Ladies and gentlemen, thank you for standing by. Welcome to the Charles River Laboratories Fourth Quarter 2012 Earnings conference call. At this time, all lines are in a listen-only mode. Later we will conduct a question-and-answer session. Instructions will be given to you at that time. (Operator Instructions). And as reminder, today's conference call is being recorded. I'd now like to turn the conference over to Susan Hardy, Corporate Vice President of Investor Relations. Please go ahead.

Thank you. Good morning and welcome to Charles River Laboratories' Fourth Quarter 2012 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 review guidance for 2013. 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 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 278709. 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 You may also access an archived version of the webcast on our Investor Relations website.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 27th, 2012, as well as other filings we make with the Securities and Exchange Commission. During this call, we will be primarily discussing results from continuing operations and 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 reconciliation link. Now, I'll turn the call over to Jim Foster.

Good morning. I'd like to begin by providing a summary of our fourth quarter results, before commenting on our business prospects. We reported sales of $280 million in the fourth quarter 2012. Although, this was 3.7% below the previous year, the decline was due to the inclusion of the 53rd week in the fourth quarter of 2011 which had 4.3% to sales growth and also to the effect of foreign exchange which reduced sales sell by 70 basis points. When adjusting for the 53rd week on a constant currency basis, total sales increased by 1.3% in the fourth quarter with our net sales declining less than 0.5% in PCS sales increasingly approximately 4%. We were quite pleased with these results especially in lieu of that the fourth quarter of 2011 benefitted from strong year end spending by clients as compared to this year's fourth quarter when clients restrain spending. These results underline our confidence that our market remains stable as well as the fact that we are gaining market share. Lowest sales volumes in RMS was the primary driver of the 120 basis point year-over-year consolidated operating margin decline to 15.9% and 17.1% in the fourth quarter 2011. Normal seasonality results in lower sales of research models and operating income is extremely sensitive to changes in volume. Restraint client spending in this year's fourth quarter increased the impact on both sales and the operating margin. We have continued to focus on our process improvement initiatives which are enabling us to partially offset the impact of higher compensation cost, inflation, lower RMS volume, and cost associated with the start-up of new and expanded strategic relationships. Earnings per diluted share were $0.64 in the fourth quarter of '12 compared to $0.69 in the fourth quarter of 2011. We generated less operating income…

Thank you Jim, before I recap our financial performance let me remind you that I will be speaking primarily to non-GAAP results from continuing operations. Reconciliation of non-GAAP items can be found in our press release and our website. Our fourth quarter performance was largely in line with our prior outlook. With the exceptional of favorable tax rate, operational trends track closely to the expectations that we discussed on our December guidance call. Jim has already discussed the sales performance so I will begin my comments with the operating margin. Our consolidated operating margin declined by 120 basis point year-over-year to 15.9% in the fourth quarter but essentially in lined with our expectations. Lower margins in both segments were partially offset by a decline in unallocated profit cost. The PCS operating margin declined by 90 basis points year-over-year to 12.1%. The fourth quarter 2011 operating margin benefitted from $1.7 million non-income base tax adjustment. Excluding this adjustment, the PCS operating margin would have increased year-over-year due to improved capacity utilization and prior cost savings initiatives. In the RMS segment the operating margin declined by 150 basis points, year over year to 27.3%. This decline reflects the sensitivity of the RMS operating margin to changes in sales volume which was caused by the stronger client spending in 2011, as compared to restrained spending in 2012, particularly the small models. You may recall that we reported a 4 million inventory write-down in the large models business that negatively impacted the RMS operating margin in the fourth quarter of 2011. Unallocated corporate cost decreased by 1.6 million year over year and 0.6 million sequentially to 15.4 million in the fourth quarter. The year over year decline was primarily driven by the absence of the 53rd week as well as lower costs related to…

That concludes our comments. Cynthia would you please take questions now.

Thank you. (Operator Instructions), we'll first go the line of Tim Evans from Wells Fargo, please go ahead.

Jim could you maybe tell us what's going on with small models, there was a statement about that in the press release, and then I would also be curious as to, if you can give us an update on conversations you're having with potential new strategic partners.

