Good morning welcome to the Waters Corporation First Quarter 2010 Financial Results Conference Call. (Operator Instructions) I would like to introduce your host for today’s call, Mr. Douglas Berthiaume, the Chairman, President and Chief Executive Officer of Waters Corporation. Sir you may begin.

Thank you. Good morning and welcome to the Waters Corporation first quarter financial results conference call. With me on today’s call are John Ornell, Waters Chief Financial Officer; Art Caputo, President of the Waters Division and Gene Cassis, the Vice President of Investor Relations. As is our normal practice I will start with an overview of the quarter’s highlights. And John will follow with details on our financial results and provide you with our outlook for the second quarter and for the full year and then we’ll open it up for Q&A. Before we get going, John will 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, at this time for Q2 and full year 2010. We caution you that all such statements are only predictions and that actual events 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, 2009 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 July 2010. During this call we will refer to certain non-GAAP financial measures. A reconciliation of the non-GAAP financial measure to the most directly comparable GAAP measure is attached to 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 items such as those outlined in our schedule entitled Reconciliation of Net Income per Diluted Share included in this morning’s press release.

Thank you John. Well, our results in the first quarter I think signify continued improvement in customer demands and also stronger reacceptance of our key new products. But we’re not totally prepared to believe that the economic conditions that have challenged industries since late 2008 are fully behind us. We are increasingly optimistic about our business prospects for 2010 and are very excited about out strong product division. The difficult business conditions in 2009 required us to improve our operational efficiency and with these efficiency still in place improving end markets in 2010 should allow us to transition toward our more traditional sales growth rates in 2011 and beyond. Turning to first quarter 2010, our organic sales growth with 6%, and we delivered 9% adjusted earnings per share growth. And however more important, we executed well on our new product initiatives most notably, our new Synapt G-2 and our H-Class ACUITY UPLC systems. Demand for our Synapt G-2 has been strong and we successfully delivered and installed the record number of Synapt class mass spectrometers in the first quarter. Sales of new Synapt instruments was strongest in North America, Europe and Japan. Key application areas of Synapt continued to be in proteomics and metabolite identification. However, we have more recently begun to see uptake by customers in organic synthesis and central analytical labs and pharmaceutical, academic and industrial accounts. On decision to introduce the H-Class ACUITY UPLC early in 2010 helped to drive order growth in LC instrumentation an important. Our H-Class UPLC system was designed based on consistent customer feedback regarding key performance features required to accelerate UPLC uptake and regulated testing applications. As you may recall we introduced this new instruments configuration in late January and gained customer shipments in early February. Though significant new launches often result…

Thank you Doug and good morning. First quarter sales increased by 10%, and non-GAAP earnings per diluted share were $0.81 this quarter compared to earnings of $0.74 last year. On a GAAP basis, our earnings was $0.79 this quarter compared to $0.75 last year. A reconciliation of our GAAP to non-GAAP earnings is included in our press release issued this morning. Reviewing Q1 sales results compared to Q1 last year sales were up 10% this quarter with currency translation representing 4% of this increase. Looking at our sales growth geographically and before foreign exchange effects, sales within the U.S. and Europe were up 2% sales within Japan were up 22% and the sales in Asia outside of Japan were up 12%. Turning to the product front within the Waters division, instrument system sales increased by 7% recurring revenues grew by 6% this quarter. Within our TA Instruments Division, sales increased by 8% versus prior year. Now I would like to comment on our Q1 non-GAAP reported financial performance versus prior year. Gross margin performance was larger than originally anticipated this quarter and came in at 60.3%, the company continues to benefit from manufacturing cost reductions and more significant foreign currency translation benefits than expected. The combination of the relative strength of the yen and weakness of the British pounds versus the U.S. dollar had a beneficial impact on our gross margin percentage based on our geographical sales and production mix. We experienced a similar and even more pronounced currency impact in Q1 of 2009 and this accounts for the year-over-year decline in gross margin percentage. Going forward, the 2009 base of comparison becomes more favorable and we expect to see year-over-year growth in gross margin percentage in future quarters. SG&A expenses increased 8% this quarter compared to prior year and…

Thank you John. Operator I think at this point we can open up the phones for Q&A.

(Operator Instructions). Our first question is from the line of Ross Muken with Deutsche Bank.

