Susan Hardy - Vice President of Investor Relations Jim Foster - Chairman, President and CEO Tom Ackerman - EVP and CFO

Douglas Tsao - Lehman Brothers Eric Coldwell - Robert W. Baird Randall Stanicky - Goldman Sachs John Kreger - William Blair & Company Sandy Draper - Raymond James John Sullivan - Leerink Swann Doug Schenkel - Cowen and Company Jon Wood - Banc of America Securities Soo Jin Nam - JPMorgan

Ladies and gentlemen thank you for standing by. Welcome to the Charles River First Quarter 2008 Earnings Call. At this time all participants are in listen-only mode. Later, we will conduct question-and-answer session; instructions will be given at that time. (Operator Instructions). As a reminder this conference is being recorded. I would now like to turn the conference over to your host, Vice President of Investor Relations, Ms. Susan Hardy. Please go ahead.

Thank you. Good morning and welcome to Charles River Laboratories' first quarter 2008 conference call and webcast. This morning Jim Foster, Chairman, President and Chief Executive Officer, and Tom Ackerman, Executive Vice President and Chief Financial Officer will comment on our first quarter results and review guidance for 2008. Following the presentation, we will respond to questions. There is a slide presentation associated with today's remarks, which is posted on the Investor Relations section of our website at ir.criver.com. A taped replay of this call will be available beginning at noon today, and can be accessed by calling 800-475-6701. The international access number is 320-365-3844. The access code in either case is 912464. The replay will be available through May 21st. You may also access an archived version of the webcast on our investor relations website. I would like to remind you of our Safe Harbor. Any remarks that we may make about future expectations, plans, and prospects for the company, constitute forward-looking statements for the purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by any forward-looking statements, as a result of various important factors including, but not limited to those discussed in our Annual Report on Form 10-K, which was filed on February 20, 2008, as well as other filings we make with the Securities and Exchange Commission. During this call, we will be primarily discussing non-GAAP financial measures. We believe that these non-GAAP financial measures help investors to gain a meaningful understanding of our core operating results and future prospects, consistent with the manner in which management measures and forecasts the company's performance. The non-GAAP financial measures are not meant to be considered superior to or a substitute for results of operations prepared in accordance with GAAP. In accordance with Regulation G, you can find the comparable GAAP measures and reconciliations to those GAAP measures on the Investor Relations section of our website through the financial reconciliations link. Now, I will turn the call over to Jim Foster.

Good morning. I'm very pleased to report to you today on another excellent quarter for Charles River. We reported robust sales of 338 million in the first quarter of '08, a growth rate of 16% and $291 million in the first quarter of '07. Research Models and Services or RMS increased 17.8% to a $169 million and Preclinical Services or PCS grew 14.1% to a $169 million. Foreign exchange contributed 6.3% and 2.1% respectively to the segment. Organic sales growth was approximately 12% for each of these segments, and on a consolidated basis was right in line with our long-term growth goal of low double-digits. For the quarter, operating income was $71.8 million, and the operating margin was 21.2% compared to $63.4 million and 21.8% reported in the first quarter of '07. Operating income growth was due primarily to higher sales and improved capacity utilization in the RMS segment and stable corporate costs. The operating margin declined just 60 basis points year-over-year, as very strong RMS performance offset the expected decline in the PCS margins, primarily due to the significant cost associated with the transition to our new pre-clinical facility in Nevada. Earnings per share increased 12.5% to $0.72, from $0.64 in the first quarter of '07. Robust sales growth and improved operating efficiency in the RMS segment more than offset the cost associated with the Nevada transition, and a higher share count due primarily to dilution from our convertible debt. As you know from our press release, we are reaffirming our '08 guidance of sales growth in the range of 10% to 13%, and non-GAAP earnings per share in the range of $2.87 to $2.97. Given the strength of our organization and the opportunities we see in our market place, we believe that these targets are achievable. In the first quarter of '08, we saw a continuation of the strong demand that drove our '07 results, as our clients endeavored to fill their pipelines with new therapies to improve human health and to do so more efficiently and cost effectively. We spoken often about the inflection point at which the pharmaceutical industry has arrived and the industry is increasing willingness to adopt strategic outsourcing is not only a viable alternative, but an incredibly efficient mean by which to help accelerate drug development and reduce the infrastructure and cost. We believe we will continue to see a steady flow of outsource work from the pharmaceutical and biotechnology companies over the long-term. Our investments in infrastructure including facilities, senior staff and information technology have positioned us extremely well to support the increased