Ladies and gentlemen, thank you for standing by and welcome to the Charles River Laboratories Second Quarter 2012 Earnings Call and Meeting with Management. At this time, all participants are in a listen-only mode. Later, we will conduct the question-and-answer session. Instructions will be given to you at that time. (Operator Instructions) And as a reminder, today’s conference call is being recorded. I’d now like to turn the conference over to Susan Hardy, Corporate Vice President of Investor Relations. Please go ahead.

Thank you. Good morning and welcome to Charles River Laboratories’ Second Quarter 2012 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 second quarter results and review guidance for 2012. Following their presentations, we will respond to questions. At approximately 9:30 when the earnings portion of the conference call has concluded, we will continue with presentations by other senior managers. The webcast will continue through the end of these presentations, which should be at approximately 12 noon. There are two slide decks associated with today’s presentation, which are posted on the Investor Relations section of our website at ir.criver.com. A taped replay of today’s presentations will be available beginning at 2 PM 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 253408. The replay will be available through August 22nd. You may also access an archived version of the webcast on our Investor Relations website. I'd 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 on our annual report on Form 10-K, which was filed on February 27, 2012, as well as other filings we make with the Securities and Exchange Commission. During this call, we will be primarily discussing results from continuing operations and non-GAAP financial measures. 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 Financial Relations section of our website through the Financial Reconciliations link. Now I'll turn this over to Jim Foster.

Good morning. I’d like to begin by providing a summary of our second quarter results before providing commentary on our business prospects. We reported sales of $285 million in the second quarter of 2012, due primarily to the negative effect of foreign exchange. Reported sales were approximately 1% lower than the second quarter of ’11. Strong dollar impacted sales by 3%, so on a constant currency basis, the sales increase was approximately 2%. PCS business delivered a very good performance in the second quarter with sales increasing 3% over the prior-year on a constant currency basis. We were particularly pleased to see a sequential improvement in PCS sales, up $8.3 million or 8% over the first quarter. The increase was driven primarily by the improvement in In-Life sales, both non-GLP and GLP services and also by the BPS business, which you may recall had a weak first quarter. The operating margin increased 20 basis points from the second quarter of 2011 and improved 170 basis points sequentially to 19.4%. The improvement was driven by the PCS business. Although declining 90 basis points year-over-year sequentially, the PCS margin increased by 420 basis points to 13.1% primarily due to higher sales. The RMS margin benefited from an insurance payment we received related to the 2011 earth quake in Japan and offset a decline due primarily to lower sales of large models. As a result, the RMS margin was 32.8%, 20 basis points over the prior-year and just 50 basis points below the outstanding first quarter performance. Earnings per diluted share increased by 7.1% in the second quarter of 2012 to $0.75 per share from $0.70 in the second quarter of ’11. The EPS increase was driven primarily by the lower number of shares outstanding. We continue to return value to shareholders in…

Thank you, Jim, and good morning. Before I recap our financial performance, let me remind you that I'll be speaking primarily to non-GAAP results from continuing operations. A reconciliation of non-GAAP items can be found in our press release and on our website. Second quarter results were quite favorable, highlighted by a 19.4% operating margin and EPS of $0.75 as well as the rebound in PCS sales to $111 million. This was particularly impressive in light of the increasingly negative impact from foreign exchange, which reduced reported sales by approximately $9 million or 3.1% and EPS by nearly $0.03 when compared to the second quarter of last year. Sequentially, reported sales declined by slightly over $1 million or 0.4%, but would have been unchanged excluding the impact of foreign exchange. We are pleased with the meaningful improvement in the consolidated operating margin, which increased 170 basis points sequentially and the $0.05 increase in EPS. Higher operating income versus the first quarter contributed $0.07 to EPS driven by the improvement in PCS sales and operating margin as well as lower unallocated corporate costs. In aggregate, items below the operating line reduced EPS by approximately $0.02, driven primarily by a $2 million unfavorable shift in other income. I will now walk you through these drivers in more detail. PCS contributed nearly $0.08 to the sequential EPS improvement as the segment sales and operating margin increased significantly as a result of improved demand across all areas, non-GLP Discovery Services, GLP safety assessment, and biopharmaceutical services. The decline in RMS sales and operating income offset the majority of the PCS improvement due primarily to lower sales volume for Research Models, particularly in Europe and Japan coupled with a negative impact of foreign exchange. Operating income for the RMS segment included an insurance settlement related…

We are happy to take your questions now.

