Ladies and gentlemen, thank you for standing by. Welcome to the Charles River 2008 Earnings and 2009 Guidance Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session instructions will be given at that time. (Operator Instructions). As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Corporate Vice President of Investor Relations, Susan Hardy. Please go ahead.

Thank you. Good morning and welcome to Charles River Laboratories' 2008 earnings and 2009 guidance conference call and webcast. This morning, Jim Foster, Chairman, President and Chief Executive Officer; and Tom Ackerman, Executive Vice President and Chief Financial Officer, will comment on our fourth quarter and full-year 2008 results and provide guidance for 2009. Following the presentation, we will respond to questions. There is a slide presentation associated with today's remarks, which is posted on the Investor Relations section of our website, at ir.criver.com. A taped replay of this call will be available beginning at noon today and can be accessed by calling 800-475-6701. The international access number is 320-365-3844. The access code in either case is 981036. The replay will be available through February 24. You may also access an archived version of the webcast on our Investor Relations website. I would like to remind you of our Safe Harbor. Any remarks that we may make about future expectations, plans and prospects for the company constitute forward-looking statements for purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by any forward-looking statements as a result of various important factors, including, but not limited to those discussed in our annual report on Form 10-K which was filed on February 20, 2008, as well as other filings we make with the Securities and Exchange Commission. During this call, we will be primarily discussing non-GAAP financial measures which exclude among other items the goodwill impairment we reported in the fourth quarter of 2008. We believe that these non-GAAP financial measures help investors to gain a meaningful understanding of our core operating results and future prospects, consistent with the manner in which management measures and forecasts the company's performance. The non-GAAP financial measures are not meant to be considered superior to or a substitute for results of operations prepared in accordance with GAAP. In accordance with Regulation G, you can find the comparable GAAP measures and reconciliations to those GAAP measures on the Investor Relations section of our website through the financial reconciliations link. Now, I will turn the call over to Jim Foster.

Good morning. I would like to begin by reviewing the '08 results and we will then discuss our '09 guidance with you. We reported sales of $311.4 million in the fourth quarter of '08, a decline of 2.1% over the fourth quarter of '07, while an increase of 2% when adjusted for foreign exchange. The increase was driven by the Research Models and Services or RMS business segment which increased 5.3% to $152.8 million and increased 7.4% in constant dollars. Preclinical Services or PCS increased 8.3% to $158.6 million. We are excluding the effective foreign exchange which reduced the PCS growth rate by 600 basis points in the quarter, the decline was 2.3%. Operating Income for the quarter was $59.2 million and the operating margin was 19% compared to 20.7% reported in the fourth quarter of '07. The operating margin decrease was primarily the result of lower sales growth and higher operating cost associated with our RMS and PCS expansions. Earnings per diluted share were $0.59 in the fourth quarter compared to $0.65 in the fourth quarter of last year. Fourth quarter of '08 was a difficult period and we like most others didn’t anticipate the extent to which the global economic crisis and the pharmaceutical market challenges would impact us. That said, even in this period of macroeconomic slowdown, we did post some impressive gains for the year. RMS delivered organic sales growth of approximately 10.5% resulting in total company net sales growth of 7.4% for '08, primarily as a result of higher sales. EPS rose 10.3% to $2.89, despite an increase in the average number of shares outstanding. We generated $82 million of free cash flow and are financially strong with a sound balance sheet. This is the significant advantage during a period of economic turmoil. I am…

