賽默飛世爾科技 (TMO) 2008 Q4 法說會逐字稿

Good morning, ladies and gentlemen, and welcome to the fourth quarter and full year 2008 Life Technologies Corporation earnings conference call.

My name is Lusalle, and I will be your audio coordinator for today.

(Operator Instructions).

As a reminder, this conference is being recorded for replay purposes.

I would now like to turn the presentation over to your host for today's call, Ms.

Amanda Clardy, Vice President of Investor Relations.

Good morning everyone.

Welcome to Life Technologies' fourth quarter and full year 2008 earnings conference call.

Joining me on the call this morning are Greg Lucier, our Chairman and CEO; Mark Stevenson, President and Chief Operating Officer; and David Hoffmeister, our Chief Financial Officer.

If you haven't received a copy of today's presentation or press release you may obtain one from our website at LifeTechnologies.com.

Before we begin, I would like to call your attention to a few items that will be helpful for you during our call today.

First, we have now posted a 2008 quarterly pro forma income statement on our website that combines Invitrogen and Applied Biosystems' financial results down to operating income for all of 2008.

As both companies had slightly different definitions of what is included in pro forma results, we have normalized their approaches in the file we have posted.

Beginning with our first quarter to 2009 earnings call, we will be comparing our results against this new pro forma income statement, so I encourage you to retrieve this document at your earliest convenience.

In addition, all the guidance we will give at the end of this call will be off of this pro forma, so as if our companies were combined for all of last year.

The second item is that we will be accounting for our mass spectrometry joint venture by using the equity method, which means the entire financial impact from our mass spec division will now be shown in other income, thereby removing all impact of the mass spec business from revenue and operating income.

The third item of note is that we will now be including FAS 123R, or stock option expense, in our pro forma income statement.

We will no longer break out this expenses, as it will be included in all the associated line items within the income statement.

The final item mentioned is related to deferred revenue recognition.

Applied Biosystems had deferred revenue related to service contracts that is recognized over the life of those contracts.

Upon close of the merger, the value of those contracts were adjusted by approximately $60 million, in line with generally accepted accounting principles.

However, to provide comparability year-over-year and recognize revenue that is associated with 2009 activity, we will be adding this back into pro forma revenue.

All of these changes, including the accounting treatment for mass spec, the impact of FAS 123R included in pro forma, and the value of the deferred revenue have all been taken into account in the 2008 pro forma income statement we have posted on our website and in the guidance we will be giving at the end of this call.

Finally, one last question before we begin.

I want to remind our listeners that our discussion today will include forward-looking statements, which include, but aren't limited to, statements about future expectations, plans and prospects for the Company.

We believe these statements are based on reasonable assumptions, but actual results may differ materially from those indicated.

It is our intent that these forward-looking statements be protected under the Safe Harbor created by the Private Securities Litigation Reform Act of 1995.

Additionally, we will be discussing GAAP and non-GAAP measures.

A full reconciliation of the non-GAAP measures to GAAP can be found in today's press release or on our website.

For today's call we will be referencing a presentation that you may view online.

Instructions to access the webcast are on our website.

Additionally we will be posting the presentation to our website following the call.

Greg will begin today's call with highlights of the year and views on the future.

Mark Stevenson will follow with highlights of the integration and an overview of our new divisions.

He will then be followed by David, who will give a more detailed view of the Company's fourth quarter and full year operating results as well as 2009 financial expectations.

I will now hand the call over to Greg.

Let me start off by saying it has really been an incredible year.

We had strong performance every quarter this year in key metrics, including organic growth, operating margin expansion, and free cash flow.

These results came from a number of things, including leadership in our end markets, successful new product introductions, and a continued focus on productivity and pricing improvements.

To top it all off, we ended the year by closing on the merger with Applied Biosystems, transforming our Company into the largest manufacturer of life science reagents and systems.

We now have the most extensive proprietary product offering and broadest network of scientifically trained sales professionals in any life science company.

Now as Life Technologies, our Company can help transform biomedical science from regenerative medicine to personalized patient care, as well as bring the power of molecular method to applied markets with easy to use automated systems.

Needless to say, I am proud of what we have created with the combination of our two companies.

And I am confident we will be able to deliver truly unique and innovative solutions and services to our customers in the future.

Before we move on to the future though I will spend a few moments going over the highlights of this past year.

In 2008 our revenue grew 27% to $1.6 billion.

Now that includes about $191 million from the AB acquisition, but it is important to note it does not include any revenue from the mass spec joint venture, because as Amanda mentioned, we will be accounting for that using the equity method going forward.

Without the AB acquisition we grew revenue by 12% in total and over 7% organically.

We sustained and built on our strong performance of 2007, no small accomplishment given the strong results we had in that year, as well as the economic headwinds that we all encountered toward the end of 2008.

We also drove significant improvements through our P&L.

Operating margin for the full year 2008 was approximately 28%, an expansion of over 320 basis points compared to the prior year.

And while some of this improvement resulted from currency and the inclusion of five weeks of AB results, much of it was due to continued and focused attention to operational efficiencies implemented throughout the organization.

We now have solid operating mechanisms in place, strong infrastructure, and very talented individuals that all contribute to our ability to consistently deliver upon our commitments.

Revenue growth and margin expansion directly impacted our bottom line, setting a new record for net income of $321 million, and translating it into $3.10 of non-GAAP earnings per share.

I believe this performance demonstrates the strength of our operating model, our technology portfolio, and our people, as well as validates the strategy we embarked upon five years ago to create the leading life science tools company, with the broadest product portfolio, while at the same time implementing a robust corporate systems infrastructure.

I don't have time to describe all the successes that led to our strong financial results in 2008, but I will go over just a few of them.

First, our new product introductions really made an impact this year like never before.

Several years ago we had to step up our investment in R&D, because we had lost our edge when it came to being first to market with transformative technologies.

That edge is back.

I can't take you all the products we launched, but if you have an interest, feel free to peruse our numerous press releases that we have issued over the last year.

There is the Countess System, our new GIBCO media bottle, the FDA approved breast cancer test, and almost 1,000 other product launches.

Countess was one of our most successful product launches ever.

This product is a desktop device which counts cells, typically a manual process for a researcher.

It is one of a number of workflow improvement devices we have launched over the last few years, and you will continue to see more of these in the near future.

Our GIBCO media bottle is a great example of customer-centered innovation.

The design was the results of many hours spent observing how our customers use cell culture products.