Good morning. The introduction of the H-Class seems to be off to a pretty strong start, relative to sort of your initial expectations if you sort of had to parse out what sort of positively surprised you at customer feedback versus where you had to sort of reposition or maybe augment sort of the marketing angle. I mean what's been sort of the, you’re sort of take on and sort of how that has gone so far and what customer basis are showing sort of the greatest interest in terms of the initial orders?

Ross, I think it's important, that this introduction of the H-Class was a little bit different than major platform introductions that we've had in the past. I refer to it as what is it either 0 lag notch where when we announced the product we started shipping potentially immediately. We had trained the sales force we had the marketing literature already that was introduced typically, introduced these platforms kind of licensed to get the Pittcon and then your shipping by the end of the subsequent quarter. This was you know and so part of it is just the way, our businesses evolve so we were very happy first of all with our ability to drive the developments and the manufacturing to the point where we are able to do that. Then I would say the most interesting dynamic I think has been with competitive accounts we knew we had some early indication in some of our classic Waters accounts about the reaction to it, we clearly aiming this technology and trying to bring a faster uptake curve into the QA regulated the applications part of our business and taking this instrument into competitive accounts has been very, very positive. So I think that’s probably the early indication, the other thing I think is we commented on that often times you introduced a new platform like this and the immediate response you see is delay because customers are used to buying your old products and they kind of put things on hold to evaluate and sometimes they run new systems through months of evaluation studies I am sure we saw some of that, but overall the net effect was really a positive effect rather than a delayed effect.

Yeah I would say the thing about the H-Class was keep in mind we introduced UPLC now growing about 6 years ago and something very unique in our business is we were left alone for our intents and purposes for about 5 years before any significant competition beside try and participate but throughout that period and out there several thousands of systems being installed and evaluated, we had a luxury of working with these customers and very precisely understanding what does it take now to move this technology downstream. And for intents and purposes replaced the traditional HPLC marketplace, while at the same time taking into consideration a large installed base HPLC that have been in play for 30 years. And so we really took our time we focused on the customer needs we delivered a product that probably is, hits the mark so precisely in terms of what customers were asking for and now seeing it’s hard to argue with something that you said if you do this we’ll buy it and so we’re experiencing this and the beauty of it is the demonstration units are in place there is no delay on delivery. It utilizes the same broad systems chemistry solution we’ve had out for six years. So its really the experience that we've had with paying off for us on this strategy.

Does that cover everything Ross. Ross Muken – Deutsche Bank: That's good. And just so I understand, so if you had a look at the industrial and the biopharma end markets, where you both had pretty strong growth, if you had to parse out market recovery versus new product momentum in terms of contributing to the strong growth, how would you weight the two, just to get a sense of how much of it is actually sort of customers coming back and how much of it is actually Waters maybe taking a bit of share with some of the new product momentum that you have?

I think probably in the industrial arena particularly for Waters that’s probably more market related. It would surprise me if you didn’t see others servicing the industrial market to see some good results because I think it was so tough that they were bouncing off more modest comparisons. We clearly had some good uptake in response to our new products, but more in the industrial arena, I’d say its probably a market dynamic. In the biopharma, boy, I think our new product are really striking a chord, not only the ones that we've already let you peak at but early it buys on some of other new stocks that come in very enthusiastic I think in the biopharma segment

Our next question is from Marshall Urist with Morgan Stanley. Marshall Urist – Morgan Stanley: A question on guidance -- you upped your organic revenue view for the year. So maybe you could just talk through what are the things that are -- specific things that are better than when you guys first looked at the year, maybe if anything is worse, then how you got to that view for the full year.

Sure, I’ll give the 30,000 foot view and then John can bring me back to Earth. Clearly the industrial market recovery is better than we had banked on in our budget. We thought we would be in perhaps attached on the conservative side because we didn’t want to over stayed out our spending budgets coming into the year. But industrial, we see that very clearly in the TA piece of our business we also see it in the Waters piece. So, I think the strength of the recovery in the India Generic Pharmaceuticals is pretty clear that’s not insignificant piece of our business, the reaction to the H-Class and the seamlessness with which its coming to market and the continued interest in the high-end mass spectrometry product lines are all encouraging. I think the thing that keep us from being maybe slightly more optimistic at this point is waiting to be sure that overall the developed markets in the United States and in Western Europe can show sustainable strength pockets there is that the industrial markets there but [big] Pharma is still going through some of the merger pains. We see a lot of encouragement from that segment of the business but we probably don’t want to take it to the bank quite yet. John?

