Good morning, and welcome to the Waters Corporation Fourth Quarter Financial Results Conference Call. All participants will be able to listen only until the question-and-answer session of the conference. The conference is being recorded. If you have any objections, you may disconnect at this time. I would now like to introduce your host, Mr. Douglas Berthiaume, Chairman, President, and Chief Executive Officer of Waters Corporation. Sir, you may begin.

Thank you. Good morning and welcome to the Waters Corporation fourth quarter and full year financial results conference call. With me on today's call is John Ornell, Waters Chief Financial Officer; and Gene Cassis, the Vice President of Investor Relations. As is our normal practice, I will start with an overview of the business highlights. And then John will follow with details on our financial results and provide you with our outlook for the first quarter and full year 2008. But before we get going, I'd like John to cover the cautionary language.

During the course of this conference call, we will make various forward-looking statements regarding future events or future financial performance of the Company. In particular, we will provide guidance regarding possible future income statement results of the Company, this time for Q1 and full year 2008. I caution you that all such statements are only predictions and that actual event or results may differ materially. For a detailed discussion of some of the risks and contingencies that could cause our actual performance to differ significantly from our present expectations, see our 10-K Annual Report for the fiscal year ended December 31, 2006 in part one under the caption Business Risk Factors. We further caution you that the Company does not obligate or commit itself by providing this guidance to update predictions. We do not plan to update predictions regarding possible future income statement results except during our regularly scheduled quarterly earnings release conference calls and webcasts. The next earnings release call and webcast is currently planned for April 2008. During this call, we will be referring to certain non-GAAP financial measures, a reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measure is attached in the Company's earnings release issued this morning. In our discussions of the results of operations, we may refer to pro forma results, which exclude the impact of restructuring, purchased intangible, and retired transition charges.

Thank you, John. Well, our fourth quarter results reflect strong operating income performance and allowed us to achieve significant sales and earnings growth for the full year, and it was accompanied by very strong cash generation. However, our earnings per share growth in the fourth quarter did not materialized quite as we had anticipated as an unexpected increase in our annual tax rate among other factors adversely affected our bottom line performance. John will walk you through the details and quantify the factors that resulted in this adjustment. Now, I will review for you some of the significant trends that we saw in the fourth quarter and how set the stage for our outlook for 2008. In the quarter, we principally saw our continuation of the trends that drove our growth through the first nine months of the year. These trends included improved pharmaceutical spending, the continued expansion of our businesses in the developing world, rapid uptake of our ACQUITY UPLC, and our new MS system, and very impressive results for the TA Instruments division. Our sales growth was in line with our October outlook. However, foreign currency translation was a larger factor than we expected. In addition, our sales in Japan were weaker than anticipated due to a combination of a sluggish economic condition and a change in the testing protocols for drinking water analysis in Japan. In our opinion, however, we have maintained or even marginally expanded our market share position in Japan through this tough period. Looking at customer segments for the largest division, growth in our overall pharmaceutical sector was again driven by generic, CRO and smaller specialty firms. Sales to our largest accounts showed mixed results, with a minority of firms depressing the sales growth for the group as a whole. Overall, the year-end budget…

Thank you, Doug and good morning. Fourth quarter results delivered 13% sales growth and 17% growth in non-GAAP earnings per diluted share. Earnings per share were $0.98 this quarter compared to earnings of $0.84 last year. On a GAAP basis, our earnings were $0.96 this quarter compared to $0.78 last year, a reconciliation of our GAAP to non-GAAP earnings is included in our press release issued this morning. Sales grew by 13% this quarter with currency providing 5 percentage points of growth and acquisitions providing about 1 percentage point. Looking at corporate sales growth regionally and before foreign change effects, our results were positive in most of our major geographies, with continuation of trends that we have seen at the end of September. Sales in the U.S. continued their double digit growth and this quarter were up 12%. Sales within Europe were a bit slower in the fourth quarter and were up 5% before it covers the effects. Sales in Japan were softer than expected and were down by 12% in Q4. However, outside of Japan, Asian sales remained strong and grew by 18%. Turning to the product front, within the Waters Division, Instrument Systems grew by 3% versus a difficult base of comparison. Our service business grew by 7% and chemistry had 20% growth, which was aided by acquisitions and growth of ACQUITY after market column sales. Without acquisitions, our chemistry business grew by 11%. And our TA Instruments division had another strong quarter with sales up 19% versus prior year resulting from strong new product sales. M&A activity contributed 2% to this result as well. Now I would like to comment on non-GAAP margins and expenses, excluding adjustments noted in this morning’s press release. Gross margin came in a little lower than expected at 58.4% this quarter. Versus…

