Included in our third quarter 2007 net income was a one-timetax benefit of $2.4 million related to the reevaluation of certain deferred taxassets and liabilities due to corporate income tax law changes in Germany,which Bill will discuss in more detail later on. For easier comparison, included in our third quarter 2006net income were $1.0 million of Bruker Optics acquisition related charges netof tax. Net income for the first nine months of 2007 was $17.5million or $0.16 per diluted share compared to net income of $8.8 million or$0.09 per diluted share during the comparable nine months period in 2006. Again, included in our net income for the first nine monthsof 2007 was the one-time $2.4 million tax benefit I just described, whileduring the nine months ended September 30th, 2006, weexpensed $5.0 million of Bruker Optics acquisition related charges net of tax. In addition to the numerous product introductions so farthis year about which we have had separate press releases, we continue toinvest in our marketing, sales, applications, service and support capabilities,particularly in high growth regions such as Asia Pacific, Eastern Europe, and India. As you may have seen from our recent press release just thismonth, we opened a large new facility in Beijing, China, which houses amodern application, demonstration and customer training laboratory, showcasinga wide selection of our life science and materials research as well as ourindustrial analysis system. In summary, we continue to make steady financial progressand feel we are well positioned going forward. Now, here is our CFO, BillKnight, again, with a more in-depth look at our financials.

Thanks, Frank. To briefly recap, our third quarter 2000revenue growth rate of 25% included approximately 2% from acquisition, 5% fromforeign currency exchange rate changes and 18% from organic growth. For the nine months ended September 30th, 2007, our revenues grew by 21%,including approximately 4% from acquisitions, 5% from foreign exchange ratechanges and 12% from organic growth. Our gross profit margins in the third quarter of 2007 were47%, up from 44% in the third quarter of 2006. Our gross profit margins for thenine months ended September 30th, 2007were 46%, up from 45.4% in the comparable period in 2006. We believe that our ongoing programs are allowing us to makesteady progress on an annual basis towards our medium term goal of 50% grossprofit margin. Our overall operating expenses for the third quarter of 2007were 38.3% of revenue, up 90 basis points from 37.4% in the third quarter of2006. For the nine months ended September 30, 2007, our overall operating expenses were38.8% of revenue, down 170 basis points from 40.5% during the nine months endedSeptember 30th, 2006. Included in the results for the nine months ended September 30th, 2006, were $5.8million of pre-taxed Bruker Optics acquisition related expenses, whichrepresented 1.9% of revenue during the period. Excluding these acquisitionrelated charges in 2006, operating expenses as a percentage of revenue werecomparable year-over-year. While we continue to get some volume leverage in our G&Aand R&D expenses, we have made deliberate additional investments in salesand marketing activities worldwide, which now contribute to our top-linegrowth, in which we also expect to begin to leverage off as a percentage ofrevenue in 2008 and beyond. In the third quarter of 2007, we incurred $2.1 million ofincome tax expense on a pretax income of $10.8 million resulting in aneffective tax of 19.1%, compared to an effective tax rate of 54.4% in…

(Operator Instructions) Your first question comes from thelike on Derik DeBruin. Please proceed.

Good morning.

Good morning, Derik.

So, could your just talk a little bit more about the qualityof the products, I guess, in terms of a little bit more details? Anything thatparticularly stood out? You said that you saw double-digit growth across allyour segments, but can you give us a little bit more color in terms of whereyou saw sales and just the type of products were being sold?

Alright, Derik; this is Frank Laukien. To give you a littlebit more color, as we had predicted, the high discrepancy or the unusualdiscrepancy in growth rates that we’ve experienced between the three differentbusinesses in the last few quarters, it's not gone entirely; there are stillsome differences in growth rate even in the third quarter. Bruker AXS is still the fastest growing part of the company,but certainly Bruker Daltonics, which had been not growing essentially for afew quarters has certainly accelerated both in bookings as well as in revenue.And so it did turn out that in the third quarter, all three businesses haddouble-digit growth with Bruker AXS still having the highest growth.

And what do you attribute to the rebound in the Daltonicsbusiness, new products and demand from certain market segments?