Yeah, I think the only other thing I would say is that we had a relatively strong Q1 with Japan, we are not expecting Japan to grow full year at those rates certainly but on the other side of that within China we had a very difficult basic comparison with the larger Melamine business that rubs off in the rest of the year. So, that’s a natural offset so that Asia, in full, I think, has balance going forward relative to what you saw in the first quarter. Marshall Urist – Morgan Stanley: Okay, great, thanks; and then, just another one on gross margins for the year. Is the change mostly due to currency? Or maybe just walk us through the moving parts of that as we go through the year in terms of some of the manufacturing transitions, how that's going to impact gross margin, and anything else we should be thinking about on that line.

The currency dynamics that we saw in the first quarter principally I continue however the base of comparison becomes less difficult if you will if you look at but going forward quarters of last year. So a piece of the improvement in gross margin, a significant piece is currency. But that being said, I would also say that layout of the gate, we have some very good product costs on new H-Class that are contributing even in the first quarter to improve margins. We’ve had a relatively strong chemistry business subjects provided a little bit of upside on the mix as well, we expect that to continue. And our Thermal Analysis business is done very well in some of these industrial accounts and within the TA product line that tends to be the one that has the higher mix of all of these factors. We think we will continue and contribute to the sort of tick up in gross margin for the year. Marshall Urist – Morgan Stanley: Okay. And then anything on the manufacturing piece is going to be especially impactful on the back half?

I would say that that’s pretty much on plan. We still have the H-Class transfer in the work, so we’re looking to see the, the benefits of that as we move through the second half of the year. I’d say this is probably nothing different from where we started the year at January from a guidance perspective. Marshall Urist – Morgan Stanley: Okay, great. And then just one last one from me. On the Americas and Europe, maybe you could just give us the growth is obviously little bit slower there, so maybe just give us a sense of the different markets there you talked about pharma, but beyond that kind of what’s driving that, you talked about 2% kind of what, what are you seeing specifically out of those geographies? Thanks.

Yeah I’d say if we looked at the developed world Europe and the US specifically here a large pharma was really the problem, as it relates to the decline that we saw in that business was a little more that we might have anticipated, well offsetting now was some pretty interesting strength in the final business outside of large pharma. Government and academic in total was good in that part of the world then we saw the industrial business begin to come back in those regions, so I would say really the only serious pocket of concern is large pharma a lot of that I am certain is merger related I think we are going to see that dissipate as we make our way through the year. Some of those accounts were up but many warrants, I think it was a may be a little bit of a lag in the CapEx release perhaps in some of the (Inaudible) and its not impossible to think that the H-Class launch well it was very successful right out of the gate is some accounts where they are going to do a little bit more work on that before its implemented and I think that’s a potential upside of some of these large pharma houses too as we go forward.

Thank you please limit to one question. Our next question is Doug Schenkel with Cowan & Co. Doug Schenkel - Cowan & Company: First question, how was the phasing of the quarter? It sounds like you still have pretty good G-2 backlog and it sounds like TA orders were may be decently stronger than the actual sales number. So I was just wondering if momentum actually builds as the quarter progressed and as we turned the page into Q2?

I wouldn’t say it was a homogenous dynamic as it rarely is I would say overall the last part of the quarter was stronger than the first part that’s always kind of the case with January being a tough side to a year. But some geographies finish stronger than others. Overall, I would say our more interesting dynamics is the early indicators of request for demonstrations, request for quotes, quote activity and some of them the soft and more intangible that I think are much stronger than we anticipated would be at this stage of the game. So that’s the kind of momentum that I think, it doesn’t result in sales in the first quarter but we’re optimistic we could gain for stronger sales as we go forward. We also in the first quarter, this quarter ended with the Easter season you had Good Friday, that always throws a little confusion particularly at the areas like Western Europe and the more traditional religious areas and we didn’t have that last year, it’s always a guess as to how much that affects your order activity lots of strong orders coming in the next week. So you know again intangible dealing that you know its all pretty good going forward. Doug Schenkel - Cowen & Company: Okay, that's helpful. You beat the midpoint of your guidance by $0.04. You bumped up full-year EPS guidance by I think it's $0.15 at the midpoint. You did bump up your revenue outlook, but I think just a little bit; I think you guided to mid-single digit growth, maybe, a little bit higher than that. But it doesn't sound like it changed a lot and it sounds like you still expect this to be a year where you spend a little bit more operationally than the norm. So what's changed here? Is it really the revenue number? Is it gross margin, or should we be a little bit more positive when it comes to modeling out non-operational items?

