Ladies and gentlemen, thank you for standing by and welcome to the fourth quarter 2009 earnings and 2010 guidance conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a questions-and-answer session; instructions will be given at that time. (Operator Instructions). As a reminder, this conference is being recorded. I would now like to turn the conference over to our host, Ms. Susan Hardy, Corporate Vice President of Investor Relations. Please go ahead.

Thank you. Good morning and welcome to Charles River Laboratories' 2009 earnings and 2010 guidance 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 and full year results and review guidance for 2010. 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 143476. The replay will be available through February 23rd; you may also access an archived version of the webcast on our Investor Relations website. I’d 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 purposes of the 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 23rd, 2009, 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’d like to begin by reviewing the ’09 results and will then discuss our outlook for 2010 with you. We reported of $295.4 million for the fourth quarter of ’09, a decrease of 5.2% over the fourth quarter of ’08, including a 3.8% positive impact from foreign exchange. Research Models and Services or RMS reported a strong quarter increasing 10.9% to $169.4 million. Preclinical Services or PCS reported net sales of $125.9 million, which was down 20.6% from the fourth quarter of ’08 that came in slightly higher than anticipated. This better than expected performance improves our level of confidence that market has stabilized and based on strong preclinical bookings for the first quarter of 2010 and early positive indication for the second, we believe we are starting to see our clients reinvigorate their late discovery and early development efforts. Operating income for the quarter was $48.9 million and the operating margin was 16.5% compared to 19% reported in the fourth quarter of ‘08. The operating margin decrease was primarily the result of lower sales mitigated in part by stringent control of operating costs. Earnings per diluted share were $0.49 in the fourth quarter compared to $0.59 in the fourth quarter of’08. Fourth quarter of ’09 tapped a challenging year in which a confluence of events, including the economy significant consolidations from the Pharma and biotech space lack of availability of funding for biotech companies and uncertainty surrounding healthcare reform drove our clients to reduce their spending on our products and services and for toxicology in particular. This reduction led to excess capacity throughout the CRO industry, which in turn resulted in pricing pressure. Recognizing that these issues would take some time to resolve and that the biopharmaceutical industry would be fundamentally changed as it emerged from this…

First, let me remind you that I will speak primarily to non-GAAP results, which exclude acquisition related amortization, charges related to cost savings, actions, convertible debt accounting and other items. This morning I will focus my discussion primarily on our 2010 financial guidance. For 2010, we expect sales to grow in the low single digits and non-GAAP EPS to be in range of $2.20 to $2.40. The increase in sales and the benefits from cost savings actions and efficiency programs will be offset by cost headwinds associated with the implementation of our new ERP systems and incentive compensations. In total, these two items are expected to increase cost by approximately $0.35 per share in 2010. Minor changes to below the line items in 2010 such as the expected tax rate, interest expense and other income arte not expected to have a meaningful impact. We also do not expect any significant changes in our share count for 2010. I’ll discuss many of these items in more details shortly. Foreign exchange reduced sales growth by 2.3% in 2009 which generated a 3.8% benefit during the fourth quarter as we anniversary the strengthening of the U.S. dollar. As we look ahead to 2010, foreign exchange is expected to have a less meaningful impact based on current rates. Foreign exchange is expected to benefit first quarter sales by a similar rate as the fourth quarter, but we expect foreign exchange to average just the 1% benefit to sales growth for full year. However, foreign exchange is expected to reduce operating income by $1 million to $2 million in 2010 due to the effect of the Canadian dollar exchange rates on our PCS Montréal facility. You may recall that approximately half of PCS Montréal sales are invoiced in U.S. dollars, while nearly all of the…

That concludes our comments, operator, would you please take questions now?

(Operator Instructions). Our first question is from Greg Bolan with Wells Fargo.

Jim or Tom, assuming the PCS cost structure has been right sized and obviously incremental resources would need to be added to facilitate a substantial improvement in study volumes, but what is your goal for sustainable PCS operating margins in the future?