Generally, the markets are good, and I think we have goodproducts. There are two additional effects to highlight perhaps, but one ofthem is the acceleration or re-acceleration of our CBRN Homeland Security andDefense business. For that, we have been accumulating orders, and those are notshowing up also in revenue. And thesecond part is we had some of our life science OEM business up for one largeOEM customer had been and continues to decline, but the effect is nowlargely offset by strength in the life science mass spectrometer and solutionsthat we sell directly or to some other smaller OEM.

Thank you, that's very helpful. Bill, when you talk aboutyour medium term growth margin estimated at 50%. How are you defining mediumterm?

I think, as we said, we expect these improvements really tostart to enter the production or the revenue process in late 2007, certainlymore fully in 2008 for AXS and optics is already there, and it's probably by2009 we are looking for further improvements in our Daltonics business. So overthe next 24 months, we hope to make very good progress on these numbers.

Generally, if I may add, we hope in gross profit margins, wehope to make about 100 basis points up to 200 basis points of progress per year;not everything lines up in every year. 200 basis points is sort of our target. But generally, if we can improve anywhere around 100 basispoints per year, then I think we're making good progress. In any given quarter,we will have fluctuations in our gross margins depending on product mix and soon.

Okay, and then one final question. When you look at the, you'vemade really good progress on the tax rate. Are you still looking at, when youstart looking into 4Q into next year, still something in the low 40s/high 30srange?

For fourth quarter did you say or…

4Q and into 2008, I guess, where do you see the tax rategoing?

I think we said for the year that we feel we'll be in the37%, 38% range and in 2008 hope to make further improvements on that. Wecontinue to monitor that very closely, and just the operating dynamics of thecompany are really starting to help on that tax rate.

Thank you.

Your next question comes from the line of John Sullivan.Please proceed. John Sullivan -Leerink Swann & Company: Hi, guys. Good morning. A couple of quick questions.Congratulations. Can you just chat a little bit more about sales growth bygeography?

John, this is Frank again. John Sullivan -Leerink Swann & Company: Go ahead.

Yeah, I think we have, it's not a clear picture. It's not asimple answer. It really almost varies a little bit by product line. We've had,without focusing on any given quarter, but let's say year-to-date because thosenumbers tend to be more meaningful, we've had good progress this year in theDaltonics business in Europe in particular, and also Japan has done well forBruker AXS, but I believe it is still particularly Asia and Eastern Europe andIndia that's developing nicely and also the United States and North America.And for the Bruker Optics business, actually, it was North America. So there's really no clear theme here, but differentbusinesses make progress in different geographies. No clear theme that'sdiscernible or worth mentioning. It depends on each product line, and I don'tthink there is any particular reason. It’s just of -- fluctuations from even onan annual basis where you make progress. John Sullivan -Leerink Swann & Company: Okay. Secondly, how is business going at the assets you'veacquired over the last several quarters, and are there any particular businessdrivers that are showing up in the acquired assets?

Yes. Again this is Frank. We are very pleased with theacquisitions that we have made. I will not focus on Bruker Optics becauseobviously that was a related party transaction, but Bruker Optics obviously hasworked out exceedingly well for us. The smaller acquisitions into EDS and microanalysis as wellas into handheld XRS have shown very, very good growth and decent margins, andwe're also pleased with our acquisition of an OES optical, Clark Optical imitation acrossto the company. We've seen good demand in the metals analysis market. Sothese smaller bolt on acquisitions, if you like, have been so far reallyexceptionally successful for us and have helped drive growth rates, and arealso, most of them are margin contributors. John Sullivan -Leerink Swann & Company: Thanks very much. And then lastly from me, how significant achange to CBRN's backlog occurred in the quarter? Sounds like you were having agood quarter in CBRN. Were you also seeing a good quarter in orders in thatarea in the third quarter?

Yes, the CBRN. I don't have an exact number. But CBRN hadgood quarters in the quarter, and, I think, I believe that's going to be asustainable trend. I think our CBRN business will be in the foreseeable future,in next few quarters for which we have visibility, I expect it to be verysolid. John Sullivan -Leerink Swann & Company: Thanks very much.

(Operator Instructions) Your next question comes from theline of Steve Unger. Please proceed.

Thanks, hi. Bill, did I hear your mention that the tax ratein the fourth quarter would be in that 37% to 38% range? Is that correct?