Yeah, I guess what’s changed is we certainly have taking a slightly different view on gross margins we had some, good experience right out of the gain on some of the new products in addition to some of the currency benefits that we’ve seen. Yes, we are continuing to make investments small investments in headcount where we need to will continue to do that. So, we are not going to see a significant gap in the growth of our expenses versus the top line but that’s no different than what we have said in January. Currency for the full year is a little bit less of the top line benefit but offsetting that and more is the fact that we did move the organic growth from what we defined as mid single digit four to six to five to seven. So, it’s little bit here and there that basically say that you know the incremental profitability that we saw out of the business in the first quarter principally continues for the next three and that comes pretty close to the full year increase that, you’ve seen in the guidance for the EPS. Doug Schenkel - Cowen & Company: And last question, it sounds like you guys are spending a little bit more on SG&A than you normally would. I think that's associated with just the spending ramp as you build towards some of these new launches. Any way to quantify that just so we can think about leverage potential moving forward?

Yeah, I guess, one of the things we look in the first quarter is you have to recognize that currency on SG&A was about 4%. So, the 8% growth in the SG&A was really only about 4% ex-currency. Normally when we look at this business we typically say that we have sales growing in the 7, 8, 9% range on an average year you’re able to grow your SG&A couple of points less than the sales line. And I would say that, that model is likely to be what we’ll continue to say going forward beyond this year because of as you pointed out because of investments that we need to make this year and this year being kind of a year of recovery on the spend line is not likely to be quite as much leverage, I don't think the expenses go exactly the same rate of sales, but there is not likely to be the full one or two points of differential. But for 2011 going forward I would submit that we’re kind of back to that traditional model.

Thank you. (Operator Instructions) Peter Lawson with Thomas Weisel Partners.

I wonder if you could talk to the impact from NIH stimulus, if you saw that this quarter?

Frankly if you didn’t know we didn’t see much stimulus, we keep hearing it, we keep tracking the code activity but the actual spending was really not material, not in the US. We’ve seen very active academic government activity in China or in Japan which is a little bit harder to tie that directly to incremental stimulus money, but frankly in the US we still have not seen a significant amount.

And the growth you saw in Japan, too a bit from academia, bit from mass spec what else was there?

Okay that's the most notable in terms of a changed dynamic. I would say the base level of pharmaceutical and industrial business was pretty consistent with what we saw in the later half of both 2009. And Japan has been pretty consistent. Japan didn’t have a big fall off in demand, with the 08 industrial slowdown. So I would say we’re seeing pretty consistent business in the Japanese pharma, biopharm industrial activity and we saw an uptick in academic, that’s like John says we are we don’t think we are going to see a continued pace that we saw in the academic business going through the year. And we temper our forecast to not anticipate quite too much strength there.

Quintin Lai with Robert W. Baird.

Congratulations on an excellent end to the year. Just kid of going back to the H-Class and the launch you had, the early adopters that have brought that in, are they running primarily just HPLC applications, or are you seeing some of the, are they starting to work in UPLC columns as well?

If you think about UPLC in general when I’d say right now 90 plus percent of the people who are buying UPLC based products for the H-Class for the original acuity UPLC system they buy it with usually the intention of incorporating the UPLC capabilities. They believe that that’s how they will justify the performance of the equipment and that’s how they will ultimately use it. The H-Class for the most part is an account with the ability to have more flexibility. So if they buy an application where they are utilizing UPLC but at the same time couldn’t justify the purchase but they may still have three or four legacy methods that are HPLC. The interest in the H-Class is that I cant if I need to also run an HPLC separation item. So well some people are buying it to future proof for potentially UPLC applications we think this will be the case moving forward, for the most part now people now are still focused on purchasing any of our UPLC products with the prospect of taking advantage of the superior performance capability.

