Well, ladies and gentlemen thank you for standing by, and welcome to the Charles River Laboratories' Fourth Quarter and Full Year 2007 Earnings Call. (Operator Instructions). And starting off today, we have Corporate Vice President of Investor Relations, Susan Hardy. Please go ahead.

Thank you. Good morning and welcome to Charles River Laboratories' fourth quarter and full year 2007 conference call and webcast. This morning Jim Foster, Chairman, President and Chief Executive Officer, and Tom Ackerman, Executive Vice President and Chief Financial Officer, will comment on our fourth quarter results and full year results and review guidance for 2008. Following the presentation, we will respond to questions. There is a slide presentation associated with today's remarks, which is posted on the investor relations section of our website at ir.criver.com. A taped replay 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 access code in either case is 905524. The replay will be available through February 26. You may also access an archived version of the webcast on our investor relations website.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 may make about future expectations, plans, and prospects for the company, constitute forward-looking statements for the purposes of Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by any forward-looking statements as a result of various important factors including, but not limited to, those discussed in our annual report on Form 10-K, which was filed on February 27, 2007, as well as other filings we make with the Securities and Exchange Commission. During this call, we will be primarily discussing non-GAAP financial measures. We believe that these non-GAAP financial measures help investors to gain a meaningful understanding of our core operating results and future prospects, consistent with the manner in which management measures and forecasts the company's performance. The non-GAAP financial measures are not meant to be considered superior to or a substitute for results of operations prepared in accordance with GAAP. In accordance with Regulation G, you can find the comparable GAAP measures and reconciliations to those GAAP measures on the investor relations section of our website through the financial reconciliations link. Now, I will turn the call over to Jim Foster.

Good morning, I am very pleased to speak with you today about our outstanding fourth quarter and full year results, which demonstrates the effectiveness of our organization and validate the investments we made and continue to make, as we correctly anticipated the paradigm shift that has taken place in the global pharmaceutical industry. Let's begin with a review of the fourth quarter and full year highlights. Strong sales growth of 17% in the fourth quarter, contributed to full year sales growth of 16.3%. Including $318 million for the fourth quarter, our full year sales reached $1.23 billion; the result of robust growth in both the Research Models and Services or RMS in Preclinical Services or PCS segment. The acquisition of Northwest Kinetics contributed 2.4% to the year and foreign exchange added 2.9% to the annual sales growth rate. For the fourth quarter, operating income was $65.8 million and the operating margin was 20.7%, compared to $55.9 million and 20.6% reported in the fourth quarter of '06. For '07, operating income rose 14.3% to $165.9 million and the operating margin was 21.6%. As we expected the operating margin declined year-over-year, due primarily to the costs associated with the transition of our new preclinical facilities in Massachusetts, and because of higher corporate costs, as we invested in information technology, and scientific and operational staff to support our growing business. However, we're very pleased that the operating margin declined just 40 basis points when compared to last year, as a result of higher sales and improved operating efficiency. At $45.9 million net income from continuing operations was 17.6% higher than the $39 million reported in the fourth quarter of '06. Earnings per share increased 12.1% to $0.65. For the full year, net income from continuing operations was $180.2 million, an increase of 16.9%…

Thank you, Jim and good morning. First, let me remind you that our discussion today focuses on results from continuing operations. In addition, I'll be speaking primarily to non-GAAP results, which exclude all acquisition-related amortization and other items. Sales and operating income continue to grow at strong double-digit rates in the fourth quarter of 2007, which drove a 12.1% increase year-over-year and EPS to $0.65. The consolidated operating margin improved slightly year-over-year to 20.7%. The RMS operating margin improvement was largely offset by a decline in the PCS margin, result of operating two facilities in Massachusetts in 2007 compared to only one in 2006, incurring some operating cost at the new Nevada facility and the negative impact of foreign exchange in Canada. As I emphasized on our third quarter conference call, we expect the foreign exchange to cross a meaningful drag on the PCS margin in the fourth quarter, just as it did in the third quarter. During the impact of the strengthening Canadian dollar, foreign exchange reduced the PCS operating margin in the fourth quarter by 150 basis points. Throughout 2008, we will working to mitigate the impact of foreign exchange on operating margins by invoicing a larger percentage of our Montreal client in Canadian dollars, reducing Montreal's US dominated sales to slightly more than half of total sales. Foreign exchange did not have a material impact on the RMS operating margin in the fourth quarter, and typically does not. In the fourth quarter, we were please to generate sales growth on a sequential basis for the fifth consecutive quarter. As expected, the consolidated operating margin declined by nearly 200 basis points and EPS also declined sequentially versus the third quarter of 2007, primarily reflecting normal seasonality in the RMS segment and a higher share count related to dilution…