We launched the new bottle at the end of the year, and we have already received an award for the most innovative package design by the packaging industry.

Quite ironic.

Applied Biosystems also had impressive product and new introductions in 2008, with the SOLiD System 3.0 and two mass spectrometry products.

The SOLiD 3 System is just the latest example of how quickly the technology is advancing in next gen sequencing, with the 3.0 system having demonstrated up to 40 gigabytes of throughput already, and we easily see a path to over 100 gigabytes by year end.

The SOLiD System continues to be the most accurate and highest throughput next gen sequencer on the market.

And we continue to ramp up our sales of the system as our customers recognize the value of its unique benefits.

The two mass spec systems we launched, the AB SCIEX Triple Quad 5500 and the AB SCIEX QTRAP 5500 are also doing very well, especially given the current market environment in the pharmaceutical sector.

The systems are innovative and streamlined, and customers have given us an overwhelmingly positive response.

In fact, we ended the quarter with a sizable order backlog.

Aside from new product launches, we also made further progress in margin expansion this year due to productivity initiatives.

In previous quarters I have talked about pricing improvements, transactional profitability, and our e-commerce channels, all as major factors to margin expansion.

The fourth quarter was no different, and we ended the year having over 2 points in realized price, $9 million in margin generated from better transaction profitability, and over 25% growth in our r e-commerce revenue.

We will continue to have dedicated teams focused in each of these areas within our new Company, because we have demonstrated the enormous impact they can have for both our customers and our income statement.

Lastly, I will touch upon a few examples of how we're expanding into other markets and research applications.

Many of you know that we have formalized a group within our Company on regenerative medicine and stem cell research.

You may not know that this group also has within it a mini academic lab that is largely funded by us, but also receives grants from outside organizations for their work.

This year we will receive almost $1 million in research grants from the California Institute for Regenerative Medicine, as well as a few smaller ones from private foundations.

The work this team does is truly novel.

They are advancing the research around stem cells, while at the same time highlighting where new tools need to be created to make this type of research happen better and faster.

We have two great thought leaders in this area, with Joydeep Goswami and Mahendra Rao, and it is a good example of how our leadership can truly make a difference.

Another great example of thought leadership is Lenny Klevan in our forensics business.

He recently received a 2008 leadership award from the National Center for Victims of Crime for his and AB's work in advancing forensic DNA applications.

Of course, our single biggest achievement in 2008 was the successful completion of the merger between Invitrogen and Applied Biosystems.

I'm not going into really a lot of detail about this, because Mark Stevenson is going to give you a more detailed overview in his remarks.

But suffice to say, the more we integrate Applied Biosystems and Invitrogen, the more confident we are about the strategic fit, the costs synergies and the workflow solutions that can deliver to the global life science marketplace.

We have already made great progress towards our cost synergy targets.

But more importantly, we have begun the critical integration of our R&D and sales teams, which will ultimately allow us to bring new and differentiated solutions to our customers.

We are extremely excited about how our new Company will be able to accelerate the reality of regenerative medicine and personalized healthcare, as well as provide solutions that monitor food and water, ensure environmental safety, and make more efficient biofuels, as well as create new molecular diagnostics.

No discussion with investors these days would be complete without a comment on on our end markets.

A little less than 30% of our business is exposed to pharma and biotech.

And there's no question these customer segments have reduced their spending.

This is not new news nor has it improved.

Another 55% of our revenue was from academic and government institutions around the world.

Some of these world geographies are holding very strong, such as Europe and the emerging markets.

But some are experiencing some softness, namely in the US, specifically related to capital equipment purchases.

The good news in is that there is a significant NIH stimulus bill in discussions right now, and about 20% of our total revenue is funded through NIH grants.

The stimulus bill being discussed could add anywhere from $3 billion to $10 billion of additional funding to biomedical research.

This bill has not yet passed so it is too early to say how we might benefit from it.

Needless to say though, Life Technologies has one of the largest presence on the NIH campus, and we would expect to get a fair share of the new funding, as our customers receive scientific grants via this stimulus legislation.

The other 17% of our revenue is from commercial applications, mostly associated with forensics and diagnostic customers.

The demand from these customers has remained relatively stable as the move to molecular methods is offsetting any kind of macroeconomic pressure.

Given the visibility we have today, we're more cautious in our outlook for 2009, and I think it is reasonable to assume we will grow somewhere in the low single digits on an organic basis.

This doesn't include any potential benefits from the NIH stimulus package, because I said it is still too early to quantify what impact it might have on us.

You will hear more from David on this later, but recall what I have said in previous quarters.

It is our job as a management team to ensure we have plans to place to withstand any negative changes in the best possible way, and we intend to do just that.

We intend to lead boldly through uncertain times so that we maintain our leadership position in the eyes of our customers and our employees.

We actually have the opportunity that many small companies do not, because even if we have slow growth, we still generate a ton of cash.

In fact, we are in a great position during this type of macroeconomic climate, because all of the work that needs to get done to battle tough economic times is exactly the same work you need to do during a major integration, such as we have before us.

We actually have the opportunity to leverage this period to gain long-term strategic advantages.

And that is exactly what we're preparing to do.

With that, I will now hand it over to Mark to talk more about our integration and our division businesses.

I would just echo Greg's comment about our ability to lead and stand tall in challenging times.

We just came off our annual global leadership meeting, and never before have I seen so many people energized and so focused on building a business together.

There is tremendous organizational power in knowing that we can and are making a difference,.

So where do we stand with integration?

The short answer is we are right on target with our plan.

Our roadmap has three phases.

In phase one, now complete, we developed a detailed implementation plan, and identified $175 million worth of merger synergies that we expect to achieve by year three of the integration.

We also established criteria and a framework for our organizational structure to support the combined Company moving forward.

We are now in phase two, and we are able to move fast, given the detailed planning we did in phase one.

This is the implementation phase where we execute on the plans we made, fine-tune the organization, and make sure that the home team is tightly aligned with our strategy.

This is also the phase were we tie our systems and processes together and execute on a go to market strategy as a combined company.

We have created blended teams that take advantage of our combined strengths and capabilities while we are executing on our detailed synergy plans for 2009.

In addition, planning for phase three has already begun.

This is where we see the long-term benefits of our merger.

It is where we begin to leverage our R&D scale and global footprint to win in DNA sequencing, to capture increased value in our cell biology business, sustain our leadership in real-time PCR, expand our franchise in RNAi and solvable prep, and grow our applied markets business.

