Good morning everyone and welcome to the IDEXX Laboratories fourth quarter 2011 earnings conference call. As 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 prefix 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 the 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 September 30, 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 any 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 discuss 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 can be found on our website idexx.com. Finally, we plan to end today’s call by 10 am eastern. In order to allow, broad participation in the Q&A we ask that each participant limit his or her questions to one with one follow-up as necessary. We do appreciate you may have additional questions, so please free to back into the queue and if time permits we will be more than happy to take your additional questions. I would now like to turn the conference over to Merilee Raines. Please go ahead.

Good morning and thank you for joining us today. For the fourth quarter, our revenues of $307.2 million yielding 7% organic growth were largely in line with our expectations at the time of our third quarter call. And earnings per share of $0.67 were about four pennies above our thinking. As we had expected, revenue growth in our Livestock and Poultry Diagnostic business abated from previous quarters and was the driver for the 1% lower organic growth than the 8% that we experienced in the first three quarters of the year. The earnings favorability was primarily driven by a $3 million milestone payment related to sale in late 2008 of our feline diabetes therapeutic. This contributed just over three pennies to EPS, slightly lower share count was a minor secondary factor in EPS favorability. Let me speak for moment on the economic backdrop for our Companion Animal business. Recent data showing a modest improving trend in certain aspects of the US economy are reflected as well in our fourth quarter metrics from a subset of nearly 500 veterinary clinics using our Cornerstone Practice Management System. Patient visits were up about 1% in the fourth quarter and this is versus flat in the third quarter and down 0.5% in the first half of the year. And practice revenues grew by 3.5% which was up 50 basis points from the third quarter and up about 150 basis points from the first half. Despite the turmoil in the European economy, our Companion Animal business in Europe achieved 8% organic growth in the fourth quarter. While we remain cautious along with others about the predictive reliability of short-term data and the negative impacts to global economy from potential further shocks occurring in any one geography such as Europe. We nonetheless feel that the metrics…

Okay, thank you Merilee. We’re pleased with how our 2011 wrapped up as a company and the momentum we have going into 2012. As Merilee mentioned, our outlook for 2012 incorporates a very modest pickup in economic activity in our CAG businesses consistent with what we saw in the fourth quarter. Again, we remain cautious about an outlook that would be any more than 0.5% to 1% improvement in practice visit trends over the 2011 levels. Having said that, our momentum comes from continued unique innovations that we bring for the market including our Real-Time Care offerings with in-house diagnostics differentiates Reference Lab Services and new and expanded information technology products and services. A key thing in early 2012 was the introduction of new menu on our existing diagnostic platforms. In the Rapid Assay business we expect to launch an expanded Canine Vector-borne Disease Screening SNAP, we call 4Dx Plus. Launch timing is subject to USDA approval which we would expect in the early Q2. SNAP 4Dx Plus is able to detect two additional tick-borne diseases added to the four Vector-borne diseases including Heartworm that we already cover with SNAP 4Dx. In total 4Dx Plus will detect diseases that can be carried by total four different tick-species, dogs for most of the country exposed to some, if not all of the species and the bacterial diseases that they can transmit. SNAP 4Dx Plus will replace 4Dx at the same price, giving our customers more value for their money and greater ability to detect patients with multiple simultaneous infections and important clinical finding. We believe that the standard-care continues to shift slowly from Heartworm only testing to full annual Vector-borne disease screening. Moving on to the IDEXX VetLab suite, we’ll also be launching in April a viable new test on our…

(Operator Instructions). Our first question will come from the line of Ryan Daniels with William Blair. Please go ahead.

Let me ask a quick one on the in-house protocol agreement program. It sounds like you are continuing to see that as a very successful strategy to place equipment and I am curious if you have data yet on what that does post placement for the consumable utilization, so anyway to compare that to an existing customer utilization or maybe that utilization versus the real-time protocol rebates.

