Good morning, ladies and gentlemen. Thank you for standingby. Welcome to the Charles River LaboratoriesIncorporated, Third Quarter 2007 Earnings Conference Call. At this time, allparticipants are in a listen-only mode. Later, we will conduct aquestion-and-answer session. Instructions will be given at that time. (OperatorInstructions) And as a reminder, this conference is being recorded. I would now like to turn the conference over to our host,Vice President of Investor Relations, Ms. Susan Hardy. Please go ahead.

Thank you. Good morning and welcome to Charles RiverLaboratories' third quarter 2007 conference call and webcast. This morning JimFoster, Chairman, President and Chief Executive Officer, and Tom Ackerman,Executive Vice President and Chief Financial Officer, will comment on our thirdquarter results and review guidance for 2007. Following the presentation, we will respond to questions.There is a slide presentation associated with today's remarks, which is postedon the investor relations section of our website at ir.criver.com. A tapedreplay of this call will be available beginning at noon today and can be accessed by calling 800-475-6701;the international access number is 320-365-3844. The PIN number in either caseis 890128. The replay will be available until November 20th. You may alsoaccess an archived version of the webcast on our investor relations website. I would like to remind you of our Safe Harbor. Any remarks that we maymake about future expectations, plans, and prospects for the Company constituteforward-looking statements for the purposes of the Safe Harbor provisions under the PrivateSecurities Litigation Reform Act of 1995. Actual results may differ materially from those indicated byany forward-looking statements, as a result of various important factorsincluding, but not limited to, those discussed in our annual report on Form10-K, which was filed on February 27, 2007, as well as other filings we makewith the Securities and Exchange Commission. During this call, we will be primarily discussing non-GAAPfinancial measures. We believe that these non-GAAP financial measures helpinvestors to gain a meaningful understanding of our core operating results andfuture prospects, consistent with the manner in which management measures andforecasts the Company's performance. The non-GAAP financial measures are not meant to beconsidered superior to or a substitute for results of operations prepared inaccordance with GAAP. In accordance with Regulation G, you can find thecomparable GAAP measures and reconciliations to those GAAP measures on theinvestor relations section of our website through the financialreconciliation's link. Now, I will turn the call over to Jim Foster.

Good morning. I'm very pleased to speak with you today aboutour outstanding third quarter results. As you know, we believe that thepharmaceutical industry is at an inflection point unparalleled in its history.In an effort to focus their resources on drug discovery, pharma companies areadopting strategic outsourcing as a means to streamline their operations andimprove pipeline throughput. Having spent the last decade expanding our portfolio ofessential products and services, enhancing our managerial, scientific, andtechnical talent, and extending our global reach, we believe we are extremelywell positioned to support our clients' drug discovery and development effortsand the strengthening demand from big pharma. Our third quarter results demonstrate the effectiveness ofour organization and validate the investments we made and continue to make, aswe correctly anticipated the paradigm shift that is taking place in the globalpharmaceutical industry. For the third quarter, net sales increased 18.6% to $314million, the results of strong growth in both the RMS and PCS segments. Theacquisition of Northwest Kinetics contributed 3.2%, and foreign exchange added2.6% to the sales growth rate. Operating income for the quarter was $70.9 million comparedto $61.2 million reported in the third quarter of '06. Although operatingincome was significantly higher, the operating margin decreased to 22.6%compared to 23.1% in the same period last year. We expected a decline because of the costs associated withthe transition of our new preclinical facility in Massachusettsand because of higher corporate costs, as we invest in information technologyand scientific and operational staff to support our growing business. However, we were very pleased with the operating margin,which declined just 50 basis points when compared to last year and improved 120basis points from the second quarter of this year. At $47.3 million net incomefrom continuing operations was 22.1% higher than the $38.8 million reported inthe third quarter of '06. Earnings per share increased 21.1%…