I expect as early as the second half of this year we will begin launching products that our combined R&D teams have collaborated on and made a reality.

To track the progress of how we are doing executing on our detailed synergy plans, we have an internal dashboard that we monitor, that you can see now on the next slide.

This is a snapshot of that internal dashboard.

We have detailed synergy targets by function and monthly execution plans for all areas.

Those plans are reviewed weekly by the integration steering committee, which is composed of Greg and the rest of the senior management team.

Each area is assessed on whether they are behind target, at risk of not hitting the target, on target or complete.

At this point in time all functions are on target and tracking well.

Some [Q1] milestones we have coming up this quarter are implementation of our go to market strategy, and having our pricing optimization process implemented across the AB consumer [broad] portfolio.

Each quarter we will give you a view it into how you're doing in regards to the overall integration by providing progress updates against specific integration objectives, including cost and revenue synergies.

The integration plans we implemented in Q4 have generated approximately $50 million in analyzed savings, almost 65% of our four-year goal.

So we are well set up for entering 2009.

This doesn't mean we will sit back on our laurels, far from it, particularly since the economic climate is constantly changing.

We will have other actions that will take place throughout the year which will get us to our full year target, including further cost-saving programs, as well as revenue synergies from our price optimization work and cost channel programs.

I will switch gears now and end my prepared comments with an overview of our new divisions.

I thought it might be helpful to give you an idea of what the product areas within each division are, and general growth expectations for each.

We have four divisions based around our key technologies.

The largest of them is Molecular Biology Systems division, headed by Peter Dansky.

This is the one division that truly is a blend of products from both legacy companies.

It includes all the molecular biology-based technologies from both companies, including TaqMan, qPCR, RNAi, nucleic acid purification, application kits for next generation sequencing systems, and other core molecular biology reagents.

The division was approximately $1.5 billion in pro forma revenue in 2008, including about $90 million in royalty revenue associated with PCR and qPCR patents.

As it relates to this royalty stream, royalty revenue in molecular systems is expected to decline by approximately $30 million in 2009.

In total, even with the declining royalty revenue, this division is expected to grow in the low single digits in 2009.

Our genetic systems business, headed by Kip Miller, includes all of our sequencing technologies, from CE to SOLiD to single molecule, as well as our applied markets businesses, both systems and kits.

Total pro forma revenue for this segment in 2008 was approximately $850 million.

A little over half of this revenue is capillary electrophoresis systems sold to the research customers.

A little over 40% is CE system and consumable kits sold to applied markets customers.

And the remaining revenue is associated with SOLiD Systems and consumable kits.

The research market for CE systems is declining in the high single to low double digits, while applied markets and SOLiD Systems are growing in strong double-digits.

The net effect of these differentiated growth rates results in the expected growth rate for the Genetic Systems Division of low single digits.

Cell Systems is our third division, and it is headed up by Nicolas Barthelemy.

This division includes mostly legacy Invitrogen products, including Bead-based separation, bio production, Cell Culture Essentials, tools and systems for cellular analysis, including immunology-based assays and our regenerative medicine and stem cell business.

The 2008 pro forma revenue for this division was approximately $800 million.

The division is expected to be our highest growth division in 2009, with mid to high single digit growth.

Finally, our mass spectrometry division is headed up by Laura Lauman.

As Amanda mentioned earlier, most of this division is run as a joint venture with our partner MDS.

And we will not be reporting the joint venture revenue in our total revenue.

Instead we will account for the joint venture income using the equity method.

We clearly plan to run this business for success by continuing our superior level of service and support.

We introduced a brand-new platform in October of last year, which has been well-received across all of our market segments, pharma, applied markets and proteomics.

In fact, demand has exceeded our forecast, and we have a good pipeline of orders yet to be fulfilled as we enter 2009.

Pro forma 2008 revenue for this division was approximately $525 million.

We expect this division to be flat or declining in 2009.

Before ending, let me make a few comments about our next generation sequencing efforts.

First, I encourage you to keep in it perspective that although SOLiD is an important productline to us, it is less than 5% of our total revenue.

As it relates to SOLiD and our next generation sequencing efforts, we started shipping System 3.0 last week.

As Greg mentioned, the new system has the highest throughput and accuracy on the market, and demonstrates the progress we have made over this last year.

With the combination of Invitrogen's powerful reagent expertise, Ambient leading RNAi product, and the superior benefits of the SOLiD technology, we are now poised to deliver completely automated, highly accurate sequencing systems for our customers.

You'll continue to see us announce significant milestones and product developments during this year in the area of CE sequencing, SOLiD, as well as further details on the third generation single molecule program we have under development.

Our Company has the most comprehensive offering of customer-focused sequencing solutions of any life science supplier.

And we're spending approximately $100 million of R&D annually to ensure that we continue to be the leader in this market.

Let me just say that I'm very optimistic with what we can accomplish as a combined Company, especially as it relates to providing our customers with a breadth of innovative solutions to accelerate their research and enable new applications.

We are already beginning to deliver on the promise of the combination, and there is much more to come.

Thank you for your time.

And I will be happy to answer any questions at the end of the call.

David, to you.

Good morning everyone.

I will now take you through the financial details for the fourth quarter and full year 2008 results.

This quarter revenue grew 62% to $545 million, including $191 million from the AB acquisition, which closed on November 21.

Currency had a negative impact this quarter of approximately 4 points.

And organic growth was around 7%.

This was another good quarter of organic growth for our legacy Invitrogen business, which we are particularly pleased with given the current economic environment.

Although we didn't recognize a full quarter of revenue from the AB acquisition, we thought it might be useful if we provided the organic revenue growth rate for the AB business within the quarter, which was a positive 1%.

The organic growth was mostly due to strong sales of SOLiD, forensic systems, and kits and consumables, somewhat offset by declines in CE research.

The AB consumables grew 3% and instruments, excluding mass spec, declined a modest 2.5%.

The mass spec division, which again is not included in total revenue growth, declined by 17% due to the reduction in spending by large pharmaceutical customers, as well as negative currency impact.

Moving on to legacy Invitrogen business, the BioDiscovery division grew 0.5% year-over-year, or 5% organically, to $240 million.

This growth was driven by increased price and new product introductions, which were highlighted in our press release today.

Cell Systems had a very strong quarter with revenue of $114 million.

This represents a growth rate of 17%, including currency and acquisition-related revenue.

Without these two items, Cell Systems grew 13% organically.

Almost all business areas contributed to this growth, including cell culture research, production media and production sera.