(Operator Instructions) And our first question is from Ross Muken with ISI Group. Your line is open.

Hi, good morning guys. So, as we think about sort of the assumption on PCS for the rest of the year, I mean, I realize some of the visibility is limited. I mean, as you feel like the trend just happened in terms of the roll in of the new strategic partner as well as maybe some of the moving parts on the big-pharma and mid-pharma side, I mean where do you feel like you were most surprised, it seems like positively relatively to how kind of the second quarter or the entire sort of first half has played out in that business?

Where were we most surprised, is that what you said?

Yeah.

I am not sure we were surprised. We were certainly pleased with the results. I think we’re executing quite well. I think we’re doing extremely well competitively. The strategic deal that we did we worked several years to get that and so we’re now seeing the benefit of that. So, the strength that we’ve seen in the first half of the year, particularly in the second quarter with preclinical, I think has been a long time coming. I think it’s a combination of our competitive strength, our flexibility in the marketplace and how we’re utilizing our capacity. Given what's going on for the last four years, given the lack of visibility, the inherent volatility in the business model, really difficult for us to just assume that things will continue to improve going forward and that we’ll continue to build share sort of at the rate that we have in the second quarter, we would obviously be delighted for that to happen. So, I think we’re taking a very an appropriately realistic look at the business. We have also had sort of a second quarter decline for the last few years just generally. People seem to get out of the starting gates faster and crank out off into the second quarter. We see some seasonality in the third and fourth quarter. So, again I think we’ve defined the year as we see it based upon our historical experiences and kind of real life activity.

Thanks. I guess on the cost side, I mean you guys have been very strong in terms of pulling extraneous costs out of the business. You’ve gotten some pretty good leverage even when top-line wasn’t sort of where it needed to be. I guess, in the context of and I don’t want to steal too much thunder from later, but do you feel like the margin progression, the path that you’re on, there’s still quite a bit of headroom there in terms of rationalizing the SG&A line, and do you feel like more of the benefit going forward as we think about margin expansion here is probably going to come more from the gross line?

Yes, yes. We continue to have a process improvement program internally. We did mention at the outside of the year that, through that program we expect it to realize $25 million in savings during 2012 which we’re on track to do. And given these competitive environment that we continue to find ourselves in process improvements for our efficiency and quality continue to be a high-priority within the company. So, I continue to believe that we’ll do that. We’re focused a lot more on a preclinical environment historically. We’re focusing aggressively as well in the research model market and services segment as well at the current time. We’ll continue to leverage SG&A as best we can. Some of those expenses were a little bit lower this quarter as we mentioned due to some of our health related benefits which were a little bit hard to predict. I do think that those will pick-up a little bit. So, I think looking forward as you asked, I think we’ll probably find a little bit more leverage in the operating margins and probably a little bit less of that will come from the SG&A, that’s our target and we’re going to continue to work hard at that.

Great. Thanks Tom.

Thank you. David Windley - Jefferies & Company, Inc., Research Division: Okay, thanks. Dave Windley at Jefferies. I have a three-parter on the strategic deal. So first, can you call out how much it really improved sequentially on revenue, how much did it contribute sequentially in revenue? From your comments -- the second part of it, from your comments on the protocol transfers affecting the margin, was it actually dilutive to margin in PCS in the second quarter? And then third, in your bullets in some of the slides you talked about this moving toward 5% of revenue in 2013. Jim, I’ve also heard you talk about it trending toward kind of $100 million run rate which would I think be quite a bit higher than 5% of revenue in 2013, and so I wanted to get clarification on what the top-end looks like for the strategic deals; so sequential revenue, margin and then top-end.

Well I think we talked about the client increasing to 5% of sales, right? going from 2.5%, there. This particular client historically has been 2.5% so they would increase to 5%, so essentially doubling to put the upper-end range on where we are. We do hope ultimately they will do more than that with the client but as defined in the terms of the agreement that’s kind of where we expect it to be, but we’re looking at and have been successful in some areas of actually pulling in other ancillary business not contemplated within a deal in with that client. We didn’t say specifically what we drew sequentially in from the strategic partnership, but sales are up. I don’t think at this particular point in time we want to break that out quarter-to-quarter, but the sales have improved somewhat. And given the number of facilities that we are using, some facilities actually the margin has increased and other facilities where there is a greater transfer of assays, we have actually seen some expense headwinds which was I think the comment that Jim had made a little earlier.

