Patricia Spinella - Director, IR Ed Ludwig - Chairman, Presidentand CEO John Considine - Sr. EVP and CFO Bill Kozy - EVP Vince Forlenza - EVP Gary Cohen - EVP

Rick Wise - Bear Stearns Kim - J.P. Morgan Glenn Reicin - Morgan Stanley Bruce Cranna - Leerink Swann Peter Lawson - Thomas Weisel Larry Keusch - Goldman Sachs Jason Weiss - Robert W. Baird Jeffrey Frelick - Lazard Capital

Hello, and welcome to BD's FourthFiscal Quarter 2007 Earnings Call. At the request of BD, today's call is beingrecorded. It will be available for replay through Thursday November 7th on theinvestor's page of the bd.com website or by phone at 1-800-475-6701 fordomestic calls and area code 320-365-3844 for international calls, using accesscode 889224. I would like to inform allparties that your lines have been placed in a listen-only mode until thequestion-and-answer segment. Beginning today's call is Miss Patricia Spinella,Director of Investor Relations. Miss Spinella, you may begin.

Thank you, Linda. Good morning,everyone, and thank you for joining us to review our fourth fiscal quarter andfull year results. During today's call, we will make some forward-lookingstatements, and it's possible that actual results could differ from ourexpectations. Factors that could cause such differences appear in our fourth quarterpress release and in the MD&A section of our recent SEC filings. We willalso discuss some non-GAAP financial measures with respect to our performance.A reconciliation of non-GAAP to GAAP measures can be found in our fourth quarterpress release and its related financial tables. A copy of the release, which includesthe financial tables, is posted on the bd.com website. Leading the call this morning areEd Ludwig, Chairman, President and Chief Executive Officer, and John Considine,Senior Executive Vice President and Financial Officer. Also joining us are BD'sExecutive Vice President, Gary Cohen, Vince Forlenza and Bill Kozy. I will now turn the call over toJohn.