Our goal for many years was 25% and aspirationally that’s still the goal that we have. Obviously we've operated below that, but we have operations that are performing above 20%. So I'd say as for the short-to-medium term goal is to get back to above 20% level and we certainly think that given the rightsizing of our infrastructure, add capacity sales and to get more pricing capability that will be able to achieve those goals.

Tom, for the fourth quarter we were modeling about 4% revenue contribution from Piedmont and Cerebricon, does that sound about right?

That’s a little bit on the higher side, I would say Greg.

Thank you. Our next question is from Dave Windley with Jefferies & Company. Dave Windley - Jefferies & Company: Little twist on Greg’s question, if we think about a trajectory of revenue in PCS and your staffing changes there, I guess what I’m looking for is, how much revenue your PCS business can add before you need to start adding staff to execute those studies, I presume you have some slack capacity including staffing?

Obviously, we can’t quantify that exactly for you Dave, but sufficed to say that we have some slack capability now, so we will be able to take on some additional business at the current staffing levels. Obviously we have a significant amount of capacity, so stake is not a problem. At a certain point we’ll have to add technical staff at technician level, so some of them I think will be prior employees and others would be new ones. We are confident that given our employment levels and the markets that we work in and the timeframe that it takes to get people up to speed the previously trained and to train new ones that we will be able to do that and instead of measured fashion given the growth rate that we anticipate for this business over the next three to four quarters. Dave Windley - Jefferies & Company: And Jim you mentioned in some cases, you will expect to able to hire back some of our former employees, are any of those on some type of small retention of some sort or is there no financial tied to those types of folks?

There was no specific financial tied, we retained virtually all the scientific staff and most of the study directors. There are probably a few of those people that are still available and that we will have some good terms and this simply was insufficient works so we would be helpful that the very good one that, which we had a long term relationship would be pleased to come back, but it’s not economically feasible to be holding that in anticipation of a timeframe that would not entirely [show out].

Thank you. Our next question is from Ross Muken with Deutsche Bank.

As you’ve sort of done the work to sort of get deeper into what’s going on in the end markets and you’ve had conversations with executives and the like that you noted, as they talked about the increased outsourcing that they are likely to do, what was driving, was it them both trying to get productivity and cost cuts, was it not having the right staffing levels internally, was it purely savings and price based? I’m just trying to get the sense for now that the budget cycle has been reset, what is sort of on the top of mind of most of the executives in terms of why now versus waiting until later in the year or ’11?

On top of mind is the fact that they have a limited number of resources and they have come up with priorities and other ones stand them and that’s going to be some very early discovery either internally or licensing end products from large molecule companies and/or driving things for the clinical and those tend to be the same what they are holding on to. Also we’ve had some assets that transfer conversations, which means that the clients have literally been not just resisting infrastructure and headcount, but actually trying to [jet] us in this as well and we indicated in our remarks that’s not something that we think makes any sense so either our clients or ourselves and we told them that and we actually think some of our clients will close those sites. So we’ve come into a new calendar year having seen the Pfizer and Merck deals finish and those businesses go through the beginnings of pretty dramatic infrastructure realignments in terms of reducing space and people and focusing on specific therapeutic areas. I think other companies have been waiting to see what that looks like so to realign their own infrastructures, we’ve seen in the last month several large other drug companies were also making large announcements. It’s really about as the patent [flip] continues to loom and there tends to be maybe a short term abeyance in healthcare legislation being enacted. It’s a period for them to I think more aggressively utilize their internal resources. So that sort of combined with the anticipation on that capacity will get tied (inaudible) and that just a fact we all in the CRO industry have excess capacity at the moment, but that’s obviously no one is building anymore. We suspended operations in mass, our clients to take their space out. So space will get tied, clients will think increasing about getting in line and how long they’ll have to wait. They haven’t had to wait very long for the last years or 18 months. And I think there is beginning to the greater thought about where they stand in the queue and also what they have been getting from a quality point of view from players that they have been forcing to provide services at much lower price points. So we think that the pricing dramatic reductions has ceased and actually has for some time and as I said, earlier we have seen some limited very early ability to push back on prices and not just for the part of it, but because we really need to be paid better to perform these exceptional services, and I think the clients will recognize that and are willing to try to buy the best services possible at a CRO price going forward. Are recognizing the fact that they no longer have the capacity to capably to do it themselves.