Thank you, Jim, and good morning. Before I recap our strongthird-quarter financial performance, I would like to remind you that ourdiscussion today focuses on results from continuing operations. Consistent withJim's comments, I will focus my discussion on non-GAAP results, which excludeall acquisition-related amortization and other items. Double-digit sales growth and improved capacity utilizationin both segments continued to drive operating income, which rose 15.8% to $70.9million. Driven by this operating leverage, third-quarter diluted EPS increasedan impressive 21.1% to $0.69 from $0.57 a year ago, despite an increase in theshare count. As expected, the operating margin declined slightlyyear-over-year to 22.6% in the third quarter of 2007, reflecting theanticipated decline in PCS margins due to the transition costs in Massachusetts,as well as higher unallocated corporate expense. The 280 basis pointimprovement in the RMS margin partially offset these factors. On a sequential basis, the operating margin improved 120basis points as operating income growth of 7.8% outpaced sales growth by nearlyfourfold, primarily due to the sequential decline in unallocated corporateoverhead. EPS also increased 7.8% sequentially. Given the normal seasonality in our RMS business, we do notexpect the sequential comparison to be as favorable in the fourth quarter ofthis year. Foreign exchange had a negligible impact on the bottom line in thethird quarter. As Jim mentioned, foreign exchange did accelerate the salesgrowth rate by 2.6%; but the operating income effect is muted by the fact thatwe are naturally hedged at most locations, meaning revenues are primarilyderived in the same currency as costs are incurred. However, this is not thecase at our PCS facility in Canada. In Montreal, themajority of sales are denominated in U.S. dollars, while costs are primarilyincurred in Canadian dollars. The strengthening Canadian dollar negativelyaffected operating margins in the third quarter, negating nearly all of the FXbenefits generated from other geographic regions. Unallocated corporate…

(Operator Instructions) And the first question comes fromthe line of David Windley with Jefferies & Company. Please go ahead. David Windley -Jefferies & Company: Hi, thanks for taking my questions. Congrats on a nicequarter. First of all, I wanted to ask on RMS margin, but for some of theseasonality, Tom, is the improvement in margin generally sustainable? Are thereother underlying trends, be it transgenics, pricing on models, anything in thatregard that are -- perhaps even PTS and leverage there -- that are, say,secular movement in margin on the RMS side?

I would say not, Dave. We obviously had a very good quarter.Margins were very good. I think all things were sort of aligned very well. Wedidn't really have any drags here or there, but in terms of the macro trends, Iwould say there are not any underlying trends that other than seasonality andthings like that bode negative for the margins. David Windley -Jefferies & Company: That bode negatively for the margins?

Yeah. I would say there were not any of those types ofthings other than seasonality. David Windley - Jefferies& Company: Okay. So otherwise, third-quarter margins are a reasonableprojection?

Yeah, I would say, the only thing, as I said, all thingswent very well in the third quarter. Even when we are doing well, generallythere is a little bit of a drag here or there. We didn't really experience toomuch of that. David Windley -Jefferies & Company: Okay.

I think it's a very good indicator, but it was a goodindicator, in the sense, that things were aligned very well. David Windley -Jefferies & Company: Right. Okay.

That doesn't always happen. David Windley -Jefferies & Company: Okay. Moving then on transgenics, obviously the compares tolast year have been easier to this point. And I suspect a decent contributor tothe overall RMS growth in 3Q. Is transgenics growing sequentially by ameaningful amount?

Yeah. It is, Dave. We are continuing to see improvement inthe demand for transgenic models as more complex models are developed.Continues to be a confirmation of the importance of these models to research. We obviously saw substantial improvement over the last year,which was a weaker year. But we continue to believe that it will improve goingforward. We don't really see any change in the demand quotient, given the levelof investment that we are seeing our clients make. David Windley -Jefferies & Company: Okay. Great. So, just obviously trying to narrow in on -- isthe sequential improvement in the business enough to overcome the sequentiallytougher comp to the fourth quarter of last year? Relative magnitudes of thetwo, I guess?

Well, I think just to add a little bit to Jim's comment, wehave been growing sequentially, and, of course, we've had nice growthyear-over-year in transgenic. What we have seen as the year has progressed,though, as the rate, particularly in the U.S.,of increase year-over-year has shrunk gradually. David Windley -Jefferies & Company: Okay, okay. Super.

It was a trend last year and this year. David Windley -Jefferies & Company: Okay. And then last question and I'll jump out is, Jim, youdefined for us your CRDRs. Talk about for me the pricing on those and, at leastin your early experience, how those evolve perhaps from a revenue standpointand then also from a margin standpoint?