Sure, small models continue, the fourth quarter we had a slowdown pretty much across the board with globally we had restrained spending by our clients who told us that that would be the case and it was, so that in impacts small models as has site closures and therapeutic area realignments. We also obviously had difficult (inaudible) and we had an unusually strong fourth quarter of last year, particularly December. We indicated that the first quarter of this year would be a little bit slow as well, although we did indicate that research model sales would be up meaningfully in the first quarter. The quarter seems to have started as we thought. January feels like December these days, takes people a long time to get back to work, researchers and the budgets to be finished and there is all of these allocation of studies internally and externally but we're getting a sense that things are beginning to tick up. Our sense going forward is that we'll continue to get price, probably 1-2% that we'll continue to get market share worldwide. I would say the emphasis on market share gains would be academic gains in the U.S., gains in Europe, particularly in the UK and continue to take share in Japan which we've been doing for the last two or three years. Our clients are talking to us about more spending in early development and also in early discovery. Obviously if that happens that generates additional research milestones and I guess that the last thing that we said in our prepared remarks and also in our last call, it's important to note, is that as we, win additional large deals whether the multi-year or individual-year, or even month-month, the work that we were doing with external clients and providing them with…

Our next question comes from the line of Douglas Tsao with Barclays. Your line is open.

Hi Jim. As your business increasingly turns towards discovery services, which is often, or generally, I would argue, a more dynamic segment in terms of technological advances, I was just curious how you were thinking about keeping Charles River at the forefront in that segment in terms of potentially your own internal R&D efforts. Or is this something in which you will largely remain acquisitive and on the hunt for small, innovative companies and bring technology and sort of services that way?

Historically our pure R&D has been principally in the EMD space, we are innovating there all the time and we have strong IP in that space and it's important to have new generations of products. I'd say that in the rest of our business both discovery and research model space, while we had some pure R&D expenditures, that's really not the way we kept up technologically which as you say, we of course have to. I would say that a lot of our acquisitions, particularly some of the small ones are specifically to gain those sorts of technologies. So we're either buying into those technologies or licensing them in. I would say that Accugenix is a technology deal. I would say that our M&A activities right now which are pretty robust in terms of the types of businesses that we're looking at, most of which are upstream, a very much technology base and I think that going forward, you will see a sort of a greater combination of efforts between our DRS business where we branch out both further in CNS and oncology, but also other therapeutic areas, in our core laboratory business where we do and more bio market work and intermodal and also in our quest to have model creation abilities. And yes, I think the vast majority of that would be externally sourced and acquired.

Do you hope that the trends you're seeing in terms of in the productions business between outbred rats and the inbred models?

Yes, I didn't address that specifically outbreed rats continues to be very much tied obviously to toxicology. I did emphasize in my answer the fact that a lot of the strategic deals that we're getting both multi year and single year where we're selling those animals essentially to ourselves are showing up in intercompany and part of our overall sales effort. And upper rat sales have definitely stabilized for a while now. I would say some of the inbred rat strains continue to increase on a unit basis similarly with some of the inbreed mouse strains. We are also getting a little bit of next.

And then, Tom, so the Vital River acquisition is going to add about 1% to the sales guidance? And so why didn’t we get a full percentage increase to the overall consolidated revenue guidance?

Well we that in January, I think a JPMorgan we did that, that's right. So originally three to five constant currency at JPMorgan, we bumped that up to four to six.

Next we'll go to the line of Tycho Peterson from JPMorgan, your line is open.

Just wanted to follow up on some of the trends for RMS that you highlighted, can you just talk about whether all the drop-off is volume related. I know you talked about your expectations for 1-2% price increases. So can you also talk about whether you've been able to implement them at the beginning of this year?

Yes, our price increases go into effect, I think we informed our clients in December. We have them a month's notice. Obviously some of those price increases are impacted by larger deals that we have with clients where they're either price protected or they don't pay the full discount and that's why we haven't been reporting the full discount. But we're going to get sort of 1-2% this year. We'll have some share gains obviously some of that share gains that will be fewer units and that'll be unit mix. I'd say that some of the strands we have had some unit declines which is the result of just overall pullback in spending that we saw particularly in the fourth quarter.

Okay, and then your expectations for rebound in that business this quarter, how much of that is predicated on things getting better in Europe and Japan versus just normal seasonality?

It's very much a combination of normal seasonality and absolutely global spending pullback by the big pharma companies, our clients tend to move as a group and similarly we saw unusually high spending in the fourth quarter pretty much across the board globally by our clients. So, we feel that that will pick up meaningfully for both reasons in the first quarter.

