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Executives

Amanda Clardy - VP, IR

Gregory T. Lucier - CEO

Mark Smedley - Global Head of Operations, Invitrogen, and Leader of the Integration with Applied Biosystems

David F. Hoffmeister - CFO and Sr. VP, Finance

Analysts

Tycho W. Peterson - JP Morgan

Quintin Lai - Robert W. Baird

Isaac Ro - Leerink Swann

Jon D. Wood - Banc of America Securities

Derik De Bruin - UBS

Jonathan Groberg - Merrill Lynch

Ross Muken - Deutsche Bank

Dan Leonard - First Analysis

Doug Schenkel - Cowen and Company

Peter Lawson, Ph.D. - Thomas Weisel Partners

Invitrogen Corporation (IVGN) Q3 FY08 Earnings Call October 21, 2008 4:30 PM ET

Operator

Good day ladies and gentlemen, and welcome to the Q3 2008 Invitrogen Corporation Earnings Conference Call. My name is Anton and I'll be your operator for today. At this time, all participants are in listen-only-mode. We will conduct a question and answer session towards the end of this conference. [Operator Instructions]. As a reminder, this conference is being recorded for replay purposes.

I would now like to turn the call over to Amanda Clardy, Vice President, Investor Relations. Please, proceed ma'am.

Amanda Clardy - Vice President, Investor Relations

Thank you, Anton, and good afternoon, everyone. Welcome to Invitrogen's third quarter 2008 earnings conference call. Joining me on the call today are Greg Lucier, our Chairman and CEO, Mark Smedley the Leader of the Integration with ABI, and David Hoffmeister, our Chief Financial Officer. If you haven't received a copy of today's press release, you may obtain one from our website at invitrogen.com.

Before we begin, I want to remind our listeners that our discussion today will include forward-looking statements, including, but not limited to, statements about future expectations, plans and prospects for the Company, as well as future expectations relating to the planned merger with Applied Biosystems.

These statements are based on reasonable assumptions, but actual results may differ materially from those indicated. It is our intent that the forward-looking statements be protected under the Safe Harbor created by the Private Securities Litigation Reform Act of 1995. Additionally, we will be discussing GAAP and non-GAAP measures. A full reconciliation of the non-GAAP measures to GAAP can be found in today's press release or on our website.

For today's call, we will be referencing a presentation that you may view online. Instructions to access the webcast are also on our website. Additionally, we will be posting the presentation to our website following the conference call.

Greg will begin today's call with highlights of our third quarter results, Mark Smedley will follow with an update on the Invitrogen and Applied Biosystems combination, and he will be followed by David, who will give a more detailed review of the Company's third quarter operating results.

I will now hand the call over to Greg Lucier.

Gregory T. Lucier - Chief Executive Officer

Thanks, Amanda. We are pleased to have once more delivered a solid quarter of organic growth and operating margin improvement. Despite the energy and time we are expanding on the integration efforts for the Applied Biosystems combination, we continue to optimize our core business with a clear focus on organic growth coupled with productivity to drive margin expansion. In the third quarter total revenue growth was 15% of which 10% was organic growth. Operating margin improved by a 150 basis points to 26.2%. Net income increased by 22% and non GAAP earnings per share increased 21% to $0.69. These results once again are testament to the impressive franchise we've build under the Invitrogen name. Both divisions had 10% operating organic growth which is a record for the BioDiscovery division as well as the overall company. In addition we expanded both gross and operating margins as a result of our ongoing focus on driving revenue growth faster than cost.

I would like spend a few moments discussing several of the operational and business highlights that led to our solid financial results this quarter. Transaction profitability project we started at the beginning of this year continues to pay off. This project is focused on improving the margin on each and every transaction and has yielded more than $6 million of additional profit year-to-date. This is a great example of the type of low hanging fruit that we can tackle at Invitrogen as we increase our sophistication in areas that have long been optimized in consumer goods industries such as price, freight, recovery, mix management, and online merchandizing.

With respect to online merchandizing, this is another area, where we continue to gain traction in Q3 as we have in preceding quarters. As you can imagine we track a multitude of metrics such as number of visitors who browse, number of visitors who created a card, and then made a purchase, average order value and many more.

This quarter, we saw an increase in each and every one of those metrics. But, more importantly we have experts to analyze these numbers to ascertain patterns and look for opportunities for further optimization on our website. Our website is a true differentiator for our company and we plan to maintain that advantage into the future.

One last area I would like to comment on, is inventory management. We made solid progress in that regard this quarter, although there is still room for substantial improvement. Total inventory came down on a sequential basis, as we had expected, but more importantly there were some great example of plans, where leaders made tremendous progress to accelerate cycle time, thereby only needing materials just in time.

In Carlsbad for example, we have reduced inventory by 7% improved cycle time and did all of that without impacting service levels. We have ways to go in terms of managing the inventory versus service level trade-off. But, I'm encouraged by the work taking place on this front and I'm confident we'll make greater progress in the coming quarters.

Few other business highlights to mention. We had several wins in our applied markets expansion this quarter. As we mentioned last quarter, we got final FDA clearance on our HER2 CISH Kit as a breast cancer diagnostic, and in Q3, we signed a distributor agreement with BioCare in the United States.

We look forward to having additional products available for this important market in the future. Also in the applied markets area, we've launched a new Sample Prep Kit for Legionella testing in water. As we've said many times in the past, there is a market for our biology based products in many of the applied markets such as water and food testing, forensics and diagnostics and these products are some nice examples.

This quarter, we received some impressive recognition in a variety of areas. As we noted in our press release today, we were selected as a new member of the Dow Jones sustainability world index and named the leader of the biotechnology sector for all of 2008. Also, just a week... couple of weeks ago, we were ranked by the patent board as the second best company in terms of patents and technology strength.

We're very proud of these acknowledgements which recognize not only the strength of our portfolio but also our efforts to be responsible stewards of the environment and the communities in which we live and we work.

Finally, let me touch on products and technology introduction this quarter. We broadened our stem cell offerings by licensing stem cell line from the Buck Institute. We also launched our own proprietary services optimized for clinically complaint stem cell culture systems. We are currently the number one stem cell tools company and we plan to continue holding that position with further partnerships and new products.

We also made a technology acquisition that bolsters our third generation sequencing efforts. We purchased VisiGen, small company in Texas that was working on third generation technology for DNA sequencing. This acquisition although small in nature significantly enhances our intellectual property portfolio in this important area. Also compliments our internal work and increases our confidence that we will be the leader in the new genomics era unfolding before us.