Currency this quarter had a negative impact of approximately 4 points to the Invitrogen stand-alone growth rate.

Interestingly, the currency impact to the BioDiscovery segment versus the Cell Systems segment was significantly different, with BioDiscovery having a negative impact from currency and Cell Systems having a positive impact.

This difference was a result of the mix of foreign revenue in each division this year versus last year.

Last year's Cell Systems had a significant amount of shipments to European customers and very little to Japanese customers.

This quarter it was reversed, so Cell Systems benefited from the positive currency movement of the dollar versus the yen.

In our press release today we provided a Q4 financial statement and associated comparisons for Life Technologies, which included a full quarter of Invitrogen financial results and approximately five weeks of Applied Biosystems financials.

The non-GAAP EPS for Life Technologies in Q4 was $0.89, excluding stock option expense, or $0.82 including it.

The AB acquisition represents approximately $0.16 of earnings.

Rather than providing year-over-year comparisons for Life Technologies, which includes a partial quarter for AB, we thought it would be helpful to eliminate the AB acquisition from our Q4 results and do comparisons on the Invitrogen base business so that investors and analysts can get a sense of how the stand-alone Company performed in the quarter.

Slide 15 shows Invitrogen stand-alone financial results for the quarter.

non-GAAP gross margin was 62.6%, a decrease of approximately 50 basis points from Q4 2007.

The gross margin decrease was a result of lower BioDiscovery gross margins, offset somewhat by higher Cell Systems margins.

BioDiscovery gross margins declined by 210 basis points over last year, mostly due to mix from lower margin products, as well as lower manufacturing volume due to significant reductions in our on-hand inventory.

Offsetting some of this decline, Cell Systems gross margin increased by 460 basis points, mainly as a result of higher volume, which led to greater fixed cost absorption, as well as sales of lower cost sera inventory.

Fourth quarter operating expenses were $125 million, a decrease of $6 million from prior levels, and a sizable decrease of more than $17 million from last quarter's level.

The declines were associated with specific actions we made to reduce our overall costs given the current economic environment.

For example, we chose to reduce the number of new hires due to the impending AB integration.

In addition, we put active cost management programs in place that resulted in lower purchased services, and reduced travel and entertainment cost.

Finally, we received a modest benefit from cost synergies implemented in December.

These cost actions resulted in operating margin improvement of approximately 300 basis points year-over-year.

Operating income for Invitrogen stand-alone in Q4 was $96 million, an increase of 18% year-over-year.

Moving back to consolidated Life Technologies results, we had a GAAP loss per share of $0.89 due to expenses associated with the AB acquisition.

A point of note on the GAAP tax rate for the full year, which was approximately 80%, this was a result of the impact from the write-offs of in-process R&D and the repatriation of cash from foreign entities to fund the AB acquisition.

As a reminder, there is a full reconciliation between GAAP and non-GAAP measures in today's press release on our website.

Moving on to the balance sheet and cash flow, our ending cash and short-term investments were $448 million, including $112 million held as restricted cash.

Our debt was approximately $3.6 billion, which includes $2.4 billion of new debt for the AB acquisition.

To date we have swapped $1 billion of our variable rate debt to fix, resulting in a blended interest rate on the new debt of approximately 6%.

For the quarter, cash from operating activities was $122 million.

Capital expenditures were $29 million.

Free cash flow was $93 million, resulting in a full year free cash flow of $275 million for Life Technologies.

I will now move on to our outlook for 2009.

As a reminder, all guidance metrics we provide are based off the 2008 pro forma income statement we posted on our website.

As it relates to the revenue growth this year, we want to be cautious in setting expectations, given the market conditions and the challenges this poses to forecasting the business.

We have good visibility to many parts of our business, but not all of them.

So we believe the best assumption as of right now is low single digit organic revenue growth.

Currency will have a negative impact of approximately 4 points to growth at today's exchange rates, and with the impact of our hedging programs that are already in place.

Non-GAAP earnings per share is expected to be in the range of $2.40 to $2.55, including the impact from currency that I just mentioned.

We expect free cash flow to be in a range of $400 million to $450 million, including approximately $175 million of onetime costs associated with the AB integration.

These costs will be excluded from pro forma earnings, but they are nonetheless cash, so they will temporarily lower our free cash flow.

Without these onetime costs, our free cash flow would be in the range of $575 million to $625 million.

A few other items related to our expectations for 2009 are as follows.

Gross margins are expected to decline by up to 1 point, mainly as a result of the negative impact from currency, normalization of onetime items included in 2008 results, such as settlements, and lower royalty revenue.

This decline will be slightly offset by synergies related to operations and purchasing.

However, these benefits are included in the 1 point gross margin reduction.

Our total operating expenses are expected to decline modestly by a couple of points year-over-year, as merit increases and growth investments are offset by $80 million in synergies, 75% of which are associated with operating expenses.

All of this will result in an operating margin percent that is flat to moderately lower than pro forma 2008 levels.

The pro forma tax rate will be approximately 29%.

Interest income will fluctuate depending on our cash balance.

Our average interest rate on investments is approximately 2%.

Interest expense is expected to range between $165 million and $175 million, depending on the timing of debt repayment and interest rate fluctuations.

The interest expense will be higher in the first half and come down throughout the year as we pay down our debt.

We will repay at least $80 million, in line with our debt covenants, but we plan to pay down more depending on our free cash flow and other needs for cash.

As Amanda said earlier in the call, our mass spec joint venture will be accounted for using the equity method, so all financial impact from that business will show up in other income.

We expect the mass spec division to generate approximately the same amount of income as in 2008, which assumes flat to down 10% organic growth.

Our diluted share count is approximately 177 million at today's stock price, but it will increase if our stockprice increases due to the dilution from our convertible debt, as well as the exercise of employee stock options.

We would encourage you to use a range of 177 million to 179 million, depending on your stock price assumptions.

As it relates to the new accounting for convertible debt associated with APB 14-1, we will be excluding this expense from non-GAAP results.

This expense will be approximately $26 million after-tax.

Moving on to free cash flow guidance.

As I said earlier, our expected range is $400 million to $450 million.

Capital expenditures are expected to be in the range of $175 million to $200 million, with at least $50 million of that being integration-related capital.

Our free cash flow expectations include approximately $125 million of onetime expenses also related to the integration.

It is important to note that our free cash flow will be back end loaded this year, as many of the integration related expenses will be incurred in the first half.