Yeah Ryan, I say we are probably a little early on that, but of course we do have data on what happens when VetTest customer goes to a Catalyst customer or when a Catalyst customer adds ProCyte and those generally of course increase the utilization and we've got a little bit more runway on those to really have an analytical approach to that. The other thing that we are seeing that is interesting is ProCyte is when combined with Catalyst is going into larger accounts. In fact the average chemistry utilization of a combined ProCyte Catalyst placement is close to 50% or 45% higher than the average of our Catalyst installed base that does have ProCyte Dx. So there is a lot dynamics going on here, but I think we are pleased with the quality of the placements and all the different initiatives which are driving utilization and ultimately of course growth in the Consumable volumes and revenues.

I guess a quick second question on how [Bob], just a little bit more color if you could on the R&D spend. I think it was up about 16% year-over-year which is the biggest uptick we’ve seen in a number of years. So a couple of questions there just, can you talk a little bit about that outlook as a percent of sales going forward. Do you expect that to stay at current levels and then maybe you could discuss some of the priorities, be it platform consumables, IT et cetera that you are currently focused on as we look forward on the R&D front?

Ryan, I’ll answer for the first question. I think the R&D levels as a percentage of revenue we see, expect in 2012 will be pretty consistent with what they were in 2011.

And Ryan, you got it. We’re going to be expanding you know the diagnostic menu, the capability consistent with real-time care and differentiated lab services which we really think are just different variations of providing, of serving the diagnostic market in general and of course if you think about diagnostics, what are they? They are really information and medical decision support and so the information technology are strategies that we have to both enhance the value of diagnostics and in fact help the veterinarians improve you know the patient traffic and the revenue per patient visit by helping them communicate the value of their services is really consistent with our overall strategy. So as we have advancements to talk about as we have done in this quarter, each quarter we will let you know. But we obviously have expanded the R&D because we think there is the opportunity in the market.

Our next question comes from the line of David Clair with Piper Jaffray. Please go ahead.

Just a couple of kind of OUS questions for me, I guess the first one, given the launch of ProCyte and Catalyst Dx in Japan, how big of a market is that currently for you guys on the companion animal side and how penetrated do you think you are in the market?

Yeah. Well of course we did launch Catalyst, a controlled launch in Q3 and of course grew that in Q4. We won’t be launching ProCyte although we are still in a lot of laser sites. But we won’t be launching ProCyte until Q2 but it will be a great accommodation. There is really nothing like a ProCyte in the Japanese market and it was kind of ironic here is that ProCyte of course is manufactured in Japan. So it’s got the kind of technology that Japanese really appreciate. It’s obviously a lot smaller market than the US primarily because obviously a small economy and less pet ownership. But that doesn’t make it a very substantial market. There are 8000 veterinary practices. There although, many of them are smaller. But I think what’s interesting for us is that in Japan we have a relatively small share in relation to other countries that we are in. We have a very experienced management team there and actually we have been in Japan for two decades. And we have sold instruments, but we really think it is going to just be a whole new game when we add ProCyte. The Catalyst is itself a new game, but then we add the hematology to it and again, they really do most of their hematology test, chemistry test and hematology in-house although most of it is not done with our equipment. So we do see a long-term expansion opportunity if not, you know, it’s just one more attractive market in our portfolio of international markets.

Okay, and then the 8% growth in Europe, that’s pretty impressive given the challenges that we’re seeing over there. Has this been fairly consistent during 2011 and what are you expecting in Europe in 2012?

I would just say, David, that as we’re looking at things and seeing a combination of both, the momentum we have in the market and the different levels of market penetration that we have in different geographies that, we’re just expecting pretty strong growth across all the regions for 2012. I don’t think there is any one area that’s driving growth significantly more than another area.

Our next question comes from the line of Miroslava Minkova with Leerink Swann. Your line is open.

Let me start with just the comment on the competitive environment. It seems like the instrument revenue growth of at least in dollar terms was a little bit slower than it has been in prior quarters. I guess I was wondering if there is anything that struck you there that will slower your expectations and also if you could please guide us into John’s commentary about the environment getting tougher competitively, [boxes] are out actually promoting their strategy that having the reference lab helps them drive instrument placements. I guess I was wondering if you could respond to that, how you respond to this competitively? Is it making any impact to you?