Jon Groberg with Macquarie Capital.

Hi thanks for taking the call. Can you just maybe talk about your view of the impact of health care reform and maybe how it flows through to clients and put that in conjunction with I guess, trying to think specifically of your pharma, your biopharma clients? And I also heard you mention that you are getting some indication that maybe your replacement cycle could be on the way. And maybe I'm just trying to understand a little bit better your view, I guess, of how some of this shakes out, kind of flows down to where you guys are at.

I think its an excellent question as to where healthcare under this model winds up, I think the direct impact are is clearly mostly I think on the medical device manufacturers, who are hit with incremental costs directly in the plant. For Pharma I think most of the effects are indirect the same way they are on all of us, I mean you have seen some companies who have plans have to record one time charges as a result of that, I don’t know that I have seen too many big pharmas do that but just certainly seen some industrial accounts do that

Doug, I think I'm speaking specifically around so that you know they've had these big Medicaid rebates so the revenues are going to be lower, I'm assuming maybe they would have to spend less on R&D, perhaps, as a percentage of their sales and may be volumes don’t really pick up as they expects going forward. And I guess understand that I don’t know

I think there are many, many type of this still and of course I don’t think was seeing the manifestations of all of them yet. I don’t think we’ve seen the Medicare dynamic it hasn’t currently popped up as a particular issue -- may be we’re seeing it in the optimism in the generics who clearly kind of by support get our favorite position in this bill, we are certainly seeing great activity amongst our generic accounts. We haven’t seen the direct results of Medicare concern is certainly reasonable to think it has to be attracted into their business plan. I think, the way we interpret our results so far is become very traditional in our big pharma accounts to see slow starts to the year and this was no different. So you’re still seeing an enormous amount of interest in our new products in those accounts. We are already I think as we start the second quarter seeing some order flow that we didn’t see in the first quarter. So I think right now it probably along the business plan that they started the year and there just kind of started over to see how they deal with the healthcare issues as I go forward.

And specifically on the replacement cycle comment, are there maybe some more detail, some backdrop to that, that you said you got a little bit more comfort that there, could be a replacement cycle coming up?

I think there is two things in place, there is clearly, they have a longed out replacement cycle over the last two or three years. We have had major departments managers complain to us that they have to make use of their equipment much longer then they ever anticipated. And we still firmly believe that that’s going to ultimately result in some pent up replacement demand coming through the system. But I would say even higher in the dynamics is emphasis on cost control and productivity and I think they have been talking about that for a long time now it really, making itself felt in the innards of pharmaceutical. And they are really looking at the productivity the H-Class and ACUITY can give them. Because it really means doing a lot of their jobs with a lot fewer people, they can replace multiple traditional HPLCs with fewer H-Class or fewer ACUITY, they’ve getting dramatically change their productivity. Is that I think is really picked up in terms of the level of interest and specifically in big pharma.

I think you mentioned stimulus is not a big contributed. Specifically you guys were giving some targets for Synapt G-2, did you hit those targets in the quarter even without stimulus?

Yeah, G-2, we are very satisfied with our G-2 Synapt results. We are hopeful that stimulus money can still add to that results but frankly in the US we are still waiting.

I guess the layers of questions here are trying to understand, going back to, you've only finished one quarter. Obviously, you don't have a lot of visibility in your business historically. You're now guiding to much better, getting closer to historical growth rates. So just trying to kind of find those pressure points or maybe if things don't go I think you mentioned some of the things that could go better. But maybe some of the things that might not go according to plan anything else we should be thinking about in terms of that potential negative throughout the rest of the year?

No it doesn’t look covered most of them. And I wanted to be cautious of the number of people in the queue. So maybe we can move on to the next question.

Tycho Peterson with JPMorgan.

Could you just comment, I know you talked a little bit about early interest in H-Class from some of your ACUITY customers? Can you comment specifically on how much of the interest is coming from ACUITY users versus some of the lower volume Alliance users at this point?

