Good morning everyone and welcome to the IDEXX Laboratories Second Quarter 2011 Earnings Conference Call. Just a reminder, today’s conference is being recorded. Participating in the call this morning are Jon Ayers, Chief Executive Officer; Merilee Raines, Chief Financial Officer; and Pete Levine, Director, Investor Relations. IDEXX would like to preface the discussion today with a caution regarding forward-looking statements. Listeners are reminded that statements that members of IDEXX management may make on this call regarding management’s future expectations and plans and IDEXX’s future prospects constitute forward-looking statements for purposes of the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by the use of words such as expects, may, anticipates, intends, would, will, plans, believes, estimates, should and similar words and expressions. Such statements include, but are not limited to statements regarding management’s expectations for financial results for future periods. Listeners are reminded that actual results could differ materially from management’s expectations. Factors that could cause or contribute to such differences are described in IDEXX’s quarterly report on Form 10-Q for the quarter ended March 31, 2011 and annual report on Form 10-K for the year ended December 31, 2010 in the section captioned Risk Factors, which are on file with the SEC and also available on IDEXX’s website, idexx.com. In addition, any forward-looking statements represent IDEXX’s estimates only as of today and should not be relied upon as representing the company’s estimates as of any subsequent date. The company disclaims any obligation to update or revise any forward-looking statements in the future even if its estimates or expectations change. Also during this call, we will be discussing certain financial measures not prepared in accordance with Generally Accepted Accounting Principles or GAAP. A definition of these non-GAAP financial measures is provided in our earnings release, which…

(Operator Instructions) Our first question comes from the line of Nicholas James with Raymond James and Associates. Please go ahead. Nicholas James – Raymond James and Associates: Hi, great quarter. Just a quick question on the catalyst, what are you guys doing to kind of generate better growth on the commercial side in North America and kind of your expectations for back half of the year, as you’ve kind of been disappointed with your performance over the last couple of quarters? Thanks.

Yes, thanks Nick. Welcome to IDEXX. I wouldn’t say that we’re disappointed with our performance, but you do clearly observe we will see a pickup in the unit placement in North America and also significant growth in Asia in the second half of the year. We’re continuing see our sales force learn how to sell real-time care both the combination of Catalyst and ProCyte. I think we’ve been through the learning phase on ProCyte. It was a brand-new instrument launch. A significant instrument launch and we’re now able to really fine-tune the abilities of both. And we’re continuing to learn how to sell protocol-based rebate programs that provide an attractive incentive for customers to both increase their profile as they buy our new instruments and be able to afford the new instruments. Nicholas James – Raymond James and Associates: And then just on the economic picture if you think about, where we are today, where you thought we would be when you initially gave guidance back in October. Talk me about that expectation on volumes and is there any pocket of areas of improvement, or is it a pretty much broad base as we would expect?

Yes, I’d say we’re probably 1% lower pet visit growth than we had in our plan, which has, of course, been made up for with growth that we’ve manufactured through our strategies of innovation. I think it’s hard that to say, it really does follow the normal consumer trends around North America and indeed around the world. Obviously, Asia really unaffected by, other than Japan with the temporary issues of regarding the tsunami. Europe is a little bit diverse market and every country is a little bit different. But it’s a market that’s showing the same growth for our businesses as we’re seeing in North America. And of course the exception there would be, our Livestock and Poultry Diagnostics business, which is predominantly close to 90% of those revenues are outside U.S. and obviously they are doing very well in Europe. Nicholas James – Raymond James and Associates: All right, thanks a lot. Great quarter guys.

Thank you.

Our next question comes from line of Ryan Daniels with William Blair and Company. Please go ahead. Ryan Daniels – William Blair and Company: Yes, good morning. Jon, I want to follow-up on one of your comments in the prepared remarks regarding the placement of ProCyte with Catalyst Dx and the fact that’s actually driving more chemistry sales. Can you give us a little bit more granularity to what type of increase you’re seeing at those clients, which have the dual equipment base?