Thanks, Pat, and good morning toeveryone. I assume you all have our earnings release and the attachments thatwe sent out this morning and have had an opportunity to review them. Since we liketo devote as much time as possible to answering your questions, our openingcomments will be brief. Broadly speaking, there are fourprimary topics we would like to address; I will take the first three and Edwill cover the fourth. First, we will review our diluted EPS from continuingoperations for the fourth quarter and 12 month period ended September 30, 2007.We will also review the items that affect comparability of the 12 month periods,fiscal 2007 and 2006. Secondly, we will describe some of the key drivers of ourrevenue and earnings growth for the fourth quarter of full year 2007. Third, wewill review our guidance for fiscal 2008, and fourth, Ed will discuss ouroverall strategy and longer term prospects. Starting now with earnings forthe fourth quarter, reported diluted EPS from continuing operations of $0.98increased by 15% over diluted EPS from continuing operations of $0.85 in thefourth quarter of fiscal 2006. For our full year 2007 results, I’d suggest youturn to the table -- table number one in the press release. As you can see therewe begin reported fiscal 2007 diluted EPS from continuing operations of $3.36and add back the in-process R&D charge of $0.48 relating primarily to theTriPath acquisition. This gives us an adjusted dilutedEPS from continuing operations of 384 for fiscal 2007. For fiscal 2006, webegin with reported diluted EPS from continuing operations of $3.18 and addback the charge of $0.21 resulting from the in-process R&D charge relatedto GeneOhm's acquisition and subtract $0.04 resulting from an insurancesettlement related to our former latex business. Taking into account $0.01 ofrounding, this results in an adjusted diluted EPS from continuing operations of$3.34 for fiscal 2006. Comparing the $3.84 in 2007 to the $3.34 in fiscal 2006gives us an EPS increase of 15%. Moving on to our growth drivers,our revenue increased by 13% for the quarter which included an approximate 3percentage points favorable impact from foreign currency translation, primarilyrelated to the Euro. Our revenues for the full year increased 11%, and we arealso favorably impacted by about 3 percentage points from foreign currencytranslation. In the medical segment, fourthquarter revenues grew about 11% led by sales of prefillable drug deliverydevices in pharmaceutical systems and continued growth in pen needles. Globalsales of safety engineered products in this segment grew about 11% to a 176million. For the year, revenues in themedical segment grew about 10% reflecting about a 3 percentage point favorableimpact from foreign exchange. Our pharmaceutical systems, diabetes, safety andflush products lines led growth. Global sales of safety engineered productsgrew about 10% to 673 million. Revenue in the diagnostic segmentgrew about 16% in the fourth quarter. Within the segment, the diagnosticsystems unit reported revenue growth of 25% with TriPath revenues of about 29million, accounting for 15 percentage points of that growth. Global sales of safety engineeredproducts in the diagnostics segment grew about 14% to $187 million, due for themost parts of the continued success of our Push Button Blood Collection Sets.For the year, revenues in the diagnostic segment grew about 11%, reflecting anapproximate 2 percentage point favorable impact from foreign exchange. Globalsales of safety-engineered products grew about 14% to $718 million. Our ProbeTecand Viper platforms also contributed to this growth. Looking at combined medicaldiagnostic global safety for the quarter, sales grew about 12% to $363 million.U.S.growth rate was about 7%, while ex-U.S. was about 27%. For the year combined,medical diagnostic global safety sales grew 12% to $1.39 billion with U.S. growthrate being about 7% and ex-U.S. being about 26%. In the Biosciences segment,worldwide revenues grew 14% for the quarter. Research instruments, reagents,bioprocessing continued to be the primary growth drivers. For the year,worldwide BD Biosciences revenues grew 13%, again including about 3 percentagepoints favorable impact from foreign exchange. Consistent with the fourthquarter research instruments, reagents and bioprocessing continue to drivegrowth in this segment. Turning to gross profit, weachieved a 40 basis point improvement in gross profit margin due both toimproved productivity and product mix, offset in part by start-up cost formedia productions, farm systems in bionutrients capacity. This result is about30 basis points below our previous guidance for gross margin improvement duefor the most part to our reclassification of certain expenses from SSG&A toR&D and RG rather than to cost of product sold. The reclassification covers allfour quarters of the year and was recorded in the fourth quarter. The amountbeing reclassified relates to the new integrated TriPath and GeneOhm platformsand was recorded to confirm the accounting classification practices for thoseplatforms to those followed by us at BD. For SSG&A for the year, as apercentage of sales, we improved by 30 basis points. R&D spending increasedby about 19% in absolute terms with about one-third of that increase relatingto TriPath. For the year, our operatingincome, adjusted for the items previously discussed, increased by 30 basispoints from 20.5% to 20.8%. We generated about $1.2 billion of net cash fromoperations for the year end, consistent with our guidance, used approximately$450 million to repurchase about 6 million shares of common stock, whileinvesting $556 million in capital and $340 million in making TriPathacquisitions. Now, the last topic I would liketo cover is our guidance for fiscal 2008. We expect diluted earnings per sharefrom continuing operations for fiscal ’08 to increase by approximately 10% to12%, from last year’s adjusted base of 384, which excludes the $0.48 ofin-process R&D charges related to the TriPath acquisition. Our full year reported revenuegrowth is expected to be between 8% and 9%, with BD Medical being about 8%, BDDiagnostics about 9% and BD Biosciences between 8% and 9%. U.S. sales ofsafety-engineered products are estimated to increase about 8%, andinternational safety should grow about 20%. Overall global safety wouldtherefore increase by about 12%. We expect our percentage grossprofit margin to be about the same as it was in fiscal 2007. Now while ourproduct mix and productivity will increase and should be very favorable, weexpect it to be offset in part -- offset actually by an increased resin andsteel cost, as well as manufacturing start-up cost. I would just add that this,and we can touch more deeply on it in the question period, that two of ourthree segments are positive to gross margin percentage, and that’s Diagnosticsand Biosciences. BD Medical is slightly under in termsof its gross margin percentage, and that has to do also with the startups thatare going on in some other items that Garywill touch on when asked. Startup costs obviously go away so that as we lookfurther out into 2009, we see gross profit margin percentage again beginning toincrease. SSG&A is expected in toimprove by about 70 basis points as a percentage of revenues in 2008. OurR&D spending is expected to increase by about 11%, in absolute terms.Importantly, overall our operating income margin is expected to improve about50 to 60 basis points. Therefore the improvements in SSG&A will more thanoffset the flatness of the percentage in gross margin. Our effective tax rateis projected to be about 27% for the year, and as you know that can vary quarterly.We expect to generate about $1.4 billion of net cash from operations and investabout $650 million in capital expenditures. We also expect share repurchases tobe about $450 million and the average number of fully diluted sharesoutstanding to be $253 million or $254 million. Finally, while it's our policynot to provide explicit quarterly guidance, I want to point out that we doexpect the first quarters EPS from continuing operations excluding specifieditems to increase at a somewhat lower rate than our annual guidance for 2008,which I'd remind you was 10% to 12%. And there are kind of three items thatimpact the first quarters earning growth. Firstly, the gross margin as apercentage of revenues should be about 1 percentage point lower than the prioryear. And somewhat similar to what we saw in the fourth quarter, some effect iscertainly happening from the start-ups, which, as I said, do have an end tothem. But we also have some of the impacts from unfavorable foreign exchangeimpact, not withstanding the fact that the Euro has strengthened against thedollar. We do get hit in the gross margin at this point in time for that. Andalso, that reclassification that we made in '07, as I said, in the fourthquarter, we accounted for our four quarters of the reclass, so therefore wehave a bad comparison on that on a quarter-to-quarter basis. Secondly, our R&D spending inthe first quarter will increase at a higher rate than for the year. It willactually look like 20% versus 10%, and that’s really the anomaly of havingbought TriPath at the end of the first quarter last year, and we’ll have thefull quarters worth of TriPath spending in this quarter. And lastly, in ourSSG&A, you will see a slight tick up, and that’s with respect to ourlong-term incentive plan, the first three year plan. Hence this year, and inaccordance with the accounting principles, we have to add at that point in time,book the related payroll tax cost for that which costs us about $0.02, thatwill also be given out for the rest of the year, and our total LTI expense willbe within a penny of what it was last year. So with all I have said now, I’dlike to turn the call over to Ed.