What I said, Steve, is we expect for year to be in thatrange.

Okay. And so you're running higher than that. So the fourthquarter, you're expecting the tax rate to be substantially below the 41% thatyou recorded in the third quarter.

Whatever gets us to that 37%, 38% range. That's what we'relooking at.

Good, okay. And then looking at the change to the German taxrate, what impact do you expect that to have? I know that it's difficult with thethree business units, but it's about a 10% change for 2008. What kind of impactdo you expect that to have? At least 3% or 4% or…

I think we'll be better prepared forward to give you abetter answer when we report on our fourth quarter and then we generally fillout our financial goals for next year. It's in that range of what you justmentioned. But we don't really have a good forecast on that yet. But we willhave that when we do our fourth quarter call.

Okay. Are the majority of the taxes that is you pay in Germany?

A good chunk of it.

Okay. And then, looking at the mass spectrometry business,Daltonics. Did I hear you correctly that you have yet to really experience arevenue pickup from the CBRN business most the orders at this point?

No, in the third quarter we had a nice pickup on CBRNbusiness already, in revenue not just in orders. But orders were also solid;that's what commented in respond to the second question, but we also had a nicecontribution to the top-line in the third quarter from the CBRN business,already.

So that's ramping is how I'm looking at it. And then I knowyou give these disclosures in the queue, but not necessarily on the conferencecalls. I was just wondering if you could help us understand the overallprofitability of the three units. I know that in looking at last quarter, Daltonics generateda small loss. Did that flip to a profitability, and could you comment on theother units overall profitability?

Yeah, we tend to think of our business more and more as onesegment, and we tend to have a little bit more detail in the queue. But Ibelieve it is correct that all three businesses at least, all three businessesmade money.

That's great. And then…

Withinhow much they contributed to the bottom line.

And then my last question would be on the inventory build.Do you build inventory? I know that because your business is heavily weightedtowards instruments rather than consumables and so forth, is that an indicationfor us that you have the visibility on these shipments? Or are you building inahead of the order book?

We do build to a hard copy. As we've said in the past, ourbookings and backlog have been very solid the last several quarters. Thisquarter was no exception. We do have visibility into the next quarter andsomewhat beyond. We do have a pretty good feel as to what the fourth quarterwill be. But so there's two parts to this inventory build. One is thebusiness has been strong and near-term; we still see that. We're also, as youknow, in the midst of really trying to improve our manufacturing processes,margin, inventory levels, and we're still in the thick of that. And as this business continues to grow, we do expect futureimprovements in these inventory turns, which will help moderate some of theabsolute dollar growth.

Excellent, congratulations on an improving year, a greatyear. Thank you.

Thank you.

Your next question is a follow-up question from JohnSullivan. Please, proceed. John Sullivan -Leerink Swann & Company: Hi guys, just quick follow-up. As you look at yourdistribution channel in 2008, are there any changes or particular spendingitems that you'd call our attention to? Are there any geographies, for example,that you'll be changing to direct distribution in fiscal '08?

John, this is Frank Laukien again. John Sullivan -Leerink Swann & Company: Hi.

I think we have switched to direct distribution where wewanted to switch to direct, and we have some very capable distributors incertain geographies that are performing well, and then where we have no present intentions of changing overto direct distribution. So what we have done particularly at Bruker AXS but also insome other area's in the last couple of years, we're in a number of geographies;we have gone direct; we believe that investment in that process is pretty muchcomplete. John Sullivan -Leerink Swann & Company: Thanks very much. And then lastly, are there any particularproduct lines in the company where refreshing them is a priority for 2008 andis a particular focus of research spending in '08?

We don't, we continue to spend quite significantly onR&D and on new products on improving existing products, but we don'tgenerally forecast what type of product introductions we're planning. We clearlyare planning a number of product introductions, also again, in 2008. But wecannot comment at this point in what areas they will be. John Sullivan -Leerink Swann & Company: Thanks very much.

You're welcome.

It appears we have no more audio questions in queue at thistime.

Okay. We thank all our shareholders and interested partiesfor joining the call. And look forward to speaking with you some time afteryear-end on our fourth quarter and full year results. Thanks again.

Thank you for your participation in today's conference. Thisconcludes our presentation. You may now disconnect and have a good day.