demand from our clients. We have built a strong franchise, a unique continuum of products and services, which expands the broadest portion of the discovery and development spectrum primarily its use for research model to proof of concept. We support and enhance our client research process as no other provider can and we believe that the expertise, we have developed over 60 years, the global network of facilities we have dealt and continue to expand and a highly talent work force of more than 8,500 our assets which bring great value to our clients. It's for this reason that we believe we are viewed as a partner of choice and one on which our clients can rely to help and navigate the challenging process of bringing new therapies to markets. Let's review our first quarter operating segment highlights. The outstanding performance of the RMS segment in '07 was followed by an even better first quarter of '08. Sales rose 17.8% in the quarter to $168.6 million. Growth was broad based in the segment, with all of our major business lines reporting double-digit growth. The segment sales benefited from robust spending by pharma and biotech clients at favorable sales mix at stable pricing environment and market share gains. Higher sales and improved operating efficiencies generated a 30 basis point gain in the operating margin to 33.4%, compared to 33.1% in the first quarter of last year. This is one of the best operating margins we reported since we went public in June of 2000. We experienced this improvement despite the fact that the first quarter of '07 benefited from a significant increase in sales of large models. As you may recall, extended quarantine resulted in the shift of a portion of fourth quarter '06 large model sales to the first quarter of '07 with a positive effect on the margin. Production of research models was largest contributed to the first quarter sales growth with all geographic locations, the United States, Europe and Japan reporting robust sales. The bellwether US business again reported a double-digit sales increase as it did in '07. We often remark that sales in research models are a proxy for drug discovery and development. Since without these critical research tools, pharmaceutical and biotechnology companies cannot bring new drugs to market, use extensively for research and oncology and infectious diseases. Sales of immunodeficient mice increased significantly in the quarter and sales of outbred rats, which are used in safety testing also, trended higher. Sales the US academic institutions and governments agencies, particularly in the United States also increased due to both higher spending and market share gain. Our clients' choice to outsourced services, which they either view as non-core or for which they choose not to retain the in-house expertise, because such services can be obtained more efficiently from a scientific expert like Charles River, resulted in higher sales to most of our RMS service businesses. Our transgenic services business, which has been re-branded as genetically engineered models and services or GEM reported double- growth in the first quarter. We are also gaining traction in our consulting and staffing services or CSS business through which we provide research model facility management services. Although contract often extend for multiple years and margins to this business are lower than the segment average. However, the return on invested capital is very attractive since we generally do not own the facility. One inception is our new facility in Maryland, which is being built to support our CSS contract with the National Cancer Institute. As you know this is the first dedicated resources arrangement in RMS and through this long-term agreement, we gained a platform to provide commercial production and services in the very attractive Mid-Atlantic region. We are looking forward to moving the NCI models to this new high-end space in the second quarter of '08 slightly ahead of schedule. Our In Vitro business again delivered growth about 20% at a rate even higher than in '07. We continue to have great success with the PTS. Growth is increasing not only as a result of a larger number of devices in use, but also due to an increase in the average number of cartridges used per device. In addition, the device is portability and ease of use, are driving expanded sales of the PTS. As we said before, the PTS is being adopted by nuclear pharmacies and dialysis clinics for rapid response time in ease of use have critical requirement. The rapid response time is also made the PTS an excellent option for compliance for the FDA's PAT initiative, which requires timely testing in order to promote improved quality control in the manufacture of medical devices and injectable drugs. In addition, a portion of the In Vitro sales growth was attributable to a strategic decision to change our distribution channel. We have slowly been acquiring our small European distributors, which gives us direct access to clients. Historically, the RMS business has been a consistent driver of our sales and earnings growth and that was amply demonstrated in the first quarter of '08. Our research, models and services are critical components of our clients' ability to successfully launch new therapeutics. And for that reason, we believe that all the way in the long-term, demand for these essential products and services will continue to be strong and the RMS segment will deliver high-single-digit sales growth, margins in the 30 plus percent range, strong cash flows and excellent returns on invested capital. The PCS segment reported robust sales of $169.1 