Yes, so our goal is to have appropriate returns regardlessof the specific structure. So we have a certain cost of capital, and we want torecoup that and then some. So, what we're trying to do is maintain a maximumflexibility as we interface with clients who all have a totally different goaland want to operate differently. So whether it should simply what we used to call the olddedicated space arrangements, where they would sort of rent space for aparticular period of years, or literally build out space for clients, or builda new building like we are doing in Sherbrooke for one or two clients who areproviding the motivation, or have our folks go in and manage other people'sfacilities, or work together collectively. And we've even had someconversations, although they haven't come to fruition, with clients who want tosell us their preclinical locations that they have taken out of commission. So, what we don't want to do is have one-size-fits-all forthese clients. We want to be able to listen carefully and respond to theirneeds and respond to them geographically as well. So it's an evolving way ofdoing business. We are not going to in any way denigrate our margins in orderto respond to the clients' needs. And I think that we should continue to seesort of the demand continue from a revenue contribution going forward. But the nature of the deals will be perhaps more complex andmore diverse going forward. David Windley -Jefferies & Company: Okay. Thank you.

And the next question comes from the line of Douglas Tsaowith Lehman Brothers. Please go ahead.

Thanks and good morning. Congratulations on the quarter.Jim, to start off with, or Tom, I was wondering if you could provide somecomment on how you see the transition to the Reno facility; and how that wouldcompare to the transition into Shrewsbury from a cost standpoint, would this bea more or less expensive operation? And how -- what's your thinking going interms of our expectations for that in the fourth quarter as well as 2008?

Why don't we both try to answer that? You should anticipatethat the Reno transition will besimilar in scale and scope to the Massachusettsone. We will be vacating the facility at the end of '08, as we are vacating theWorcester facility at the end of'07. We have in-life studies that are ongoing that can't bedisrupted, so we have to finish them in the old Reno facility at some point intime, as we did in Massachusetts; and then start new ones in the new Renofacility. So we should see similar pressure on the margin through '08.But remember, we should also see -- we expect to see some sequentialimprovement in Massachusetts aswell in '08, also.

Just a couple of other data points to think about. Bothfacilities are about the same size. We will be operating probably a little bitmore of Reno facility on day one, versus how much we built out in Shrewsbury,both facilities will be run by the same management team that is in that area ,both, seven or eight miles from the existing site. So there are an awful lot of similarities. The work that'sdone at each site is probably a little bit different on a mix standpoint. But Ithink when you tally it all up, in advance of our having completed the 2008plan, it certainly looks and feels an awful lot like the transition at Shrewsbury.

Okay, great. And then, turning to the transgenics business,Jim sort of talked about the technological evolutions there and the increaseduse of polygenics. From your standpoint, do you get better margins from sort ofbreeding and maintaining polygenic colonies versus sort of these single geneknockout/knock-in colonies?

I wouldn't expect that we would get better margins. Themargins in the transgenic business have been quite good historically and havebeen improving as we continue to fill up the capacity. So like most of ourbusinesses, as we utilize the capacity better, fill up the isolators, themargins will stay the same or perhaps get better. But the specific nature of the animals, it's unlikely thatthe work product itself will change dramatically.

And how much of a contributor -- you've commented that youare seeing more characterization work, as well as sort of analytical workassociated with the transgenics business. Has that been a significantcontributor to the rebound in that? Or has it largely been just a question ofvolume of colonies?

There has been some benefit obviously from characterization.But I think the primary improvement that we are seeing is the sheer volume ofnew models that we are setting up almost on a weekly basis; and as I said,filling up the facilities and utilizing our labor wealth. And again, it is a worldwide phenomenon. We continue to bedelighted to see it happening across the world, which gives us the confidenceto really believe that this is a fundamental refocused investment in basictechnology.

Okay. And then final question. You've spoken a lot aboutsort of entering into discovery sciences more. You have also continued toemphasize your desire to stay focused on the company's expertise inanimal-based medicine. I was wondering, when you contemplate expanding yourdiscovery services, have you ever thought about getting more into the purechemistry related services? There is a lot of -- there has been a lot of growththere, especially in the Asian market, servicing large pharma companies. And Iwas just wondering if that had entered your radar screen?