(Operator Instructions). We have a question at this time from David Windley, Jefferies & Company. Please go ahead. David Windley - Jefferies & Company: Hi. Good morning. Thanks for taking the question. I wanted to focus on the preclinical segment margins. Tom, you've outlined first quarter flat from full year comparison. There were several qualitative items that, Jim, you described the Phase I clinic in the UK, China facility startup, Canadian dollar strength. I guess, it sounds like you're going to take some steps to mitigate the Canadian dollar issue. What about the Phase I clinic and the China facility startup cost, are those addressable? Obviously, you're going to continue to spend in China, but are those addressable in a way that that impact will be mitigated as we move through 2008?

No. We think as we move forward, Dave, both of those issues will be much less of an issue. The China operation that we're going into Dave, they will not have cost increases any higher than the current year, and we intend to build that operation up and open it, so it shouldn't be any more of a significant drag at tall. And Phase I is, we believe that the one of the regulatory issue [differences], the subsequent that they are beginning to soften somewhat. We're also really initiating a more aggressive business development campaign over that drug discovery services and shall be the linkage between our preclinical and (inaudible). So, we'd actually anticipate that there will be much less of an issue going forward. David Windley - Jefferies & Company: Okay. And on the Canadian dollar, Tom, you mentioned that you are going to start billing half of that revenue or so in Canadian dollars from Montreal. But you did say Canadian dollar will pressure the first quarter, is that something that's not going to start until later in the year.

No that, if you just look back to 2007 Dave to put in to perspective David Windley - Jefferies & Company: Yeah.

We've begin the year at about, an exchange rate of 0.85 and in the fourth quarter that Canadian dollar was actually between 1.05 and 1.10. So, that was obviously exacerbated in the fourth quarter. It has improved in the first quarter, I don't know, what it will do for the rest of the quarter, but it has come down somewhat to be almost one for one. So, it will still be a difficult quarter for foreign exchange, but it should be a little bit better than the fourth quarter. We have begun already to build some additional clients in the first quarter, and we'll continue to look at that during the year. So, I think both of those factors will provide a little bit of relief in the first quarter. As you look year-over-year, it's still a lot of pressure in the Canadian dollar versus the first quarter of '07. David Windley - Jefferies & Company: Okay, I'll jump out of the queue then let somebody else ask questions. Thanks. Good luck.

The next question is from the line of Douglas Tsao, Lehman Brothers. Please go ahead.

Hi, good morning. I was just wondering if you could provide a little more color on the sequentially decrease in the operating margin for the RMS segment, certainly there is historically been some seasonality there. I was wondering if there is any other moving parts, since it seems to be little greater than it's been in the past?

Doug, the biggest thing which I mentioned to in my remarks, is that we do see the models themselves decline noticeably from Q3 to Q4, and that's really associated with activity around the holiday period from Thanksgiving, right through the New Years, and it's is a global phenomena. So, when you look at our big geographic areas North America, Europe and Japan, we do see that trend-off, as I mentioned it's very high margin business, and given the high fixed costs, it pretty much dropped straight to the bottom line. When you look sequentially at total RMS sales activity from Q3 to Q4, I think we essentially moved sideways, so we were able to pick up, in sequential growth, in most of our services business. But we just don't have the same margin flow through as on the model business. So, we do see a net overall drop in our margins from Q3 to Q4.

Okay. And then, thinking about -- sticking to RMS, when you think about the models business, is this a function where the volumes of the outbred rats and mice for the toxicology studies is sort of growing at a low-single digit and the immunodeficient and other sort of diseases models are growing at faster rate?

No. Not really, as we said Doug, we've been really pleased that that sector has been growing as quickly as it has. It grew 10% in the fourth quarter, which was pretty much its growth rate for the year. And we've been seeing increased unit growth pretty much across all of the product lines that we delineated in our prepared remarks, driven both by increased research and the oncology infectious disease area, but also significant tick up in toxicology work as well as basic discovery works. So, it's pretty much across the board in all of those models.

So, all the models are growing at comparable rates in terms of volumes?

I can’t say that exactly. But…

Okay.

The ones that we called out, the ones that we reported out are growing at significant increases over the prior year.