Thank you very much, John, andgood morning, everyone. Our strong results for the year just confirm ourpositive outlook for '08 and continue to validate our confidence that thestrategies we’ve been implementing over the past several years is a sound one,and it's being effectively executed by our team. We will continue to implementthis strategy with rewards to both our customers and our shareholders. This isthe 7th consecutive year in which we’ve achieved or exceeded our annualobjectives. Before turning to your questions,I’d like to expand beyond the fiscal 2008 guidance that John has shared withyou, and I’ll briefly elaborate on our strategic direction. And as I have saidto you before, our strategy has two core elements. The first element is toincrease sustainable revenue growth by designing, manufacturing and marketing,innovative products that address significant healthcare problems and deliver(demands to higher) benefits to healthcare workers, patients and researchers. Our plan is to grow revenueprimarily organically, and we’ve been saying and continue to say that organic growthshould be in the 7% to 9% range. We will compliment this primary organic growthstrategy by making targeted acquisitions, which will enhance our key strategiccapabilities, and I think GeneOhm and TriPath are excellent examples ofstrategic targeted acquisitions, which increase our basic capabilities.Acquisition of this nature will be strategically obvious, and any dilution isexpected to be short lived and modest, and again, I would say GeneOhm andTriPath are good examples of these characteristics. This fundamental innovationstrategy is enabled and fuelled by the second element of our core strategy,which is our commitment to achieving outstanding operating effectiveness andproductivity to accelerate our progress. Our success in the operating effectivenesscomponent of our strategy should result in outstanding customer satisfaction,strong cash flow and expanding operating margins. And again I think '07 and '08are good examples, of the evidence of this operating effectiveness. Achievingoperating effectiveness will very importantly enable us to increase ourinvestments in innovation, which in turn fuels our future growth. We continue our commitment toreturn excellent value to shareholders through dividend increases, sharerepurchases and growth in income. So, how we are going to do all this? AlthoughBD is a complex institution comprised of three major segments, with over adozen global business units operating over 50 countries, there are much smallernumber of focused strategies and themes which are aimed at specific areas ofopportunity to improve human health. Let me summarize few, what I havebeen describing to our shareholders and associates as what we are calling theBD success paradigm, and this success paradigm is present everywhere we aresuccessful and has four essential elements. I think you can see these elementsin all of our successful businesses. First BD, I think, is mosteffective when we are identifying emerging or under-appreciated healthcareproblems. We did this 20 years ago with healthcare worker safety; we are doingit again today with our healthcare-associated infections. The second thing is,we apply technology to solve these problems. This technology is principallydeveloped organically but occasionally is supplemented by acquisitions,licenses, etc. The third element is we use our outstanding manufacturingexpertise to produce these products with very high quality and very low cost sothat can be affordable and available to people all over the world, thereforehelping our people live healthy lives, which is our purpose. And finally, thefourth element of our paradigm of success is that we surround these productswith outstanding service and support, and in fact, many of our sales associateslook more like missionaries than they do like sales people. They are alwaysconverting from one level of healthcare to a higher level. So if you take these four themesand apply them to the business, you can see that there are a finite number ofareas of strategic focus, which really transcend even the business units. Andthese areas are number one, reducing the spread of infection, number two,enhancing diabetes treatment. Number three is advancing drug delivery. Numberfour, we are addressing unmet global healthcare needs. Number five, we areimproving pharmaceutical and research efficiency; that's our Biosciences group.And most recently, we are significantly improving the clinical management ofcancer, which was again expanded with our TriPath acquisition year ago. Now while all six of these areasare important, in the interest of time, I'll elaborate on two of them just abit, but we are with our management team here prepared to answer the questionsyou may have regarding any element of our strategy. Looking first on the areas of focus,reducing the spread of infection, this is a major focus for BD and it actuallymanifests itself in a number of our business units. This is demonstratedparticularly, but not exclusively by our products, which enhance healthcareworker safety. We’re very proud of the efforts of our associates over the yearsso that our global safety revenues have increased to $1.4 billion. And lastyear, it increased 12%. We are projecting 12% again next year overall, and thisis up from a base of $266 million in fiscal 2000. Over the past few years, recentintroductions of the Vacutainer Push Button Blood Collection Sets in the [Saf-T-Intima]fully integrated IV catheter, are both examples, excellent examples of ourongoing commitment to continued leadership, innovation and growth in thisarena. Another significant opportunityto reduce the spread of infection is in the area of healthcare associatedinfections or HAI’s. These infections account for nearly 100,000 deaths peryear and tens of billions of dollars in excess healthcare cost in the U.S. alone. Andmortality rate for one specific type of HAI, which is methicillin resistance Staphaureus or MRSA, mortality rate for this particular organism is 25% to 30%. The CDC estimates that over 60%of Staph infections, occurring in hospitals, are resistance to the drug methicillin.This prevalence rated a national concern and is particularly troubling since itwas only 2% in 1972, and the resistance rate is now 60%. The resistance rate isrising at an alarming rate, not only in hospitals, but now in the community atlarge. While MRSA has long being recognized as a problem in healthcaresettings, awareness of community-associated infections has been significantlyheightened in recent weeks by the extensive media coverage of tragic deaths ofyoung people in Virginia, New York and elsewhere due to MRSA. On the policy front, much ishappening, in terms of recognition of this serious healthcare problem. Fourstates have passed legislation, and New Jersey legislation, I would point out, was signed bygovernor Corzine only yesterday. So but, New Jersey joins four other states passing legislation,which requires reporting of hospital level infections. They require hospitalsto have an active MRSA management program, and the important part of thatprogram relative to BD and what we contribute to it is that active surveillanceof high at risk patients is a core element of these eradications. So 27 stateshave mandated reporting, and 13 are in the process of discussion. And also, wecan point to numerous leaders and organizations around the country and aroundthe world that have taken proactive stances regarding the treatment andfighting of this particular problem. Specific to BD, our GeneOhm platform,and again this acquisition was made in February of 2006, this platformpositions BD to play a leadership role in this developing market of HAIs. GeneOhmwas the first FDA cleared assay that can accurately detect MRSA in less thantwo hours, and it is the preferred approach from medium to larger volumetesting customers. And just to put the opportunity into perspective, there arehundred million hospital admissions annually, in United States, Canada,Western Europe and Japan,so in the developed world there are hundred million annual admissions. In addition to MRSA, we areexpending our manual test. We recently submitted the StaphSR assay to the FDAfor 510(k) clearance. This test will enables clinicians to identify susceptiblevirus resistant Staph infections from a positive blood culture within twohours. And this will replace the current culture based method, which takes aday or more to produce a specific answer. We're also developing rapid test forthe detection of vancomycin-resistant enterococci (VRE) and clostridiumdifficile (C. Diff) which are also causative agents in healthcare associatedinfections. We expect these tests for VRE and C. Diff to be approved andcleared by the end of 2008. Another area of strategic focusis cancer diagnostics. Cancer remains one of the highest causes of death in theworld; expanding BD's presence in cancer diagnostics is a key element of ourstrategy to drive growth through innovation. Our cancer diagnostic strategy isto improve through innovative solutions to the Clinical Management of Cancer, includingdetection, diagnosis, staging and treatment. We believe that the TriPathplatform positions BD to have a significant impact in the marketplace, and toadvance treatments through more accurate and timely diagnosis. We have anexciting opportunity to improve the diagnosis of cervical and ovarian cancerswith new diagnostic tests in the years to come. As you can see, with these twoexamples, and we can elaborate more, we are innovating for impact, andcontinued innovation requires continued investments. As John pointed out, weare investing for the future primarily through increasing the pace of our ownR&D spending. And it is appropriate through strategic investment such as GeneOhmand TriPath. Continuously improving operatingperformance as evidenced by increasing our operating margin goes hand-in-handwith investment and innovation to build the platforms that will enable us tosustain double-digit earnings growth and provide value to our shareholders.Starting now and going forward in the coming years, we are redoubling ourefforts to drive value and productivity through our entire supply chain. Theseefforts will address every aspect of our business operations, beginning withprocurement and category management through manufacturing in evidence of themarketplace and how we serve customers in markets all over the world. We’re also taking a fresh look athow we deploy all of our G&A functions with the goal of improving servicequality and reducing cost. We will continue to build on our core strengths andinvest in new capabilities. By successfully implementing our strategy, weexpect to deliver strong results. Importantly, this should allow us to continueto invest, to increase our returns to shareholders in the form of sharerepurchases and increase dividends. So, in summary, 2007 markedanother year of excellent progress. One of our values is we’re always strivingto improve, and we will continue to do so and to accelerate our pace ofprogress. Our fundamental strategy has not changed, and we’re staying thecourse that we’ve been on for the past seven years. By continuing on thiscourse, we are confident that our progress should continue in the years ahead.The future holds many opportunities for BD to continue our request forgreatness and to pursue our purpose of helping all people with healthy-healthylives. So with that, we are happy totake your questions. In order to allow for broader participation, we’dappreciate that you limit your questions to one plus a follow-up. So operator,please open the call for questions.