Then can you just talk a little bit about expectations for Endosafe? I mean, you talked about the Nexus launch later this year. How should we think about that ramping in the back half of the year and what is kind of baked into your expectations?

I'd be careful to over analyze those. As we introduce new products and this is an automated product which will increase throughput in the central laboratories. It will enhance that whole product line particularly from a cartridge unit basis. The best way to look at that whole business is that, it's going to be double digit growth for the next few years at least, combination of growing share, introducing new technologies and essentially staying ahead of the market, also as we moved into microbial detection through our Accugenix acquisition, we've opened up larger market opportunities which will clearly benefit that business.

Lastly, to clarify, you had talked about spot pricing increases in December. You mentioned it again today. Is there any kind of meaningful underlying trends here that looks like it is improving as we start out the year, or is it just very sporadic at this point?

It's hard to tell, we don't want to over say this, in situations where we don't have very large deals that are locked in, particularly as capacity have continued to get tighter, we have testing pricing and are periodically getting it, if that periodically turns into something more consistent then it will obviously be terrific, but there is obviously going to be some correlation between available capacity and our ability to get a greater price. So we will continue to test that and hopefully continue to have pricing be more of a part of this business going forward.

Next, we'll go to the line of Dave Windley with Jefferies. Your line is open.

I wanted to follow-up on Tycho's question there. Jim, it seems to me from your descriptions that the real opportunity for growth in this business is going to be share gains, but particularly through broader strategic relationships. Those relationships bring with them, I think as we saw with Astra Zeneca, some amount of price concession for the volume that the client is bringing to you. I guess I'm interested in your drilling in just a little deeper to help us to understand the puts and takes on pricing. Is it net positive because utilization and spot is improving, or is it going to be net negative because the mix of your volume is shifting more toward these protected-price strategic relationships?

Yes, these strategic deals are again whether they are multi-year or single-year or even shorter periods of time, sometimes we just prefer a provider. And one of our top five clients doesn't want a multi-year deal but we get virtually all of the work and obviously that's fine. Look, we've always given better prices for volume and I suspect that we always will and that's across the board in all of our products and services. So that's really nothing new. In the strategic relationship, as we have indicated, particularly for the very large complex one we're probably going to have some start up drag in margin and the revenue will come more slowly as we're learning to run the protocols and assays. In the very earliest deal that we announced, we did that work in very aggressive margins and it's proven out over the last year to have very attractive margins given the total volume and mix of studies and other work that we were doing for these clients. So, the margin we still think it's very positive in terms of getting share, having closer partnership, definitely invigorating the top line and if we are good and if we execute well and if we drive efficiency which we're definitely committed to, while we hope to get price and we just talked a little bit about it. We can't guarantee that. So it's going to be volume and efficiency, we do continue to think that we cannot just drive the top line but continue to improve our margins. so it all conspires, I wouldn't care if you are inferences, we just would never back off of pursuing these ideals the client face particularly with the very-very large clients is relatively small. There's a small number of clients left that probably before the consolidation will certainly be significant, dramatic additional outsourcing and to be the beneficiary of that outsourcing and it's extremely powerful and positive. And then it's up to us to drive home the value proposition. I can just tell you that every business in this company is spending a significant amount of time driving productivity and driving efficiency and doing everything they can to contribute to pushing margins going forward given our basic assumption that pricing is possible that will be a challenge.

I would just add a couple of things to that so in addition to the efficiencies either because of our familiarity with a specific client or general efficiencies across the board and more work in the parameters of the arrangement, the partnerships are agreements themselves tend to be more narrowly defined along a certain path and studies as you might imagine. And so as we move outside of those particularly defined studies, we have additional benefits to price goes a little bit more abrasively. In addition to that, Jim talked about more volume; a lot of these are master agreements where they provide the incremental discounts across all of their buying. so it does provide for an ability to actually pull in more work in other areas of the company as opposed to just for instance in life work, so.

Okay. And switching gears then, as I look back through my notes, I think the automated MCS, or Nexus, I believe you are calling that now, at the investor day in the late summer, was expected to launch in the second half of 2012. At JPMorgan, you talked about the first half of 2013. And today, you said later in 2013. I don't know if that means just later here in the first half or if you mean the second half of 2013. I was hoping you can kind of describe what is going on there. Is there an approval that you are waiting on externally or something like that that is impacting the launch date of that product?