Thanks, John. I think, operator, now we can open it up for Q&A. Question and Answer

Thank you. [Operator Instructions]. Our first question comes from Quintin Lai, Robert W. Baird.

Good morning. Turning to Japan, could you point out what percent of your sales are… come from Japan right now?

Yes, about 10% of our overall sales are based in Japan.

And then, with the forecast that you are putting in, what do you expecting for Japan in 2008?

Low single digit growth and that’s based on anniversarying some of this issue, obviously, as we go through the second half of the year, probably a little bit more of a difficult comparison early on in the year. But for the full year, a few points of growth out of that region.

And then with the rest of the outlook for 2008, what are you expecting for Europe in terms of big pharma?

We are pretty much expecting a continuation of current conditions in big pharma, which is a mix of some of those showing pretty good demand, some of them being slow. But pretty much, a year that’s a continuation of large pharma dynamics that we are seeing at the end of ’07.

Great. And then I will ask one more question, then I will back get in the queue. With respect to cash deployment, last year sounded like that your number one option was to do more M&A and then number two might have been share buyback. Any change in thought with current conditions now?

Yes. I get you, I think that first and foremost we would certainly like to continue the M&A opportunities, continue to address the smaller ones that exist. We continue to peruse what’s available in the marketplace. We’ve made a few smaller acquisitions over the last few years that I think are still somewhat indicative of what we might be likely to do as we move forward. To the extent that we can’t deploy cash there, then we will continue to deploy cash on the buyback effort, and we are budgeted to do that as we look at the cash we are going to generate in 2008.

I’d answer it by saying we were reasonably aggressive buyers of our stock at its peak. To the extent that our stock were below its peak, we would be more aggressive buyers of our stock.

I guess, just for a point of clarification then, the guidance of a 103 million shares for 2008 does not assume significant share buyback?

Yes. It assumes about $200 million is deployed on buyback and it also assumes that the option exercises continue so that the net of those two is about a neutral situation. These are existing options that are in the market that we’re anticipating will be exercised.

Right.

So I think that’s probably conservative but that’s where we are starting.

Alright, thanks.

Tycho Peterson, J.P. Morgan. Tycho Peterson – J.P. Morgan: Hi, good morning. Maybe just starting off a little bit with some of your comments around the gross margins. I mean, you talked about less favorable manufacturing variances and lower than anticipated instrument production overseas. Can you give a little color as to how you are thinking about the ramp in Singapore and Ireland? I mean is there a chance you could get more aggressive over the course of the year or do you have to kind of maintain the timelines that you’ve previously laid out?

Yes, I would say that as we look at margins, we certainly do expect higher volumes of our SYNAPT product, as we continue through the year that will be favorable versus our prior year. We are looking at improving our costs on our ACQUITY products. We have some engineering cost reductions that we are working on that will improve the margins on that product by a few percentage points or more, as we go across the year. We are looking at moving additional production, a couple of detectors to our Singapore facility, really kind of mid-year. So there will be, I think, a significant increase in volume through that Singapore operation. All of that then will be offset by what we think will be a significant growth in ACQUITY that will put a little bit of downward pressure on all of these other factors that I’m describing. So, I think, in total, as we look at that we feel comfortable that for the full year, kind of that 20-basis point improvement that we target year-over-year, would appear to be conservative given our plan. Tycho Peterson – J.P. Morgan: And I guess, along the same lines, in terms of the tax rate, is there an opportunity for some additional leverage there? I mean I know you laid out what your specifications are for the year, but given the same comments in terms of the offshore ramp.