Yes. Well, obviously ProCyte has a couple of positive impacts. The first one is the door opener in an attractive way. I think there is something about hematology in particular. ProCyte really provides a level of capability for in-house hematology that even LaserCyte did not provide because of its speed and unprecedented accuracy. LaserCyte have excellent accuracy, but it didn’t have the speed. And so, as a result the Catalyst in many times just goes along with it. And I think we’ve been come quite effective in placing Catalyst and ProCyte in accounts that are new to IDXX. So that’s a good door opener. Second, of course, Catalyst and ProCyte are very natural pair for real-time care and it just makes it easier to include a CBC with a chemistry run which is, of course, good medicine, best medicine. And then third, we’ve been selling Catalyst for a couple of years now and ProCyte really only in the last year. So number of our ProCyte sales have gone to existing Catalyst customers. And I think what we are seeing is – may be the hematology was the bottleneck to running more in-house and with ProCyte we’ve eliminated that bottleneck. So we are seeing a modest pickup actually, kind of modest single digit pick up in the chemistry slide utilization when we put a ProCyte in. I want to say that these are very early numbers. We don’t even have year-over-year numbers yet, because we haven’t been selling ProCyte for a full year. So, this is very early days, but the numbers are encouraging. All of these trends – you can put a number here, you can put a number there, but I think kind of they all speak to – we really like the long-term dynamics of how all these come together to drive consumable growth. Ryan Daniels – William Blair and Company: Okay, very helpful color. And then maybe one quick followup just on Japan, as we think about the launch of Catalyst in the back half of this year. I guess really two questions associated with that. Number one, do you know the current installed base of chemistry analyzers with some range, I know you might not have an exact number, but kind of how large that market is? And then number two, is the thought process there to quickly try to get approval for ProCyte to bundle the two together to add more of a value proposition in that market?

Yes, I’d say, when you say installed base, I assume you mean that the market as a whole. Ryan Daniels – William Blair and Company: Yes, overall market.

Yeah, I think there are around 8000 veterinary practices in Japan. It’s kind of a - I don’t know, it’s a techie market. They like instruments. They’re really probably one of the most in-house oriented, naturally in-house oriented markets in the world versus reference lab. We have a meaningful but much smaller share that was all based what we have in other markets. And Catalyst really provides capability with its features of fast and easy and the clip, that’s not available in the Japan market. And you’re right, ProCyte which actually is manufactured in Japan as it is in other markets, it would be a very nice addition. Of course, we have LaserCyte today and that works very well in Japan. And we are going through the approval process with ProCyte in Japan. But, Japan is the only market in the world that has an approval process for instruments, so we just have to proceed through that before we can be adding ProCyte to the equation. When we do? It will be just a fabulous in-house offering and unmatched both on chemistry and hematology and it’s an in-house market. So we are excited about it. Ryan Daniels – William Blair and Company: Great. And I apologize, but one quick followup. Any idea on how long that approval might take or is that too hard to determine?

Yeah, it’s not within the next 12 months and I’d say it’s not outside 24 months. It’s a little hard to predict. There are not particular time frames, and we just have to see, but we are going through that process. Ryan Daniels – William Blair and Company: Okay, thanks, and great quarter guys.

Our next question comes from the line of Miroslava Minkova with Leerink Swann. Please go ahead. Miroslava Minkova – Leerink Swann: Hi, John, hi Merilee, congratulations on the quarter. Let me start by talking about the vet market environment. Obviously the economy hit sort of a soft patch here in the second quarter. Maybe if you could elaborate a little bit on what you are seeing happening at vet practices and what your assumption is for the remainder of the year? Are we going to stay at the current levels or do you still anticipate things to sort of improve a little bit towards the yearend?

Okay, I will take the first half of that question on the expectations and then I’ll pass to Merilee. What we saw was not really a soft patch, we just didn’t see a growth, any change in the rate of growth versus the first quarter. So, maybe it was just a soft patch with regard to expectations, but with regard to really the trends they were flat line, if you will. What we do see is individual practices are performing very well in this environment as they are really adapting to the changes in the pet owners and adopting some of our technologies which drive productivity and a better customer experience and practices just manage better, do better. So, we actually see a great variation in practice success even in the current economy. But as a whole really it wasn’t a soft patch as much as it was in a growth dynamic. Merilee?

Yeah. And Miroslava as regards to our thinking about the economy as we look forward in the year, I think that based on the fact that we just haven’t really seen any movements so far in the first half of the year that we kind of tampered down our thinking about any kind of help from the economy over the course of the year. So, I think if things do pickup at all, it will be decent. It will be good news for us and some upside. Miroslava Minkova – Leerink Swann: Okay, thanks. That makes sense. And secondly, maybe if you could since you did end up at the high end of your organic revenue guidance range for two quarters in a row now. Maybe if you could help us understand how much of the second quarter was the distributor inventory changes and why should your organic growth rate moderate in the second half of the year, perhaps other than these distributor adjustments?

Primarily, looking at the distributor number, one thing is we just had, if you look for the company as a whole, we had great organic growth in the Livestock and Poultry Diagnostics business in the first half of the year. And we had some actually good growth in second of last year. So, we are going to lap ourselves there. So that the organic growth will – while it’s a tough business to predict, we would see a significant drop in its growth in the second half of the year. So, it’s one contributing factor.