(Operator Instructions). Ourfirst question will come from the line of Rick Wise from Bear Stearns. Pleasego ahead. Rick Wise - Bear Stearns: Good morning Ed. Good morningJohn. Couple of things, first, you invited us to ask about startup costs at BDMedical and maybe you can help us quantify those and I know we should tie thisback into gross margins but maybe a related a question is maybe you couldamplify on a couple of issues there, you quantified the fourth quarterreclassifications. Can you tell us the impact on gross margin in the quarterhow do we think about what normal gross margin would look like?

I'll let John elaborate a littlebit there.

Yeah Rick, if you take a look atthe fourth quarter prior year we were at 51.6 and you look at what happened weactually would have had productivity mix and other around 40 basis points whathappened is the startup cost and they range throughout the medical there isalso some in biosciences and other would be about 40 basis points and they areunique over these two year's. You might remember we had some of these when wefirst started safety when we were not yet achieving the gross margins that wenow enjoy because we were in the startup phase. So that was about 40 basispoints and then the reclassification of GeneOhm and TriPath these were coststhat we have historically classified as charges against cost of good sold GeneOhmand TriPath both had these reflected on the, primarily on the SG&A line andmaybe a little bit on the R&D line. So we took the entire amount of thosecharges from quarters one, two and three and what would have been in four andmoved them up against quarter four's gross margin, so it had a large impact ofabout 40 basis points. So if you think about anormalized gross margin, you wouldn't have the productivity in product mix andother of about 40 basis points, it would does not had startup although we mayhave startup again as we keep innovating. And you would not have had thereclass; you would have had probably 10 basis points of this instead of 40basis points, because you would have had only one quarter, but it will berunning against quarter. So I would have thought that it should probably be up40 basis points on this quarter, if not for these discrete items. Rick Wise - Bear Stearns: Okay. Two other quick questions.First, immunocytometry, both U.S. and international were particularly strong,especially since you had cautioned about last quarter but the tough compsprobably the year ago in fact cancelled two launch. Is this market is it, yournew product, is it -- I think Becton stumbled a little bit this quarter indeliveries did you benefit comparatively? And last, just a larger question. Edyou, highlighted the goal of reducing infections spread, maybe you could justgive us a little perspective, how does -- how could we see Becton benefit overthe next 6, 12, 18 months from concerns over MRSA, specifically? And, do allthese issues accelerate have the potential to accelerate growth at some point,sort of beyond your kind of guidance? Thanks.

Well, let me answer the last onefirst. And I'll ask, let me just answer last one, if there is a follow onquestion you can do that and then I will let Bill talk about our continuedsuccess in Biosciences. Now we had been guiding all year that GeneOhm, the HAIpiece of our infectious disease business, would be about $20 million, put inperspective it’s still a relatively small business. And yes next year wehaven’t mentioned yet, but yeah, next year we’re looking at that business togrow to be about $35 million to 40 million. So, on a year-on-year absolutepercentage basis, there is some fairly dramatic growth. It will take a fewyears. Now what we are dealing with hereis changes in medical practice and we are proven to ourselves over our lifehere in this industry that that takes time. Notwithstanding, there is anextraordinary compelling a rationale behind active surveillance as one componentof an informed and aggressive MRSA eradication program. And so activesurveillance is most hospital start with it as a screening, what they refer toas high risk patients, patients coming from other hospitals, patients being inmilitary emergency room an intensive care. Number of hospitals started inthis place and they found that, they were so many infections on the generalward and coming in from the community that they soon became involved inscreening all patients. Now this is still a small number of hospitals doingthis. Most of them are struggling a little bit with the issue of understandinghow big the problem is and then knowing what to do when they find thesepatients. Very importantly, we recently participated with [Cardinal] in makingan MRSA’s surveillance software, which is available through Cardinal. We’re nowproviding this on a pilot basis to any hospital who wants it's for the firstfour months and that’s very-very exciting. You may recall, many-many yearsago having a similar program, I think it was called EPINet, which we gave tohospitals to help them understand their under appreciated problem with healthcare workers safety and accidental needle stick. So I see extraordinaryparallels to what we did for health care workers safety, now manifesting itselfin a broader problem which is health care associated infections. So again, small business for now,but we are very positive that being there as we are among the first players inthe space with a very effective test and even now expending our menu is goingto help us to grow in that space, but currently a fairly small business but wehave high hopes for it in the future. Having said that why don't we, I am goingto ask Bill to elaborate little bit on the success he is having in Biosciences.