Yes, Dave, these products, they're complicated; there's lots of hardware and complex and innovative software. We like to alpha and beta test these thoroughly, obviously before they go out and we often get really good ideas from our clients on additional enhancements. So we still think it'll be in the first half. Its lead a quarter or so, its fine as it tried to indicate when I was answering the last question. These additional products will have a subtle impact on the overall volume this year and mostly on the cartridges and obviously we will always delay a product to make sure it's as perfect as possible before we launch it, and I think it's all part of the wonderful world of software, trying to call the launch dates properly.

Our next question comes from the line of Himanshu Rastogi, your line is open.

Staying with the DCS segment and thinking about the evolution of EBIT margins in that segment, assuming you’ve even won Astra Zeneca life partnership every year, is the mid-teens target attainable over the next few years? And for my follow-up, how is that partnership evolving? Thank you.

Just to clarify the question is as an example on the AZ partnership, are mid-teens margin's achievable. And obviously which will be beneficial to the overall margin. While I would go back to some of the points that both Jim and I just raised, based on one of Dave's question where, these things are priced aggressively as you might imagine, that’s probably the genesis of your question. We do, as Jim said, believe in participating with our clients, particularly in these multi-year deals, it does increase our capacity utilization, it does provide stability and visibility over an extended period of time. So, I think it’s really important to participate. The RRP process is aggressive as you said, so we are pricing these to make good margin, margin somewhere in the range of where and as we both pointed out, I think the opportunities to improve that lie with higher volume, gaining an understanding of that work and in some cases these clients work is a little bit different to us from some of our other work doing it better, general efficiencies across the board, looking to extend this master services type agreement into other areas of business in the company where we can provide incremental work and say other areas of the company products and services. And also as I mentioned, these profiles of competitive RRPs are somewhat narrowly defined along certain study bands because each study is while similar, different in many regards. So it’s nearly impossible to provide an RRP that considers every type of possible study that might be done in the agreement. So, once you sort of start moving away from that band, pricing is less defined and therefore we have an opportunity to improve that. So, I think, the long answer to your question is I do think that we can continue to improve our margin and deals like AC and across pre-clinical and part of that depends more broadly speaking on pricing trends and capacity utilization and things like that as well, for which over the long haul we do think will improve.

And how is the partnership with AstraZeneca evolving?

How’s the partnership going? Partnership is going extremely well. We have very-very close scientific ties with AZ. And we are kind of using each other interchangeably; I think they look at us as AZ folks. So, communication is very close, we have people working together and discussing transfer of work daily, we continue to be very enthused with the long-term prospects for the relationship.

Our next question will come from the line of John Kreger with William Blair. Your line is open.

Jim, could you just expand upon the comment you made earlier that you are seeing some signs of clients reemphasizing early-stage work? That is a very intriguing comment. Just maybe expand upon what are the sort of things you are seeing?

We constantly ask them what the allocation is to spending between the clinic and earlier development work and even though in discovery work we've had a significant number of clients indicate that their emphasis while shifting and had shifted. We can also tell a little bit about this ship, if you look at early development based upon the increase in regulated preclinical studies, the nature of those studies and also to a lesser extent I suppose how some of the discovery work is coming. We are a pretty good mirror image of clients spending particularly on a global basis because we do so much work with so many of them. So, that would obviously be quite positive for us if that realignment is spending between the clinic and some of the earlier activity.

And then as a follow-up, if you look across both your businesses, are you seeing any change in model usage per compound? Is that going up or down or pretty stable?

I wouldn't say we've had any discernible changes in model usage.

Our next question will come from the line of Ross Muken with ISI Group, your line is open.

This is Vijay for Ross. Thanks for taking my question. Jim, I just want to dig in a little bit on RMS and the comment that you made, saying volumes were down and you were beginning to see this trend in Europe and Asia, while US has been weak for several years now. I am just trying to put that in perspective. Are that Europe and Asia will sort of mimic what we have seen in the US for the next few years?

It's difficult to predict that, sometimes you Europe and Asia follows the US, but I think the phenomena we saw in the fourth quarter much, just a pullback in spending by all the drug companies on a global basis. We would be surprised if we don't continue to get competitive win, share gains, both of those look held as we happen for the last few years given the weakness of some of the competition there. We are also getting price in those locals as well. I think those locations albeit smaller are still in some ways a little bit stronger in a growth rates versus the US and I wouldn’t expect that we have any sort of dramatic change in the slope at the current time.