Okay little bit I’ll give a flavor to that. If you think about ACUITY we think about this in the context of accounts. As we look at the number of ACUITYs sold over the last five years and so we’ve had very broad-based penetration, it is almost impossible to find large accounts it doesn't sound multiple traditional ACUITY UPLC systems. So what you're dealing with is the ACUITYs purchase has been purchased by early adopters, development people and some method development and even QC departments. So what we’re really looking at is its while we are selling H-Class to the people who have very little exposure to UPLC at all its probably less than a quarter of the sales, so both of the sales are really the early adopters testing it, verifying it, setting up an understanding with the technology coming to us and say here are the areas within our corporation that we want to utilize this technology. But here the attributes I think is different from that than for us this is the new purchase traditionally those design to us early adaptors get a very broad versatility, full capability research type view of the product, here is what's required of people in methods development, quality control, while routine applications what typical HPLCs user would look to attributes that, emulate more of our Alliance products than the full research grade. So I’d say that the bulk of our focus of interest is to progress the technology downstream in the already dominant position we have across large and for that matter is intermediate by companies throughout the technology laboratory world out there.

Okay. Can you comment on how you look at the pull-through opportunity for mass spectrometers with H-Class?

The predominant mass spectrometry sale is still oriented towards our traditional UPLC system. Primary reasons for that is the technical attributes of the product lend itself very well for the extremely high speed that mass spectrometry operates within, extremely fit, change level of volumes and well H-Class will work nicely with a mass spectrometer for many applications. Most mass spectrometers are really looking at the attributes that are full research grades, super high performance UPLC system that has great levels of versatility. But when we think that we shift overtime as you may go downstream and Mass Spectrometry gets more prolific in the more routine applications, but for the time being, we are finding that nanoACQUITY the traditional ACQUITY has the bulk of those sales clearly with the original ACQUITY systems.

Maybe one for Doug. I know you don't like to talk about product cycles ahead of time, but you did lay the bait for ASMS, and I think the quote was significant product cycles. Is there any kind of color you can give us in terms of whether this is a high-end system targeting the academic markets or something more for pharma? Or, can you just kind of point us directionally in terms of where you're going?

I think the best I can do for you Tycho is the same, look broadly I mean I think you will be seeing very interested in things at that kind of augment the high end G-2 Synapt kind of thing. You would be looking at multi purpose capabilities and I think you will also see as how work closes into the midline and on the bench drop, so still a little bit early we're several weeks away from ASMS but I think its, watch this space for further notice

And then last one for John can you just quantify how much the margin this quarter was currency versus cost reductions? I know you talked a little bit about how you're thinking over for the rest of the year.

Yes, on a year-over-year basis there was about 200 basis point decline associated with the currency and there was about a 60 basis point improvement associated with the cost reductions and mix that offset that.

Jeff Ares with Leerink Swann & Company. Jeff Ares - Leerink Swann & Company: I know you gave a little bit of color on India being a little better in the generic pharma, and as well as last year I remember it was pretty weak in Q1 and through the first half of the year. How much of the improvement in India was more of a function of year-over-year comps and the rupee doing a little better versus actual demand?

Well, it’s certainly a better demand compared to last year. I think India at this point is about flat in the first quarter 2010 with 2008. Gives you an idea, it’s not huge growth over 2008 substantial growth over 2009 but I think a very clear indication that things around the mend there in that generic industry is kind of coming back to at least equilibrium if not prepared to grow very strong. You know they went a year essentially without preparing the growth for all these drugs that are coming off pattern. So, we are optimistic that there is a stronger growth ahead. Jeff Ares - Leerink Swann & Company: So looking at this 5% to 7% organic growth guidance, how much improvement in India do you have baked in there outside of just easier comps?

: We wont go into that but I would be willing to say that we anticipate that the India business is kind of on the trajectory that it is on now for the rest of this year. Jeff Ares - Leerink Swann & Company: Switching gears a little bit, you made some comments about stimulus. Now you are taking a more conservative approach. Are you still looking for $20 million to $30 million, I think was the number you gave for this year, or has that changed?

We are more conscious about our outlook for stimulus business this year and this outlook. We are probably looking at more like half of that level than that level.

But as we look here at the demands for the high end instrumentation whether it comes through government supports stimulus dollars or not we are pretty confident that high end aspects are going to do well.

And being more conscious about the length of the queue I would like to try to get as many questions as we can so we could move ahead and we get near the end point of the session. So can we have the next question?