Thank you, Jim. First, let me remind you that I will speak primarily to non-GAAP results which exclude the goodwill impairment, acquisition related amortization and charges related to asset impairment; cost savings actions, repatriation and other items. This morning my remarks primarily focus on two important elements, our 2009 financial guidance and our balance sheet. For 2009, we have opted to provide wider ranges for both sales and EPS guidance from prior years, in order to encompass the uncertainty in our markets from the reduced visibility into preclinical demand, pending potential merger activity among our pharmaceutical clients. Reported sales are expected to decrease between 2% to 7%, which includes negative foreign exchange impact of 5% based on current exchange rates. The net effect of acquisitions and divestitures including the planed divestitures of our Phase I clinic in Edinburgh added less than 1% growth for the year. The organic sales growth is expected to be in a range from growth of 2% to a decline of 3%. Based on these sales assumptions, we expect 2009 non-GAAP EPS to be in a range of $2.30 to $2.60. And the components of this range include the impact of lower sales and operating income, a negative $0.12 per share impact from foreign exchange and below the line item such as increased net interest expense and a higher tax rate. These are expected to be partially offset by the cost savings and a lower share count. I will now outline each of these factors in more detail. Foreign exchange has a significant impact on our guidance in 2009. Our guidance is based on current foreign exchange rates and does not include the impact of future movements that these rates will have on our results. You can get a sense of the magnitude of our sales…

Thank you. (Operator Instructions). And we will go to line of John Kreger with William Blair. Please go ahead.

Thanks very much. Jim, you mentioned in your remarks that of your outbred rat business was down giving it's tied off the toxicology business. Could you just expand upon that a bit and give us a sense of your model business? What percentage is generally tied to a toxicology work versus other uses?

It's probably close to half, John, it could be a little bit less than that. That isn’t consistent necessarily from year-to-year, but I think over the long-term we are seeing about half the animals used for discovery and half used to serve development purposes. Obviously, it has an impact, it correlates pretty closely. You should get some relative early indicator, confirmatory indicator that tox is firming up as we see research model purchases strengthen, perhaps a quarter in advance or so. And we will get a sense of that for the whole industry. So, it’s a very good guideline for us.

Great. And I think, you also said that you were seeing some signs recently in the last few weeks firming up in your business. Can you just elaborate a bit, is that coming in, in the form of better orders, fewer delays or perhaps commentary from those client meetings you mentioned?

: Combination of all, inquiry levels have been extremely low in the past, at least two quarters maybe three quarters. And they became increasingly slow. And so, it started the quarter slow as well as several of our preclinical locations. We are beginning to see inquiry levels increase substantially or meaningfully at many of our locations. The second quarter as we said in the prepared remarks certainly looks stronger. That's a very good sign. What we don’t know of course, is will that continue to be steady slippage as we saw very much through much of '08, where now that we have inquiry levels so we had booked orders and they continue to slide sometimes from month-to-month and sometimes quarter-to-quarter. So inquiries were up substantially as we were able to close that business and hold on to it. That will serve the combining metric for us. And again given the fact that there are large number of preclinical molecules awaiting development given the fact that the drug industry does for a living and given the fact that they didn’t do it much of that in '08 as perhaps they would have liked to or should have, it's not yet. They are going to get back to developing them, it's when we believe we are seeing some really strengthening signs that they will do that. That’s definitely buttressed by our conversations with very senior people as we also said, we've had a large number of those conversations already. We have several more scheduled to this month and we will continue to do so, and I am talking about the top two or three persons in the drug company. So we are talking about long-term strategy, we are talking about the utilization of outsourced services, how much work they will do inside, what types of work they consider core versus the type of work that they are comfortable finding the strategic outsourcing partner, what they are building or not, how they are going to utilize their internal resources in terms of asset shutdowns or other things. So, I would say a combination of those conversations, the firming up of work, the necessity to get back to work and a sort of leveling of the competitive playing field in terms of capacity build-out and the price point definitely points to a strengthening second quarter, slightly strengthened second quarter and a stronger back-half of the year.

Thanks very much.

And next we will go to the line of Douglas Tsao with Barclays Capital. Please go ahead.

Hi. Good morning. Jim, I was just hoping you could provide some context regarding the hold-back that you spoke about having seen in the GEMS business this quarter. Are we seeing something of similar magnitude to what occurred in the 2005-2006 period or is the pull back more modest and if could you also sort of elaborate in terms of similarities to what occurred then and the differences to what occurred then?