Okay, I was at this client for most of the day, a couple of days ago. And there’s an enormous amount of additional opportunity for us to work with them beyond this particular deal and we really have gotten to the point that the conversation was such that, it wasn’t the client and a bunch of Charles River people, it was really -- it felt like we were the client which is definitely our goal here. So, I certainly think $100 million is in our foreseeable future maybe 2013 was a little bit early, just to clarify that, maybe not, but perhaps, but where we continue to talk about additional services that we can provide them as they continue to rationalize their cost structure and I do think as we said before, this is a really good template for other deals and other relationships and other conversations we’re going to have with clients. All of the big drug companies are going to have to rationalize their infrastructures faster and as we continue to demonstrate our capability to have multiple sites working in units and great IT interface quality of the science and data and as they begin to see us the same I think it’s a very powerful transformation that we’re actually in the midst of right now. David Windley - Jefferies & Company, Inc., Research Division: Okay, and if I could follow-up on a clarification on the guidance if we do the math, the second half Tom as you kind of talked about, second half is pretty substantially down on a kind of run rate basis from what you’ve done in the first half. And if I -- I want to make sure I interpreted your comments, unless things get really bad, you’re kind of taking the bottom-end of the range off the table, but the factors that could drive sequentially the earnings down would be, the healthcare cost were a big benefit about $2 million swing in the second quarter. Tax rate was a little low. The insurance settlement was a couple of pennies, its positive in the second quarter, those kind of factors. Is that the right interpretation and did I leave anything else? Thanks.

Pretty much Dave, that’s a good summary. We have, as Jim said earlier the research model business is down in the third quarter due to seasonality both in the top-line and the margin. As we said we think that the preclinical business itself on a sales basis will be reasonably stable. We did say that it would be moderately lower, but still higher than Q1 – meaningfully higher than Q1 and a little bit lower than the Q2 numbers. So, I think it’s fairly consistent with what we have seen in the past years with the exception of a couple of the one-off that you actually referred to.

Hi. This is Garen Sarafian, Citigroup. Well, first congratulations on that PCS the uptick after some numerous quarters of declines. I was just wondering, how … (Multiple Speakers)

All right, sure. Garen Sarafian, Citigroup. On PCS, how has the recent changes in the toxicology competitive landscape contribute to the results, is it just -- its coincidence or if you could just, you can qualitatively speak to the supply consolidations, rationalizations in the sector impacting your results, and how typically -- how long do they typically last, if it’s a tailwind?

Our competitive situation is really strong in preclinical. We did a lot of our internal rationalization of space and staff earlier than some of our competition. We spend a lot of time on IT interface and we’re really listening to the clients and not trying to drive this -- sort of this is the way we work and you need to work with us in this fashion. And we’re seeing share gains with multiple competitors, large and small. And so -- and a lot of that has to do with the fact that we’ve been working really hard with what we call our mid-tier clients kind of small pharma and value tech clients to make sure they understand that. And not only we not to large came to face with them, but we can do that well and that we’re structured to do that efficiently. So as we’ve seen an uptick in our mid-tier clients we have several clients that we have all of the share; we have increasing share with others. We have seen share gains with some clients and in competitive bid processes which we are in constantly with large and small competitors we’re winning sort of an undue number of those bids versus what happened historically. So, I don’t know, it’s a lot of factors where I think we really figured out how to put our best foot forward. In the final analysis putting price aside which is hard to do but as we’re able to compete competitively it continues to be all about the science, and all about the interface and all about the responsiveness and turnaround time and I think we’re actually continuing to do that better, and the conversation for instance that we had with this large client that we’re working with, we have this big contract with. We’re serving this contract for multiple child service sites and what this, and they said the other day that they’re so pleased with the fact that the molecule goes in one place and they get the answer back and they have no sense that they’re dealing with multiple sites and that’s actually been our goal in preclinical for years. I do think that we have achieved that in large measure and we’re continuing to enhance driver efficiency that we can do that even better going forward.

And you mentioned price, and when does pricing -- when capacity becomes more rationalized then there’s more leverage for stable and perhaps even increasing pricing. How has pricing trended in toxicology in the last 6 to 12 months then?

I think pricing is relatively stable. It’s a big issue with everyone. And our capacity is feeling, as I said in my prepared remarks some of our sites are actually at what we call our full capacity utilization levels, optimal capacity utilization levels. I think that’s going to be -- continued to be helpful. We constantly test pricing as we did on things. But we’re not assuming that we’re going to have it, so we just sat down and did our three year plan and we have very little price in there, we have some but we have very little price. The assumption is that we’re going to have to drive efficiency which we are in the combination of efficiency and volumes I think it is conspiring to, help improve the operating margins.