(Operator Instructions) Rob Hawkins with Stifel Nicolaus.

I'll keep it to one question, but probably the one you don't like to answer. It's capital allocation. You picked up your purchasing, your share purchases in the quarter, and you if you’re on track for $400 million in free cash flow. You've got an optimistic outlook. I know you guys are being cautious. Now what do you think about where you spend the cash?

Well kind of what we said we would like to continue to focus acquisition policy and swallow it up in acquisitions and we will use excess cash to continue stock repurchase program, I don’t think it is any more complicated than that.

May be just one asset, you said you are making some investments and people in some of these things you know I know its not typically releasing about capital allocation, any specifics there?

Yes, all the investments we’re making are within the cash flow expectations and the operating budget as John described.

Maybe we call them investments only from the perspective of kind of last year we had a very belt tightened situation where people who have left work replaced and you know so we are coming off of a base that is a little bit depressed so that we are beginning to add some of those headcounts back, but those are in the operational expectations with the business and the free cash flow estimate.

I think that’s important just for them to check here last year. Even in very difficult top line conditions we grew our earnings per share and we did that by being ultra cautious on our spending controls. Bonuses were not present last year pay increases were few and far between travel money and we controlled hard on that and knew as things came back we are running out to replace a lot of that and we have got a structural comparison there the same way we have got an easier comparison on the top line which clearly got a more difficult comparison as you have to provide the sales commissions for bonus payments and for things like that I mean that’s like that business but it’s a reality of why John emphasis that it’s highly unlikely it was on to be able to see that same ability to leverage our operating expense, expanding this year. Think we can come to it in more normal year, but this year it’s going to be tough.

Steve Unger with Lazard Capital Markets.

John, what was the asset impairment in the quarter? And this is the second straight quarter now of some restructuring charges, is that now complete?

There is probably a little bit of a trickle into the second quarter at some of this restructuring that has to do with how we have to account for some of the restructuring that is taking place within Europe but I think Q2 you’ll see the of that and the asset impairment is related to the consolidation of facilities that our project is beginning in the UK where we want through a fixed asset inventory and found some assets that were no longer of value. So that should be a one-time event principally. You may see other tiny bits going forward, but it's a rather modest amount and related to the consolidation of facilities we saw in the UK.

Derik De Bruin with UBS.

Hi good morning, John make sure I’ve heard right, so you’re looking for a 75 basis point increase in the grossed margin year-over-year for this year?

That's right

So I guess when we think about how much more juice there is (Inaudible) about this. I'm trying to figure out how much of that 75 is FX-based. And I guess when you look at this on a currency-neutral basis and you start thinking about where the gross margin can go in 2011 and such, how much more room is there for expansion in that?

I guess I'll go back to the kind of traditional budget model that we have where if you hold currency constant it’s kind of tough to predict where that’s going. Generally we’re able to provide maybe 10 or 20 basis points of gross margin improvement out of the business just based on the incremental volume of instrumentation that we shipped more than getting a true price. I don't think that model has changed going forward I would also point out to you that some of the product transfers that are currently in place are only going to have a partial year benefit this year, so I would say we can be a little optimistic that we’re not at the end of the road in gross margin improvement and if you’re likely to see the continuation of those we talked about next year later this year.

I seem to be underestimating the gross margin. I think last year it was a 150-basis-point swing coming out of Q1 from where you were till you had guidance, and other times a little bit more than that. So I'm just wondering if it's, I seem to be underestimating or overestimating the currency impact in that so I am just trying to get the growth there. So that's good. I'll just leave it at that; I'll catch you guys offline.

Operator I think we can have one more question before we close the call.

Thank you Jon Wood with Jefferies.

John, can you just quantify what the broadly defined pharma account based in terms of organic revenues in the quarter and then major pharma within that and then just provide your expectations for that account base for 2010?

I would say it’s about, it grew about with the corporate average of somewhere around 6% large pharma was the top 15 accounts what we defined were actually down in the quarter and the remainder of the accounts all of the biotechs and the generics CRO they were up high single digit. So the large final was a significant anchor to the results in the first quarter when we are at this stage convinced that we are going to see better performance out of those accounts as we make our way through the year

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Thank you. Thank you for your participation. Today’s call has concluded. Please disconnect at this time.