Rick, good morning. Just to getyour fourth quarter question on immunocytometry that the biggest positive storyfor the quarter was our reagent performance, and on that just reagent category,associated just within immunocytometry systems we have kind of mid 20% growthand that was driven by favorable and better than expected clinical reagentperformance. Two key categories there, the largest and biggest contributor wasour HIV reagent business and this is coming, as you know, from our worldwidepresence in CD4 monitoring. We also had very favorable performance on cancer,on our [MNL] clinical reagents. Those two factors created a very favorablereagent impact for the quarter, additionally we were up against as youmentioned a tough analyzer comp year-on-year. However, our sorters for thefourth quarter performed well above expectation and actually grew kind ofmid-teen range for the quarter. So it's the factors of the clinical reagentsand the sort of performance that really offset the tough comp we had on theanalyzers. Rick Wise - Bear Stearns: Thank you very much.

Our next question will come fromthe line of Mike Weinstein from J.P. Morgan. Please go ahead. Kim - J.P. Morgan: Hi guys, its Kim here for Mike.Can you hear me?

Yes. Kim - J.P. Morgan: Okay. Just a follow-up on thegross margin. Looking out to fiscal 2008, you're looking for flatyear-over-year margins.

Right. Kim - J.P. Morgan: Is this the right way to thinkabout it, this sort of organically would be driving probably, lets call it 40to 50 basis points improvement, but these startup costs are probably what'sgoing to hold that flat. And in the sense of, can you talk a little bit about-- just specifically kind of what are these startup cost? Is it mostly going tobe TriPath and GeneOhm related our platforms and how they should play outthrough the course of fiscal '08?

Yeah, well the topics, I'll letJohn to elaborate on this because he did such a good job on the fourth quarter analysis,we'll see if he can handle the '08 analysis as well.

Okay. Alright. So a very similaranalysis. If you look at the expected productivity and product mix benefit wewould get, it would have -- we estimate it would provide about 80 basis pointsof improvement, net of some other cost, maybe about 70 basis points when youget off through it. There are two items, one is the startups and that's about30 basis points. And to your question, what do they apply to? Well, as we rampup Nexiva production, there are startup costs with that kind of leading edgecatheter. Within pharmaceutical systems there is expansion going on and some ofthose costs end up in P&L before you really producing anything. When you look at Biosciencesbusiness in terms of reagent manufacturing in Puerto Ricoas we do that good project which should serve us well into the future, againthey our period costs would end up going to the P&L without associatedrevenue. So, those types of things in terms of startup, bionutrients would beanother where we were seeing that kind of thing, so we can take deeper if youwant to talk to the business guidance on that. Media production is another andso there are those things that we get in there. The other thing that gets in therethis year is obviously no surprise to anyone resins cost have increased and resinscost and steel cost and like that among raw materials notwithstanding goodproductivity that we’re seeing. We estimate it will probably cost us about 40basis points, so if you look at those two you’ve got 30 basis points for thestartups of 44 resins matching against 70 basis points of improvement andthat’s kind of why we are in the situation where as a percentage you don’t havethat increasing. Again as I said before startup costs go away by their owndesign. Raw materials in terms of resins, these are resins we spend about $200million currently on these resins, so we have a budget in there that has anestimate of some price. There's not a one for one correlation against oil, butas oil tends to move up we tend to get some kind of commensurate increase inthose prices. Does that help? Kim - J.P. Morgan: Yeah that’s helpful, just afollow-up on that though. It seems like some of these startup items Nexivapharma systems expansion and certainly the rising costs on the other side ofit, it should have been present in part in 2007 and you saw some improvements.So, I am wondering are you able to tell us what was the resin cost on pressurein '07 in basis point term and then perhaps its sounds like the startup cost of30 to 40 basis points. And just maybe are there any other items that mightdrive the improvement in '08 and I guess looking forward to '09 do we expectthat there were improvement in some of these startups drop off?

Just lets look at the startupsbecause they don't happen within one year so if you look at '07 in terms ofjust absolute dollars you have been talking about $16 million, $17 million, $18million of startup costs and in '08 you are probably talking about $40 millionof startup cost because the we are really in the final throws of institutingthese improvements because these startups are obviously just to state theobvious design to improve our margins. In terms of the resin costs you werelooking at in '06, oil around 66, in '07 you were looking at oil of about 65although we were using more resins. Right now in '08 we had in ourbudget in the resin does that relate to oil would probably be in the 75 or 80kind of range even if you have oil up right now to breaking through 96 wehaven't seen that. Kind of when we look at the overall budget, there is --that's we have always started looking at risk. There is some risk there, butit's certainly manageable at 90, if there were a direct correlation, that couldcost us $15 million or $20 million. On the other hand, if foreignexchange stays where it is that would more than offset that kind of a risk. Sowe feel very good with this budget right now. We think it's well balanced interms of its risk and upsides to the P&L, both in those two categories. Andin particular, I think that as we get to '09 to the final part of yourquestion, borrowing us starting up something that's not right now on horizon.We should see continued productivity outpacing other cost and you should seesome increase in gross margin. I would forecast here exactly what that wouldbe. Kim - J.P. Morgan: Okay, that's very helpful. Thanksfor the color on this to add on it.

Our next question will come fromthe line of Glenn Reicin from Morgan Stanley. Please. Glenn Reicin - Morgan Stanley: Good morning, folks. Twoquestions. Just, I'm processing all your guidance and I'm, in terms of thequarterly progression, it looks to me like we're talking about low to mid-single-digit EPS growth in the first quarter. Low double-digit in the second and thirdquarter and then close to 20% growth in the fourth quarter. Is that sound aboutright?