Yes, I would say, certainly Singapore is expected to provide some downside pressure on the rate. However as we look at the volume coming out of the UK, the SYNAPT product is going to offset that to some extent. I think as we look to the future though, and as we look beyond movement of just these couple of detectors and the continued success of the facility that we have in Singapore, yes, there is more opportunities to move volume over multiple years and enjoy a tax rate there that perhaps will bring our overall rate down slightly in the future. I would just say for right now I am going to be a little, I think, cautious and suggest that starting at 18% starting point is probably prudent. Tycho Peterson – J.P. Morgan: Okay. And then finally on Japan, I appreciate you kind of quantifying the size of that business, can you give us a sense as to whether you are seeing anything different competitively, specifically from Sysmex in that market and whether you are seeing any changes just in terms of the level of competition.

No, I’d say just the opposite, Tycho. I believe in all of our core applications, we’re probably seeing, on balance, a little bit less competitive in a case by case example. ACQUITY has done very, very well in Japan. And there is really no practical competitor for it. So I do believe that this is… now in any one quarter something can, can blip, but in broad terms, I am pretty satisfied that we are more than holding our own in the Japanese market. The pharmaceutical market in Japan is probably the other thing that is much weaker even than it is in other areas of the world. So I think that’s the dynamic that we’re also seeing play out in Japan a little bit more than another area. Tycho Peterson – J.P. Morgan: Okay. Thank you very much.

Ross Muken, Deutsche Bank.

Good morning, gentlemen. Can you talk a bit about sort of the trends you are seeing in mass spec. It’s obvious, given your commentary that SYNAPT continues to sort of gain transaction. I assume that’s sort of relative to market share gain versus the entire market sort of growing at that rate. Can you talk a bit about sort of that dynamic and where you are seeing most of the placement in terms of the end customer mix, and then talk about sort of on the lower end pricing trends in sort of the LCMS business, business?

Sure. I think in SYNAPT, we are seeing it pretty much where we expected in proteomics, in metabolized profiling application. We are seeing it in biopharma… kind of interestingly enough in biopharma, almost QC applications. In terms of these complicated biopharmaceutical products being better characterized upon release with the capabilities of SYNAPT. So, and that’s a relatively new application for us, I would say. So SYNAPT is very encouraging in kind of the spread although it is essentially large molecules. On the low end, our results were softer than we expected particularly in the, that core benchtop single quadrupole that has traditionally been a pharmaceutical marketplace for us. So, as pharmaceutical sales are tougher, that has had an impact on that single quadrupole marketplace. We have done very well as John noted with our new TQD benchtop triple quad instrument. As you know that aimed at more in the applied markets as opposed to that workhorse [ph] drug metabolism laboratory, where with a higher end triple quad is an area where we still don’t have the market share that we hoped to have someday.

And, relative to the CRO market which continues to be strong for you, how should we think about that sort of going forward relative to the amount of outsourcing being done in pharma? I mean in some quarters, could we see increased weakness or is it sort of a longer term trend to see maybe pharma R&D growth be a bit lower because so much of it’s being outsourced to the CROs and we're seeing the growth there. So, we should think about that sort of on a cumulative basis or are we not sort of at the point yet where we see that significant migration out of the sort of internal pharma R&D labs?

No. I think it’s an excellent point, Ross. We're clearly seeing some of it and I think you're seeing… the impact of direct outsourcing, so, where a large pharma is contracting to have the CRO do work that he used to do in-house, you're seeing much… as drug come off patent clearly, you're seeing work that was going on in an ethical pharmaceutical house, and all that business going to a generic and that generic could be in the U.S. or it could be in India. I think, what we're clearly seeing is CROs being more aggressive about adopting new technology. And it’s not totally clear to us whether that’s just a new development in the marketplace, whether it’s a new attitude, a new drive for efficiency. It perhaps signals a subtle degree of independence on the part of the CROs, where they’re driving more into that efficiency area and sponsor pharmas are perhaps given a little bit of a control there. So it definitely does kind of impact you when you say what’s big pharma doing versus what’s specialty pharmas or CROs, because the work being done is probably exactly the same work. And it may even being done for the same companies just down on a contract basis. I think, overall, the dynamic works in our favor because there are more CROs implementing new labs. So they’re not just driving more business into an existing instrument base. We’re clearly seeing that in Eastern Europe, in places like Poland and Czechoslovakia and in India that, where the generic and the CRO base is growing phenomenally fast.