million in the first quarter, a growth rate of 14.1% over the first quarter of '07. January was a light month as we experienced the usual slow study starts, which occur when pharmaceutical and biotechnology clients establish their compound priorities at the beginning of the year. February and March were quite strong, the numerous studies being initiated at our toxicology facilities. We were particularly pleased with the growth in Massachusetts, which has continued to make excellent progress towards its goal to shift the sales mix to a greater proportion of GLP toxicology services. As a result of this progress and the closure of the legacy Worcester facility, the Massachusetts operating margin improved both year-over-year and sequentially. Our new state-of-the-art facility in Nevada opened on schedule in January. And as planned we expect to have 80% of the building or 370,000 square feet open by mid-year. Our global facilities management group and a dedicated team in Reno worked together to bring this newly validated facility online on schedule. We are proud of the facility and very pleased with our clients' positive response to it. Like Massachusetts last year clients are eager to begin work in the new facility. All of our major clients have completed their site audits and many have already placed studies. Increase are increasing and we are successfully converting those increase to bookings. Overall, we have extremely pleased with the success of the transition to date and fully expect to meet our schedule completion date in December. As we've discussed previously, the cost of transitioning from the legacy to the new Nevada facility is substantial, which is one of the two contributing factors in the PCS first quarter operating margin. The operating margin declined to 18.3% from 21.4% in the first quarter of '07, and sequentially from 20.6% in the fourth quarter of '07. With the facility newly opened, we believe the Nevada operating margin was at its lowest point in the first quarter. We expect sequential improvement in the PCS operating margin from this point driven primarily by improved efficiency in Massachusetts and Nevada. Foreign exchange in Canada was the other factor that significantly affected the PCS operating margin in the first quarter of '08. As a result of the strong Canadian dollar, the PCS operating margin was reduced by 175 basis points compared to the first quarter of '07 when the US dollar was stronger. We are continuing to work with our customers to shift our billing to Canadian dollars, which will result in a natural hedge as we have in other countries where we do business. As we've discussed previously, we expect that by the end of '08, we will be billing slightly more than half of Montreal sale in U.S. dollar. Our Phase I business performed in line with our expectations in the first quarter. Clinical Services Northwest reported strong sales growth, but Clinical Services Edinburgh continued to be impacted by uncertainties surrounding regulation. Foreign exchange exacerbated the situation with clients preferring to place business in the U.S. to avoid currency arbitrage. We have implemented changes in the U.K. clinic, including a new management team. We believe these changes will benefit our operation and expect the business to improve by the second half of '08. As you know, Nevada and Massachusetts were the largest of our expansion project and the ones that presented the greatest execution risk. As we move towards completion of the first phase in Nevada, I am very pleased to say that both projects went extremely well. I am exceedingly proud of the Charles River team, who dedicate themselves to these projects and who maintained that dedication as we continuously expand our facilities to support the demand with services from our client. We are working towards an early '09 opening of the facility in Sherbrooke, Quebec and still expect it will dedicate to one or two large global pharmaceutical clients. Both Ohio and Edinburgh expansions are progressing well and will be opened in mid '09. The 50,000 square foot facility in Shanghai will open on schedule in the third quarter of '08 and will likely be dedicated to a small number of large multinational pharmaceutical client. Based on the strength of demand from these clients who are working in China, we are already pursuing the second phase of our operation. The China marketing is expanding quickly and we expect it to be a major venue for multiple Charles River products and services within the next three to five years. We intend to be a leading provider of drug development product and services to our client in China and we'll judiciously build the infrastructure we need to make that goal a reality. As we said before, building capacity while challenging is not the fact to which limits our ability to grow. Staffing that capacity is the key to our ability to support our clients demand and our own growth. As we explained only transition in that we have developed extensive hiring protocols to ensure that we attract the qualified personal we want and the programs to train them to work successfully in our business. We did play well staffing at Massachusetts and have expanded and customize the staffing plan for Reno. Recognizing that Reno would be a more difficult local from which to draw an employee pool, in '05 we began to reach out through educational institutions in the area, in order to raise our visibility and employer choice for graduates that effort combined with our staffing plan has created a larger pool of qualified applicants and we are successfully hiring to fill new position. We