Well, we have indeed thought about it, but it really doesn'tfeel like it takes advantage of our core capabilities. There are lots of peoplein that business already who have been doing it for a long time. While it'scertainly in the development chain for new compounds, it's probably one that wewill continue to leave to others. So our discovery services business is very much autilization of our core capabilities, premised on our veterinary medicineexpertise. It's the same drivers that we're seeing in the regulatedpre-clinical studies that are going to drive this. And we think this is asubstantial business opportunity for us, albeit a small one at the currenttime. So we're going to stay focused on the animal-related andveterinary-related aspects of it.

Okay. Great. Thanks a lot. Congratulations on the quarter.

Thanks.

And the next question comes from the line of Eric Coldwellwith Robert W. Baird. Please go ahead.

Thank you and good morning. The first question is just asimple one on Nevada. It appearsto me at least that, perhaps, your GLP work is starting faster than pastimplications. Is that an accurate assessment?

Well, we've commented on it before. We have booked studiesand have been booking studies in that for '08. Those are new studies,obviously. So it's pretty much what we anticipated. This is a facility that hasa long and distinguished reputation in large animal toxicology work, similarclient base and the same staff. So the new facility just makes it, frankly, moreadvantageous for these clients. But we're seeing repeat work with them andexpect to continue to see that but not surprised by it.

Okay. In Shrewsbury,the commentary in the prepared remarks was that it's near capacity on the spacethat's currently being utilized. I guess the question is -- what percent ofthat facility is currently staffed and equipped, and what would be the timingof additional shelf rollouts in Shrewsbury?

We've finished, we've renovated 60% of about 450,000 feet.There is some administrative space in there. And remember, lots of this isreplacement space. We've renovated that and that, we would say, is nearingcapacity. Where a lot of that is sort of earlier non-GLP work, we'rebeginning to see a gradual shift in mix, which we're delighted with. I think that'sgoing to be really important to this operation, and that should continue. We'reseeing an increase in the backlog in basic toxicology services at that site aswell. So while we are nearing capacity now, we will see a shift in how thatcapacity is utilized. We retain another 150,000 feet of space, which is shelfspace. That gives us great flexibility to finish that in a myriad of fashionsand phases at once, depending on what the demand is for our clients. While weare looking at the design, we'll pull the trigger when the demand intensifiesand when we see a more discernible need.

Great. And then, finally, regarding the new facility in Quebec,I guess, there has been some talk about that facility in a press release earlier.But I'm trying to get a sense of what will be unique about that facility interms of maybe your mix of CRDR work there being higher, perhaps, than in otherfacilities or what is the exact plans for that facility in terms of mix andstructure and how you work with clients there versus your other existingfootprint?

So let's just go back to the driver. The driver for that newspace was the fact that we're out of capacity. We're out of physical space. Weplan to build at our current Montrealsite, which has grown quite large. We have some very large top-tier pharmaceutical clients, whoprefer utilizing that location, because they have a long relationship with thestudy directors and they're happy with the quality of the work, who, while we mayhave capacity elsewhere, really prefer to stay in Montreal.And that's the fungibility of the space, is definitely a goal of ours. But atthe current time you can't always direct a client to where you want them to. So there were a couple of clients, in particular, drivingthis space. This is sort of a satellite facility, a kind of the mother-shiplocation that we've had for years. This is clearly a dedicated resourcesarrangement, we have one or two of those clients who will take the first spaceof this site, which we anticipate will be about 300,000 feet. We'll build out 75,000 feet immediately. And by the timethat's operational, at the beginning of '09, it should be full. So it's more ofthe same sort of work, but as we said on a satellite basis and we also continueto grow it on a dedicated resources basis as well.

That's great. Let me add my congrats on a really strongquarter. Thanks, guys.

Thank you.

Thanks, Eric.

And the next question is from the line of John Kreger withWilliam Blair. Please go ahead.

Thanks very much. You mentioned your results out at Montrealbeing affected by the strengthening Canadian dollar. If you adjust for that,how did Montreal do on kind of aconstant dollar basis in the quarter relative to your expectations?