The prior slowdown that we saw was much more dramatic, with major rationalization of models across the whole range of clients. It also demonstrates some dissatisfaction with the quality of the models and their predictable translational value. So, what we are seeing now is something pretty much entirely different. We are seeing definitely cost sensitivity across all of our clients. So, I think they are going to evaluate what they outsource, what they don’t and the utilization of these models. But we are seeing a greater acceptance and clients are definitely more pleased with the quality of the models. The models are much more refined, much more sophisticated and tend to apparently have better predicted value. So, the commentary which was around genetically altered models was more questionable I would say a few years ago. Now there is a great focus on them, there is actually some resurgence in the creation of the model by our clients, they tend to be multi-genetic so the are much more complex. And I think we are seeing now just slight rationalization of the portfolios and we are seeing strength in different geographic locales which also gives us the confidence to recognize the fact that these models are deemed to be important discovery tools for our clients.

Okay, great. And Tom, you commented that you saw less than 5% of your customer base as being at risk. I was just hoping if you could provide a little more detail in terms of what you are defining as an at-risk client.

Doug, we took a look at approximately 250 of our clients that we felt fell into that category of smaller companies, biotechs, etcetera. And actually in conjunction with our own available data, as well as Standard & Poor's, basically we looked at those that we thought had capitalization with appropriate cash on hand and things like that to essentially winnow down the large number into companies that we felt would probably be more at risk in terms of continuing relationship for sales. Companies that may cut back on sales because they are looking to stretch out cash flow from 12 months to 2 years or possibly companies based on their size that may not exist in business for that much longer.

Okay. Yes, that’s helpful. I will hop out for now. Thank you very much for taking question.

Thanks Doug.

And next we go to line of Eric Coldwell with Robert W. Baird. Please go ahead.

Thank you. First question relates to the company's plans with clinical pharmacology moving ahead. Clearly, Edinburgh has been a challenge for sometime, but we understood Northwest Kinetics was actually doing quite well. Should we read into this that you plan to keep the Northwest Kinetics business and would you have future plans to expand Phase I, if you find a site that you are more comfortable with?

Yeah Eric, this is a very disparate operation. At one point, they were both performing extremely well and the regulatory environment in the UK was challenging and remained challenging for us. In the early days we also had some currency arbitrage pressures. And I would say, looking at not just our location but the competitive locations, I think everybody has the same situation. So, it's just not a viable business strategy for us continue the Scottish facility going forward. Northwest Kinetics, we have been very pleased with the progression and development of that site. It was a new facility when we bought it, reasonably large facility amongst the Phase I players. We filled it up nicely with very high value studies and a loyal and repetitive customer base; some in the West Coast, but not entirely, it's a worldwide base as well. We still believe in the strategic benefit of having Phase 1. We are experiencing some pull through effect from preclinical to Phase I. In fact, some of that is with some of our larger clients. So, yes, if and as we find Phase I facilities that are of extremely high quality and high signs and are in the right geographic locale. And we think that they yet or they can complement our current preclinical portfolio, then we would be likely to do add something in. We certainly wouldn’t be reluctant also to add something off shore along the same line.

Thanks. Shifting gears, research models, you had a fairly noticeable price increase in your US catalog for models this year. I suspect that Europe was less and Japan was flattish in terms of pricing. Could we get a weighted global average for your expectations of research model pricing contribution in 2009?

That's probably 3% to 4% and as you say U.S. was always historically and this year stronger, Europe less so and Japan price increases have historically been on more of a periodic basis although not necessarily as a case this year. So, across the worldwide RMS global business we are probably seeing 3% to 4%.

Great. Last question relates to in vitro, continues to put up a great growth rate and be a driver for performance in the RMS segment. We felt we understood from a recent conference or presentation that you made though that the growth rate has flowed to the high-teens down from the low to mid-20s. Could you just update us on what the growth rate was in the fourth quarter and what the outlook is for 2009?