All in all, third quarter was another testament to the strength of our company, the soundness of our operating model and the excellence of our people. And effective we accomplished all of this while making great progress on the ABI integration is quite impressive.

Mark will provide more detail on how those plans are going in just a movement. But I'll first make some final comments on a topic that comes up in just about every conversation I have with investors these days.

In this time of economic turbulence, I'm often asked about our end markets. Obviously, the world has experienced a period of significant economic turmoil. But, as we have often said before, we tend to be less affected than other industries. For one thing, I strongly believe that the government funding for research will not be reduced in the months to come.

In fact, we believe there are positive signs in the horizon that NIH funding may actually increase rather than decrease. Secondly D&A sequencing continues to gain momentum attracting more attention and more dollars and Invitrogen is well place to take advantage of that phenomena.

Finally, experience has shown us that spending by our customers on consumables doesn't immediately slowdown when the economy does. Experiments that have been in the works for years don't just stop on the dime. Now, that said with all the economic uncertainty around us, it's certainly possible demand for our products could be affected.

At this point, while our end markets may now be in flux based on what we know today we still expect growth in the mid single-digits going forward. Nonetheless, it's our job as a management team to ensure we have plans in place to withstand any negative changes in the best possible way.

So, even if our end markets were to grow only in the low single-digit, we have enough levers at our disposal to still meet our earnings commitment for 2009. Clearly, revenue growth is one of the single biggest drivers to our earnings growth, but we do have the ability to grow earnings even if the top line doesn't grow as fast we anticipate.

Those levers include accelerating productivity plans that we have in our roadmap for future time period as well as accelerating the plan to ABI synergies. In addition, we can make adjustments to our cost structure that although not ideal could get done. We could used our cash to optimize earnings growth whether that be accelerating buybacks, repurchasing more of our debt or making operating company acquisition that are inexpensive because of the current M&A environment.

And finally, we have the ability to further monetize our IP or even make small asset sales. Honestly, most of those actions or things I'd rather not do, because they don't come without a self sacrifice. So, I'd prefer not to break the glass if you don't have to.

We intend to lead boldly through the uncertain times so that we maintain our leadership position in the eyes of our customers and employees. Lessons of history show us that some of the most successful corporations emerged from difficult economic times, because they took the long-term view and continued to invest while the rest of the world withdrew.

Invitrogen actually has the opportunity that many small companies do not. Because even if we have slow growth, we still generate a ton of cash. So, we are financially strong even if the top-line might not be accelerating. We actually have the opportunity to leverage this period to gain long-term strategic advantages and that is exactly what we are preparing to do as I speak.

I will end my comment to say for what it's worth 2006 is not a too distant memory for me or anyone on my management team. We understand what went right and what went wrong as we integrated over 10 acquisitions in a very short period time. We are also trying to radically operate our infrastructure.

We understand what it takes to make hard decisions and had a focused organization on the most important things extremely quick. We are prepared to deliver on the promise of the ABI combination even if that has to be done in difficult macroeconomic times. Mark Smedley, the leader of the ABI Integration will be going over what we have accomplished to date and the process we are using to insure we successfully deliver upon the planned synergies and the promise of the new company.

Mark has experienced in leading major products of the Integrations in the past with Novartis. In addition to Mark's expertise we have many other members of the new management team, who have experience in leading or playing major roles in large scale integrations. David, for example has experience from Mackenzie where he led several engagements for large scale integrations.

Joe Beery who just joined us from US Airways led the information technology integration between US Airways and America West. And Peter Dunsky who will run the molecular biology division of the new company led the integration of Ambion and ABI. So we have a pretty seasoned team when it comes to leading integration with experience enough to know what to do and what mistakes to avoid. And with that I will now hand it over to Mark to elaborate on these efforts a bit further.

Mark Smedley - Global Head of Operations, Invitrogen, and Leader of the Integration with Applied Biosystems

Thanks Greg. As you've seen from the press releases we put out in the last few weeks, our integration efforts are moving along very well. We've made great progress across all fronts and are well prepared to deliver on the promise of the combination of our two companies once we close this transaction. As Greg said, several of us have a lot of experience in executing large integration efforts. But we are not counting on the management team's experience alone. We've engaged a skilled and seasoned partner to help us develop a detailed integration plan and to ensure that we have all the right operating mechanisms in place as well as the ability to track, measure progress and to see risks before the impact to business. The latest being our trusted advisor every step of the way and we feel that their council has helped us make considerable progress we have to date. As we near the close date for this merger, our integration activities have picked up substantially. And we now have a team of 80 employees dedicated to bring the two companies together.

In total, there are 250 Invitrogen and ABI employees working on this transaction. So we are very confident that we have the right amount and type of resources dedicated to making this merger successful. I would like to share with you the basic philosophy that guides our thinking when it comes to ensuring that end integration particularly one of the sizes of success.

The philosophy has three basic principles. First, make sure, the integration is quick and efficient. This means identifying the synergies, getting the right organizational structure in place and making sure that we have a good business operating model as swiftly as possible. Second, we need to keep running the date to day business. We have to ensure there's no drop in service levels or in the quality of our products and services we provide to our customers.

Finally, we need to continually drive growth for the business. This philosophy has guided our integration process with AV every step of the way; and every person working on the transaction knows that they need to abide by these principles. Even if their immediate focus is on the first principle, which is to achieve a quick and efficient integration they must never do so with the expense of the second or third.

Now, I'd like to give you an update on how the integration is going. I'm pleased to say that we now had detailed plans in place by function as well as cross functionally for achieving synergy targets and having the right structure and model in place for the new organization. Each member of the leadership team has a set of responsibilities that are known, quantified for which they are accountable and with regard to synergies as we said in our press release a couple of weeks ago, we now expect our synergy realization for year one to be $80 million, $20 million higher than we had previously announced.

As you can imagine our internal synergy targets were also higher than what we communicated externally when we saw in the deal. So finalizing detailed integration plans in the last few weeks, we've gained greater clarity on the actions we need to take to achieve our synergies and then the timing of those actions. This has given us the ability to be more confident in our internal synergy targets and to communicate higher numbers externally. Since we've signed the deal, we've systematically achieved every milestone that we needed to close this transaction.

One milestone that we just completed in early October was the official notification finding with the European commission. We've had questions about why it took us so long to follow the EC. So let me give a little background on the process we followed to get to where we are today.

We considered it a good practice to engage the EC in lengthy pre-notification conversations before actually filing. We wanted to ensure, we had taken any concerns or questions they had into consideration before we started the clock. We feel very good about the disclosed discussions and to date, the EC has not expressed any concerns about our filing.