Okay. And then one final question on PCS, you referred to a lot of client demand for services in China. I was just wondering if you could provide some comments on the source of that? I mean are these large multinational pharmaceutical companies? And where would this potential work -- would this be coming from the discovery operations based on China or is this the question of taking molecules discovered in the US and bringing them to China for toxicology work?

They are all large international and multinational companies that have discovery efforts, either of their own or in some contract basis in China, and specifically in Shanghai, frankly. So, this is not to support local Chinese companies, it’s to support the clients that we have elsewhere in the world, for whom we do work, both in North America and Europe. And this is for discoveries that are made locally, where they're going to want preclinical task force locally as well. So, it's not for molecules to be shipped from the US or Europe to China.

Thank you. And our next question is from the line John Kreger, William Blair. Please go ahead.

Alright, great thanks. Jim question, given the economic weakening that we've seen at least in the US and the difficult year that pharma had in '07 are you seeing any change in behavior of your clients both at large company and small?

We really haven't, it's been quite consistent throughout '07, pretty much quarter-to-quarter with significant increases and certainly versus the prior year. We seem to see just the continual virtualization of these companies and because of some of the economic pressures and also some of the pipeline pressures that they have been facing, all with an accelerating interest and desire to outsource and of course we're not just seeing outsourcing of the preclinical sector. But the service components of the RMS business are also sort of the direct legacy of that demand as well. So I think as more as work as these clients can do externally that they got to be done as well as were done internally to allow them to focus their attention else where than more they kind of can do that. That will require continued investment in facilities and staff for us to really show them the quality of our work and of course the same number of the people that we can get into work in our business in particularly at the highest levels, senior scientific levels that coming directly from big pharmas. So to some extent it's kind of the same quality work that's overseen. So we haven’t seen any diminution in demand, we wouldn't expect it to, we would expect that outsourcing would continue like sort of a safety valve to alleviate some of the pressure that these clients are feeling and I think as long as we have the infrastructure in place, it will continue.

Thanks and just a second question, you talked about the fact that you expect Reno expenses touch around significantly in the first quarter. Can you just expand about what’s really driving that, is that the lack of capitalizing some of those costs or is it really a spike in staffing? And as we look through the rest of the year, should we expect that to continue to around for sort of a plateau at first quarter levels?

Remember that Reno is certainly ramping up the first quarter. We are going to continue to open that about the 80% of the space that we renovated over the next two quarters and then finally have that space finished by this summer. So we will have increased costs during that time and duplicate costs indeed over the prior year. Commensurate with that will be filling up that space as quickly as we can as I reported to you earlier. We've had more than half of our clients already audit the facility and are quite pleased with that. And we have additional clients coming back soon. So, we think the uptake is going to be considerable and consistent by the token the costs are considerably higher than the prior year.

Thank you. Our next question is from the line of Hari Sambasivam of Merrill Lynch. Please go ahead.

Yes, thank you very much. Jim just a quick question on the Endosafe PTS, could you give us, maybe give us a quantification of how big this opportunity might be? Just in terms of where you have penetrated your possible or probable accounts and how much actually you can expand on it? And the second question, I’m wondering is on the PCS side you are talking about a mix improvement going forward in Shrewsbury and I’m just wondering what kind of studies you maybe talking about that might be actually contributing to that improvement in mix?

The PCS mix is - historically the Massachusetts operation has done more discovery work or short term work which tends to have a lower margin. They did that very well and the size and scale of the facility and the staff were more commensurate with that type of work. As we cranked up the physical plant and certainly improved the depth and quality of the staff, we are able to do much more sophisticated and long term studies. So we saw that mix actually change nicely during '07 and we anticipate that, that will continue to shift dramatically so that we are relying less and less on discovery work and more on more longer term higher value studies. On the PTS side, we are extremely pleased with this product line. We have a very strong IP situation, we have very good uptake from clients. There is some validation time required, whether they are actually switching from our old technology to the new one or from a competitive technology to a new one, but that's happening consistently throughout the world. Additionally, we are watching the increase in the numbers of cartridges sold along with the machines now seem to increasing nicely as well. So, I think the only metric that would be appropriate to give you as we have given historically is that, by virtue of this device we increased the size of the market four or five folds from it's historical norms, and we think that we are playing in endotoxin testing market with just a couple of hundred million dollars in total revenue, and we anticipate it will have the majority of that going forward. But the conversion time, there's no way to short circuit that or to actually speed it up, we are doing the best we can from a technical service point of view. The response has really been rewarding and positive from clients. So, we anticipate that we will continue to build share and convert that both our own clients, but in particular the competition clients.