Montrealcontinues to do exceptional both in terms of revenue and operating margins. Andactually, notwithstanding the margins, the impact from the Canadian dollar, themargins are still extremely strong and, if not for that, it would have justbeen better. So it does take a little bit off of our overall margin forthe PCS and the corporation. But overall, from a foreign currency standpoint,because of the pickups we have elsewhere, where it's sort of muted on theoperating income level, but we are seeing pickups in sales, as we translate.

Great. Thanks. Then, a general question about theprofitability in your pre-clinical services business. As you look across yourvarious toxicology facilities, how would you characterize the performance? Arethey all kind of meeting your expectations or is there a potential to sort ofapply a best-practices approach to drive further margin leverage in thebusiness over the next couple of years?

We're really pleased with the performance of most of ourfacilities. We've had topline growth everywhere, except for Nevada,which had capacity-constraints we've had sequential improvement in operatingmargins everywhere, except Massachusetts,which obviously had duplicate space. We have -- our goal is to get to 25% operating margins inthis sector. And we have most of our operations performing at or better thanthat level. So we continue to be pleased with the performance. We still havesome opportunities to maximize and implement best practices across all of oursites. We're continuing to work hard and drive efficiencies. Wecertainly hope to get increasing efficiencies in Montrealand Massachusetts and Nevada,which are newly built, obviously, and quite flexible in terms of how the spaceis utilized.

Great. And then, one last question. Jim, could you justexpand a bit on your dedicated resource comments? As those relationshipsevolve, are they starting to include kind of a dedicated staffing role as well?

They may. Our goal is to expand our consulting and staffingbusiness, which is predominantly a primarily research model related at the currenttime. We have clients that have space that they want to utilize but don'tnecessarily want to do the work and who may not necessarily have the expertiseto do the work. While it's very early in those types of discussions, we'recertainly having them. Of course, people are utilizing our facilities, we haveanother arrangement that we're talking about where some of the clients will bepermanently or at least partially located in our facility at the same time. So,again, the goal here is maximum flexibility for the clients, utilizing thefacilities that are proximate to them, whether they are currently built out orcould be built out in the future.

Great. Thanks very much.

And your next question comes from the line of Alex Alvarezof Goldman Sachs. Please go ahead.

Good morning and congrats on the quarter, guys. Just wantedto continue with some of the earlier questions on RMS. This year, there havebeen a lot of moving parts that have impacted revenue growth. And I was justhoping if we could get some color from you in terms of what you would kind ofview as a long-term growth rate for the division? I just want to make sure we don't get carried away withexpectations, because I think the last time that the Street was looking for along-term double-digit growth rate, it did create some challenges for thecompany.

It's okay, if you get carried away. I think that it'sreasonable to expect, even though we're talking about low double digits forthis year, there is some FX in there. So our realistic aspiration is that webelieve we can grow this business at high-single-digit rate. That's obviously acombination of multiple businesses with different growth rates commensuratewith them. But we see a very significant demand both in the earlydiscovery side and the later-stage development side of our business, and on theproducts and services side as well. We're thrilled with the way that PTS isgrowing. We're thrilled to see our U.S.rodent sales and European rodent sales are growing at double-digit rates thisyear. And we are very -- and continue to be delighted with thetransgenic service improvement over the prior year. And we don't really see anyindications that that demand quotient should change. So we're looking at sortof high-single-digit growth, where operating margins are continuing to remainin the low 30s.

All right. Thanks. That was great color. And then in termsof the improved growth in research models right now that you're seeing, wouldyou attribute that primarily to higher spending by customers or is there asense internally that you're making some market share gains as well?

I think both. We're seeing higher spending in basicdiscovery, as I said, and in development work, because pipelines have to beinvigorated. And that's really the only way to do it. We certainly believe thatwe're taking share from at least one of our primary competitors, particularlyin the United States,particularly in the academic and government sector, and a little bit in thepharmaceutical sector as well. We continue to get pricing, but we're seeing some nice unitgrowth and increasing mix benefits and believe that those, sort of, metricsshould continue.

And just one last one, in terms of PTS, how many salespeopledo you have out in the marketplace, right now, selling the product? And then,could you just remind us of the sales cycle? How long is it taking potential customersto move from the validation stage of the product to actually making a purchasedecision?