In fact, these integration expenditures, coupled with our annual bonus payments which happen in Q1, will most likely result in a first quarter free cash flow of zero to slightly negative.

This is a positive.

There is a benefit to this as we are implementing our integration actions early in the year so that we could capture the maximum amount of savings before the end of the year.

Now that you have our assumptions for 2009, let me remind you of the key variables that most impact our earnings.

Every point of organic growth contributes about $0.08 of earnings per share, now that we have excluded mass spec from our revenue.

Every 10 points in mass spec revenue equals approximately $0.02 per share.

Every $10 million in operating expenses equals $0.04 per share.

One other metrics that might help you is the impact from further currency movements.

As you know, we now have a hedging program in place with forward contracts implemented on approximately 60% of our forecasted foreign operating income.

We calculated what would happen if all currencies moved against the dollar by 5%, which as you know, is highly unlikely.

If all currencies moved against the dollar by 5%, and our mix of foreign currency stayed exactly the same, the effect would be $0.10 of earnings per share.

That summarizes our outlook for the year.

With that, I will hand the call back over to Amanda so we can answer any questions you may have.

Before we begin with questions, let me remind you of the 2008 pro forma we have posted on our website.

We have tried to include as many notes as possible so you can follow the math, but we would be happy to do a further follow-up phone call to take you through that.

While we open the lines for questions, we will we leave up slide 19, which explains of all the guidance metrics we have just provided.

We are now ready for our first caller.

(Operator Instructions).

Ross Muken, Deutsche Bank.

This quarter kind of marks a culmination of a lot of the strategic efforts that you have put in place for quite a long time.

And obviously it is getting off to a pretty good start.

In terms of as we move forward throughout the year, where are the key -- I know you gave key delta points in terms of some of the different metrics that could increase or decrease EPS.

But as we think about relative to Q4, which was obviously a very strong quarter, where is the largest disconnect in terms of the conservatism?

Is it around some of the instrument-based genetic analysis systems?

Is it assumptions on employment, NIH, on the consumable side of things?

I'm just trying to get a sense of for a little deeper in -- given how great these results are, just trying to translate that to some of the deeper assumptions on the guidance.

I think you are absolutely right.

The quarter was a culmination of a lot of things that we have done, and we're certainly very pleased with the results, particularly on the Invitrogen stand-alone performance in Q4.

If you take a look at Q4 on the basis of assuming that the two companies were combined for the entire quarter, and look at the organic growth rate, our organic growth rate in Q4 as a combined Company would have been 3% to 4%.

And so as we look forward into the first quarter, we assume that trends will basically continue.

And that is consistent with the guidance that we provided in low single digits.

I had it calculated just a little bit higher.

In terms of the stimulus package, it looks like NIH is going to get something in the area of $10 billion or so.

I know you sort of gave a range and it is not finalized.

But, Greg, you sort of over the years continued to increase that on-NIH campus, assuming we would see an inflection point at some point in terms of funding.

Clearly we didn't see a lot of it during the end of the Bush administration, but I'm assuming this was what you were hoping for.

What are your thoughts in terms of the time it is going to take from whenever this is passed and the monies are appropriated via the committees to when it actually starts to flow to the different parts of the NIH?

And then in turn, do you think you're going to see a disproportionate amount of monies going to some of the genetic analysis tools or genomic research specifically, given FDA's interest around pharmacogenomics, and also obviously the increasing interest within the core NIH academic base?

Thanks for that question.

Just on the first part about the bet on the NIH coming back in terms of funding, one of the statement that I have used over the last couple of years was our goal was to be euphemistically the last man standing on the NIH campus during the Bush administration.

So we continued to invest in the NIH presence in academia, because our thought was that over the long-term funding had to return to biomedical research, just due to the pressing challenges in the healthcare sector to decrease costs.

So we're very pleased with what is now transpiring.

And like you say, could be as high as $10 billion.

In our work through our government office in Washington, it would seem to us that a large proportion of the incremental funding more systematically will be, as you say, towards genetic systems.

There is just an amazing amount of discovery taking place on these next gen sequencing machines today.

And I think that the knowledge coming off of them really is stimulating further downstream research there.

I think we will see a large bolus of spend there.

More particularly, how does this money then flow more immediately, if you will, to researchers and then ultimately to companies like ours?

I think there's about $1 billion that will get funded very quickly to grantees that were unfunded during the Bush administration.

And so we will see the immediate stimulus of that.

I think you'll see a pretty fast spend into genetic systems, not all of it, but a lot of pent-up demand on sequencing studies that could be funded fairly quickly.

So I think that is the other area that we see pretty strong growth.

Then lastly in regenerative medicine, clearly further regulations need to change at the NIH.

We think they will.

But we will also see quite a nice step up in stem cell research, or research in and around regenerative medicine, just through incremental grants.

Certainly there is pent-up demand in researchers here in California due to what took place over the last couple of years to create pretty strong research community in California in that area.

That is just my thoughts on how we see this playing out.

Great.

That was helpful.

Maybe one last quick question for Mark.

We heard commentary coming out of AGBT around expectations for a third generation technology sometime in the next, call it, 24 months.

Clearly AB was at the forefront of the boom in capillary, but in terms of where Agencourt came in to market it was certainly second to the Illumina system.

And obviously because of that, they have had a bit of a first mover advantage, despite some of the nice advancement you have had for the SOLiD 3, it has been a bit of an uphill battle, although you're doing quite well.

Do you see like where this third generation box is, do you think you're positioned now to be in a leadership type position for that market, or are we just way too early to know where we are in the development of any of those systems?

We are very pleased where we are now with SOLiD 3.

I think when we came into the market we realized we were second.

But coming in now, the automation that we have now put onto the system to enable customers to fully walkaway.

We were so impressed with the data we got, I mean, getting 40 gigabases of data off in production instruments that just started shipping out to customers, just exceeds anything that is delivered and executed on the market today.

Then we are combining that with the kits we got out of Invitrogen.

You will see us launch the DNA-based sample prep kits and RNA and ambient.

So we're really rounding off the workflow.

And now just the commercial presence we got out in the marketplace, we just think the market is just taking off very fast.

We are tremendously well-positioned with SOLiD 3.

We're just going to continue to invest, as you see, in bringing further improvements to the system.

We are going to expand that, we expect to be 100 gigabases by the end of the year.

And we will continue to invest in SOLiD for short-run reads.

We will also continue our leadership in sequencing, with complementary products.

We have talked about the single molecule there will be complementary long-run -- long read for the short run systems for different applications, as well as continuing applications in CE.