: Well it was in the high teens, we don’t consider that any sort of meaningful slowdown, it’s increasingly off of a higher base. It’s a very strong franchise, we are clearly the market leader. We continue to take share and continue to convert clients from our historical technology over to the PTS technology, and also the up tick in the disposables or the cartridges is increasing nicely. So, we continue to be very optimistic about that product line and going forward both in terms of making a meaningful contribution to sales growth as well as margin contribution.

So, we would be looking for a mid teens to high teens growth in 2009 is that still in the target?

Yes, I think we anticipate similar growth rates to what we saw in the back-half of this year.

Great, thanks very much.

And next we will go to line of Dave Windley with Jefferies & Company. Please go ahead. Dave Windley - Jefferies & Company: Hi, thanks for taking the questions. Jim, are you seeing a noticeable difference in demand levels for specially toxicology services versus general toxicology, either you answer it that way or in terms of your ability to maintain utilization levels in the respective pieces?

Yes we have seen a slowdown pretty much across the Board for the last few quarters. I would say that we are seeing strengthening now in terms of inquiry levels and demand again across the portfolio. So, we have a strong and unique portfolio for which clients seek us out both because of the geography or the specialty nature or indeed a fill-in for general toxin. I don’t think that trend has continued. I think the new facilities will be very beneficial to us. Places like Montreal which has significantly high compilation of specialty services continue to be in strong demand going forward. So, I think as the market invigorates, we will continue to see increased demand across all of what we do. Dave Windley - Jefferies & Company: Okay, and Eric touched on Edinburgh Phase I a little bit, was there I think the longer term thought process there and dating back to the prior owner was the opportunity to pull clients through talks in the Edinburgh area and into Phase I close by. What factors I guess caused that not to pan out?

I mean that was certainly the case early on, I think it was in large measure the nature of the client base that impacted that, the fact that clients that we had previously were doing business with us and perhaps other people in the states and elsewhere. Even at a lighter volume, we still did see some pull through but not as much as we had seen in previous years. So, it's really a function of demand, client mix, availability of business from the US that really impacted kind of the basis of the bargain at that location and our ability to be able to use it as strategically as we have been in our Northwest Kinetics site. Dave Windley - Jefferies & Company: Okay. And Tom, on tax rate, I think you mentioned that, the lack of an R&D tax credit in Canada is a factor there and I also understand something about your FX impact as it relates to Montreal having an impact on the tax rate. I didn’t quite understand that.

No, the primary impact, Dave, is the not lack but slightly reduced R&D credit in Canada versus last year, the same to a smaller extent in Edinburgh as well. And in Canada, it's because we are seeing more clients profess a desire to be billed in Canada and capture some of those credits themselves. The other thing that’s a little bit at play is just our earnings mix will change a little bit more favorable to the US which of course we have a higher tax rate in the U.S. Dave Windley - Jefferies & Company: Okay, thank you. I will drop out, thanks.

Next we will go to the line of Ricky Goldwasser with UBS, please go ahead.

Hi, good morning. I know you said that the guidance assumes potential consolidation. Can you just be more specific if you are factoring in what’s already was announced or also potential additional deals. And then assuming that Pfizer Wyeth closes in the third quarter, would the impact be greater than 2010? And then lastly what would be the EPS impact if there is no pick up in the second half of the year and is that factored to low end of guidance range, and if not what is the sensitivity on the EPS?

Our guidance does really anticipate the consolidation through mergers that have at least been announced and identifies and maybe more of course, but the ones that are publicly teed out. We typically always in our RMS operating plan assume because it's been the case over the last few years that there will be some merger and we have an operating margin contingency to protect us against that. And of course, we started the year with that as well this year. So guidance does anticipate that there will be the consolidations at least that we know of. We studied our current volume of business with those clients carefully and tried to prognosticate what the impact would be from the consolidation. It's always a little bit difficult to call it, because every single one of them historically has been different, but we would expect by and large some short-term slowdown in purchases across all of our products; research models as well as pre-clinical, by one or both of the combined entities, usually one, and a significant pickup in service demand into next year. So certainly, we anticipate both of these deals will be done sometime in '09, last half of the question?