Thank you.

Sure.

Hi, thanks. This is Tim Evans, Wells Fargo. Could you talk about, a little bit about your IT infrastructure; where you’re in that build out, where you have left to go and how that might be contributing to the, I guess, improved win rate that you were just talking about?

Sure. We went through an ERP process a few years ago, and we saw the benefits in our preclinical business almost immediately. We were able to get very refined data and particularly on the cost side to enhance our ability to bid successfully. So, I think, some of the share that we’re getting frankly, particularly with these competitive pricing scenarios is based on really understanding our cost well and knowing how far we can go. So, that’s improving dramatically. We have to still roll out our ERP with, in our European locations, in RMS we are in the final stages of developing a plan to do that, and we understand what -- where the benefits came and how to rollout certain aspects of that. So, that’s in the drawing board. In terms of our IT interface with our preclinical clients we have very, very specific needs. In particular, they want to get online and see the data. They want to know that it’s confidential, they want to know that its relatively real time and they don’t want you to necessarily tell they want to see it or discuss it with you, and the space yield that we did last November and in others that we’re beginning to work on, we’re putting together I don’t want to call them unique, but sort of QUOSA unique structural relationships with the clients from an IT point of view. So, they’ll have to be somewhat customized, the point being that they want to see the reports and not recognize them as coming from Charles River. So the best compliment we got the other day was the client saying, we’re getting all these reports from you and it feels exactly like its coming from our internal operations. So, we’ll continue to do that, we’ll continue to refine our interface with them and we’ll continue to build out our ERP capabilities.

Great. And then just one clarification on the strength that you’re seeing in regulated safety assessment; how broad is that from a client perspective and from maybe – are you seeing in both, small clients, large clients et cetera. And also can you just clarify is it up both year-over-year and sequentially?

Yeah of both, we have a really good composite right now. So, we’re seeing particular strength in the small clients. The problem with the big clients is, you have very, very big wins and then you have major consolidations with some of your customers that can kind of outset that but for the companies that aren’t so dismantling themselves we’re seeing some very big wins there as well. So, yeah its -- the studies are still shorter than we would like them or that they have been historically but having said that we’re seeing more specialty work right now. We’re seeing the studies elongate, so the better we’re seeing more complexity in this studies and we’re seeing higher quality proposals from the clients coming in asking us to bid. So, this is all sort of working together to improve the mix a little bit and to improve the overall volume. Obviously the sequential pop was more significant.

Good morning. This is Doug Schenkel. Can you hear me now?

I think it’s on there -- I can hear you but it’s not on.

It’s not on. All right, I’ll talk louder.

Okay.

Here we go. Doug Schenkel from Cowen. Thanks for taking the questions and thanks for hosting this, this morning. First, really a question for I think Tom; a very nice improvement in PCS margin in the quarter. It doesn’t sound like the strategic partnership had a meaningful impact on operating margin, good or bad relative to what you reported in the quarter. At least if I am understanding things correctly, if that’s the case, would you be willing to provide any color on how much of the margin improvement is attributable to utilization versus product mix versus any other notable contributors FX price again it seemed like there was a very nice improvement relative to Q1.

Yeah, I think the largest contribution to the margin improvement in PCS is obviously volume which relates to capacity of utilization of course. I think the strategic partnership is contributing. It’s contributing at or above where all of our preclinical businesses are. So we are seeing some headwinds in at least one location as we ramp up assays, but a couple of the other locations that are more managed have been doing better, and of course some of that work is actually on the RMS, so we’re seeing some benefits in the RMS from the strategic partnership as well. So, I think the key driver as I said and you sort of referred to is really the capacity utilization.

Okay, thanks for that. And then, I may be jumping the gun on Foster’s presentation for later this morning, but I guess, I’ll ask the question anyway. Any changes in how you’re thinking about the total addressable market opportunity and then In Vitro you have a pending launch of the automated MCS, it’ll just be interesting to hear how things are building into the second half, any backlog details that you’ll be willing to share and anything that you might be willing to share in terms of just how things are going geography by geography?

I am not sure exactly what you’re getting at. From an addressable market point of view as we continue to enhance these products and particularly as we move into the central average we’ve increased the market size.

Yeah, that’s where I am getting at; it’s just how has that evolved over the last few quarters?