So overall it will just give us total leadership that we think we're going to win in this sequencing market.

Thanks Marks.

And congratulations everyone.

Good execution on this quarter.

Quintin Lai, Robert W.

Baird.

Taking a look at pricing, you talked about 2%, I think, that you got for the Invitrogen business.

Can you talk a little bit about what AB -- how AB did?

And then as you look into '09, what do your anticipate pricing to be, I guess either for the legacy Invitrogen, AB, and is there an opportunity there, and what is built into guidance?

Thanks for that question.

In terms of the legacy Invitrogen, we did have a good performance in 2008, 2 points of improvement.

When we look at the legacy Invitrogen business going into 2009, we expect to make good progress in 2009 in terms of our overall pricing strategy, but we haven't provided any guidance specifically on that part of the business.

Now interestingly on the AB side we have been working seriously between the two teams to apply some of these practices over on to their consumables and integrate those practices.

A lot of those changes have just now gone into effect in January, specifically in the United States and rolling across the world over the next couple of months.

We think we're going to see a nice pick up in terms of improvement in margins there.

But again, we haven't guided.

I would just simply say maybe the best way to model it would be that -- over the last couple of years you saw Invitrogen step up year-over-year in terms of price performance, and we will have that same nice improvement off of -- certainly the consumables business inside AB over the next couple years as well.

Thank you for that.

In the fourth quarter we took notice of the fact that you were able to cut costs as the environment started to slow.

As you look into 2009, now that you are a bigger organization, how much flexibility or nimbleness do you have to move the operating expenses if we get more volatility in your end markets?

One of the benefits we have, as David highlighted in his comments, is the fact that we're going through this integration process caused us to reexamine every single organization inside the combined Company, every single cost bucket inside the combined Company.

So all of that work really created the template for managing your operating expenses.

We have a great base plan in place.

And we have contingency plans on top of that if the economic environment changes on us.

So again, as David said, I think we're lucky that we were going through this integration anyway, because it really caused us to build a pretty robust operating plan with contingencies if we needed it.

Just a quick housekeeping and I will jump back in the queue.

The fourth quarter, or calendar fourth quarter of mass spec, you said 17% down.

Did that include FX or is that organic?

That includes FX.

What would it have been organically then?

There is about 4% impact of currency.

Tycho Peterson, J.P.

Morgan.

Just actually following up on the last question on mass spec, can you give us a sense -- first of all, MDS has talked about plans to form an exploratory committee.

Can you give us a sense as to just what your thoughts are on the business for the coming year?

I know you talked about flat to down 10% organic, but in terms of strategically how that fits in longer term, if you could give us a sense there that would be helpful.

You bet.

We just as our first Board meeting as Life Technologies with MDS.

Mark and I and Laura Lauman were in Toronto, and I think we had a very constructive dialogue between the two organizations, where the two companies are making joint decisions to further fund investments in growth.

We have some very interesting products that have been invented in the MDS R&D shops that we intend to fund and bring to market quicker.

So I would just simply say the dialogue is extremely constructive about getting this business back on a growth track.

As Mark highlighted, the 5500 really didn't ship much in the fourth quarter, but you are seeing the ramp up in the first quarter.

We see a potential improvement in growth trends here versus what the experience was in the fourth quarter.

I would just make that point.

More broadly, as we have said, we are very committed to running this business for success.

It does leverage a lot of our core competencies.

And it just -- at this stage we're trying to be constructive with MDS, whatever happens on their side of the joint venture.

But our goal, and I think it is MDS' goal as well, is we remain focused on the customer.

We're going to invest in the business, and we're going to grow this business as best we possibly can through the economic environment.

And we will does have to see what happens on the MDS to side over the next couple of months.

That is helpful.

Greg, can you talk a little bit about how you look at bio production?

I know you don't talk a lot about sera and these things these days, but we're hearing anecdotally from other companies that things are picking up a little bit in terms of demand.

Can you just talk about how you are viewing that market over the coming year?

We had a pretty good quarter in sera in the fourth quarter.

And we have had a team very experienced in that business since our dark days of 2006, and I think they have the right formula of how to be long when you're long and how to be short when you should be short.

So we actually see a fairly decent environment in 2009 for sera.

And the metric we use to run that business is gross margin growth, and not necessarily revenue.

So our whole goal is always to get the right spread on what we pay and what we sell for.

So 2009 should be actually a pretty good quarter -- I mean a pretty good year for sera.

That's helpful.

Just one last one on real-time PCR, as we kind of think about what you have talked about in the past in terms of some of the patent expirations, any additional thoughts on where you are in the development of either new consumables or instruments, or how we should be thinking about the timelines there?

Firstly, on the real-time PCR patents, we have disclosed the amount of royalty there.

And we will continue to look at ways to mitigate that and improve on that during the year.

With regard to new reagents, we will continue to innovate, and you will see during this year us continue to come out with new reagents, new master mixes, new sample prep that will buildout that franchise.

We will continue to work on the sort of workflow, particularly now we have the presence of this global sales organization, to get really the attachment of the consumables onto our real-time PCR platforms.

And you will see us both innovate around the platforms and the reagents and systems, really building out that franchise.

Doug Schenkel, Cowen and Company.

I think, and please just correct me if I'm wrong, but I think you said that instrument sales for ABI were down 2.5% in the quarter, excluding mass spec, is that correct?

That is correct.

Any chance you would provide a little bit more commentary on what is going on there?

I know you talked about weaknesses in CE for research purposes.

But any additional color you could provide on real-time PCR, PCR instrumentations and SOLiD specifically would be useful.

The instrument side is exposed to the same end market constraints that we have there.

Particularly we're selling -- it was about 30% of our business when you look at total end market goes into pharma and biotech.

We didn't see any year end flush of money that sometimes we have seen in past years.

That didn't happen.

So that was a constrained environment.

So that overweighed what was going on, as well as just where people were in academic budget cycles for the year.

So that was the main sort of trends going on in the end markets that affect the capital side in the end of the year.

But on a product by-product basis, other than what you highlighted on CE for research, it doesn't sound like there was anything particular better or worse across different instrument products?

No, there was nothing you would call out as unusual.

It would really just be the impact of the end markets during that quarter.

Then, again I apologize if missed it, but where are you guys -- can you provide an update on where you are in achieving the $80 million cost energy targets for the year?

Yes, well we said that we are right on track really with that.

We already made and took actions during last quarter that got to a substantial portion of the savings that we needed to achieve for the full year.