Last half of the question, I think was about sensitivity to the second half of the year Ricky?

Yeah.

And I wouldn't want to be too specific on the answer, but let me try to answer it this way. We set a wider range of EPS in part, because of some of the uncertainty that exists out there. So I think our range itself suggests some level of uncertainty in terms of the recovery, the timing, the liquidity and things like that. Clearly, if we don’t see a recovery as we progress through the year, we will have to continue to reassess the structure of the company and how we are organized and our particular infrastructure and take appropriate actions. But at this time as we said, we are anticipating a stronger second half of the year and will have to, as the year plays out, obviously get more visibility and decide if we are taking the appropriate steps in the company. Anything else?

So just to clarify, the 230 still assumed to pickup in the second half, or assumes a partial pick up?

Well, it's like I said really, we have a wide EPS range anticipating the volatility in the marketplace and the visibility that we have, it’s not as easy to predict exactly what will happen as we have had historically. So I think, we have talked about pharmaceutical mergers, which was the first part of your question. Obviously that could play into our numbers, the timing, the pace of the recovery could play into our numbers. That's primarily the reason for the wider range, we could experience some disruptions in our costs, while I don't expect commodity prices to trend upward dramatically in the near-term. They are always unpredictable, so the range doesn’t necessarily cover or encompass every single outcome nor is it intended to be necessarily. If nothing better happens or nothing worse happens, it's sort of our best range for where we think things will be at this time giving a little bit more wider breadth to that.

Okay, thank you.

Thank you, Ricky.

And next we’ll go to the line of Randall Stanicky with Goldman Sachs. Please go ahead.

Hi, great. Thanks, just a couple of questions. Tom, in terms of the PCS margin, I think you had talked and you gave a lot of detail in the disclosure. Where do you see that margin hitting from a low perspective? You talked about it being down from the 18.2%, I think meaningfully lower, but I guess where does that go to and then how do we think about when that starts to ramp back up?

Well, we didn't say exactly what we thought it would be in Q1, so by default I won't be too specific on that other than to say, we will come down from Q4, and as Jim said, we will come down meaningfully. Some of the reasons for that are obviously the headwinds in terms of sales; we mentioned that sales would be down sequentially that puts some pressure on the number. While we are taking costs actions, we are taking those literally as we speak, so this is almost the middle of February, so it will have some impact on Q1, but obviously is going to play back with our price reductions. And we are opening up our Sherbrooke facility a little bit later, but still we are opening that up during the first quarter; we brought on our Shanghai facility during the fourth quarter. So we are seeing some increased in costs as well because of those. So Q1 should be the low point for the year, and as Jim said, demand seems to firming up a little bit. Hopefully we will start to see a slight sequential pickup as we move through the year, and then a large recovery in the back half of the year. The cost benefits will have a larger impact obviously in Q2, Q3 and Q4, so I think Q1 will be the low point and then we should pick up from there, Randall.

Okay, how much of the cost benefit, the $20 million I think you talked about this year, how much of that falls in PCS versus RMS?

Yeah we didn't say, but certainly based on the headcount reductions, which Jim mentioned primarily with PCS, the vast majority of that would be PCS.

Okay

Over 75% just as a watermark.

Okay, and then my last question. I want to go back to the utilization theme. As you think about, I guess first what is the utilization? And then the other part of that is, as you think about ramping that utilization back up, how much of that is pulling forward business that you currently have booked. In other words, moving ahead with projects and avoiding some of the slippage versus the need to go out and bring new business into PCS.