I don't know the exact number of salespeople on a worldwidebasis. So we'll have to get back to you on that. But it's primarily directsalespeople. It's a highly technical sale that usually requires some sort ofwet lab training. The sales cycle can take a while, sort of, three to ninemonths, kind of, thing. Even when they're transitioning from our own oldertechnologies, just to understand it, obviously, it's a little tougher when theyare transitioning from a competitor's technology to ours. But once we havecaptured the clients, we feel that we will be able to hold them. And we aredefinitely making those transitions now.

Great. Thank you for the details.

And your next question is from the line of Rob Gilliam withUBS. Please go ahead.

Hi. Thank you. Most of my questions have been answered atthis point. I guess just one and I don't think that you have addressed itearlier. But just given the robust demand for RMS and as well as the positivemix shift towards transgenics that you spoke about earlier, just curious aboutpricing. I understand that this is the time of year when you passthrough the new pricing for 2008. And is the 3% still the right number for RMSas a whole or given the positive mix shift could we maybe see that number driftup a little bit higher?

So we're not going to give details on '08, until our guidancecall, which is in mid-December. So I'm not going to answer that specifically,except to say that we've always been able to improve our prices, appropriatelevels, in our research model business. And I would anticipate that we'll beable to continue to do so next year. And when we do that, we can give you morespecific color on that.

Okay. Thanks a lot. That's all I have. Appreciate it.

And your next question comes from the line of HariSambasivam. Please go ahead.

Yes, thank you. A quick question for Tom Ackerman. Justgiven the decline of the U.S. dollar and I'm just wondering in terms of yourcapital expansion plans ex-U.S., how does that -- how do you sort of thinkabout it over the next, say, three to five years with the dollar going where itis? Secondly, in terms of the U.S. dollar declining as well, howdo you sort of adjust pricing for that? Is it something that you can recoupfrom ex-U.S. clients? Or is it something that you have to eat, like in theCanadian facility?

Yes, the -- well, it's relevant in a couple of ways, Hari.And most specifically in our Canadian operations, where many of our customersare based in the U.S.and the predominant mode of invoicing or method of invoicing is in the U.S.dollar. So a couple things that we have looked at and continue tolook at is we're having discussions with some of our larger clients aboutpotentially billing those in Canadian dollars, which would obviously alleviatesome of that risk. We are also doing hedging practices and looking at extendingthose, although given the weakness of the dollar today it would obviously bedifficult to make a long-term hedging decision. But nonetheless we want to atleast put in policies and practices that would allow us to probably go out andhedge longer than we have historically. We do look at, as we expand, the locations where we areexpanding and the benefits of that. And while the exchange rates are somewhatunfavorable between the Canadian dollar and the U.S. dollar at this particularpoint in time, labor rates historically have been lower in Canadathan they have been in the U.S.So it still continues to be a good source of appropriately priced labor supply.And of course, that's one of the factors we look at as well.

What about longer-term ex-U.S. expansion with the U.S.dollar going where it is, Tom?

Longer-term, where we would expand, you mean?

Right. I mean in terms of capital expansion ex-U.S. with theU.S. dollar going down, I'm just wondering that makes it much more expensive tosort do capital expansions elsewhere. So does that sort of figure into yourplans as to how you can recoup this investment if the dollar keeps sort ofdeclining over a period of time?

Well, it does. I mean if you think about Canadaas an example, we are cash flow positive in Canada.So the CapEx that we would spend in Canadawould be mostly driven by operating cash flows within Canadaitself. So it's not like we have to send money from the U.S.up there at an unfavorable rate, or if we needed to we could obviously borrowlocally. So, I think all those things factor into it, but from wherewe sit today, as an example, the expansion in Sherbrooke,we believe, is still a good transaction to undertake.

Thank you.

And the final question is from the line of Doug Schenkelwith Cowen. Please go ahead.

Hi. Good morning and congrats on a great quarter. Relativeto Street expectations, as I just referred to it was a very good quarter. Ithink Q3, I think it's fair to say that Q3 is usually a bit of a tougherquarter seasonally while Q4, while it's tough seasonally, it usually rebounds abit sequentially. It doesn't look like that's going to be the case this yeargiven that you have implicitly guided the Street to expect a sequentialslowdown in sales heading into Q4. So just so we can better understand howstrong a quarter Q3 was, can you talk about whether or not you pulled somesales into Q3 that were expected in Q4? And if so, on which side of thebusiness? How should we think about the margin impact both from a Q3 upside andQ4 outlook perspective?