And we’re taking share as we convert our clients from our competitions technology. It’s still early days there, so that’s actually quite positive as our technology improves and we get deeper with our clients. We’re quite confident we’re going to be able to continue to grow those business at sort of 10 percent-ish top-line run rate. We’ve got very, very attractive operating margins in that business as well and we’ve gotten very efficient in terms of our ability to both manufacture the devices and price them, and our approach has basis the price is actually higher for the client, but their overall labor component internally will drop in the speed at which they get the answer is so much more profound, that they’re happy to do that. So, we feel we’re going to be able to continue to convert the market over the next few years. And I am sure we’ll have new products coming out over that timeframe as well.

Okay. Thank you.

Sure. Tycho Peterson - JP Morgan Chase & Co, Research Division: Hi, good morning. It’s Tycho Peterson, JP Morgan. Just following up on your comments in the strategic deal; I am wondering if you can talk to your appetite and bandwidth for other deals and should we assume that these all would also come with some margin pressure initially as you ramp. And, as you’ve had success with the first deal, do you expect follow-on deals to start kind of piecemeal with the trial period or can you actually go and shop a larger deal from a strategic perspective to other partners?

Yeah, this deal has definitely helped us generate conversations with other clients, in fact we always indicated a couple of times now that we have actually used the big clients that we have, by the way I was with them as I said earlier this week and we talked about how nice it would be to be able to name them. So we don’t have to euphemistically keep talking around in circles here, but nevertheless, yeah I mean it helped us in a lot of ways to enhance the conversations and sort of two things are happening at once. One is that we’re establishing the fact that this sort of work can be done externally by someone like Charles River over multiple therapeutic areas without losing speed. Speed is a big issue for these clients. So, without losing speed and without in anyway sacrificing the quality of the science. At the same time, many, many other companies have drugs rolling out patent, reducing infrastructure and are going through exactly the same situation. The preclinical capacity is and can be used for regulated studies and non-regulated studies. So from a capacity point of view we definitely have the bandwidth to add additional large contracts. I think we’ve said publicly two or three of similar scale. We have much of the senior scientific staff that we need, but in specific therapeutic areas I think we’re going to need to flush that out further. So, we’re talking about adding primarily technician level people and making sure that the IT interface is specifically designed for that client. So, we’ll be able to do them faster perhaps, it really depends on the client and the geography and the mix and their therapeutic area and what their individual assays look like. For sure there’s going to be a startup here with everyone where you’re transferring the protocols and we’re making sure that we are getting them right and they’re happy with it. So, if it takes a half a year to wrap these things up I think that will be fine. There’s a modest impact on large initiative there and its modest and I think once you’re up to full strength we’ll be able to offset that. Tycho Peterson - JP Morgan Chase & Co, Research Division: Okay, and then there’s a follow-up, you touched on M&A as one of the uses in capital, I mean should we assume that [by a series] to add additional capabilities and if so whether obvious areas clients are asking about and alternatively, geographically are there areas that would be interesting, there’s obviously another Chinese asset up for sale, so just curious just to your thoughts there.

So without specifically answering that question; we’re quite active in M&A right now and I would say it’s across three of four different buckets. Yes, we’re looking geographically. We’re looking to expand some of our current service offerings with additional technical capabilities and we’re looking to expand the whole offering with some capabilities that we don’t have now and we continue to look entirely upstream. So, the whole focus is earlier as the drugs are developed, and perhaps more to come on that. Gregory Bolan - Sterne Agee & Leach Inc., Research Division: Hi, Greg Bolan from Sterne Agee. So to follow-up on the earlier question on the In Vitro business, would you characterize the addressable market as kind of going from $50 million about three or four years ago, to about $200 million today?

Yeah I think we’ve sized it about $400 million now. Gregory Bolan - Sterne Agee & Leach Inc., Research Division: And is the multi-cartridge system included in that $400 million estimate?

Yeah. Gregory Bolan - Sterne Agee & Leach Inc., Research Division: Okay. And then just thinking again about the leverage ratio now seems low, what's the thought process between accelerating debt payments versus adding more to the share repurchase program?

Yeah, well we’re comfortable with our leverage ratio at this particular point in time. As we have mentioned in the past we have a split rating with the two agencies, one is investment grade and one is a couple of notches below and for a lot of reasons the other company is pretty comfortable with that. So, we did lever up to do a lot of share repurchases last couple of years. And as we look at capital deployment going forward, we’ll continue to buy some shares which we’re doing this year. In terms of M&A Jim mentioned there is some things that we’re looking out, out there smaller type acquisitions we’ll look at the impact that, that has on our available cash and we’ll probably monitor our debt closely. We did talk about the convert briefly. We’ll be working hard to look at options for that next year which we have been doing already. So, now I think the company is pretty comfortable with our debt basically where it is. Gregory Bolan - Sterne Agee & Leach Inc., Research Division: Thanks, Tom.