And just a sort of follow-up on that, Jim. It seems like in general for this industry, price is obviously fairly key to profitability and that’s no surprise, but as we think about sort of the recovery in that level, I know you sort of talked about some of the different factors on that. Obviously it’s heavily capacity utilization weighted, as you thought about the last time industry maybe went through a down turn even though it’s not necessarily as comparable. How should we think about the time period or sort of the sequence of events that need to happen to get to that from next incremental price being up versus flat and how did those sort of discussions start with the biopharma heads?

It’s beginning to happen steadily and slowly right now. As you said, it is directly related to current available capacity to more importantly how much space to the clients here will be available to them when they need to move quickly? I think they will have less flexibility than they have for the last year or so, and they have been able to book studies in the mater of weeks and historically it has been for months. While we do believe we are beginning to get some pricing capability and we’ll increasingly do so, we haven’t built our internal plan on it. Our plan is built upon filling capacity, being more efficient and improving our margins top line and our margins outlay. To some extent I think pricing will just sort of (Inaudible) there will be sort of an additional benefit, but right now we are driving efficiency gains through the restructuring of our preclinical organizations and our Six Sigma initiatives and our procurement initiatives as aggressively as possible to sort of fill in wherever lack of pricing has left us, but we’re certainly moving in a directional pricing, we’ll become something that will be available to us. We are sort of anticipating that it’s not going to be a lever that we’re going to be able to pull that to any significant degree in fiscal 2010.

Our next question is from Sandy Draper with Raymond James.

Longer-term question, you made the comments about eventually getting back to a double-digit growth number. When you look at that, is that really predicated on eventually getting back to some more normal growth around PCS, do think it sort of a balanced growth between the two and without trying too get specific 2011 guidance, would that even be a reasonable short in 2011 or are you really looking at more of a three to five year target to eventually get back there? Thanks.

We have been talking directionally in longer-terms, so 2011 it’s difficult to comment on, we certainly wouldn't go so far right now to say that we’re in the hunt for double-digit in '011, but if anything possible. Look, RMS, we should continue to get price, the models business should continue to be a solid as a result of continuing to take market share across all geographic locals and the academic sector in particularly these days we do think our new sales force realignment will be extremely beneficial to see more rapid top line growth from the services part of our RMS business. As infrastructure realignments continue to take price with the pharma companies and as capacity tightens and space is reduced inside of our client on the preclinical side that will begin to stimulate growth there. So it's difficult to call sort of when we get to that level, but we're sort of inherently thinking that RMS sort of gets back to high single-digit preclinical at low double-digit obviously it puts some pricing power again in the preclinical business that could be more easily realized. So it's a more mid-term goal obviously.

Our next question is from Doug Schenkel with Cohen and Company.

What's been the early feedback from clients regarding transitioning studies from Shrewsbury to other facilities, it sounds like there haven't been any real problems yet, I just want to make sure there aren't any new concerns specific to not having a facility right in the neighborhood of east coast clients?

We are very pleased with the client’s response; I think the testament to quality of the relationship we have with them, their belief in us as a company, actually their belief in being comfortable using multiple sites to get the work done. There were certainly some clients that integrated Box scenario that were preferred to use local supply source because they like being able to go there by car pretty much whenever they wanted to. But since that’s no longer available by us or anyone, and they have multiple high quality options at other facilities and some of our clients who use a single facility some will use several of our facility, that really holds us in good stand and continues to give us good flexibility and should continue to ensure capacity value well utilized. The conversation have been extremely professional clients have been, I can't say that they are thrilled about this, but they are very comfortable with that, they are working with us, they are happy to stay with us and it’s gone, I would say, better than we had anticipated about concerns of the amount of work that’s moving and in clients openness and willingness to work closely with us and in some cases to get out and audit other facilities that they weren’t necessarily familiar with.