Under European commissionaires the commission has 25 business days following the date of notification to respond to the filing. So, we expect to be able to complete this milestone on or before November 11th. In addition to EC approval the last item to check off is the shareholder vote.

As you know that vote was supposed to be completed on October 16th. But we might have slight revision to the merger agreement to remove the closing condition and remove the stockholder meeting out by two weeks to make sure the stockholders received information regarding the changes in advance to the meeting.

We do not expect to move with the shareholder meeting date to affect the vote. In fact, we achieve core on many weeks ago with almost all votes being in favor of the transaction. We are solidly on track to close in the middle of December assuming we get easy approval by November 11th till which point we will begin implementing our integration and synergy plans.

The detail is to how we will realize the synergies we have committed to is the same as what we have communicated before. Past synergies will be achieved through corporate overhead redundancies, purchasing, sourcing a logistic savings, facility rationalization and R&D optimization and scale.

The vast majority of the synergies we expect to realize in the first year will come from cost synergies, mostly related to the first two items that I mentioned. On the revenue side we see great potential on recognizing synergies through mix optimization, cross selling opportunities and higher transactional profitability as well as the launch of new products in the long-term.

In summary, we are in a great place with regard to integration about a month out from our expected close day. I'd like to make clear that our vision of how to move forward is really a reflection of the views from both AB and Invitrogen and that we spend a lot of time ensuring that our path for the future takes into account both our company's perspectives and is strongly influenced by the rich heritage on both sides.

I also wanted to say that I'm very proud of what employees of both companies have achieved through this process so far. We have some extremely dedicated people working very hard and very long hours to ensure that our coming together as one company is a success. I'm continually pleased by how much enthusiasm I see for both Invitrogen and AB employees for this transaction and for the promise of our role as a new company and the role that we can play in shaping the future biosciences. This concludes the Integration update.

And I would like to turn it over to David.

David F. Hoffmeister - Chief Financial Officer and Senior Vice President, Finance

Thank you Mark. And good afternoon everyone. I'll now take you through the financial details for the third quarter. This quarter we grew revenue 15% including the impact from currency and acquisitions, 10% organically. We are clearly very happy with this record level of organic growth. Always worth mentioning a few extraordinary items that contributed to this growth before we get into the business unit detail.

In the third quarter, we had an extra selling day, which always helps our growth because of the run rate nature of our business. In addition, we had a record level of royalty revenue both from reoccurring contracts as well as one time deals. The Estimate for non-recurring royalties is approximately $3 to $4 million.

These two items contributed approximately 2 to 2.5 points due to growth rate for the quarter. Aside, from these two items, the rest of organic growth was due to the continued strength of the business and new product introductions. BioDiscovery grew 13% year-over-year or 10% without currency to $249 million. This growth was driven by increased price, new product introductions and improved volumes as well as the increased royalty revenue I mentioned before.

Molecular biology and cellular analysis products both had double-digit revenue growth. Cell systems also had a very good quarter with revenue of a $112 million. This represents a growth rate of 19% as reported including currency and acquisition related revenue. Without these two items, Cell Systems grew 10% organically. Almost, all business areas contributed to this growth including cell culture research, production media and production sera.

As we stated in the press release, production media and sera grew in the double-digits as we had anticipated. All regions had solid organic growth with US growing 11%, Europe 8%, Asia Pacific excluding Japan at over 20%, and Japan in the low single-digits.

Currency this quarter contributed approximately $11 million of revenue or about three points of growth. Currency benefits added approximately 100 basis points to operating margin expansion and $0.05 of additional earnings per share.

Moving on to other line items, non-GAAP gross margins was 65.6%, an increase of 120 basis points from Q3, 2007. The gross margin increase was a result of improved BioDiscovery gross margins and currency benefits offset somewhat by lower cell system's gross margins. BioDiscovery gross margins improved by 230 basis points over last year, due to higher prices, increased royalty revenue and improved mix. Cell Systems gross margins decreased by 90 basis points as expected mainly as a result of a higher mix of lower margin production sera and acquisition revenue. These affects were partially offset by positive currency benefits.

Third quarter operating expenses were $143 million, an increase of $17 million over prior year levels and roughly equivalent to last quarter. The year-over-year increase was mainly a result of higher employee related expenses in sales, marketing and R&D, additional operating expenses from acquired companies and hired purchase services. Currency also added approximately $2 million of additional expense year-over-year.

Operating income was $95 million and an increase of 22% year-over-year. The operating margin was 26.2% representing 160 basis points of improvement over prior year. This level of operating margin expansion resulted from gross margin improvements, operating cost leverage as well as currency benefits. Interest income was $6.3 million, interest expense was $6.9 million and other expense was $600,000 associated with foreign currency losses and minor asset impairments.

In the quarter, the non-GAAP tax rate was 28%, the tax decrease year-over-year as a result of earnings growth and lower tax rate jurisdictions and lower than expected taxes due to prior year returns.

Net of the loss of the federal R&D tax credit which expired at the end of 2007. As you probably know, the federal R&D tax credit has since has been re-enacted and the benefit will be recorded in the fourth quarter. Our diluted share count for the quarter was $97 million.

Now let me pause here for a moment to reiterate some detail on share count that we've provided before as it relates to the dilution from our existing convertible debt. The dilution from our existing converts is as follows. At an average share price in the quarter of $35 per share, the dilution is 500,000 shares. At $45, the dilution is 2.7 million shares, and at $50, the dilution is 3.6 million shares. Our average share price in the third quarter was $41 per share. And this should help you as you build your models for future quarters.

Back to these quarter's results. Our non-GAAP earnings per share which does not include stock option expense was $0.69, an increase of 21% over last year. Stock option expense for Q3 was $8 million pretax, $5.6 million after tax and $0.06 per share. GAAP earnings per share were $0.26 as compared to $0.32 last year. This includes a $0.19 charge for in process R&D related to the VisiGen acquisition and if you were to exclude this charge GAAP earnings per share would have grown over 40%.

In addition, we have begun incurring expenses for the ABI acquisition. In the third quarter, those expenses were $11 million. Majority of that spend was for consulting support as well as travel and meeting costs. As a reminder, there is a full reconciliation between GAAP and non-GAAP measures in today's press release and on our website.

Moving on to the balance sheet and cash flow, our ending cash and short-term investments were $676 million. This compares to last quarter's balance of $646 million. Cash from operating activities were $86 million. Capital expenditures were $25 million, free cash flow was $61 million and our debt remained the same at $1.15 billion.