Well, of course the closure of Arkansas should help our utilization, and we are obviously working with those clients, there will be a ramp down of the facility itself as we complete studies and things like that. Our utilization is not at our ideal level right now; obviously it's not at 50% or however either. So it's really somewhat less than what we would like it to be, but not horrific. And one of the things that we didn’t express is, while we are taking a number of actions, we are still trying to preserve a lot of the key talent that we have and infrastructure that we have, so that we don't put ourselves in a position where recovery starts to occur in the second and third quarter, and was actually cut deep. So I think we have taken appropriate actions, but we are still maintaining quite a resident level of expertise, so that we can continue to do that work in a meaningful way as it comes back. So, I think it’s a combination of those factors Randall, managing our capacity aggressively and that's really one of the keys in terms of driving the margin backup.

Yeah. I guess the question is, is there a way to place, how much importance does that bringing in new business, in other words, new contracts in PCS versus the slippage issue, which I assume a lot better visibility around mid-to-late March?

We are continuously bringing new business, Randall, all the time. So it is indeed important not just to meliorate the slippage, but just to fill capacity and have a better, have larger role of satisfying our client, so we have a lot of repeat business and lot of loyal clients of large pharma and biotech in multiple locales. We certainly are hopeful that the slippage is going to continue to dissipate as they really have to get back to developing new compounds by the same token, should be given in geographic locale of our two larger sort of rebuild facilities in the East and West coast that the huge number of clients out there that are locals that we are actively talking to and working with the service. We just got a new dedicated resource agreement with one of them in our Massachusetts facility for long-term arrangement and we think there more of those. So certainly it's a combination of servicing our current clients consistently and brining on new ones as well.

That's great. Thanks, guys.

: Next we go to the line of Tycho Peterson with JP Morgan. Please go ahead. :

Hey, good morning. I wanted to ask on, you didn't talk a lot about the academic business, but Jim we are in an environment here where things are potentially getting better on the academic front. Can you just comment a little bit as to whether you are seeing any pick up in demand there from your academic collaborators?

Yeah. I mean it's a little early to see any flow through from the anticipated increase in the NIH, so at this point, we have I'd say, for the last three years focused aggressively in terms of how we structure our sales force, have greater coverage to the academic marketplace. I am talking principally in the U.S. of course. Our sales have been up, were up in '08 in a meaningful fashion. We would anticipate certainly that that will continue A, because we are focusing on it, B, because our price premium is less dramatic versus the competition than it was historically and a lot of the academics didn't buy from us, because it was a perception that we were too expensive, which is no longer the case. There is no question, I was talking to one of our directors who is a senior policy person on some of these issues in Washington, who was saying that we are beginning to see in the back half of this year sort of more meaningful flow through from the government directly into the academic and university based marketplaces. So we got to see some pickup there. Also, we do a fair amount of government work as you know. Obviously a lot of that is contractually committed over the long-term, but we would expect to see more RMPs coming out as well and given our strong reputation in that genre, I think we will be able to increase sales there. So, I would imagine overtime as our academic sales as a percentage of total sales will continue to increase.

Okay that’s helpful. On RMS, I appreciate the color you provided on price, can you give us a sense as to what you are seeing in terms of share? I felt like coming out of your RMS stake last year that you are still talking about kind of 3% or so from competitive share wins. Can you just kind of the competitive dynamic right now?

That sounds a bit high to me. We certainly have been taking some share from our primary competitor over the last, basically four years now and I would say maybe a percentish a year. Again that has to do with a compression of our price points and I think the fact that we are providing a higher service level combined with our geographic reach. So those structural strengths that we have not changed at all and notwithstanding the overall economic environment, I think we would anticipate that we will be able to continue to take share from that competitor and perhaps others. Again our price points versus all of our competitors now is not nearly as dramatic as it used to be and as you see there are some product lines where our prices are the same and few where they are actually less. So we are in a very strong competitive position also because of the range of services that we provide. If you go to the RMS side, our service component is probably one-third of total RMS sales and the clients who buy research models from us increasingly want us to provide services for them or to them in some cases without some even shipping to the client, but as maintaining them and providing the services to them. So whether it's GEMS or our laboratory services or our growing discovery services business, we think we got to be able to not only pick up share but be able get more of the outsourced business from our clients than our competitors will be able to.