You'll see us during this next couple of quarters then take further actions.

And so we believe we are comfortably on track.

We have a tracking mechanism that tracks all the individual work streams and teams that are working through achieving those actions that are across the board in various different areas.

So we feel absolutely on track and good about where we are so far.

Just to add, we said that we were targeting $80 million in synergies in the year.

And the actions taken to date should generate $50 million.

You have talked about investing over $100 million in R&D, I think you said this year specific to sequencing.

I think that is about one-third of your total runrate R&D budget.

Given that, is it right to think that most of your cost savings are going to be coming from the COGS and the SG&A line rather than the R&D line?

Yes, that is the right way to think about it.

When we first came together we eliminated some overlap with duplicate programs, but the approximately $300 million we will spend in R&D.

We will continue to invest in the future in sequencing, with the other one-third going into Cell Systems and molecular biology systems.

And we want to continue to invest in this innovation, and think we can during this time.

Then we will be taking costs out of the -- the COGS out of the supply chain, out of our manufacturing efficiencies, and also just some further duplications in SG&A.

Last one, and then I'll get back in the queue.

The $2.65 guidance number that you had provided earlier, did that exclude FAS 123R?

And then I guess how many quarters -- how many weeks were in this quarter for accounting purposes?

The previous guidance did not exclude FAS 123R, so it actually included it, so it is apples-to-apples.

In terms of how many weeks of what -- AB results?

I know it was five for AB, so was it a 13-week quarter for reporting purposes?

We are on a calendar quarter so --.

Understood, but just because of the abnormalities quarter to quarter in terms of how many weeks there is different ways of accounting for that, I believe.

I'm just trying to get at was it 5 of 12, 5 of 14, and 5 of 13 weeks that AB (multiple speakers)?

I don't actually know the answer, but we are on a strict calendar quarter, so it was October, November, December.

Isaac Ro, Leerink Swann.

First off on NIH timing, I know that the actual dollar amount to NIH is still very much up in the air.

But I am just trying to think, if we look back historically on how the actual budget authority -- the total R&D budget for NIH -- I'm sorry, the NIH budget might have varied from the actual dollars dispersed throughout the course of the year, and with the understanding that many grants are funded over a five-year period, is there a good rule of thumb that you have in mind when you think about how much of those dollars actually materialize in a given year versus the budget?

I would just -- some things of the budget is going to flow fairly quickly, we believe, which is the outstanding grants that have been put in.

And basically the line is going to be drawn further down so more get funded.

What we're hearing as we speak your customers, as well as Greg sits to our Washington D.C.

office, is that we expect to flow fairly quickly.

What we're also hearing from some of our customers that had been asked to put in grant applications is they're looking for the money to be spent within two years.

So some of the additional applications -- and that is in really areas of science that can make a difference is building out the genome and understanding that.

The funding we expect to flow -- how it will exactly flow will be different, but the grants are being requested to be spent within a two year timeframe.

Then just switching other to your headcount.

I believe it was about 9,500 people at the time of the deal close.

Where do you think it ends up at year-end of 2010?

I don't think we have really made any comments on what headcount targets are.

Is it safe to say that with regards to the previous comment on where the cost efficiencies come from, that if it isn't necessarily headcount that you have -- how would you weight the opportunities within sales and marketing, for example, to optimize your profitability?

One of the things that we have said is that sales in particular, and marketing as well, is not one of the areas that we're targeting significant cost synergies.

We think that there are revenue synergies and opportunities.

The cost synergies are more around things like reduced duplicate corporate overhead.

We're looking at significant sourcing savings in our overnight delivery services, for example.

And as Mark said, we have eliminated some duplicate R&D programs.

Those are the kinds of things that we think we're going to get the cost synergies from.

Then just lastly on the mass spec, I think you said down 10% to flattish.

What are some of the things that you think need to happen to get to flattish?

I just kind of assumed that it is a very difficult capital environment -- capital equipment environment for everyone, even with new product cycles.

Do you assume that there is a meaningful improvement in the drug industry or is it may be elsewhere in other non-healthcare applications?

The variable, one of our core markets is clearly the pharma market.

And what we saw at the end of the quarter was pharma had stopped spending during that period, principally on mass spec.

That is a key variable as we go into the new year.

We continue to expect while pharma is reorganizing itself will spend.

And within the CRO, they are seeing the new 5500 as a tool that they want to upgrade to, because there are some applications that they couldn't do on their legacy systems, so we are seeing that pull through.

In the proteomics section we expect some of that is exposed to the NIH budgets, as we think about biomarkers and more of that translational medicine.

And then we're very robust in the markets in applied markets for doing food testing, environmental testing.

And those markets are continuing to be an increasingly important part of our business as we see continued pressures globally on testing for contaminants like Melamine in countries like China.

So those are some of the variables that gives us cause for optimism as we think about the mass spec business during 2009.

Derik De Bruin, UBS.

I know that the prior guidance of $2.65 didn't include the stock options, but it did include roughly about $0.10 from mass spec.

Is that correct to assume?

We didn't specifically call out how much mass spec was in that guidance, the previous guidance.

But $2.65 did include the mass spec business, correct?

Yes.

That is helpful on that.

I guess when you look at the PCR royalties, I do appreciate the color on that, and going to Tycho's questions when he asked about the new product introductions could potentially offset this.

Can we look at this over the next several years as like down $30 million this year, down $20 million, down $10 million?

Because I don't think -- because if you are assuming new product introductions it wouldn't affect the entire $30 million -- the entire $90 million is going to be disappearing between now and 2012, I think, when the bulk of these patents come off.

I think that is the right way to look at it.

It is a series of patents.

It is a complicated estate that we expect, as we model out, would decline over that period going into actually 2012, 2013.

It doesn't go to zero over that time.

In addition, we have new IP that we're developing that we will be looking at out licensing new programs.

And as well, as we have give in our guidance, where we do offset that by new product introductions, that grows.

So overall within that business area we view it just like a mature productline.

That works to -- we have a great deal of visibility into the next five-year revenue stream.

And then we're challenging the teams to offset that both with new product introduction and new IP that we will out license.

So overall we will offset that negative picture with a growth in that business area.

I think it was the five-year visibility I was getting to, just like how long the things trail out.

But that is very helpful.

Thanks Mark.

Greg, I know that Wyeth was an important customer for Invitrogen.

And I assume that your sales to Pfizer are not chump change.

So how do you look at the impact of the merger going forward, or how could that merger impact you?