Thank you. One additional question on the RMS side. As you sort of see, I guess I am wondering about the condition of the economy, pressures on governments budgets etcetera. How do you sort of mitigate the impact on RMS or do you that business is more vulnerable to government cutbacks, institute cutbacks etcetera. And how do you sort of go about sort of mitigating that risk?

We don’t really think it's more vulnerable. The NIH budget has been beleaguered for I don’t know the last three or four years, and so, we are certainly in for another year of that. We’ve got 15% or less of our revenues dependent on the academic and government marketplace, and a lot of our government contracts are already in place. So it’s a de minimus impact on us, from that point of view. And as I said earlier, while I think the large pharmaceutical and certainly several of large biotech companies have a lot of pressure on them to invigorate the pipeline. The principal and primary way to do that is to invest more in research, not less in research. So we are seeing continued increases on research spending, continued increases in outsource research spending and development spending. And so, that gives us a level of comfortable, particularly off of our strength in '07 that we should see similar trends this year, which you can see in our guidance of 10% to 13% growth for '08.

Thank you, and our next question is from the line of Randall Stanicky, Goldman Sachs. Please go ahead.

Good morning. It's Adriana calling on behalf of Randall Stanicky. I actually have two questions. First one is; you guys have been talking about attracting new customers. Do you provide some information on your breakdown of your customers by biotech and pharma? And my second question is regarding your toxicology business, it's being growing very strongly. Do you provide some information, how much of the organic growth in the quarter was attributed to your tox services?

So on the biotech and pharma, we haven't done that recently and the majority of our sales are the big pharma, and I think that's probably the best way to answer that. And it's significant portion -- and a significantly growing portion at biotech. One of the reasons we don't -- so that's the best answer. But one of the reasons we don't think the distinction is all that useful because, fair amount of the funding from biotech comes to us from big pharma and it tends to be some sort of a blurring between the two sectors and it is sort of an area that's grey, and so much of the biotech work is for the big pharmaceutical companies. So we tend to look at them as a collective entity, and we look in terms of the growth of our industrial sector. But we've seen growth in really both large pharma and biotech. And your second question was about how much toxicology was contributing to our organic growth?

That's correct. Yes.

Well we don't break that out specifically, but obviously the growth in our toxicology business continues to be consistent as we built and fill up these new facilities. And while, we've some pricing down at that, we're experiencing significant and consistent organic growth in that product lines commensurate with the level -- driven by the levels of outsourcing.

Thank you. And once again, we please ask that you limit your questions to one per queue. Next question and this line is from Robert Gilliam with UBS. Please go ahead.

Sure. I just want to follow-up on I think it was Doug's question from earlier. Just on the RMS margins, the kind of a sequential decline and I kind of understand all the moving parts you laid out there as far as the seasonality that we see. But I guess, I was hoping we could drill a little bit deeper and understand why the magnitude of the sequential decline was more pronounced than it has been in the past? And then also, if it is sequential, should we expect the RMS margins to kind of rebound to the 43%, 44% level in the first quarter year?

Well without being specific on the first quarter, we'd obviously expect them to rebound like they have traditionally moving over from quarter-to-quarter. Last year, we did have a little bit of a positive pickup in Q1, last year being '07, because we've had some quarantine issues in our large animal model facility in the fourth quarter of '06. Those slid over into the first quarter of '07 and we had probably a little bit better than typical quarter. But other than that, I would expect them to come up just as we've always said. The first quarter was typically a good quarter, so I do think that, that trend would continue.

Thank you. And our next question is from the line of Tycho Peterson, JPMorgan. Please go ahead.

Hi, good morning. Following up actually on one of the earlier questions just on the Endosafe, I'm just wondering, if you can give us a sense as to what the global demand is like. I mean, you talked about the PAT initiatives here in the U.S., but how you are seeing demand shapeup overseas? And then where you are on the capacity side? I think you are manufacturing most of the systems In South Carolina, so do you need to add new capacities for the new cartridges?

We are seeing a very good up-tick in demand and purchases of this device in Europe. We sold a lot of these devices for R&D purposes in Europe before we had the FDA approval. We continue to do so. And so, we've got very strong purchases across the whole range of clients, overseas as well. So, there is not a huge difference geographically in the response to the product. We are doing final assembly manufacturing in our own facility, we intend to continue to do that. We have continuously ramped up our GMP production capacity to accommodate the anticipated growth rate and we're comfortable, we'll able to continue to do so.