Yeah, Miroslava, I would just say, as I look at it – first half versus second half. When we look at organic growth for the company overall adjusted for the distributor inventory dynamics and assuming that the distributor inventories will come down in the second half, then the organic growth rate would be exactly the same for first and second half. And as I had indicated, I think that what we will see is that the components of organic growth, what makes up that total will be a little bit different between the first and second half. And that we will see a lesser contribution from Livestock and Poultry Diagnostics and offset by somewhat higher contribution from instruments, but overall, very, very consistent organic growth between first and second half.

Yeah. And just I know you know this Miroslava, but just to remind investors the general Livestock and Poultry is about 8% of our business and instruments is I don’t have the exact percentage, but probably not that different. So, really these are refinements around the mean. Miroslava Minkova – Leerink Swann: Thank you very much. I will get back in queue.

We have a question from the line of David Clair with Piper Jaffray. Please go ahead. David Clair – Piper Jaffray: Hi, good morning everybody. Congratulations on a great quarter.

Hi, David. David Clair – Piper Jaffray: Yeah, you guys touched on this a little bit on the call, but I was hoping you can give us some more color on the initiatives underway to drive operating margin expansion in the reference lab, for example, the links lab information system and test consolidation. I think the metric was 200 basis points expansion year-over-year. Where do you guys think this can go?

Well, we see sort of a steady progression in the operating margin growth in the reference lab over really the next five years. And as we just continued to implement the productivity initiatives, and of course, get the benefit of volume leverage, you mentioned links, which is really hasn’t – it’s a very small percentage of our company today, but it will be in the vast majority of the worldwide, it will be operating in the vast majority of the reference lab business in the next three years or so. So, that’s really a factor that’s going to be a one that goes forward. And links not only has significant productivity benefits, but also gives us a great deal of more information to be able to serve the customer in the way that we provide diagnostic results. It kind of eliminates a lot of constraint that we had with historical lens systems. So, it’s also introduction of new technologies in line, some of which is just technologies that we can adopt and some of which that comes with volume leverage in the larger labs. It’s continuing to take advantage of a hub and spoke core and day lab network to optimize where those tests are run from a both customer service level and a cost standpoint. And so we think there is significant steady progress opportunity. David Clair – Piper Jaffray: Okay, great. And just a quick follow-up, given the day labs that IDEXX has been adding for the last year, I was hoping you could give us an estimate of same-store sales growth within the reference lab? Just trying to tease out the impact of the additional day labs?

Exactly, how do you mean same-store? David Clair – Piper Jaffray: I mean labs that were around a year ago, what was the growth rate year-over-year with the labs that you already had in place?

Yes, it’s hard to really look at it that way because sometimes we’re putting day lab into an existing market that we’re already serving and we’re just increasing the service level and maybe increasing the number of customers. But it’s already they serve existing customers too. So, it’s not like a Starbucks or something we put one in and we got a new store with sales and we can measure that versus the same-store sales growth. It’s not the way that we look at the business. We more look at the business in terms really new customers versus existing customers and growth in their testing volume, maybe the core volume and what they’re adding in terms of specialized tests. We find that those are more helpful metrics. And what we’re seeing is, at least in the U.S. market, where I think we have better data, is very consistent with what we see our Cornerstone data. We cannot strip out all the factors, price, growth in number of customers and growth in the utilization of specialized tests, the core volume, there is no growth in it and that’s very consistent with the Cornerstone data. David Clair – Piper Jaffray: Okay, great. Congratulations again.

Thanks, David.

We have a question from the line of Ross Taylor with CL King. Please go ahead. Ross Taylor – C. L. King: Hi, you may have answered to some extent in your prepared remarks, and I just missed it, but I wonder if you could outline some of the specific factors that are prompting you to increase your investments in more lab facilities or more day labs. So, I just wondered, is it some of the success you have had with some of the labs you have opened over the last year or so or are there other factors involved?

Yes. It’s good question. I can expand upon that. I think we have really good momentum in the business around the world in North America and internationally. The incremental investments will be both in North America and internationally. There are markets that we are not in, but are attractive markets, where we are already there in some of our other businesses, including some of our other Companion Animal businesses and the markets are saying; hey we would like a lab service from IDEXX too. So, I think we’ve just coming down the learning curve on how to open these labs and that gives us confidence with them. It’s an investable business model and we think that’s an attractive investment that will create shareholder value for us. Ross Taylor – C. L. King: Okay. And just one quick follow up, you also mentioned, you have a good pipeline of new diagnostic test and I just wonder if you could highlight, whether that’s more weighted towards the reference labs or in house test?