Could you just walk us again through the sequestration assumption? If we do have a sequestration now, sort of what would be the impact or what do you guys think could be the impact?

We have a relatively small amount of our sales, specifically to the government. We only sales to NIH like everybody else and then we have a lot of government contracts, but again in the aggregate that's a relatively small number. I think it's unlikely that they're going to slash ongoing contracts particularly for, most of those are for basic animal models used for basic research which I think is pretty important part of structured research within the government. So we think that's unlikely. It's more likely to have a greater impact on things that, new contracts being let, it could have some modest impact I suppose on work directed from the NIH. But our total sales, we don't break it out for US. So I was going to say our total sales for academic and government are probably about 24%, but that's worldwide. We have a lot of government sales in Europe so I don't have the number at my fingertips but the impact if any, will be very modest.

Our next question will come from the line of Robert Jones with Goldman Sachs, your line is open.

Hey, it's Adam calling in for Bob. Just wanted a little more color on strategic partnerships, you spoke to 25% of your total revenue coming from strategic partnerships, not assuming any further partnerships what do you think the number could get to with regards to expanding your current footprint with existing partners.

That's a bit of an imponderable. Obviously we will work hard to have as many strategic relationships as possible. again whether they're multiyear or not is not particularly relevant, the point is that if you have a relationship with the client and you're either the sole source of providing work for them or the primary source of providing work for them, I've seen a lot of cases, we have that, we just got word actually this week of re-upping with a large client that we already had and working out to RRP and we're getting that on a sole-source basis. That gives you very increasingly better visibility and predictability of our business model. It also gives you better opportunity to work on pricing and also to plan for future capacity utilization. So, I don’t know what that number is going to be. We'd like it to be as large as possible because that means that we have enhanced relationships with our clients.

Just also to ask around the RMS margins, definitely somewhat disappointing relative to our numbers and the street numbers for four Q, how do you look at those going forward and was this just more completely volume and seasonal-based?

With specific as to what, I am sorry?

I am saying were the 4Q margins as, I think complete the non-GAAP was at 27.3% which was the lowest since 2008, so do you see those re-accelerating up to 30%, or is that possibly in the high-20s is the kind of normal?

No we do, I mean what we said in our December guidance call is that we expected our margin to be really in line year-over-year, I know it was a little bit lower than normal in the fourth quarter but of course the fourth quarter is typically low which I am sure you are aware this fourth quarter was a little bit lower. We did talk about that in December and a little bit earlier about seeing a little bit of pull back due to clients trying to meet their budgets at yearend and what not. So I do think other than we said about a little bit of snow is out of the gate in the first quarter, we do expect to see margins be pretty normal and stable overall in our mess year-over-year.

Our next question comes from the line of Ricky Goldwasser with Morgan Stanley. Your line is open.

This is Andrew Schenker in for Ricky. Just to follow-up on the margin discussion. I know you guys did discuss this in the December call, but you are expecting margins to be flat, even with benefits from the profit improvement program and increased sales. So maybe a way to word this a little differently is what do you guys think it will take to see margins expand going forward? Is it strictly a volume issue, and kind of what is that magic point where volumes kind of exceed annual cost increases maybe?

I think it’s a combination of continued volume growth, we have to work hard, continue to work hard on efficiencies but even with efficiencies we do have cost increases every year. So that’s given the limited volume increases they would had it makes very difficult to improve margin when you are not getting substantial volume or pricing so I do think we need some pricing. I think that environment will get a little bit better as we get more volume and the industry gets more volume. So, I think really it’s a combination of considering to be diligent on efficiencies, continuing to improve the top line, be it volume ultimately as capacity gets better we need to start seeing some price increases.

And just following up on that, you did highlight another $20 million on the profit improvement program. In which buckets is that $20 million going to fall? And then thinking forward is there more upside to that going forward as you increase your attention on efficiency or continue your attention on efficiency?

Yes there is. Obviously we talked about that for 2013 in our original guidance and talked about some of the offsets for that like normal merit increases and some inflation from some of our vendors and things like that. So I think that's the kind of thing we are going to do every year just to offset, merit increases and things like that. A lot of that would be in PCS. I think that's probably the number one area, we obviously have a number of saving in RMS as well as corporate but I think In terms of ranking that, PCS would be the rank order number one and then RMS in corporate.