I'll now move on to our outlook for the fourth quarter of 2008. At this time all guidance we give for Invitrogen is on standalone... is as a standalone entity and it does not include any benefit from the Applied Biosystems acquisition closing before yearend. On Invitrogen's standalone, we expect organic growth in the mid single-digits. We expect non-GAAP EPS to increase at 1.5 to 2 times the rate of total revenue.

As it relates to currency, at today rates, currency would have a negative impact of 1 to 3 percentage points to top line growth in the fourth quarter compared to Q4 2007, depending on the mix of revenue by country.

The percentage of currency impact to revenue that flows through to operating income is approximately 50%. We get a lot of questions about whether or not we will hedge currency going forward. As most of you know, Invitrogen has not hedged currency over the past several years whereas ABI has. Once we close, we intend to maintain ABI's hedging program through 2009.

As is our practice, I will also give you a few items to take into consideration for the coming quarter.

In Q4, volume typically comes up, although a portion of that is lower margin OEM business. So we would expect our gross margins to decline sequentially in line with seasonal patterns. Operating expenses will go down slightly on a sequential basis. Q4 tax rate is expected to be approximately 28% which includes the full year benefit of the R&D tax credit.

FAS 123R expense will be in the range of $0.06 to $0.07 depending on stock option exercises. Share count will depend on our stock price given that we cannot predict where our stock price will be, we suggest to use a share count between $97 million and $98 million. Free cash flow for the second half is expected to be in line with the first half. Capital expenditures are still expected to be in the range of $70 million to $80 million for the year.

Before I close, let me give an update on the financing related to the ABI acquisition. We've completed this indication and have signed credit agreements. We're comfortable with where we stand with our lender group and the current issues in the capital market have not affected our deal financing.

Funding will occur once all closing conditions have been met. We have approximately 30 banks in the Term A loan which is $1.4 billion in size and has an interest rate of LIBOR plus 250 and a term of 5 years. We have over 250 institutions in the Term B loan, which is $1 billion and has an interest rate of LIBOR plus 300 and a term of seven years. We can choose from a variety of LIBOR indices for example one, three or six months.

The interest rate is floating with LIBOR. But we plan to swap out a portion of the loan to fixed rates after closing. We require to convert $800 million from variable to fixed and may do more depending on the outlook for interest rates. I am happy to answer any further questions you may have on the debt during the Q&A sessions. And with that I'll now hand the call back over to Amanda to open up the line for questions.

Amanda Clardy - Vice President, Investor Relations

Thank you David. As we prepare for the Q&A portion of the call, we ask participants limit question to Invitrogen quarterly results as much as possible. Anton, you can now open up the line for questions.

Question And Answer

Operator

Thank you. [Operator Instructions]. Your first question comes from the line of Tycho Peterson with JP Morgan. Please proceed with your question.

Tycho W. Peterson - JP Morgan

Hi good afternoon. Wondering maybe, Greg, if you can just comment a little bit more on the VisiGen acquisition, where you see that fitting in and just competitively how you see the technology stacking up?

Gregory T. Lucier - Chief Executive Officer

VisiGen for Invitrogen was a relevant acquisition, because of its intellectual properties. The way that Invitrogen's program is proceeding the intellectual property of VisiGen greatly compliments the fairly large and growing intellectual property estate we have been building. That was the primary reason that we acquired VisiGen.

Second reason is that they do have some particular strength in a couple of areas of enzymology and some other areas that also complements the large and growing team we have in single molecule sequencing development. So, primarily with the intellectual property and the secondary reason was for some particular scientific strength in areas that augmented our team.

Tycho W. Peterson - JP Morgan

Okay. On your pricing strategy you obviously been fairly local about kind of your... the traction you have been getting. Can you just talk a little bit about what the pricing dynamic is like now, how you envision it next year and maybe what's the initial opportunity you see around ABI consumables will be in terms of pushing your pricing strategy through their portfolio?

Gregory T. Lucier - Chief Executive Officer

So, the first part of my answer is that again barring any changes in the economy and sensitivity around price per se, our strategy is to employ the basic pricing strategy team and techniques across the ABI portfolio. And, when we do that many times prices go down, sometimes prices go up.

And, net overall we believe that we are able get a couple of points of improvement in revenue. Now, as we look forward in the 2009, again we are going to do that overall should be very sensitive to customer situation and just to make sure that we are optimizing the value they get in that equation.

I think the great advantage of having now combined with ABI of having such a broad portfolio, is that we can have a broad spectrum of offerings, whether it would be a value menu, if you will let alone a more premium menu. And that's part of the work going on right now is to deliver value yet also deliver we think what we had said before, good incremental pricing improvements into2009.

Tycho W. Peterson - JP Morgan

Okay.And then just finally on the change in the cost synergies that you've provided with the pre-announcement. Can you give us a sense of where the delta was there; I mean is there one particular area that you had... our performance or is that pretty much across the board in terms of the synergies you have played out?

Gregory T. Lucier - Chief Executive Officer

Yes. It's a great question Tycho. I would say it's across the board. Where we stand in our joint integration efforts is really ahead of where we thought we would be at this time, I think the two respective organizations have worked so well together, and so, productively that we were able to communicate the fact that were now accelerating, about $20 million of synergies. It really again is just the timing acceleration.

Tycho W. Peterson - JP Morgan

Okay. Thank you very much and congratulations.

Gregory T. Lucier - Chief Executive Officer

Thank you.

Operator

Your next question comes from the line of Quintin Lai with Robert W. Baird. Please, proceed with your question.

Quintin Lai - Robert W. Baird

Hi, good afternoon. And, congratulation on your results.

Gregory T. Lucier - Chief Executive Officer

Thank you, Quintin.

Quintin Lai - Robert W. Baird

Thanks for the color on the, you're feeling about, how the end markets are. And you'd talked a little bit about the academic side. Could you kind of address what you're seeing on the commercial side, the big Pharma, big Biotech, have you seen any changes in kind of how does that play into your '09 outlook?

Gregory T. Lucier - Chief Executive Officer

Well. It's, too early to draw any conclusions, we haven't seen at this stage any material changes in buying behavior. My comments were really to point out that we remain on guard and we remain ready, if we have to change our operating model, if the volume coming into us changes subsequently.

Now, I have my own personal opinions on what actually will happen in 2009, I won't go into here but we are ready for both the downside case and we are ready these times shall pass, if you will in the next couple of months and things really are not affected. The point I would simply make is that we are all working, I think to be paying to attention to the underlying trends and at this stage we haven't seen any changes.