And quickly, lastly, on ACQUITY, obviously the uptake there continues to be strong. Were you surprised by the sort of multi-instrument placements you were getting in sort of single sites? It seemed like you sort of highlighted that in the commentary, and I didn’t know if this was a distinct change. I thought we were seeing some of that before, but maybe the degree to which we were seeing that this quarter I guess was maybe more evident than it was previously.

I think it’s notable… particularly in light of kind of continuing weakness in some big traditional pharmaceutical accounts. So in spite of that, we’re seeing ACQUITY make more progress, and we like to kind of continue to watch this progress in the more of the QC applications, where we’ll clearly get into the QC applications later, than the very strong uptake in the R&D and front-end applications. But we think we’re really beginning to see that. That of course has been influenced by tough conditions in big pharma with these big labs where they’ve been under very tough spending controls. So one, is clearly being affected by the overall conditions. But in spite of that we’re seeing these multiple orders for ACQUITY and I think that’s a very good long-term sign.

Great. Thank you very much.

Derik deBruin, UBS.

Hi, good morning.

Good morning, Eric.

When you look at the Japanese market, I guess, could you just talk about a little more about, you saw some shift in the drinking water regulations. I know nothing about that overall end market. I just was wondering if you could give me a little bit of a background on it.

Well, Japan, specifically on the drinking water applications, Japan had very strong regulations concerning the number of samples. It began, probably in earnest about three years ago. And they continued to expand the analytical requirements and they continued to expand the number of samples that had to be run. So, labs had to keep adding capacity, not only in our gear but in a lot of analytical technologies in order to meet those requirements. And what happened last year is that the Japanese government substantially reduced the sampling requirements. And as a result, we saw a reduction in our business. We had a leading share in this marketplace, and we saw a reduction in both the consumable side of the business because of the samples as well as the instruments that were required to run it. I got to, I guess, take a little bit of the blame here. We probably should have seen this a little earlier, we knew that the slope wasn’t going to be as strong forever in these applications. But the downturn came much faster than we anticipated. So, the slope in the fourth quarter was a pretty significant one, and that’s what caught us by a little bit of a surprise.

Fair enough. When you look at your 2008 guidance, when you still think that… to put it in terms of instrument consumables and services… I guess when you look at the chemistries that are there... you still see that market… you see the chemistry business growing ten-ish percent or a little bit higher than that and how do you see instruments growing?

Yes. We think that our chemistry will continue to be strong. We think that the ramp that we’ve seen in the ACQUITY columns over the last couple of years that’s been very, very steep, will begin to impact growth, as we look at 2008. So, thinking of chemistry as a double-digit business, I don’t think is the least bit aggressive based on the trends and the history that we see there. On the service front, I think we are still looking at high single-digit growth, for the services, for the corporation and then instruments are going to modulate, depending on whether organic growth is going to be 8% or 10%. So we are looking for high single-digit growth out of the instrument business, obviously led by ACQUITY and the SYNAPT mass spec. And we have got some new offerings, likewise coming this year at both PECON [ph] and ASMS, that we think will aid that instrument growth too as we move through the back end of the year.

Great, that’s helpful. When you look at the gross margin number, about 20 basis points increase year-over-year, I guess, how much is FX being a headwind on your gross margin number and I guess, can you just give us a little bit more color in terms of what is going to be your forecast in that?

Yes, I mean FX, if you look across the year, obviously we end the year at about the rates are at today. We begin the year with FX being more of an impact if you will. So I would say early in the process you are more likely to see FX be a depressant of our overall margins by maybe 20 basis points, 30 basis points, and by the end of the year becoming closer to neutral. So, I think overall, we are looking at a slight impact of FX, should rates stay above where they are today.

Okay. Thank you.

John Groberg, Merrill Lynch.

Good morning.

Good morning.