Our next question comes from the line of Garen Sarafian with Citigroup. Your line is open.

A couple follow-ups. One is on your strategic partnerships. You mentioned the headwinds as you invest in the relationship with these strategic partnerships. I'm just wondering, do you have anything contractually stating some sort of a volume minimum or dollar minimum so that down the road that you are assured that these investments are going to pay off?

We actually don't have dollar minimum, I can just tell you going back to the first big one we announced. We were negotiating a dollar minimum right up to the last moment. Clients decline was very resistant to that and I think given the dynamism in the pharmaceutical industry with the massive changes that they have constantly of management and drugs selling and changes in therapeutic areas that just hate that. It's not comfortable for them. And I remember in the last day they said that you can be confident that you will get the volume that you are asking for, we just can't contractually commit to it and I know that sounds odd. And I think the only sort of euphemistic or the only example I can give you is that actually on the anniversary of that deal, the dollar amount came out exactly as we had requested and that they had confirmed, albeit not in writing. So, yes, I suppose it would be better but not if the clients was uncomfortable by that and not if the client wouldn't contract with us so. I think we get a lot of these deals because we're flexible and because we're thoughtful and because we don't push those things too hard. I understand the essence of your question is that there needs to be a payoff at some point for taking on this work and obviously we agree with that and so far the progression of these relationships has been quite positive and there is an opportunity for us as I said earlier, through driving efficiency and also through the Nexus studies and or other work across our products and services portfolio that do have an opportunity to enhance both the top line and the bottom line, so we continue to feel really good about our ability to impact the contribution that these large deals will make almost as much as the clients do.

Sort of related to the strategic partnerships, with nearly 25%, you are fortunate that these relationships bring in business. But could you just perhaps talk about the competitive environment, maybe from your smaller competitors that do not have these partnerships? And with the volumes still into 2013 not yet picking up, how are your competitors reacting to fill their capacity? Just overall pricing pressure, are you seeing anything change?

Not really, we have smaller competitors whose capacity is definitely not very those who are very aggressive on price. Here’s an anecdotal example for you. We just won some work this week from a large client that we already had but it was competitively bid, and we were not the lowest price, and so as we say, every time we talk to you folks, science is the most important thing to our clients, and in the final analysis it really is so, we know what our walk away point is, we know how much we are willing to be aggressive with pricing on the downside, we also know at what location the volumes would be most beneficial, but we’ve been able to compete very effectively for the last year or two with very large comparison, very small ones, almost regardless to the pricing that they throw at us. And as I said with this anecdotal example, we stopped because the client wanted great science, we knew that the price point we were giving them, we could deliver that great science and we got the work even though we weren't the lowest price. So lowest prices doesn’t always prevail in this market, sometimes it does, sometimes we are the lowest price. But we do that always with our eyes open.

Thank you. And our final question comes from the line of Todd Van Fleet with First Analysis. Your line is open.

Jim, the free cash flow yield of the Company is pretty attractive. The growth profile for the Company overall is relatively steady. Acquisition appetite you guys have seems to be more kind of the bite-size than something that is more significantly sized these days. So I'm wondering at what would the circumstances have to be before Charles River would consider paying out a cash dividend to investors.

We take a look at use of cash all the time, we actually have board committee that discuss that along with common eye. It's hard to characterize acquisitions because I think our acquisitions are supposed to be quite good and we could have a larger number of small deals. We could have a more modest sized deal. We have no intensions of doing anything gigantic, but we could upsize the deals a little bit. Again that would always be the best use of our cash for strategic accretive acquisition which help us to grow and service our client. If for some reason we were sitting here and had gone, I don’t know - a couple of three years without doing any acquisition and cash flows mounting and we thought our leverage was where we wanted to be, I suppose we could determine that dividend would be the best use of cash at the time or buying back stocks. So it's always circumstantial, we always look at all of the possibilities - continue on. You know what our preference is, but we have a responsibility to utilize our cash responsively and gives you a hope of best return. So I would never say we would never do anything and so we will continue to watch it, although I would have to say there are M&A pipeline that's unusually strong because we have been working on it very-very hard and I was seeing some things now that are of significant strategic merit.

With that speakers I'd like to turn it back over to you for any closing comments.

Thank you for joining us this morning. This concludes the conference call.

Thank you for joining us this morning. This concludes the conference call.