Quintin Lai - Robert W. Baird

All right. And then, one area in the past that you have seen some lumpiness in terms of timing is in the production side, what kind of visibility are you getting from your customers for some of those larger bulk orders.

Gregory T. Lucier - Chief Executive Officer

At this stage on the bioproduction side, we haven't seen any changes in end market demand for our products. But we are still projecting high single digit, low double digit growth for the full year.

Quintin Lai - Robert W. Baird

And then with the stock coming down and along with the overall market weakness, could... talk a little bit about, your strategy on share repurchases, I know that you're still in the process of the merger but there may be post merger uses of cash and where does share repurchase kind of rank in that use of cash now?

Gregory T. Lucier - Chief Executive Officer

Our philosophy on share repurchases has not changed. We've always used share repurchases to... as an efficient way of returning excess cash to shareholders and we intend to continue to do that once we've merged with ABI. Obviously at this point as has always been the case, we'll first invest in the growth of the business. We now... initially will have a fair amount of debt and so debt repayment is an item that hasn't been high on our list before, but as we said we generate a lot of cash and we'll anticipate bringing our debt down fairly significantly over the first couple of years. And then we would use the remaining cash to continue to repurchase shares.

Quintin Lai - Robert W. Baird

All right. Thank you congratulations again.

Gregory T. Lucier - Chief Executive Officer

Thank you.

Operator

: Your next question comes from the line of Isaac Ro with Leerink Swann. Please proceed with your question.

Isaac Ro - Leerink Swann

Hey, guys thanks for taking the question. Just one on the technology side, as you guys look at down the road the molecular diagnostic marketplace and the application of next generation sequencing in those applications, do you think someone has commercial view of the... to your people when did due diligence, if you like solid hedge commercial visibility there as in technology or as its currently kind of constituted or do you think the VisiGen assets were a major factor there in helping you restart market overtime?

Gregory T. Lucier - Chief Executive Officer

Well, the solid platform I won't speak for ABI, however I would simply say continues to get broader acceptance and we are encouraged by the uptake of that technology. Beyond that in the terms of sequencing technology for diagnostics, we think that it has both today and tomorrow tremendous potential, market potential for the new company as we combine with ABI. The VisiGen acquisition is to augment one particular program in a set of different sequencing programs that we have and that is around our single molecule sequencing development. And down the road, three, four years or so we think single molecule sequencing could be a very important both research and medical tool and that certainly what we're investing to try to target and get.

Isaac Ro - Leerink Swann

Okay, great. And then just getting back to the Applied Bio-Invitrogen merger in and sort of your strategic opportunities. Are there any... is there a short list of geographies where you see the biggest opportunities outside the U.S. to expand the Invitrogen brand with their region and sort of vice versa?

Gregory T. Lucier - Chief Executive Officer

One of the important reasons why we are combining with AB is because we get much bigger scale into the growth markets of China, India, Singapore and Korea. The combined company's footprint in those countries, I think, will be unrivalled in the world of life sciences and our goal is to overweight the investment into those countries in 2009. That's one of the very first and important areas of integration of our two corporations.

Quintin Lai - Robert W. Baird

Okay. Great, and then a just last question on China. Hearing, I guess, some conflicting things throughout earnings season; I think one competitor had a decent quarter there, another one seeing sort of slowdown during the Olympics. So, I'm wondering, you guys obviously had a good quarter. I think you said up 20% ex Japan, was that a function of, maybe some of the competitors you have seeing a slowdown related to non-healthcare markets. It sounds like there wasn't a really slowdown in your core research and now biotech markets?

Gregory T. Lucier - Chief Executive Officer

Our markets again are somewhat insulated from the general economy and general things going on society. This is funding to universities, funding to institutes, which goes on and the experiments are fairly longtime and their planning. So, there was no disruption primarily for our business in China and we grew extremely fast in China in the third quarter.

Quintin Lai - Robert W. Baird

Okay. Thanks so much.

Gregory T. Lucier - Chief Executive Officer

Thank you.

Operator

Your next question comes from the line of Jon Wood with Banc of America Securities. Please, proceed with your question.

Jon D. Wood - Banc of America Securities

Hey, thank you. Greg, the cell culture business, realizing you haven't seen near the level of dislocation as other bioproduction manufacturers this year. I mean, what's the probability in your view that that business actually accelerates next year?

Gregory T. Lucier - Chief Executive Officer

Well, we are not going to give guidance for 2009 on that segment. What I would say is that, again longer term, this is a good area for our company, high single-digit, low double-digit growth and the customers we have are unique and different than perhaps other companies, customers and profile.

And so, our own experience is not easily comparable to another company's experience in this bioproduction space. But, we're having a year as we planned in 2008 with more backend loaded to the revenue and we think again without giving broader guidance that the next couple of years should be... continue to be a good business year.

Jon D. Wood - Banc of America Securities

Great thanks. And then, on the BioDiscovery organic growth, did any particular end market or customer groups stand out to you, be at Biotech major Pharma academic, applied market or whatever. Was the strength there just broad... more broad based?

Gregory T. Lucier - Chief Executive Officer

I guess my answer will be on one part disappointing, but may be on another part encouraging. It was across the board, all customer segments, all areas of the world strong. I think the team on the commercial side is executing extremely well right now.

Jon D. Wood - Banc of America Securities

Okay, thanks again. Dave, what have you modeled for the effective rate for the new debt next year both term A and term B, the blended rate for 2009?

David F. Hoffmeister - Chief Financial Officer and Senior Vice President, Finance

In terms of the interest rates?

Jon D. Wood - Banc of America Securities

Yes, the actual effective rate. I mean, I got the spreads and we know LIBOR, is there any debt amortization cost or facility fees baked within the actual quarterly rate?

David F. Hoffmeister - Chief Financial Officer and Senior Vice President, Finance

Yes, about A+.

Jon D. Wood - Banc of America Securities

Okay.

Amanda Clardy - Vice President, Investor Relations

A little over 8% for the new debt, the debt is a little over 8% is what we are modeling.

Gregory T. Lucier - Chief Executive Officer

And that's the 42.4.

Amanda Clardy - Vice President, Investor Relations

That's correct.

Gregory T. Lucier - Chief Executive Officer

Yes.

Jon D. Wood - Banc of America Securities

Okay. And then any plans to float any of that debt internationally... in international currencies as a potential hedge next year?