Yes, this is Tom, Doug. There is no -- I would say no -- wewould not pull any sales forward. We wouldn't do that, and it's generally notthat available to us anyway. We can't ship out animals a little early with somesort of a [SPF program]. I think one of the things that I said earlier is that it wasa very good quarter almost everywhere we looked. We always have businesses thatoutperform, we have businesses that are sort of where you expect them, andsometimes of course we have businesses that are under-performing and theportfolio sort of manages that. This quarter, being Q3, I would not say that we had anydisappointments anywhere. So the stars were sort of aligned all over the place.Corporate expenses were favorable as we talked about, up versus last year butsequentially down versus Q3. We wouldn't expect to see that same thing in Q4, although wewould still expect to see it on a favorable trend basis. So I think it was avery, very good quarter and I think we are sort of seeing the same similarthings and guiding that way that we would expect in Q4 in terms of seasonality,opening of the new facilities, things like that. A couple of things that we probably didn't mention in ourprepared remarks is, we did have a bump up in the tax rate in Q3 of last year,which we didn't experience this year. We also expect a higher share count inQ4. Last year we actually had some favorable foreign exchange activities in Q4,and I wouldn't expect that again this year.

Yes, okay and now that makes sense. And again it was astrong quarter and I understand it's hard to accelerate sales from one quarterinto another. Just given how positive you and others have been aboutbiopharma demands on the outsourcing side, it just looks like your PCS salesgrowth is a big conservative, given that if I just punch in the numbers for Q4to get to your full-year guidance, it doesn't look like you're expecting amaterial increase sequentially. So I don't know. Is that conservatism? Or is there somethinggoing on there from a capacity standpoint? Or is it a transition into newfacilities? Could you provide a little bit more color there?

Yes, well, we certainly wouldn't comment on the type ofquestion and I know you don't mean it that way that is it conservative? I mean,we wouldn't comment on that. RMS is typically down sequentially in the fourthquarter. We don't expect to see anything different this quarter. That's sort ofwhat we talked about in our prepared remarks. And I do think, we will continue to see some sequentialgrowth in PCS. But I think given the higher profitability of RMS, it sort ofweighs on that more heavily. And then I think if you go into a couple of theother things that we talked about, like the continuing transition inShrewsbury, we now are beginning to occupy Reno, where we will start to havesome duplicate costs that will overlap in the fourth quarter, which is reallythe first time we've seen that. So while we are not occupying Renoen masse, we do already have people that show up there everyday for work. So weare seeing operating expenses in the fourth quarter. So we kind of have that atboth facilities. So I think it will be a good quarter, but I think it will be adifferent quarter from the third quarter, obviously.

Okay. And just one last one, kind of an updated picturequestion. Clearly, you guys have the nice problem of being at full capacity insome of your older and newer facilities. Clearly, there is going to be upsidedriven by mix on the topline as well as at the margin line. Is there any ability to use, I guess what we're referring tonow as CRDRs as a way to shift projects amongst facilities, so that you couldfree up capacity at some of your facilities where it is tight right now?

Directionally, that's certainly our goal and particularlyamongst the four big locations that we have, that have a whole range ofproducts and services. We are hoping that over time clients will pretty muchlook at them similarly, so we can sell space that's not fully utilized at aparticular period of time. And we are quite confident that we will get there. It willtake some time. As I said earlier, clients have long-standing relationshipswith particular locations and particularly the study directors in thoselocations; and there is some reluctance to make changes even within a system assophisticated as ours. But as we build particularly these two new facilities andare able to validate the depth of expertise we have, we are comfortable thatover time that will change.

Great. Thanks for taking my questions.

There are no additional questions at this time. Pleasecontinue.

Thank you for joining us today. We look forward to seeingyou at the Credit Suisse Healthcare Conference next week and speaking with youon December 13, when we hold our 2008 guidance call. This concludes today'scall. Thank you.

Ladies and gentlemen, that does conclude our conference fortoday. Thank you for your participation and for using AT&T executiveteleconference. You may now disconnect.