Well, I think in the firstquarter I will give you this color Glenn, I don't think you're wrong. I thinkthe reported numbers, we don't want to get away from our policy and so I won'tguide specifically but, less than our average is what I had inferred in thosecomments so less than a 10% or 12%. I think when we do the kind of a pealingback of the onion when we have this call for the first quarter, you will seethat there are certain skewed items that cause thanks. I think that the slopeof the line that you are drawing from the first quarter, through the fourthquarter is a bit too steep. But… Glenn Reicin - Morgan Stanley: Bit too low in Q1 and bit toohigh in Q$?

A bit too high in Q4. Glenn Reicin - Morgan Stanley: Yeah.

And I think you will see that andwe will try to, as we move through the next quarter, if there are anomalies, wewill fill in the blanks there. Glenn Reicin - Morgan Stanley: Right. But we do have because ofthe reclassification we have some really weird Q4 numbers?

Yes we do. Glenn Reicin - Morgan Stanley: Okay. The only thing I had heardthat sort of surprised me on the guidance was that tax rate nudging up to 27%.Most companies are moving it down. Why is that going up and should we expectlonger term?

Well, I don’t know why, mostcompanies moving it down may or may not be. This is just a balance of our U.S.income against our tax saving income. We will it get better overtime, itshould, that’s one of the reason that we’re moving reagents to Puerto Rico,while more pending alliance went in to Ireland, while we are doing more atSingapore. It’s very manageable, we hadguided overtime that we should have that and in discreet to this year, we didhave some extra benefits from the ketchup of the R&$D credits. So, I thinkall in all that’s not a major move for us. Glenn Reicin - Morgan Stanley: There [inaudible] that’s $0.04,but are you assuming that the R&D tax credit that will be renewed?

We’re assuming that the R&Dtax credit will be renewed. Glenn Reicin - Morgan Stanley: Okay. And then as we look out sayin ‘010 or ‘011 timeframe, do you have any promise getting that number down to25%?

I think that’s a little bitfurther out than I want to go right now. If however, that said as we drive moreproduct manufacturing to tax saving jurisdictions, which is among key elementsof our plan, we should certainly see the balance of international income rise.So all other things being equal I think that we feel pretty confident. The taxrate it is not I think at this point of time a major hurdle on our horizon. Glenn Reicin - Morgan Stanley: Okay. Getting back to sort of thebusinesses can you talk a little bit about the performance of ProbeTec and Phoenix for the quarter?And then, can you just give us the numbers for Medical and Diagnostics for U.S.International safety, sort of you put them all together, just lot of thesespecifics?

Right. I'll ask Vince to cover ProbeTecand Phoenix and Gary can talk about safety on behalf of bothsegments.

Okay. Let me start with Phoenix, Phoenixsales were $8 million for the quarter compared to $6.4 million in FY '06 orincrease of 24% and year sales were $28 million Glenn, up 25% for the yearthat’s 22.5% in FY'06. So what we started to see, as we had discussed on lastquarter, this impact of the level playing field with the change in the softwarerequirements on this. So for the first time we are starting to see a little bitof acceleration on the Phoenix growth rates United States so that was good tosee. And then on ProbeTec, ProbeTec sales were $32 million compared to $30million in FY '06 for the quarter and year-to-date sales were 125. Of coursethe total business is a $148 million, just to make sure we got all the detailsright, you've also got the firm product line in here, it's also doing well. Glenn Reicin - Morgan Stanley: Okay. Very nice, thank you.

Hey Glenn, this is Gary. Were you looking forthe fourth quarter on safety? Glenn Reicin - Morgan Stanley: Yeah.

Okay. So where you asked, medicalup 6, diagnostics up 8, company up 7, and international medical up 37,diagnostics up 23, company up 27. Glenn Reicin - Morgan Stanley: Thank you very much.

Welcome.

Our next question will come fromthe line of Bruce Cranna from Leerink Swann. Please go ahead. Bruce Cranna - Leerink Swann: Hi, good morning.

Good morning. Bruce Cranna - Leerink Swann: John just simply, thinking about'08 and you're improving, I guess the assumption of improvement in EPSperformance as the year goes on. Is this really a function of easier comps onoil or resin costs as the year goes on or is it, I guess a relative easing ofstartup cost as the year progresses?

Well, as you know one thing Imean it's, we do -- the sales do build as we move on, some of the startup costsmove behind us. As we move through, the gross margin does strengthenquarter-on-quarter as we start moving through the year. You do get rid of this,we do have that anomaly in well that's not really in earning I am just thinkingof the optics. As we move forward we continue to get better leverage on ourSG&A as we move forward, Bruce, that is very important. That's 70 basispoints that we talk about for the entire year certainly helps us. LTI as I saidwas slightly, couple of pennies front loaded. So that will also impact U.S.So it is a kind of sled of things that gets better as we move forwardthroughout the quarters. Bruce Cranna - Leerink Swann: Okay and then on TriPath justquickly, I guess a fairly decent number. Sales you were reporting there Iassume is that just all liquid base pep or have you started showing some actualmaterial amount of ASR sales from TriPath oncology?

No, this is Bill. Those are allliquid based pep revenues growing off the base of business that we acquired. Bruce Cranna - Leerink Swann: Are you taking any share there?

Well that market is fairly lowsingle-digit type growth, so it’s fair to say we are making some headway on theshare yes. Bruce Cranna - Leerink Swann: Okay, and can you guys where youpart with the revenue number for GeneOhm for the year, I know it was small, butI am just curious?

Yeah we said that the year justended was about 20 as guided.

21.

21, okay so that was pretty closeand next years 36 to 40, 35 to 40. Bruce Cranna - Leerink Swann: Right, okay and then I think thequestion was asked about the slow business and whether or not you had any youguys saw any impact from Beckman's issues, I didn't hear the answer there. Andthen secondarily, within immuno can you give us some sense actually how big isevents by our processing within that number?