Gregory T. Lucier - Chief Executive Officer

We are continuing to look at that. The couple of weeks ago when we looked the rates in Europe were higher than they... substantially higher than they had been in the United States and so wasn't attractive option at that time. But that's certainly one of the things that we continue to look at as way to provide more currency hedge and we are also most actively exploring and planning to put natural hedges in place by expanding our production overseas such as Singapore and other areas.

Jon D. Wood - Banc of America Securities

Okay. Thanks a lot.

Operator

Your next question comes from the line of Derik De Bruin with UBS. Please, proceed with your question.

Derik De Bruin - UBS

Hi, good afternoon.

Gregory T. Lucier - Chief Executive Officer

Hello.

Derik De Bruin - UBS

When you look at the fourth quarter also about 2% boost from M&A?

Amanda Clardy - Vice President, Investor Relations

I mean if we close the...

Derik De Bruin - UBS

Yes, no... I mean no I'm sorry. No, I'm talking about the existing acquisition you have done already this year. you had about 2% gain this quarter from acquisitions. I was wondering if that's about same level you are looking for in the fourth quarter.

Amanda Clardy - Vice President, Investor Relations

Yes. It wasn't exactly... it was less than 2%. But yes.

Derik De Bruin - UBS

Okay.

Amanda Clardy - Vice President, Investor Relations

Similar.

Derik De Bruin - UBS

Okay. And I guess on FX, if you kind of look at rates where they are now and you kind of project that out into 2009, that would be correct me if I'm wrong about a 3% headwind?

Amanda Clardy - Vice President, Investor Relations

In Q4, yes.

Derik De Bruin - UBS

No, I meant in 2009.

Amanda Clardy - Vice President, Investor Relations

2009.Yes, but we are miling around 2% to 3%.

Derik De Bruin - UBS

Okay, okay. And obviously, the same type of operating margin, fresh yield for that with the dollar coming in there as well. Okay.

Amanda Clardy - Vice President, Investor Relations

Although,Derik for that point, it matters on where the currency... which currency moves and where our revenue is from. So...

Derik De Bruin - UBS

Right.

Amanda Clardy - Vice President, Investor Relations

It's difficult to give an exact number on operating margin pull-through. But...

Derik De Bruin - UBS

Okay.

Amanda Clardy - Vice President, Investor Relations

You can take historical.

Derik De Bruin - UBS

So, it's very mix dependant.

Amanda Clardy - Vice President, Investor Relations

Yes.

Derik De Bruin - UBS

Okay. When you look at the potential for combining the ABI in the Invitrogen businesses, I guess have you any further thoughts in terms of the Mass Spectrometry business, any comments on new products being introduced and I guess just can you tell us what your thoughts are on that front?

David F. Hoffmeister - Chief Financial Officer and Senior Vice President, Finance

We're excited by the product launch that AB made a couple of weeks ago and had a chance to speak with a couple of customers, and they're incredibly enthused by the new products. So, at this stage, pre-closed that's really the only public statements I'll say that we're really excited about the new product being launched.

Derik De Bruin - UBS

Okay. And... actually most of my questions have been answered. So, I guess when you look at the... when you look at the amount of projects that you're doing R&D wise and it's how you look at the R&D spend from the standalone basis into buying [ph] company. I mean how many of your synergies are coming out from optimizing R&D projects. I mean you're clearly investing a lot of things like some synergies on your own. I guess can you just give us an idea for, how you see your R&D investments going forward particularly given at the uncertain environment we are seeing?

Gregory T. Lucier - Chief Executive Officer

Well Derik I think what we've said before is that we'll obviously want to discontinue those projects that both companies were doing in the same area. And part of that work can be going on right now in a clean room environment and more will have to do be done post close when we can really open up and get into the details. We anticipate that there we will some savings in R&D but it's not the primary source of savings we're targeting for 2009. We think on that score, there is better opportunities for savings in the back office, in the plant structures, and in terms of material cost productivity and that's where we've placed the majority of our emphasis.

Derik De Bruin - UBS

Okay. ABI owned a stake in VisiGen, didn't they?

Gregory T. Lucier - Chief Executive Officer

ABIdid own a stake in VisiGen, yes.

Derik De Bruin - UBS

Okay... I'll get back in queue. Thanks.

Operator

Your next question comes from the line of Jonathan Groberg with Merrill Lynch. Please proceed with your question.

Jonathan Groberg - Merrill Lynch

Thanks for taking the call.

Gregory T. Lucier - Chief Executive Officer

Hi, Jonathan.

Jonathan Groberg - Merrill Lynch

On the debt, David is there any...we were looking, you did this... you mentioned you published a bunch about this. But I can't find any covenants. What are the covenants that you have on your debt? For example it's like pro forma in '09 maybe they're going to be somewhere between 4.5 to 5 times in terms of your interest coverage ratio. And I'm just curious what covenants were associated with the net?

Gregory T. Lucier - Chief Executive Officer

I think at close we will be closer to about 3.6.

Amanda Clardy - Vice President, Investor Relations

That times EBITDA.

Gregory T. Lucier - Chief Executive Officer

Times EBITDA.

Amanda Clardy - Vice President, Investor Relations

So he is asking do we have covenants for interest coverage or just EBITDA coverage which we do have with an EBITDA.

Gregory T. Lucier - Chief Executive Officer

If we have some interest coverage covenants as well I don't have the detail right in front of me. But I think, we feel very comfortable with our covenants. We are very, I think, fortunate particularly given the credit markets that we were able to negotiate covenants that we feel comfortable with across the board.

Jonathan Groberg - Merrill Lynch

Okay. But so... sounds like kind of total leverage to EBITDA, you are talking about three points... three times, I mean are you near, are you kind of flirting with some of the covenants...

Gregory T. Lucier - Chief Executive Officer

No.

Jonathan Groberg - Merrill Lynch

...as soon as the deal closes or do you have some leg room. Maybe could you...

Amanda Clardy - Vice President, Investor Relations

Given the covenants.

Gregory T. Lucier - Chief Executive Officer

Well really we're not anywhere near any other covenants.

Amanda Clardy - Vice President, Investor Relations

The specific EBITDA covenant is that we need to get down to three times leverage by the end of 2010.

Gregory T. Lucier - Chief Executive Officer

Right. And we started out at 3.6 and we feel that we can easily get to well below that level in that period of time.

Jonathan Groberg - Merrill Lynch

Okay.

Gregory T. Lucier - Chief Executive Officer

That's the most significant covenant.

Jonathan Groberg - Merrill Lynch

Right. And it sound like its sliding, so it's three times by 2010, right?