Congratulations on an overall great 2007. Just on the Japan number you gave, John, you said minus 12%. Was that excluding currency or including? Somebody said excluding, and somebody didn’t clarify.

That was excluding currency. That was before currency impact.

Okay, so that was…

Yes, the Yen was not nearly as variable as the Euro and some other currencies. So I think the Yen, on average for the quarter 1.12, something like that, 1.11.

And then, if you look at that and Japan, I mean, would you categorize that minus 12% almost entirely due to this reduced number of required tests for water quality or are there other things going on in Japan?

The most significant effect was the water testing. We saw a little bit of a fall off in the food testing business also. So, the regulated applications for food testing and water testing are probably the two most significant factors.

It was down 8% at actual currency rates, John.

Okay. And then you mentioned… maybe to follow on that… a number of times in your call you mentioned most drivers remain intact. And that most end markets and geographies remained stable. I mean, excluding Japan, and maybe we’ve talked about, what else are you seeing out there that made you say, most, as opposed to a little bit more bullish commentary a quarter or two ago?

Sure…

And what specifically… sorry… and what specifically… it’s probably questionable, people will question that the markets that you saw in the fourth quarter of ’07, given what we’re seeing happened, kind of in the macro environment will stay as they are. So if maybe you can just address that as well.

Sure. That’s a fair question. You remember, at this time last year, probably the single biggest question that we had was how is the US going to be, because the US is clearly our largest territory, and we have had like one quarter of decent performance in the US coming out of ’06. The very clear story for us in ’07 was good strong double-digit growth in the United States. And partly in the US, it’s the fact that they’ve been under pressure in the large accounts, and we have looked to expand our business outside of those key large pharma accounts that we owned for so many years. But as we came under pressure there, we certainly have done a better job at expanding our business in smaller accounts. And we have seen that keep up throughout 2008. We’ve also continued… I think in the US, we have seen this very clearly, these systems are very clear, high productivity systems. So even in challenging economic times, we are finding in many accounts the ability to make a very strong case for investing in these high productivity systems. And that seems to be playing itself out in the US very well. If you look at our high growth areas of Asia, India, China, Korea, Taiwan, those very high double digit growth rates, we have seen no slackening of the interest, and the early demand signs from those territories as we go into 2008. As a matter of fact, in some cases we are even seeing stronger signs of growth. So, our traditional of the last couple of years, high end growth vectors are, we believe, continuing into ’08. Japan, we think the fourth quarter was a little bit of an anomaly, not a total anomaly, but the slope is not going to be as severe as we go into 2008. So you… and then, so Western Europe is the other large territory, geography. We saw a little bit of slow down versus our expectations in Europe in the fourth quarter, but it wasn’t huge. So we are looking at Europe carefully. Europe is a whole bunch of little markets rather than kind of one big one. And we are, we have leavened our expectations, but we don’t think it’s dramatically different from what we have seen in the fourth quarter. So, you add to that a healthy dollop of new products coming in and the ramp up on things like ACQUITY and SYNAPT continue to be very strong. So that leads you to an ’08 that’s kind of as John outlined it. It’s probably… it’s a little bit conservative versus what we saw on average in ’07. But the key geographies and the key customer sets are not all that different.

Okay. And just as a point of clarification, ending ’07 what was your mix of say life science and all the CROs, pharma, all those clients and more industrial or applied markets, and if you are kind of broadening out there?

If you look at the overall, we talked about our overall mix of life science sales versus industrial… John, you have it right at your fingertips.

Yes. We look at about 70% of our business in that range being broadly defined life sciences, with about 50% of that being university, government, the rest being for-profit and then 30% being really defined other. I mean there is a lot of different categories in there, as you know, that’s food and beverage, that’s environmental, that’s the pure chemical industries, the Dow, the DuPont. So there is a pretty diverse set of customers in that other 30%.

And academic and government is 15… 1-5?

Well, 15%. And that is worldwide, so there is not quite as much exposure there to the US, as you may think.

And what would that have looked like into ‘06 if you have that number, just to see if there was kind of a broadening out.