I'll let Bill to comment.

Sure on the first question I meanour comment on the Beckman thing that most of these instrument purchasingcycles are based over months and months of time. And I guess we would attributethe growth much more to the array of the product, the quality of the product,the service that we bring into customers and I don’t really know what wespecifically capitalize on that but you heard the number, so its clear that weare gaining market share. We have been gaining market share against them forseries of quarters. So I would like to think its maybe as doing some thingsvery well. Bruce Cranna - Leerink Swann: Okay, so that there it should besustainable there?

We think where our revenueguidance for next year will look similar an issue where we kind of in that 8%and 9% for this year and we hope to be there next year as well. Bruce Cranna - Leerink Swann: Okay and then on advanced bioprocessing can you cite for us?

Looking for the year a littlenorth of 25%, so think about that right now and concluding FY '07 as roughly a $50million business. Bruce Cranna - Leerink Swann: Great, thank you.

Thank you. Our next question willcome from the line of Peter Lawson from Thomas Weisel. Please go ahead. Peter Lawson - Thomas Weisel: Could you provide an update on GeneOhmsort of how many hospitals were dumped in contracts one and whetherintegrations been finished or not and when you are expecting to be breakeven?

I'll ask Vince to elaborate onthat.

Sure, I am not going to get intothe specific number of hospitals but what we saw a very strong ramping up to $7million. I had guided on the last call of 20 we ended up at 21. Most of thatrevenue is still heavily US rated, we do expect to see acceleration in Europenext year as the UK starts to move ahead aggressively on some surveillanceplans here and as Ed said we expect to be 35 to 40, and what you are seeing inthe revenue numbers is really a test in the 85% to 90% of these revenues aremore test revenues than instrumentations. Peter Lawson - Thomas Weisel: When do you expect it to bebreakeven?

Couple of years. Peter Lawson - Thomas Weisel: And then, one of you could justprovide some color on the next generation instruments MRSA?

Yeah sure. Well, let me just reiteratefirst with the menu, we do expect the StaphSR, that we did file back in thespring, we are in the last back and forth with the FDA we believe on that. Sothat should -- we are expecting that to be approved in the quarter and ofcourse that's out. In Europe that is for theblood culture claim, we expect the nasal and wound assays to follow coming morelikely in the second quarter and VanR and C. difficile, in Q2 and Q3. In termsof the instrument, we are moving ahead and we expect to meet our timeline toreplace the Smart Cycler that contract is up in FY'08. Our target will be FDAsubmissions in the spring for the assays and so we will replace the SmartCycler and we expect to be bringing forward improved sample handling at thesame time. Peter Lawson - Thomas Weisel: And then just generally on colorfor M&A. What are the metrics to look -- is it more of a technology play ordo you think it will be more products in the general business, I guess that'sfor John or Ed.

If you look at the way we wentabout recent acquisitions they were actually the outgrowth of strategicplanning deliberations and discussion at the business unit level and also atthe company level. You may recall that we now have an office of the CEO, whichincludes the three business Executive Vice Presidents plus John Hanson and JohnConsidine and myself. And we are constantly engaging the business in discussesof strategic direction and growth and those discussions inevitably result insome opportunities, almost universally where your own internal growth can besupplemented on occasion with other additions. And therefore, in both themolecular diagnostics space, coupled three years ago, those discussionseventuated in the acquisition of GeneOhm, that was something that we wentlooking for and found the business team and the strategy team known to behighly aligned with our own strategy and goals and it was a perfect fit. Wewe’re able to enter the market through that capability, expand our platformfrom our own amplification system SDA, it now include PCR and Vince justelaborated the menu expansion and the improvements in the instruments that arecoming. So that’s a good example of a strategy driven acquisition and TriPath Ithink is another great example of business that we actually had a relationshipwith over numerous years; 6 years to 8 years at a minority investments, in thecompany dating back to those period of time. And it became obvious in workingtogether that one plus one was going to make us something more than two. And sowe were able to make that acquisition last year. So these are good examples, thedilution in both these areas. Because they are new capabilities, there is somenear-term dilution. But we’re able to offset them in the case of this year andas I said we should be able to explain these acquisitions very quickly. So theyshould therefore be strategically obvious. They should be capability driven anddilution, if any should be modest and short-lived. And I think you shouldexpect future acquisitions to be accessed in the same basis. Peter Lawson - Thomas Weisel: Do you think more of acquisitionsare going to fall under the Bioscience division as oppose to the Diagnostics?

We really can't tell. We have, webelieve if you look out three, five years that the growth trajectories of allthree of these segments is not similar, when we talk about seven to nine, nextyear, we are looking at an 8% to 9% growth, you will notice that all threesegments are in that same ballpark and therefore also, we also know thatacquisition opportunities are also resonate in the all three segments. So Iwouldn’t emphasize one over the other. Peter Lawson - Thomas Weisel: Okay. Thank you so much.

Our next question will come fromthe line of Larry Keusch from Goldman Sachs. Please go ahead. Larry Keusch - Goldman Sachs: Yeah, good morning guys.

Hello. Larry Keusch - Goldman Sachs: Couple of quick questions foryou, on the SG&A John, it was actually on an absolute basis down and when Ijust looked back over the course of the last several years it tend to trend up.And is that a function of taking those SG&A cost and putting them into costor is there something else going on there as well?

About the quarter or the year or? Larry Keusch - Goldman Sachs: The quarter.

: Larry Keusch - Goldman Sachs: Okay.