Gregory T. Lucier - Chief Executive Officer

Yes.

Amanda Clardy - Vice President, Investor Relations

Yes.

Jonathan Groberg - Merrill Lynch

Okay. And, then just on your comment on swapping over to the fixed, I think you said you were required to do $800 million. I am just curious given that spreads between LIBOR and Federal funds of the treasurer are still fairly high and LIBOR potentially could come down, I am just curious, if there isn't more of any opportunity to see if the markets normalize before you swap, and I am just curious about the details, there were?

Gregory T. Lucier - Chief Executive Officer

Well we have a window of opportunity before we have to do. Make that switch. So it is not that we have to do it immediately after closing. In a way of several months before we have to meet that particular covenant and the slop rates are... have been much more attractive than the long-term interest rate swap.

Jonathan Groberg - Merrill Lynch

Okay. Great, thanks. And then, just to the business, a couple of questions. Sorry, one on that what you mention on the terms of FX, I think you mentioned that in 2009 you're maintaining ABI's hedging, I assume your mention, just for ABI's business, are you on implementing that in that for Invitrogen's the business as well.

Gregory T. Lucier - Chief Executive Officer

My comments were for ABI's business and we are looking at extending it to Invitrogen's business as well.

Jonathan Groberg - Merrill Lynch

Okay. Then your commentary was really meant for at this point of ABI?

Gregory T. Lucier - Chief Executive Officer

Yes.

Jonathan Groberg - Merrill Lynch

Okay. And, then Greg. Can you maybe just... you alluded I don't know if you actually said this so you could correct me if I'm wrong, but it sounds like you were still fairly optimistic that maybe we could get some increases in the NIH project with lot of people probably questioning, giving how much money is being spent on other things nowadays, but can you may be just expand on why you perhaps are little bit more optimistic than maybe others about that?

Gregory T. Lucier - Chief Executive Officer

Jonathan, it's really at this stage just a personal opinion. But just based on conservations that I have had in these circles that government spending to stimulate the economy will be one of the levers that gets pulled, and we believe that one of them could include research funding through the NIH. And so, that's why we don't think it will go the opposite direction.

Jonathan Groberg - Merrill Lynch

Okay. Sorry, last question guys. Can you guys say and I will just for the queue but how much you spent on the VisiGen acquisition?

Amanda Clardy - Vice President, Investor Relations

$20 million.

Gregory T. Lucier - Chief Executive Officer

$20 million.

Jonathan Groberg - Merrill Lynch

Okay. Thanks a lot.

Gregory T. Lucier - Chief Executive Officer

Yes. Thank you.

Operator

Your next question comes from the line of Ross Muken with Deutsche Bank. Please, proceed with your question.

Ross Muken - Deutsche Bank

Hi. Good afternoon, guys. I am assuming Greg, you are wearing your old Bama Bedding [ph] relevant to your NIH comments?

Gregory T. Lucier - Chief Executive Officer

It's on my schedule, believe it or not.

Ross Muken - Deutsche Bank

By the way congratulations. The results were quite good. In terms of Biotech as a specific customer base, much of the commentary was around sort of the larger cap folks. Can you kind of qualitatively talk about at least within your business portfolio, how much smaller and mid cap Biotech's firms comprise of overall spend and then talk a bit about sort of the market what we are seeing there. Obviously, if you look at venture and obviously the equity markets, there's not a lot of capital available. Are we starting to see any kind of slowing demand there, are they sort of chugging ahead because they have raised quite a bit of capital over the last few years?

Gregory T. Lucier - Chief Executive Officer

Ross, it's a good fair of question and I don't have a crystal ball at this stage that gives me any great insight. The Biotech space represents about 25% of our revenues. We have to remember that they were achieving record funding in 2007. And, we're on track again for 2008 for record investment through VC. And so, I think they're fairly well funded for a period of time.

Now that doesn't mean that, they will modify... they won't more modify their behavior to preserve cash. It's just that, I haven't seen any changes as of this stage to.... to give you any more color commentary.

Ross Muken - Deutsche Bank

All right. Thanks. And in terms of, the smaller piece of your business and your investment in stem cell, can you talk a bit about some of the trends you're seeing there, a lot of activity globally, is that something you're still looking for in '09 to be an important revenue growth driver for the pro forma entity?

Gregory T. Lucier - Chief Executive Officer

Well. We think it's an important revenue growth driver today; those basket of products that we track are growing in excess of 30% and the money is really flowing into that space broadly whether it's through California some of the states, a lot of the overseas governments and we've built out a team and a commercial thrust to really go capture the money. So, we see it as an important element of the overall growth strategy for the organization.

Ross Muken - Deutsche Bank

Great. Thanks again.

Gregory T. Lucier - Chief Executive Officer

Thank you.

Operator

Your next question comes from the line of Dan Leonard with First Analysis. Please, proceed with your question.

Dan Leonard - First Analysis

Hi. Thank you for taking my call.

David F. Hoffmeister - Chief Financial Officer and Senior Vice President, Finance

Okay.

Dan Leonard - First Analysis

Dave, what currency rates you have built in your forecast for 2009?

David F. Hoffmeister - Chief Financial Officer and Senior Vice President, Finance

We had it with the... basically the October rate at the time we announced. We changed the guidance.

Amanda Clardy - Vice President, Investor Relations

Yes. When we count that guidance it was the week of around October 9th or 10th. I think you can currency rates at that times that we are specific to.

Dan Leonard - First Analysis

Okay. So, like $1.35, $1.36 for the euro.

Amanda Clardy - Vice President, Investor Relations

Yes.

David F. Hoffmeister - Chief Financial Officer and Senior Vice President, Finance

Yes, $1.35.

Dan Leonard - First Analysis

And you mentioned that that will flow through at 50% margin in the fourth quarter anyway. If I look at your results over the past several quarters that seems to have usually with some exceptions flown through at a much higher margin than that. So, why would we expect it, is that 50% margin? Something we should keep

David F. Hoffmeister - Chief Financial Officer and Senior Vice President, Finance

Yes, it's been about of 50% and its goes up and down depending on what particular currency moves, how much.

Dan Leonard - First Analysis

Okay.

David F. Hoffmeister - Chief Financial Officer and Senior Vice President, Finance

That's simply what it is; the 50 is on average, if you are looking over several quarters that's what we use to forecast.

Dan Leonard - First Analysis

Okay, and then Greg, in your prepared remarks, you made a point to detail some of the levers you could pull to grow earnings irrespective of what the broader environment looks like. Given the volatility of foreign currency, how do you know when to pull what lever?