Miroslava, I will just speak for a moment on the instrument revenue growth. I think we characterized that placements and how we felt about those and you know I think again I will just reiterate that you know. As far as the placements were, they were I think I would characterize as solid in the US and then in Europe they were a little bit lower than in the US and another geographies and Asia was a little bit stronger albeit a smaller market. I think some of the factor that is driving a lower organic revenue growth is the fact that it is a competitive market and we are finding that our marketing programs do involve discounts. I talked about discounts on instrument consumables, but they also are requiring discounts on instruments and I think the placements I guess I would summarize and say we are feeling good about the placements. We are pleased with the double-digit growth that we had both for chemistry and hematology for our largest instruments and the somewhat lower AUPs that we have via discount are something that is helping us to achieve the placement levels that we have.

And Miroslava, its an entire business model. So you've got the instrument placements and of course the instrument revenues, you have consumable. We are pleased to see that the quality of our consumable growth is entirely volume-related. We think that's a good, strong strategic dimension to our business and then we've put our cost reductions in there and you put the whole thing together we are able to get the top line growth and the margin expansion in the instrument business and continue to innovate. And of course people are going to come when they can and follow and try to copy innovations that's the nature of these markets and yet we are continuing to lead the way with new levels of differentiations. I think one of the things that we are very pleased about for example with our catalyst and our ProCyte install base is the loyalty and the retention of our customers when they start using these technologies is extraordinarily high. They really value them when we put them in place and I mean its impressive. So that's another thing that makes us feel good about the long-term prospects for growth in this business.

Okay, great. And maybe just a quick follow-up, the operating expenses as a percentage of sales, guidance that Merilee gave for next year is probably a little bit higher than what I would have thought. I appreciate you are making some significant investments there. Maybe if you could give us some color on what exactly are you investing in?

Well, I am not going to get into a lot of specifics on that, the two primary areas will be within RD. And then within sales and marketing it is largely related to commercial activities. There are some infrastructure investments that we are looking to make internationally. We are also continuing to make investments in our commercial sales force in the US. So I think its really across the globe in a variety of different things.

Okay, great thank you and I’ll get back in queue.

Thank you. Our next question comes from the line of Jonathan Block with SunTrust Robinson Humphrey. Your lines is open.

Thanks and good morning. Some of my question have been already asked. I guess if can follow up here as well. John you mentioned the slight step down from 10% to 8% in CAG but again the number considering the environment was pretty good. Can you just maybe give us some more detail on the type of customer over there in Europe? And what I mean by that is wellness testing as prevalent in Europe or is it not, and it its not, does give you a little bit more of a cushion those growth rates because maybe the testing environment would be therefore less discretionary than what we might see here in the US?

John, that is an excellent insight and we do believe that, so called wellness testing or what we would preferred to call it as a preventative testing is really at a very, very low utilization versus the US. And its really the way that vet schools we thought of course were trying to shift the market but there is a much higher mix, if you will of sick animal or chronic care type of testing that’s on our testing to confirm a diagnosis. So that’s one of the reasons why I said I believe this markets are earlier in their development and also of less discretionary as a result. Also the other thing that we are finding in Europe and I mentioned this generally but certainly it has been very true in Europe, is that with a combination of Catalyst and now ProCyte, we are actually getting into some large accounts that we really previously didn’t have, a great reason to get their attention. A Catalyst was very nice, many of these accounts have vet chemistry, which is a technology that works very well on high volume, but it didn’t capture their attention but with ProCyte where there nothing like it in the hematology. We are capturing the attention and we are getting the whole suite and I think that is helping too. That’s one of the market opportunities that we are capturing and of course the other thing is we are expanding our lab business in Europe. We have not crucially been in all the countries. Now we are in Italy, we weren’t in Italy before, even though we have had very strong commercial organization in Italy. That has done very well and so when we add lab to that commercial organization, they get very excited. We did that previously in France and Spain. We have a very, very strong operation in Germany in lab, which actually serves a whole bunch of countries surrounding Germany and those services are expanding. So the combination of the instrument business and lab business appear to have excellent momentum in Europe.