I guess, also, are you looking for further -- does your guidance include a potential for further other consolidation in the big pharma space?

Generally, the merger of Pfizer and Wyeth I think is actually a net positive for us.

In our preliminary discussions with their purchasing organization they have indicated a desire to consolidate vendors to their larger suppliers like us.

So typically what we see is there is a little bit of confusion as you bring two big companies together.

But we are actually quite excited about the opportunities to merge their two purchasing spends and get more share of the combined entity.

Actually that is what we're working on right now.

I guess looking at the -- I was just looking at your pro forma restatements.

Are you going to do anything to basically break out the four different business units on a quarterly basis now that you have reorganized into the new divisions?

We will certainly be providing revenue on an ongoing basis, and some indication of what the growth rates are likely to be.

But you are not going to go back and just give us -- until the quarters come out basically?

Correct.

When you look at into all the things factored in, what is the biggest variable in determining whether or not you're going to -- about how much you're going to pay above and beyond what you have to in terms of your debt repayment?

I guess can you tell us what you're thinking in terms of how quickly you're going to go after that, after the debt?

I think our number one use of cash is the repayment of our debt.

So we will -- that will be the first thing that we will focus on.

And as I said in my remarks, it just depends on what the level of free cash flow generation is.

Certainly we're going to invest for the long-term sustainability and growth of the business.

But the primary focus is going to be pay down the debt.

Derik, I just want to confirm one thing or reconfirm it.

On our current guidance that also includes mass spec.

I'm not sure if your original question was, did we have it in one number and not in our current guidance.

The old guidance, as well as our current guidance, includes the impact from mass spec.

It is just in different line items.

Thanks for the clarity.

Jon Wood, Banc of America-Merrill Lynch.

Just to be clear, the capital redeployment in the guidance is just the $80 million of debt that is required?

That is correct.

Then the rest of the cash, you assume it just builds on the balance sheet?

We assume we will put it to use, but the exact use and timing of such is not completely quantified, but we assume we are putting it to use in some way.

The operating cash flow guidance X the onetime items looks to be about $750 million to $800 million or so.

What in terms of working capital use have you built into that number, Dave?

I think that we have -- in terms of we have built in basically sustaining at this point our current levels of working capital turns, inventory turns, for example, receivables as a percent of sales, etc.

Now that is one of the areas we're working on.

As we have said before, for Invitrogen stand-alone we think there are opportunities in inventory.

But for our modeling purposes at this point we're not counting on any significant improvements in working capital in 2009.

So does the CapEx go to like the $50 million to $75 million level after '09, because I believe you said $125 million of onetime costs in the capital guidance this year?

No, our capital expense -- again, what we have assumed in our capital expenditures going forward is a combination of the two companies' capital spend.

So that is closer to $150 million, $160 million.

(multiple speakers) $175 million to $200 million.

I thought he said onetime.

The cash tax rate, is that expected to differ from the book pro forma rate?

Probably, because we will probably have a lot of integration-related expenses that hit the GAAP.

I don't know the exact number, but I would imagine it will differ.

Then last one.

Is there a way to tease out the accretion or dilution assumption for ABI in your guidance or is it too difficult to pull it out at this point?

It is too difficult to pull it out.

It is a totally integrated company at this point.

Marshall Urist, Morgan Stanley.

A couple of questions.

The first one, can you just talk about the legacy real-time PCR applied genomics AB business in the quarter?

Obviously it has been very strong.

And just give some sense of how all of the factors on the end market side that you guys talked about impacted that business in the quarter?

That business, as you say, has continued to be very strong.

Really the market drivers for that -- really this molecular methods switch from traditional techniques continues.

The drivers to do more DNA-based testing, we see more states, for example in the US, testing for all arrestees.

We see China building up 300 labs for forensics.

That macro continues.

In the pharma environment using molecular methods, you see more outbreaks like the one that has been very well-publicized for peanut butter and looking at how do you test for molecular-based methods for salmonella or E.coli.

So those are all the macrotrends that all pull forwarded real-time PCR reagents, sample prep that we have done from ambient instruments that come through, and just a broad range of microbiology products into those areas.

We continue to see that.

It grows in double digits for us.

And you will see it reported out mainly in the genetic systems business, as well as in the microbiology systems business, some of the real-time instruments, and some of the areas we're looking into like animal health production, animal testing.

So that double-digit number that you mentioned, that is an organic double-digit growth number in the quarter?

Yes, it is.

Then the other question I wanted to ask was just on the revenue guidance, just to be clear, so the low single digits obviously excludes mass spec, right?

Can you give us a sense -- I know it is hard because of the wide range that you gave, but give a sense of where the total organic growth guidance might have come out had you included mass spec in those numbers?

Just so we can think about so on an apples-to-apples if we just added sort of calendarized AB and Invitrogen revenues year-on-year, how we should think about that.

We have given you the pro forma mass spec number.

So I think you should be able to pull that out.

If you are trying to do your own 2008 pro forma by adding together AB and Invitrogen, you now also have the mass spec number that you can just pull out.

So I think what we have provided you -- we have tried to provide you now an apples-to-apples by excluding mass spec from the base year of 2008, and giving you guidance off of the new 2000 (sic - see press release) pro forma, which is -- we posted on our website.

So I'm not sure that we can give you a different guidance number or a different range if mass spec were in the revenue in 2009.

But you are just saying if I just -- in your range, if I weight whatever the assumption is, and throw it into the top line, you get what the combined number is.

All right, cool.

Thanks guys.

That's right.

We have time for one more caller.

Peter Lawson, Thomas Weisel Partners.

Could I just clarify something?

The organic growth assumption for next year, does that include AB or is that just AB at the end of the year?

That includes it.

We provided a new 2008 pro forma on our website, which is the combination of the two companies for all of 2008.

From here forward guidance and our results that we start comparing to, we will compare to a 2008 as if the two companies were combined the entire year.

Thank you.

Then just quickly on the headcount.

What is it at the moment?

Approximately 9,500.

Could you just remind us how much operating income did the mass spec group generate in '08?

That would be in the 2008 pro forma we posted on our website, roughly $38 million.

Perfect.

Thank you so much.

Okay.

That now concludes our fourth quarter and full year 2008 earnings conference call.

This webcast will be available via replay on our website for three weeks.

Thank you again for joining us this morning.

Ladies and gentlemen, thank you for your participation in today's conference.

This concludes our presentation.

You may now disconnect.

And have a wonderful day.