Gregory T. Lucier - Chief Executive Officer

Well, I would say you have to got at look at your actions in terms of short-term and long-term. Now, kind of longer term as David mentioned in his comments, we are moving more of our production into the Singapore facility that ABI has built.

It's a great facility and we are going to put a lot more work into that plant. That will help with currency effect to some extent. And, also help with the economics of our products in terms of improving the cost position.

On a shorter-term basis, we have most of our costs in semi-variable buckets, people, and while it's a painful at times to remove personnel cost, it's a lot easier than running a steel factory. And, I think I would just have people think about that as they think about the flexibility we have in our overall cost structure.

So, we will be smart if we have to take costs out, but they are semi-variable and they can be removed if we have to, if the economy takes it so.

Dan Leonard - First Analysis

Okay. Thank you.

Amanda Clardy - Vice President, Investor Relations

Anton, we have time for one, maybe two-three callers.

Operator

Your next questioncomes from the line of Doug Schenkel with Cowen. Please proceed with your question.

Doug Schenkel - Cowen and Company

Good afternoon, just a couple follow ups. First on VisiGen, they had talked about launching a sequencing service in Q4 of next year and I believe an instrument in 2011. How does the acquisition effect these plans and timelines?

David F. Hoffmeister - Chief Financial Officer and Senior Vice President, Finance

The technology of that will launch in the single molecule space will be the Invitrogen platform. We haven't fully disclosed when we will be launching that. I would just say is extremely competitive when perhaps other people have made promises and we will be giving more details in 2009 on what we are actually doing in that area.

Doug Schenkel - Cowen and Company

Okay. A follow up on the NIH questions that you have received. Well there is potential when the fiscal '09 budget gets finalized, we could see an increase along the lines of what you guys have talked about and I hope you are right.

The reality is it that finalization of that budget could really be three to six months away at least that's our understanding. In the meantime what we are hearing from labs, there's a lot of uncertainty and ultimately maybe this is just a flexible pacing of research spending.

But, I was curious in the current environment are you seeing anything suggest that this uncertainty is affecting spend at least right now and for the foreseeable near-term.

David F. Hoffmeister - Chief Financial Officer and Senior Vice President, Finance

Well, I think your comments are primarily related to government/academic funding and the best to my knowledge their money doesn't carry over to another fiscal year. So, they spend it and they spend it otherwise they lose it. So, the government budgets for the NIH are locked and loaded and they are spending according to those budgets as we speak.

Doug Schenkel - Cowen and Company

Okay. Yes I guess what I was just talking about is just this continuing revolution situation we are in which I think in past years where we have that situation not all of the grants get released upfront. So, it's I didn't know that. If our understanding is correct, at least of what's happened in the past and what we are hearing from labs is correct, we have heard that there are concerns and I just wanted to make sure that you are not seeing anything to suggest that's impacting the business right now?

David F. Hoffmeister - Chief Financial Officer and Senior Vice President, Finance

Look, I think you will hear from any citizen, just not any country they have concerns, but again more on the government academic side, pretty much that money is budgeted and it will be spent and we are going after it.

Doug Schenkel - Cowen and Company

Okay. And, then clearly you guys had a good quarter and I would say that was despite the inevitable distraction associated with the large acquisition pending. Any idea how much better the performance might have been if it weren't for this typical distraction?

David F. Hoffmeister - Chief Financial Officer and Senior Vice President, Finance

That's highly hypothetical and we have no answer. I think it's just was... is worthy of emphasizing that we delivered a good quarter and we also did great work on the integration at the same time and we will keep doing that.

Doug Schenkel - Cowen and Company

Okay. And last question. Regarding the update you provided on synergies and pro forma EPS last week, is it fair to assume that's not the final update meaning we'll get something new when the deal closes.

David F. Hoffmeister - Chief Financial Officer and Senior Vice President, Finance

We will be giving guidance some time in early 2009.

Gregory T. Lucier - Chief Executive Officer

2009, yes.

Amanda Clardy - Vice President, Investor Relations

On our February call. So, Doug, I wouldn't assume you are going to get any more details to synergies or 2009 guidance into our February '09 call.

Doug Schenkel - Cowen and Company

Okay. Thank you very much.

Amanda Clardy - Vice President, Investor Relations

Okay. Anton is there anyone else in the queue?

Operator

Your final question comes from the line of Peter Lawson with Thomas Weisel Partners. Please, proceed with your question.

Peter Lawson, Ph.D. - Thomas Weisel Partners

Greg, just over the last few weeks in Q4, have you seen any change in end markets any slowdown?

Amanda Clardy - Vice President, Investor Relations

Peter. This is Amanda. I'll just step in real quickly.

Peter Lawson, Ph.D. - Thomas Weisel Partners

Yes.

Amanda Clardy - Vice President, Investor Relations

You may want to... you may have jumped on the call late, so you might want to reread the transcript specifically to that. So, something...

Peter Lawson, Ph.D. - Thomas Weisel Partners

Just the last few weeks in Q4. We have kind of heard about Q3 commentary. I just wondered if there's anything new in the last few weeks.

Gregory T. Lucier - Chief Executive Officer

I mean basically, it takes us three weeks into a quarter to really spot a trend and so it's too early at this point for us to comment on Q4.

Peter Lawson, Ph.D. - Thomas Weisel Partners

Okay. And then just thinking about 2009 which market are you most concerned about?

David F. Hoffmeister - Chief Financial Officer and Senior Vice President, Finance

2009?

Gregory T. Lucier - Chief Executive Officer

Look, again, my comments have to be more global guys. I am not an economist. I see what you see and we are going to plan our business and size our business accordingly if volume for whatever reason doesn't materialize. But, I don't have any particular insight to know anyone else has, and we are just going to be ready to act if we have to on our cost structure.

Peter Lawson, Ph.D. - Thomas Weisel Partners

Okay. Thank you so much.

Gregory T. Lucier - Chief Executive Officer

Thank you.

Amanda Clardy - Vice President, Investor Relations

Okay.

Operator

And this concludes the question and answer portion of today's call. I will now turn the call back over to Amanda Clardy for any closing remarks.

Amanda Clardy - Vice President, Investor Relations

Thanks Anton. This also concludes our third quarter earnings conference call. The webcast will be available via replay on our website for three weeks. Thank you again for joining us this afternoon.

Operator

Thank you for your participation is today's conference. This concludes the presentation and you may now disconnect. Good day. .

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Source: Invitrogen Corp. Q3 2008 Earnings Conference Call Transcript
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