Okay thanks, Jim, and one real quick follow-up. It was clearly very good to hear some encouraging words regarding the pharma; I guess the outlook for hopefully a pick up in PCS demands heading into Q1 and Q2. Any color you can provide regarding certain product areas or geographies within PCS that you think are going to pick up prior to other areas.

Not really. We hope it will be the sort of usual balance we have between specialty work and also long and short-term work, I mean that would be a more normalized market. Obviously we have a bigger foot print in specialty work that tends to have margins and a healthy goals of that is obviously beneficial to our P&L, but I think supporting the clients across the whole range of tox studies in sort of a testament to them doing work both early and comment (inaudible) with the longer clinical trials. Given the foot print that we have with different of our facilities having different capability, the more we can keep space for across the entire portfolio the better the P&L will look for the better clients what we’ll be able to manifest by using our entire infrastructure, so hopefully it will role out pretty much across the board.

Your next question comes from Isaac Ro, Leerink Swann.

First off on RMS, just wondering if you could remind us what price increases you guys realized for 2009 and then maybe if you could comment on any further mixed trends that you might expect in 2010 that could help the business that would be helpful.

Yes, 2009 was probably around 3ish percent, maybe a little bit better. So, we obviously expect it to be a little bit lower than that in 2010, but not significantly. The second one, could you follow up on the question. The mix in RMS or?

Yes, just I think you touched a little bit on the mice versus rats' data and then like I’m wondering if there is anything else in the animal mix that we should be thinking about?

Not really, I mean the stimulus funding will primarily be beneficial to mice sales, variety of mice activity and as Jim referenced with the tox-rebound that would primarily be driven towards larger out-bred rats. I can’t say that that’s a significant profit driver in terms of those to, I mean our toxicology rats are probably bread and butter, but many of the inbred mice are also very favorably priced and have very good margins as well.

And just secondly, if you could touch on progress in China, maybe how that performed in the quarter and then your outlook for that region in 2010?

China has generally gotten more slowly than we had anticipated initially, because of construction delays and secondarily because as the whole industry pullback. So, remember that of our clients of large international drug companies and not Chinese based. We do have Chinese based discovery organizations either they own or contracted out. They have been very careful about spending in China as they have everywhere else. They’ve also been reasonably price-sensitive even in China. So, we’ve had a large number of audits, we’ve had a large amount of non-GLP work and we currently have several GLP studies going on at the same time with several large pharma clients. So, the work is beginning to get done in a more significant fashion, clients seem quite pleased with the facility and the quality of the work. The site continues to be a drag to the P&L; we are unwaveringly committed to China as having vital strategic deployments to our business and our industry going forward. So, we’re out there working hard to bring in more clients. I think we have pretty healthy client roster lined up for 2010, both very large pharma clients and some slightly smaller ones. So, the client base is actually fine. It's going a little more slowly than we would have liked, but improving all the time.

Your next question comes from Douglas Tsao, Barclays Capital.

Jim, how are you sort of managing the process in terms of negotiating potential asset trends per deal and the sort of balancing what you view sort of your near-term and perhaps even long-term sort of financial interest versus the risk in terms of sort of a competitor potentially coming in and making a deal on less favorable terms and what you’re willing to accept and sort of addressing, what I would almost characterize as “The Prisoner’s Dilemma” of some sort with some of your large competitors. And also largely, are most of the sites that you’ve been in these assets transfer negotiations, currently active talk sites or have these already largely had operations wound down, perhaps not all the way, but to a certain level, but already had some significant pullback in terms of their level of activity?