Okay, great. Thanks for that color. May be just one more question that might have a couple of parts to it, but the organic growth in Rapid Assay was a big number. It seems like Merilee almost half the growth rate was a sell-in to the distributors. So I just want to make sure I heard it correctly, may be a couple of million dollars was a sell through in to the distributors on the Rapid Assay form, but there was a normalized level of inventory on the consumables. So, I guess that’s sort of is just a clarification. And then in the second part to the question would just be Jon, why aren’t you taking price on 4Dx Plus if you would? Maybe if not today, that’s something that you might roll out in a couple of quarters. Thanks guys.

Well, first let me just kind of clarify or walk through the components of the organic growth. Again, so, organic growth 14%; 6% of that it was attributed to changes in to distributor inventory levels year-to-year. And then so the adjusted growth and normalized growth, which is what we are typically looking at was 8%.

Right. So, 8% I think is the right number. To answer your question, of course we did take a price increase in 4Dx in October, as Merilee had mentioned. But we really think the opportunity to grow the utilization of Vector-borne disease screening is a bigger opportunity than to realize price. So, interestingly, there are 70 million plus dogs in the US and not all of them are going to a veterinary clinic unfortunately. 35 million of them are on some kind of heartworm preventative and only 21 million of them are roughly, these are all rough numbers, are tested annually for heartworm, even though it’s a really recommended test before we put them on preventative. And then less than nine million of those have a heartworm test associated with the full Vector-borne disease screening, even though 75% to 80% of the dogs in the country are exposed to ticks. So, we think that there is an opportunity to continue to expand the utilization of heartworm and in this case, Vector-borne disease screening and really so our focus is in that area with the 4Dx Plus test and of course all the medical education and support that we give with that offering.

Thank you our next question comes from the line of Ross Taylor with CL King. Your line is open.

I’ll just have look at two topics, I wanted to ask you about. First of all did I catch from your prepared remarks that your protocol rebate programs are still relatively insignificant in Europe and related to this I just wanted to clarify. Are these programs here primarily important to you economically because they are helping your drive your instrument placements or are you actually also seeing an improvement in your chemistry and clinic revenue and your profitability for the consumer growth as well?

To answer the first question, they are really not been introduced in Europe yet. We think that maybe every country in Europe is a little different and there may be some opportunities to do so in Europe but not at this point of time. They are certainly helpful with instrument placements, they also provide a nice framework for customers to expand the utilization. So I think that part of the story of moving to real-time care with that primary first screen, or what we call in medical profession minimum database of chemistry and hematology values is run at the point of care upon the presentation of the pet. So they provide a foundation for that. I think I answered in our early question, we are too early to really see this to be able to measure that at this point in time.

The last question is fairly minor but I noticed in your guidance some of the Fx rates you use are a little below where the current market rates are and I just wondered if there is any particular reason for that?

Well, you know I think the rates have sort of been all over the place recently and so our feeling was I don’t know, you know it’s typically, it just feels like with the environment that we have in Europe that you know that probably 125 is we’re looking out over the years and it’s good of a rate as any. And I think that’s why we are hurt you know because we can’t predict these things very well that we’re just pretty clear about stating what our rates are and then giving the sensitivity guidance and metrics for you so you know everybody can calculate what the changes would be.

Thank you. Our next question comes from the line of Erin Wilson with Bank of America-Merrill Lynch. Your line is open.

Most of my questions have been answered, but I noticed that you established a relationship with one of your distributors MWI to meet demand to the Cornerstone platform and I think that starts April 1st as I recall and can you elaborate on this relationship and other opportunities or existing similar relationships with other distributors and does this offer some sort of stickiness to your model?

Yeah.