Okay, that’s helpful And just a last one on China, and I understand the timelines have slipped a little bit. But can you give us a sense of to what you are assuming there for this coming year in terms of that business?

We think we still have a strong competitive position in being the fourth large international player who is going to have GLP quality space.Our location is very fortuitous being in close proximity to major clients. Because of the delay, we are just sort of finishing the validation of that site and while we have a large number of clients who have been interested in utilizing this site, they are not going to make major commitments. We are doing non-GLP work. We are not going to make major commitments until this space is fully validated. So we anticipate we should be getting some commitments from them in the back half of this quarter, maybe the beginning of next quarter. So it continues to be online in terms of fulfilling customers' needs and demands, we are just a quarter behind.

Okay thank you very much.

(Operator Instructions) And we will go to line of Isaac Ro from Leerink Swann. Please go ahead

Hi guys thanks for taking my question. I was just wondering if you guys have had conversations with your major pharma customer and potentially seeing cases where you are actually getting maybe materially higher levels of outsourcing levels for fiscal '09 relative to what you would have previously expected but maybe at the same time actually seeing the dollar levels lower than you might have expected. Just trying to wonder how you are comparing the low level of outsourcing versus the dollars that are flowing through to you?

That’s an interesting question. I think that, I don’t think the levels are dramatically higher I mean the levels, if anything would have solved somewhat and beginning to reinvigorate. Yes, when they do invigorate, there is probably some impact across the whole spectrum that price affected because as long as there is more than sufficient capacity, price will be of a greater issue. I will tell you that in a lot of our conversations where price is still important, that science and service are more important. And so we are really focusing on execution and we are really focusing on providing value, as opposed to pricing benefits. So, we are trying to sell our clients a larger range of product services which cut across both of our businesses. We are having some success in doing that and while that may end up with more beneficial price plan, it ends up with greater volume to us. So I think the volumes will increase as we said in the back half of the year. The pricing issue or pressures will continue to persist, but we should get more leverage with the increased volume.

Well thank very much.

And we will go to our last question with Greg Bolan with Wachovia Capital, please go ahead.

Good morning and thanks for taking the question and just one from me here. Jim when you think about your pharma clients' willingness to strategically outsource preclinical work. How much do you think is core to pharma and how much do you believe is non-core. I guess I am just trying to get a sense as to how much these sponsors are willing to outsource? I know this will kind of require a very anecdotal answer. But is it everything or is it capped at some level?

We ask that question to every client. The answers range as you would imagine, to nothing core to a great deal of it is core. But I would say on balance, the clients have a previous position to keep some of the very short term studies in house to gain greater knowledge about the molecule and see the very early results. And they have the scale and the scientific stats will accommodate that. When we get into longer-term studies, specifically more of the complex studies and lot of specialty work, there is very little interest in doing it. So we have to say that much of it is available to be outsourced over time. And that very little is essentially core and I would also say that every quarter and certainly every year that we have the conversations with clients, less than last year's quarter, and I think that’s from operational financial necessity on their part, but they really have to make some decisions on what they must do internally and since they have greater confidence in our ability and others ability to do the work with that, they are letting go of those things. So as we've said historically, we certainly believe that 50% of this work will be outsourced, probably 75% will be outsourced or greater. And that provides this very large market opportunity for us when the demand begins to invigorate again.

That’s helpful thank you.

And I am showing no questions in queue. I will turn this call back over to you for any closing remarks.

Thank you for joining us this morning. We look forward to speaking with you in the next week and seeing you at various conferences in March. This concludes the conference call. Thank you.