Yes, about the same, because as you know our businesses, the TA have done very, very well. A lot of the life sciences businesses have done well. A lot of the food safety applications have also done very well, so that, on average we really haven’t seen a dramatic shift in that proportion of our business over the last couple of years.

Okay.

The biggest dynamic would obviously be large pharma that has been a little bit of an anchor to our performance. But that’s been offset, as we’ve talked about by improvements in the generic CRO and Biotech areas.

Okay. And then last question, you also made a comment that the budget flush this, in the fourth quarter was maybe a little less than hoped for and maybe not so far out of your expectations, but then hoped for in this. And just, maybe, have you talked to people in the field and got a census to maybe why that was the case?

Yes, I would say we saw probably as much as we had expected in the US, it was probably a little bit softer in Europe. And I think in general, we have seen big pharma in Europe be a little more problematical than big pharma in the US. Now you know that a lot of those accounts have the same names in Western Europe as in US. But we do, I think, see where the traditional European pharmas are perhaps outsourcing into Eastern Europe and into India a little faster than the traditional American big pharmas. So, I think that’s one of the things that we keep monitoring, as we look at our European business. We have seen some very clear anecdotes of that. I don’t have any absolutely rolled up numbers to prove that but, that’s what I think has happened a little bit more in Europe, as we got into the end of the year.

Great. Thanks a lot.

John Sullivan, Leerink Swann.

Good morning.

Hi, John. How are you?

A couple of quick ones here. John, when you were talking earlier about ACQUITY margins, having a chance to grow by a few hundred basis points over 2008, is that instrument manufacturing improvement alone or does that also include perhaps some benefit of mix shift away from instruments and toward columns?

No. I‘m talking about truly engineering reductions of cost with those products along with higher volumes alone for a bit more favorable production variances and purchasing leverage as well on all of that. I think we're just that alone, we're talking about being able to improve margins by 3% or so as we go across the year.

Okay, great. And then relatedly, to the ACQUITY related columns carry higher margins than the instrument itself at this stage of the game?

Higher, yes. But they’ll be comparable to the margins that we get on HPLC columns. So the margins as we've said are definitely higher than the instrument margins and comparable to HPLC.

Okay. And then lastly, what portion of the company’s revenues are coming from recurring sources today?

Little over 40% that come from recurring sources. 40% to 45%.

Thanks very much.

Sure.

Derik De Bruin, UBS.

Hi. Just a couple of follow-ups. So, what… when you look at 2008, what’s your depreciation and amortization and CapEx reduction?

The CapEx would be comparable to this year, so a number of around the $60 million range. And I don’t have the depreciation and amortization with me, but it would be, it’d probably be about 5% to 8% higher than this year approximately.

That’s helpful. Thank you. And you did say during… you don’t break out the specific product lines anymore, but you did say that there was growth of 20% in most of the major product lines. Is that… did I catch you correctly on that one?

No. We were specifically talking about ACQUITY…

Okay.

…SYNAPT and TA instruments.

Okay.

…Being the things that we had focused on in recent communications.

Okay.

… And they in fact continued with their momentum in the fourth quarter.

That’s double-digit growth in the other two lines, the other three lines?

Yes.

Okay. Thank you.

Hi, thanks for taking the follow-up. I think that one of the general concerns, I think that is going to come out of this report is your exposure to cyclical markets. So, can you kind of just review for us in terms what do you view as some of your products that might be historically exposed to cyclical markets? And then as a follow up to that, talking about TA which has been putting out some really good numbers, your expectations for the TA business?