Well, we have a relationship with one of our distributors. I suspect overtime that that will grow; that allows the customers with our practice management software to have a greater level of electronic integration with the distributor. We think that was really part of the entire trend of moving to information technology to make the practices increase the standard care, in this case increase the productivity and the profitability of the practice. So it’s very exciting; and I think it brings great value to our customers who use Cornerstone and what I will tell you is that people who you know purchase practice management software, they usually keep it for very long time, I mean there is very little change in the installed base overtime of practice management software; its not a decision that you make lightly and you want to make one with somebody who is going to be in the market for a long time and continuing innovate with advanced releases. And we haven’t really spend any time in this call, but we have in past calls, we’re just very excited about Cornerstone and its ability to move into electronic medical records and integration with the in-house system whether they would be diagnostics or others and with suppliers such as in the case with distribution. So I think it’s just continued evolution of that connectivity that’s taking place.

On the bioresearch opportunity, I know it’s still very, very small, but how can we track the performance of this business going forward?

Yeah, it’s pretty small; I think we’re going to have within the parts of the business, both with the Reference Lab and the point-of-care. We were very certainly very pleased with having leaded the acquisition of RADIL and we’ve been very pleased with the integration today. And indeed the performance of that business in a short term that business part of the IDEXX family and we’re also very excited, you know they really had an outstanding reputation, but they were primarily, the revenue has been primarily domestic and it’s really a global market and so one of the opportunities that we see in bioresearch is to expand that capability internationally. And again, when I was in Europe with our European organization, they were excited about the opportunity to expand the bioresearch presence. But, it’s so small in relation to the larger businesses I think we will be tracking as part of the larger lines of business.

Our next question will come from the line of Nicholas Jansen with Raymond James & Associates. Your line is open. Nicholas Jansen - Raymond James & Associates: Just one quick question, most of my questions been answered, but thinking about kind of placement activity for 2012, certainly you had a kind of a robust finish of 2011. I know you gave initial guidance last year kind of what you anticipated for kind of ProCyte placement growth, just may be any expectations surrounding the number of placements for ’12 and then also with Catalyst you are several years into the placement ramp; just kind of your expectations for Catalyst placements heading into 2012? Thanks.

Hi Nick, with regard to, let me just say proudly, our hematology line, so we got LaserCyte and ProCyte, we are anticipating approximately a 15% unit growth year-to-year and for ProCyte that would kind of translate we’re expecting about 1,400 placements. And as we look at our Chemistry Line, Catalyst and VetTest, we are expecting about a 5% to 10% growth across both.

And our final question will come from the line of Mitra Ramgopal with Sidoti. Your line is open.

Hi, just a quick question regarding Europe, clearly as we look at the numbers, it’s now about 43% of revenue and with the investments you are planning in increasing infrastructure there, how do you see that number moving over the next couple of years?

I think the 43% is total international. And so, is the question with regard to Europe or international, in general?

Overall, as Europe grows and I guess, even in Asia, how much is international sort of, become, I mean do you see it becoming 50-50 sort of over next five years or so?

You know, it’s a question that I get frequently and I am certainly very, very excited about the growth internationally. But quite frankly, I am pretty excited about the growth domestically too, because the US is really going through a technology, the US market; for veterinary care it’s going through an information technology revolution which is really able to change the game in terms of the pattern of the client experience, and appreciation for veterinary care. So, while we think that the international markets are underdeveloped in relation to US market, we think the US market is underdeveloped in relation to what we’re seeing leading practitioners accomplish with pet owners. And we’re not talking demographics here, we’re not talking geographies. We’re just talking about practices who are very, very successful in communicating the value of care and having greatly expanded, therefore intensity of care, which quite frankly, lengthens the life of the pet and lowers the cost of that pet over the long-term, because you don’t have as many chances for chronic or acute intervention. And so, you know, that’s a long way of answering that; I don’t think those numbers will change a lot between domestically and internationally. They do change as much because of currency as they do underlying volumes in those core markets. But having said that, you know 10 years ago, I think the mix was 39% international and today the mix is 43% international. So you know, there has been some shift in that direction.

Thank you. And with that Mr. Ayers, I would like to turn it back over to you for any closing comments.

Well, I just want to thank everybody for joining the call and it being the wrap-up of 2011 I also just want to take this opportunity to thank and congratulate all of our employees. And indeed of course our customers; we wouldn’t be in the market without our customers and we know we have to win our customers’ confidence everyday and we look forward to continuing to do that in 2012. Thank you. That ends the call.

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