Doug, this is really a classic example of how timing is everything in life. So, I would say that if went back five years ago, before we started are very aggressive less than CapEx to build and renovate and refurbish facilities. The face of these asset transfer deals, they would obviously look more attractive. You would get facilities and people and business in one fell swoop and we would have had a different orientation to them, so would the competition and I think we would be out there negotiating very aggressively for that. They’re not sort of strategically something that we are interested in on their face, because of the obvious reason that there is too much space out there and all it does is exacerbate the problems for Charles River. Frankly, for our competitors and actually for clients too doesn’t really solve an issue for them, except sort of transfer responsibility to manage their employee base instead of them doing it, that doesn't really feel like the proper thing for us to do. Having said that, why we should have a general and negative predisposition, we’re obviously very respectful of our clients. We live to serve them and also every preclinical talk site is not created the same. So, some of them are better than others, some are newer than others, some are more efficient than others. And to the last part of your question, some are more full than others, but in any event I would say they are all somewhat less than full and in the process of winding down, obviously they don’t need to stay. We have done thorough investigations including, run the numbers, visited the facility, met the people and thought very carefully about them and passed. We are willing to take the risk that a competitor sees the situation differently although I can’t imagine why, even if they all have too much capacity, but we are willing to take that risk or pain as it were, because it doesn’t make good economic sense for us and we actually don’t think it is the best thing for the client. So, we pass them having thought it thoroughly and we are having no sort of - not a feeling that we would leave anything on the table as a result of that.

Your next question comes from Natalie Nadler, William Blair.

It’s Natalie Nadler in for John today. I was hoping you could expand on the demand dynamics that you are seeing in the market right now. And more specifically, what you are seeing from large pharma clients versus mid-size versus small biotech and how much of the improvement that you are currently seeing is being driven by the different segments?

Well, we try very hard to service, in the way we restructured our sales force, we are looking at our client base and so three different constituencies, one is academic and government, two obviously falls mostly on the preclinical side and we have had a lot of traction and historically sales were up in 2009 and we anticipate a good 2010. Specifically, because of the stimulus money and more sales force. There is a lot of mid-size companies' sort of small pharma and mid-size biotech companies; it’s a challenging client base to support, just because there is so many clients. We are very optimistic that our new structure with generalist and technical experts supporting them will allow us to infiltrate and support those clients more readily and we really have a much enhanced focus on the big pharma clients who we have dedicated very senior people at global account managers servicing them as well. So, there will be a lot of businesses available for all three of those segments, there probably will be a disproportionate amount of money available relatively quickly. From big pharma companies, I only say that because their spend on an individual basis is so much more and their movements in terms of shrinking their own infrastructure and immediately having to look for us. So I think capabilities will be more dramatic and there probably will be opportunities to lock in clients for longer and lock out the competition and so we are very focused on that as well. So, we’re trying our best to service the very large client base and take advantage of available business and all of them. Obviously biotech companies by definition do very little of what we do internally, at least smaller ones. For instance, they don’t do toxicology work at all and those that do we don’t see investing in infrastructure. We don’t see them investing in discovery services or in the RMS services sector at all. So, we’re really particularly well poised at the current time when clients really need, it’s really not optional they really need to invest aggressively in outsourcing and I think as the price points begin to soften somewhat, we will really see material benefits.

And then just given that the environment has improved for biotech funding, have you started to see an increase from that client segment?

I think somewhat our biotech clients fell out somewhat, but some of that slack was picked up by direct investments for the pharmaceutical companies, particularly for those biotech companies that had compounds that they want to license or support in some way, but we’re probably just beginning to see an up-tick as a result of more money being available for the capital markets.

Your next question comes from Tycho Peterson, JPMorgan.

Just following up on actually Doug’s earlier question on kind of capacity transfer, you’ve been pretty clear that you don’t want to go down that pass, yet at the same time, I think you’ve talked about the increasingly strategic nature of your discussions with clients. So, are there other paths that you’re looking to go down or is it your view once the demand starts to firm and go back to kind of a normalized business as usual environment?