Sure, I mean I suppose it’s all in how you define a cyclical market. For years and years the pharmaceutical industry wasn’t cyclical. And now depending on how you define it, it’s cycling in a different direction. We used to… in those days think of the industrial chemical market as being the most cyclical, with companies like Dow and DuPont, Shell Chemicals as being the ones that would have three years on and two years off. I think you really have to look underneath those broad terms of what these customers are to think about cyclicality. I still think if you look broadly at the pharmaceutical marketplace that we are talking about, including generics and CROs and bio-pharm, we still look at industries that are investing and going to continue to try to find new products to improve their bottom line and improve health. It may be business that’s done more in China and India, one quarter than is done in Europe or the United states. But overall you are still looking at growth applications. And we certainly saw that in 2006 and we saw it in 2007. So, I don’t think overall if you look at that 70% of our business, that it is not growth. It still is, but it is moving around and moving around different accounts, different applications, different customers. So, I think overall there is still no reason to believe that the sum total of that, given the developing countries, the developed countries and the regulatory spending that that doesn’t support what I would call a growth industry. I also think in these applied markets, the food safety, water testing, overall, more of that’s going to be done tomorrow than it’s done today. More of it is going to get done in the U.S., more of it is going to be done in the exporting countries. So, in any individual quarter, maybe you have a blip. We honestly had one in Japan, but overall those environmental and regulatory applications are high growth areas. So I don’t, I don’t think we are in cyclical business. I think it’s sometimes tough to call from quarter to quarter. But overall, it’s not all that variable; it continues to exhibit a pretty good underlying fundamental increases in demand.

And on the TA front you had asked growth there, we are expecting about 8% organic growth out of TA and another couple of points of growth through the acquisition on the microcalorimetry front. And we see some pretty interesting opportunities still on that front of incorporating our products into the TA line. And TA has a new regulometer [ph] coming out next year too that looks pretty exciting. So I think their new product pipeline continues to be strong. So it wouldn’t surprise me that you saw a continued double digit top line for TA Instruments as we look at 2008.

Great. Thank you for taking my follow up. It’s tough that right off the bat you are one of the first tools companies to go off and so right now, a lot of people are going to be looking at your experience of what’s going on in Japan for… is that something, just a blip or is that one quarter or is it something just overall market but from the sounds of it, it sounds like just a lot of that weakness was related to that water reg change. And then just going into the visibility for 2008, I guess you feel okay about the Japanese market getting more solid…

Yes, I think we feel okay is probably the best term. We are not expecting it to become double digit. But we are not expecting the steep drop that we saw in our fourth quarter to continue.

All right, thanks.

And if you look at the base of comparison there, if you look at last year you saw mid-teens growth in that market. So it was a difficult base of comparison as well.

All right. Thank you.

Tycho Peterson, J.P. Morgan.

Thanks for taking the follow up. Doug, following up in your comments from a moment ago about just some of these, these other markets that are more driven by regulation, food testing, environmental testing, things like that. Can you give us a sense as to whether there are any kind of regulatory developments that you are looking at or monitoring over that could impact the business one way or another over the next six months or so?

Six months may be a little early, Tycho. I think we are going to see a bigger, longer term effect as in the US, particularly with food and safety testing. There is definitely a lot of discussions going on in Washington concerning the regulatory environment. There is definitely concern on the part of our Asian customers concerned with how are they going to have to change their procedures to satisfy what they perceive as likely incremental regulations coming out of Washington. So I feel pretty confident that that’s likely to happen in the long term and spur investment on both sides of the ocean. But I don’t sense that happening in the six month time frame.

Okay. And then from a portfolio standpoint and kind of the sales standpoint, you feel comfortable serving those markets with what you currently have or is there a need for further portfolio evolution to kind of cater to some of these emerging market opportunities.

I think we have got a very strong portfolio to serve them now. There is always some tweaking that’s going on, kind of in the ease of use area. Because oftentimes, you are dealing with technicians, who are running the instruments and you need to concern with instruments that are very easy to use. But, in terms of the technical capabilities, I think we have all of the capabilities that are needed to serve that marketplace.

Okay. And then just finally, can you comment on the neonatal business, how that’s been doing and your outlook there.

Yes. Neonatal business is part of our clinical operations. We are happy… as most of you know, we access the neonatal business through a partnership. And the neonatal business is still a good business. We tend to get boluses of orders. It tends to be a lumpy business on the instruments side. But if you look at it in full year terms, we think that application continues to be a growth opportunity for us. Inside the US, and as various states get up to speed, as well as major opportunities in places like Asia.

Okay. Thank you.

At this time, there are no further questions.

Alright operator. Well thank you all, we appreciate you taking the time this morning. And we plan to talk to you again in another quarter. Thanks again.