Again that’s a good question. In fact, what we are really looking at first and foremost is disease states and then the core R&D work is actually that we are finding the biomarker is worked that has to happen, whether you’re going to go with the in-house system or on the reference lab and even in-house it could be on an instrument and it could be a standalone test kit like a SNAP and the answer is all of the above. So, that’s a core area of R&D for us. We think there are areas that can benefit from additional diagnostics biomarkers and it’s going to improve all of our offerings by doing so and expand the market and expand the opportunity to find and monitor and treat diseases. So, we think again those are good investments to make. Ross Taylor – C. L. King: Okay. Thanks very much. Thank you.

Our next question comes from the line of Jonathan Block from SunTrust. Please go ahead. Jonathan Block – SunTrust: Thanks and good morning.

Good morning. Jonathan Block – SunTrust: Maybe just a first question, Jon or Merilee, the de-leverage that you’re talking to in the back half of the year, I think it implies around 7% to 8% of revenue growth, but only about 5% EPS growth. Merilee you threw out some verbiage about additional labs. Is there anything else in there from initiative standpoint and then maybe more importantly how long is that last for? Is that done by the end of ‘11 or does it fell into ‘12? Thanks.

Yes. It’s actually a couple of areas. We talked about the labs, it’s some sales resources, other commercial resources on the margin and it is some R&D initiatives that we are accelerating because we think they are good investments. And it’s all in the margin. Merilee?

Yeah, I think that’s right. I mean also part of the growth here too is information technology investment and some of that is as we’ve talked about with our laboratory information management systems and whatnot. Some of these things, Jon, we had expected would tick up in the second half of the year anyway, and I think in addition to that over and above where we see some really good momentum in some of these areas, we just felt that it was appropriate to kind of turn up the gas in spending and really capitalize on that momentum.

And Jon, I know you know this, but of course, another dynamic in the first half and the second half is ending the second quarter with a little bit higher distributor inventories than we would typically see at a quarter end, and of course, that helps to reset earnings growth and hurts a little bit the second half earnings growth. So another factor. Jonathan Block – SunTrust: Great, I really appreciate that. And then maybe second, the focus on the rapid assays, Jon, even if you tease out some of that additional inventory that you just referenced, it was up, it was up for the second quarter in a row and that was after down for four or three quarters in 2010. So, certainly a positive. Maybe any color there, in other words, is it a world of easy comps? Are you seeing any of the guys that left you for the cheaper heartworm only competitor comeback? Is it just a little bump from the new feline that you rolled out? Any comp there would be great.

Thank you. And yes, that is a very astute observation. It’s a correct observation when you do the adjustments. We are seeing about 2% growth in the first half of this year when we saw negative growth last year. And it is all of what you mentioned. Of course, we introduced in the second quarter a new snap, snap for feline pancreatitis called SNAP fPL. And I think one of the things that a new SNAP 1 which was really asked for by our customers, once they understood what we could do for pancreatitis in the dog and what we could do in the lab. They said, look, we’d like to have something for the cat in house. And whenever you have a new SNAP, I think it’s reason to go in and talk to customers about it and sell the whole snap line, people like to have new products come in. But we have also done a really good job, I think, in the core canine parasitic disease market and just continuing to be price competitive. We’re seeing some price erosion in the core heartworm test, but we’re doing very well with the volume. So it’s all the above. But, one thing that’s not helping us is, I think maybe one thing is helping us is on the canine side, we’re just seeing a little bit better year-over-year growth in pet visits versus 2010, but we’re not seeing that on the feline side. The diversions between growth of canine and feline vet visits, we saw that divergences, that divergences is continuing, so the feline pet visit side is not helping the equation. Jonathan Block – SunTrust: Great. And then if I could just do a quick clarification question. Obviously, LPD is doing very well. You mentioned the headwinds coming in on BSC as the months go up. Can you give us some, maybe rough guidelines as to what BSC is as a total percentage of your LPD revenue?

It’s about 10%. Jonathan Block – SunTrust: Perfect. Thanks guys.

Thanks, Jon.

There is a question from the line of Erin Wilson with Bank of America/Merrill Lynch. Please go ahead. Erin Wilson – Bank of America/Merrill Lynch: Hi, thanks for taking my question. Can you speak a little more to the traction of your real time care program? What proportion of your customers are currently on board with your initiatives there, and how you’re seeing this ramping over time?