I don’t know what a business as usual environment means anymore. I think what’s happens historically is not really relevant and it is not a particularly good predictor. We have a client base that has totally changed, totally morphed and continues to shrink. What we’re really trying to discipline ourselves to do is deal with every client on an individual basis and not try to force them into some specific paradigm that we worked out for all of our big drug companies for instance. So, some will continue to launch dedicated space, some may want to transfer assets, they may not transfer them to us. Some will be lot longer-term preferred provider agreement with some sort of specialty ability to be in front of the line and return for large amounts of work and many will be comfortable just getting in inline and waiting, I do think that being comfortable getting inline and waiting will dissipate as space begins to shrink. So that's the only thing I do think as relevant what we’ve seen historically. Right now if you can book a study in a few weeks you don't really have to think about it all that much or plan that carefully, if that hopefully gets to the point where it is a couple of quarters lets say and clients are vary impatient because they have a new compound, that will change the market dynamics significantly. I do think that we continue to be on uncharted waters in terms of what the competition looks like, what our clients look like and what we look like. We’ve tried with all the changes that we made in fiscal ‘09 to be very creative and flexible and open to working with clients differently and we don't really think that's going to change any time soon. I don't think we're going to get back to any specific way to work with most of our clients.

And then on Shrewsbury, can you talk about what you would be looking for in terms of a sign that you’d consider reopening that and just talk mechanically about what would take to ramp that facility backup if and when the demand does return?

I mean it's very straightforward, as you know while we haven't given the specific percentage, our capacity utilization is quite low, and we recognize quite low for all of our competitors as well. It will improve literally as a result of our Massachusetts off-line, but still won't get to the point that we’d like it to be probably by the end of fiscal 2010. As we see our preclinical space beginning to get to the point where it’s approaching optimal levels around 85%, let's see, we see ourselves getting close to 80%. We will be looking to bring that facility back online, the facility of course only needs to be revalidated and it would take us relatively short period of time to get a small crew in there to do the validation and to open in a small period of time meaning about six months, it probably takes us a year to year and half to be fully at the level we were out when we closed it. So let's say, it takes us a year to get back at a reasonable capacity to take on additional work. We definitely will have additional time to do that. We also have some work available and we know that just fully outfitted by they are dime and ready to go and we have some additional space in Ohio as well so we are very flexible from brining new space online, if we happen to call this long a business come back faster, not it’s problem they have. We certainly have sufficient space to do this and it’s entirely been a factor of how quickly we can bring on both old staff and train new staff to be able to do quality work.

Thank you and our last question is from Robert Jones with Goldman Sachs, please go ahead.

On the use of the cash, I know you mentioned strategic M&A and also share buybacks. On M&A can you discuss what types of deals you might be looking at, I wouldn’t imagine these would include taking on any additional toxicology capacity and then on share buybacks, Tom, I believe you mentioned that there is no change with the share count in 2010 guidance, if that’s right how should we think about the potential per share buybacks going forward?

Yeah, I will take your last question first and then flip it to Jim, but we do have a 145 million remaining on prior authorizations or existing authorizations with our board. As we said, we will look at myriad of options as we move to the first quarter and to the extent that we do reinvigorate that potential will push down our share count during 2010.

On the M&A side we continue to be interested in looking at mostly service businesses, mostly upstream to fill in our portfolio. The kind of optimal deal size for us has kind of been 50 plus million, from a purchase price point it doesn’t mean that we restrict ourselves to deal that size, I mean we would be certainly willing to taken a reasonable amount of debt to do a bigger deal to make sense for us strategically and it continue to distinguish us from our competitors and provide the services that our clients want so deal flow continues to be good we are always active in that space.

Thank you. And that conclude our last question.

Well, we know there were a few people left in the queue, we apologies that we didn’t get you but we’ll follow-up with you later today. Thank you all for joining us this morning that concludes the conference call.