That wasn't – you switched subjects.

Yeah

So, pricing on the preclinical side has been continuous to always be a factor, but I would say less significantly than we seen in the prior years. I think there's some acknowledgement that we are bankrolling, both the space and the headcount significantly, and need to pay for that. So, we have what we believe are appropriate pricing increases. And have had very well push back at all from our clients. As I said earlier, we think that the Chinese marketplace for us is going to be a place to support local, to support international clients who have located in China, to use that as another locale for basic discovery. Too early to comment on what the pricing scenarios will be over there, except to say that, we are quite confident that we can fill up as much of the new facility that we are currently building, as we see that pretty much on day on. So, there is really a significant client interest in having a high quality GLT facility and of course we intend to be the first company to open the facility there in the second half of this year.

Thank you. And our next question is from the line of John Sullivan, Leerink Swann. Please go ahead.

Hi guys, good morning, thanks for squeezing me in. Just a quick question about the biotech industry as a customer group for you. Funding is probably a little bit harder to come by, especially for some smaller biotechs, any change in the profile of business with the biotech industry specifically and how important is the biotech industry to your overall business? Thank you.

John we really haven't seen much of a change, biotech continues to increase in a meaningful way. As I said earlier, we think a lot of the money doesn’t just come from the capital market, it comes directly form big pharma, as they use biotech as a discovery engine. It’s only a meaningful part of our total sales portfolio, and we expect it will continue to be. I think many people believe that the future success of biomedical research will come directly from the small biotech companies. So, they will continue to find sources of capital to keep them going.

Thank you. And our next question is from Sandy Draper, Raymond James. Please go ahead.

Thank you. This is a little bit more, just about a higher level question, looking back at '07 and looking into '08, obviously throughout the year, you ended up delivering very results in beating the numbers. Just for sort of a perspective, when I look at it between FX, acquisitions, strong organic growth, and research and RMS and PCS, how would you sort of qualify where the biggest surprises in 2007 were, in terms of beating the results? And then looking out at 2008, where do you think the biggest risks are and where would say the biggest potentials for upside are? Thanks.

Well, we wouldn't characterize '07 as full of surprises, I guess the best way to characterize it is that we have a dozen or more P&L's. It's unusual that virtually all of our businesses perform well at the same time, virtually all of them did and the result of that was that we were able to increase our guidance a couple of times. We always intended to guide as accurately as possible. And so, I wouldn't say we were surprised by the results, but we were pleased with them. We certainly would like to see that trend continue, it's not necessarily a realistic assumption. I don't think there are any particular areas of concerns that we have, we think the demand will be quite consistent and conservative for both of our product lines, RMS and PCS, given the state of our clients. We think that outsourcing will continue significantly both on the PCS side and the RMS Services side. And we're quite confident that we'll continue to see purchases of our core research model products and our in-vitro products would be strong as well. So, we believe that our guidance for '08 is a accurate reflection of what we believe the demand would be, and sales and profit will be on that activity.

Thank you. And our final question will be from the line of Jon Wood, Banc of America. Please go ahead.

Thank you. Jim you touched on this qualitatively, but can you give us the sense of your estimate of the growth of the US Research Models business in 2008 for the whole market from a volume perspectives? And then, typically, what proportion of the targeted price increases in the models business are realized in a given year? Thank you.

So, I am not going to answer that specifically, US Research Models did about 10% last year. It's a very strong year for us. We would like to believe that growth around and in that area could continue. It's always been our strongest market, with the strongest margins. And we've always been the leader in that market place as well. We provide our price increases at the end of a particular fiscal year, and we usually, just kind of a pushback, we see it quite early, we really haven’t, we tried to be responsible and respectful of our clients and their financial situation, as we raise our prices. We've also had some competitive opportunities where we've had competitors raise their prices actually more aggressively than we did and reduced the premium that we disserve frankly. And so, it actually made our price increases seem even more responsible than I think there's. So we've seen virtually no pushback, we believe the demand will continue, we don't have any indications when we are putting our operating plans, I suggest that it would.

Thank you. And speakers you may continue with any closing remarks you may have.

Thank you for joining us this morning. We look forward to speaking with you soon and to seeing you at the Cowen and Lehman Healthcare conferences in March. This concludes the conference call. Thank you.

Ladies and gentlemen, that does conclude your conference. We do thank you for joining, for using the AT&T executive teleconference. You may now disconnect. Have a good day.