Erin, thank you for the question and welcome to IDEXX. I would say that there has been a percentage of customers that have always, a small percentage of customers that have always practice real-time care. And what I am defining as real-time care very specifically is that they are actually running the blood work during the exam and presenting the results to the pet owner before the exam is complete, and therefore getting the real value of that face-to-face interaction. Well, of course, it is a large market for in house testing. If you are talking about chemistry and hematology lot of times it was run quickly, but it wasn’t run as quickly enough to be able to be presented to a pet owner with a 20-minute to 30-minute on appointment link. But what’s happening now with our new systems, Catalyst and ProCyte, we are uniquely in the position to be able to turn the practice, turn that around and see the benefits in the pet owner experience and the compliance that results from having the answers right there in the follow-on medical services that, that might be appropriate given those results. So that is a – it’s still, I would say, a minority, a smaller percentage than what we see. We see it as a long-term growth driver for diagnostics. And I would say also that when we see a customer adopt a real-time care approach we see growth in diagnostic testing in general really doesn’t put the reference lab, because some of that follow-on work is reference lab testing that might happen. And so I’d say we are very early days, but it’s exciting to see. And one of the things that’s different, I think now than maybe in the past is that more progressive veterinarians get that they need to be pet owner focused. And when they are pet owner focused with their medical services meeting showing the results on the exam, their practices grow. And so they are more tuned to the need to if you will market their practices and adjust their strategies in order to deal with current economic environment. So, they are very open to considering, moving to real-time care. So, we are still pretty early days, but we are very excited by what we see. Erin Wilson – Bank of America/Merrill Lynch: Okay, great. And then given recent transactions in the sector, do you proceed your online or technology opportunity as better or worse?

I think we had a – if you look at the kind of the core areas of our R&D or technology competence, I would say to the previous question diagnostic assays, instrument systems and information technology in general. And so one of areas that Merilee talked about I was very pleased is the real momentum that we have with Cornerstone that which of course itself is a software offering that not only runs the practice from a business point of view, but kind of again very similar and somewhat synergistic with real-time care. The adoption of electronic medical records is another significant trend that is being the pets are realizing more and more not only gives them significant productivity benefits, but also improves the pet owner experience. So, that’s just one of set of opportunities we see to grow the business by investing in information technology and related products and services that either supplement our existing offerings or provide new offerings. And I don’t think that’s really changed, I think it just gets more attractive everyday with the general trends that are happening within technology. Erin Wilson – Bank of America/Merrill Lynch: Okay, great. Thank you.

We have a question from the line of Mitra Ramgopal with Sidoti. Please go ahead. Mitra Ramgopal – Sidoti: Yes, hi, good morning. Just a couple of questions on the reference lab business, first, just looking at your competitors and the market overall, are you more inclined to expand your lab footprint in North America or more towards Europe and Asia?

Yes, thank you. We really see opportunities in all of our markets whether they are North American or international, although of course Canada is an international market from the U.S. perspective. And Europe, Asia, it’s – we think it’s a leveragable business model. We are global player already and so it’s really just – it’s continuing to invest in growing that global footprint. Mitra Ramgopal – Sidoti: And just a quick follow-up on the price increases, are you the price leader now or just pretty much again as you look at the fact that there are fewer visits and soft economy, your ability to continue to raise prices, is that going to be an issue?

Well, I think it’s first of all – you’ve got the list price and then you got the discounts to customers off that list. And so I’d say it’s a – we are realizing a little bit of price in the reference lab business as Marilee mentioned, but it is a very, very competitive market. And I think everyday it’s a little bit more competitive. So, I’d say, kin of hardly answer that question. I’d say we have to compete to grow our business. We have to be price competitive. We think we have a superior lab offering, but we still have to be very price competitive. When somebody doesn’t use our lab, it’s hard to convince them. We have superior lab offering, we have to get them to start using us and in order to do so we have to be price competitive. Mitra Ramgopal – Sidoti: Okay. Thanks again.

Thank you and that concludes our questions for today. And I will turn it back to Mr. Ayers for closing comments. Jon Ayers – Chief Executive Officer: Okay. I want to thank everybody for being on the call, and we look forward to updating everybody as the year progresses. And as I said, I think we are excited about our opportunity. We are not expecting much from the economy and would like you all help out here with the economy and get things going for us and that going to be beneficial to everybody. But anyway, I do also want to congratulate the IDEXX team that’s on the call. It was a great quarter and I think we are very excited, not only about the rest of the year, but the multiyear outlook that we have in front of us. That concludes our call.

Ladies and gentlemen, that does conclude our conference for today. Thank you for your participation and for using AT&T Executive Teleconference Service. You may now disconnect.