Thank you. We will go to the line of Ricky Goldwasser with Morgan Stanley. Your line is open.

Thank you. Good morning.

Good morning.

Good morning.

So, Jim it sounds like your strategic partnership provides you with a lot more clarity and an insight into how your large customers are thinking about prioritizing to work. Has this change in anyway your overall view on the value given the type of work not necessarily the pricing and the margin structure for the PCS segment on a steady state perspective?

Sorry Ricky, it’s really hard to hear your question.

I can repeat it. Can you hear me better now?

A little bit.

A little bit.

Speak slowly.

The question is really around, how the strategic partnership that you now have that gives you more clarity and more insights how large customers are thinking about their work. Has this change your overall view on the value and margin structure for the PCS segment on kind of like longer term basis?

Does it change our view on what Ricky?

On the value and margin structure for PCS and it’s given the type of work that the large customer wants to do with you and not necessarily the pricing structure.

So I think you’re asking about the additional large strategic deals and the impact it will have on operating margins in that sector going forward. And so if that’s the question, with regard to the preclinical assets and margins we’re aspiring from mid to high teens these days and I think we should be in the hunt to do that. Some of the services that we actually reported in the RMS sector particularly from our Finland and North Carolina facilities have higher operating margins and we would be quite confident that we would be able to maintain those as well.

Ricky what I would add and Tycho referred to that a little bit before is, certainly the strategic partnering environment is competitive from a pricing standpoint. Some of the benefits to the company are clearly the incremental volume which allows us to fill some of our space. We do collaborate quite closely with our clients and as smart as we think we're we have found a number of different ways to actually do the work more efficiently through our clients and interacting with them. As Jim mentioned and we have already seen this in some small areas, there is incremental other work that can be gained outside the partnership and one of the things that we’re learning more closely with our partners in these particular areas is the importance of gaining consistent stream of work. So, our clients are coming to learn that better as we work more closely with them the value of providing forecast and a steady state of work that allows us to use our workforce and our space more consistently and keep running more smoothly. So I think that, while that continues to be a competitive pricing environment, I think there are a number of other factors that will allow us to believe and as Jim said our margin will stay about where it is and improve into higher levels as we move forward.

We just have time for one more question. At this point we have other periods of time for question and answer later in the program.

Thank you. We’ll go to the line of John Kreger with William Blair. Your line is open. John Kreger - William Blair & Company L.L.C., Research Division: Hi thanks very much, hopefully you can hear me. Just a follow-up question on the strategic discussions you are having. First of all the current strategic client; can you give us a sense of when you would expect that to get up to the 5% revenue range and then more broadly the other questions you’re having -- the other discussions you’re having with other strategic opportunities. Are you seeing those focused mainly on the discovery services areas or are you seeing a mix of both, regulatory and non-regulatory tox work?

So we’ll exit the year at the 5% run rate and we’re tracking nicely towards that pretty much according to schedule in terms of the protocols being transferred to us and that’s getting up to speed. So we’re quite confident and we’ve just reviewed that with them two days ago. Conversations with other clients are both sort of classic non-GLP discovery and also safety assessment. So I think we’re going to get some relationships that are one of the other or some that are both. That sort of space is being dismantled at multiple pharma companies, they’re taking vivarium space out that will impact all of that. So, on the safety assessment side, they have obviously known for years so we can do that, so that’s a little more straightforward. On the Discovery side, a lot of it has been getting the word out that we have those capabilities, particularly across multiple therapeutic areas. I think we will continue to see it in both lines of business. John Kreger - William Blair & Company L.L.C., Research Division: Great. Thanks. And Jim, one quick follow-up, it sounds like you’re getting some nice list in your capacity utilization on the PCS side. Can you give us a sense about in aggregate how much more the business would have to grow before you just started bringing on additional staff?

Additional staff? We’ve been bringing on additional staff this year, at a couple of our locations. So we’ve been running lean, appropriately lean and as new work has been coming in we’ve been adding staff to make sure that we have the capability to do that and we will continue to do so, mostly at the technician level. John Kreger - William Blair & Company L.L.C., Research Division: Great. Thanks very much.