For the quarter. But I think whatyou're seeing here, your bigger question in terms of what we see with SG&Ais? We look at this, obviously there is a lot of focus on gross margin, butthere is equal focus on the service excellence and what we're trying to drivethrough in terms of productivity and the SG&A line, as well as the G&Aline itself. And that affords us, that gets us the opportunity to invest morein R&D. So as there is in our plan a move to continue leveraging of the saleswe get and therefore leveraging the cost that we have in SG&A. And seeingthem move down as a percentage of revenue overtime and, in '07 obviously we didachieve that and we have that well resident in the plan for '08, and I wouldsay you will continue to see that beyond there. Larry Keusch - Goldman Sachs: Okay, terrific. And then just twoquick ones. As it relates to the dilutions from GeneOhm and TriPath, where didyou ultimately come out this year and what's baked into your thoughts for nextyear? And just the other quick one on flu in Japan which also can move around alot of you guys. Is it too early to call where that's going and when do wereally start to see that manifest itself?

I'll let Vince talk about theflu.

Sure, I'll talk about the flu,I'll start with that. The flu was only $10 million for the year versus for thisyear, the flu business. So we're hoping to see some recovery, it's way tooearly to say where the flu season is going to come out. So flu won't have asense for that till the end of the first quarter. But it's a relatively smallbusiness now. Larry Keusch - Goldman Sachs: Got you, okay.

And it tells you where GeneOhmand TriPath ended, for the year I believe we came in pretty much on what wehave been guiding.

Yeah, on TriPath essentially I amtaking of course the capital out of it, but just it was about a penny ofdilution for the year. GeneOhm it’s a little bit different deal because itdoesn’t have the revenues yet and it’s both a product development as well asthe market development efforts, so there is more spending on the SG&A line.To your point Ed though we come in about right where we -- what we thought wewould maybe a penny or often it probably costing us overall about $0.09 orsomething like that. Larry Keusch - Goldman Sachs: Okay, so if you are getting closeon TriPath and GeneOhm obviously it will ramp it sales but sounds still like itwill loose some money for couple of years. What should we be thinking just sortof ballpark next year that kind of in year '09 it's more like five or somethinglike that that you are taking on in terms of dilution?

It improves relative to thisyear. Larry Keusch - Goldman Sachs: Right.

Yeah it’s a little bit, you knowbecause the market development of this -- it’s a lot more like I hate to bringwhat was the word of the evil empire Pharmaceuticals here but this is actuallylot more like a Pharmaceutical where you have to drive that market first thenyou are going to spend investments spending or kind of the SG&A on these inparticular on something like this is. Right now the world every papers full ofit and there is great debate on for what the solution is for MRSA and AGI as awhole. So I think you are going to see more investment spending by us as we gothrough and continue to establish that.

But the good news on this is thattheir investment spending sometimes shows up in a form of clinical trials andthat’s a good thing, because that’s the last step before you get to themarketplace and the clinical trials for TriPath in particular are very intensebecause we are going through very claim so again directionally its really not amajor force next year as we continue to marginally improve them but again theinvestments are benefiting the future periods. Larry Keusch - Goldman Sachs: Okay, that’s really helpful,thanks guys.

Our next question will come fromthe line of Jason Weiss from Robert W. Baird. Please go ahead. Jason Weiss - Robert W. Baird: Hi, good morning. Can you give usa little insight as to how big you expect the market for the VRE and the C.Diff test to be with respect to MRSA, I mean are you anticipating that thesewill also be candidates for active surveillance?

No they are not going to be, thisis Vince. They are not going to be a screening tests because they aresymptomatic. So with MRSA you have this colonization issue we had in thecommunity and you want to do broad base screening these will be significantlysmaller markets in terms of total test because there'll be diagnostic marketsnot screening markets. So it tend to size but very important assays for thehospital C. Diff is also a very deadly bug and is actually growing faster inthe hospitals than MRSA is but having said that you are not going to screen abroad general populations. Jason Weiss - Robert W. Baird: Okay and could you talk aboutsome of the advantages of using molecular testing for C. Diff?

Well its going to be sensitivityand timely result its going to be those two things its clearly going to be thetwo benefits for the hospital. Jason Weiss - Robert W. Baird: Okay, great. Thanks for taking myquestions.

Okay.

Our next question will come fromthe line of Jeffrey Frelick from Lazard Capital. Please go ahead. Jeffrey Frelick - Lazard Capital: Yes first question for Gary and then a quickfollow-up for Vince. So Gary maybe help me understand a little bit, so thegross margin benefit kind of lags with the Nexiva product line until we seesome I guess automated manufacturing really kick in, when do we see thatbenefit and then kind of second question to that is the Japanese launch forNexiva any timing on that?

We'll see the benefit of Nexivaautomation starting in '09, through the process automation this year but thatwill continue to carry forward because we generally do this one line at a time,but just to be clear and as we stated in the last call although Nexiva isgrowing, it is growing nicely, it actually slightly exceeded our expectationsin '07. It has a negative affect on GP today with semi automated processes isconsiderably lower than the average GP in analytical segment of course that'llchange with full automation. And at this point today our focus on Nexiva is onUS and Europe primarily all this markets we are moving through the process ofregistration in Japan. Jeffrey Frelick - Lazard Capital: Okay. Thanks, and just for Vince.I think couple of quarters ago you guys have talked about some major IDNsundergoing some trials with BD GeneOhm, just want to know any update there howthey are progressing, or the ideas that they are buying one GeneOhm for thecore lab is from its multiple locations or do we expect several purchases underthe IDN?

It's hard for me to answer that’soff the top of my head but I would say ultimately large integrated systems, youare certainly going to see them doing systems in the core labs. Whether or notthey put some systems out in satellite areas that’s still a possibility. Butcertainly what's driving our growth is systems in the core lab and oftenbackend, with multiple life cycle or so. Jeffrey Frelick - Lazard Capital: Okay, great. Thanks.

And there are no furtherquestions at this time, please continue.

Okay thank you very much. I thinkthat concludes our call for today. You know how to find us on the web and toget replays and with that we thank you for your participation and we’re signingoff. Thank you, operator.

And ladies and gentlemen, thatdoes conclude our conference for today. We thank you for your participation andfor using AT&T executive teleconference service, and you may nowdisconnect.