are using variations of these staffing plans at all of our location and I very pleased with the results that we have achieved. So in conclusion, I would like to reiterate that the growth we experienced in the first quarter of '08 demonstrates the strength of demand for the broad portfolio of essential product and services we offer. All of our decisions in recent years we directed a physician in Charles River to support the trend towards outsourcing among our pharmaceutical and biotechnology client. These decisions included a focus on our core competencies of laboratory animal medicine and science and regulatory compliant preclinical services, capacity expansion, strengthening our senior management team and hiring scientific experts to deepen our knowledge base, strategic bolt-on acquisition and investments in technology to support the growing information requirements of our business. We believe that the goals of faster and more efficient drug development will continue to lead our client to outsource and the expertise of premiere partners like Charles River, who have the capacity to support drug discovery and development, will continue to enable this trend. We believe we will continue to see the virtualization of big pharma and biotech. So at Charles River, we are building our clients facility and hiring staff for them. In fact we are becoming our clients' infrastructure, working with them to accomplish their goals of bringing new therapies to markets faster and more efficiently. I would like to thank more than 8500 employees for their exceptional work and commitment and our shareholders for their continuing support. Now I will turn the call over to Tom Ackerman

Thank you, Jim, and good morning. Before I recap our strong first quarter financial results, let me remind you that I will be speaking primarily to non-GAAP results, which exclude all acquisition related amortization and other items. Sales and operating income once again grew at a robust double-digit rate in the first quarter, continuing the momentum from 2007. This drove a 12.5% year-over-year increase in EPS to $0.72. The consolidated operating margin declined 60 basis points year-over-year to 21.2% as very strong RMS results offset a significant portion of the increased operating cost due to the Nevada transition and the negative impact of foreign exchange in Canada. Foreign exchange benefited revenue growth by 4.2% in the first quarter or by approximately $12 million. The RMS segment benefit was 6.3%, due primarily to the continued strength of the EURO. However, the PCS segment gained only 2.1% from FX, primarily as a result of the impact of weaker British pound on our PCS facility in Edinburgh, Scotland. The $12 million top line gain translated into nominal benefit to consolidated operating income. As a result of our natural hedge at most of our locations, we would expect the top line to flow through to operating income at the margin range. However, due to our exposure to the Canadian dollar at PCS Montreal, where we are not naturally hedged, the flow through is limited. Foreign exchange primarily due to the strong Canadian dollar reduced the PCS segments' operating income by $2.3 million and margin by approximately 175 basis points compared to the first quarter of last year. We are making progress in our goal to reduce the impact of foreign exchange in operating margins by invoicing more of our PCS Montreal clients in Canadian dollars and expect to reduce Montreal as US denominated sales slightly more than half by the end of 2008. This configuration takes time as the change in billing will be perspective and we remain in US dollars for studies in progress had already been scheduled. Foreign exchange did not have a significant impact on sequential PCS margins, since the US dollar has not moved much relative to the Canadian dollar in the last six months. We generated a six consecutive quarter of sequential sales growth in the first quarter, driven primarily by the RMS segment. The consolidated operating margin improved by 50 basis points sequentially versus the fourth quarter of 2007. The 580 basis point improvement in the RMS margin from the seasonally weaker fourth quarter more than offset the expected decline in the PCS operating margin as well as a sequential increase in unallocated corporate cost. The margin increase and a lower tax rate result in an 11% sequential increase in EPS during the first quarter. Unallocated corporate overhead declined by $200,000 year-over-year to $15.6 million in the first quarter of 2008, as cost related to performance based compensation and the EAP implementation were offset by lower healthcare related expenses. On a sequential basis, unallocated corporate overhead increased by nearly $6 million driven by the expected increase in healthcare fringe and related costs. The fourth quarter included favorable true ups for certain expenses at year end, which did not repeat in the first quarter. Net interest expense decreased by $600,000 sequentially and $1.4 million year-over-year, primarily driven by lower interest rates. Debt repayment activities also contributed to they year-over-year reduction with slightly over one-third of our debt floating rate, the federal reserves, aggressive rate cuts resulted in lower interest expense as the LIBOR-based rates decline. Other expense was $800,000 in the first quarter as a result of an investment losses on assets associated with deferred compensation plan. As expected, our tax rate declined to 27.8% in the first quarter due to a reduction of the corporate tax rates and certain foreign jurisdictions, including Germany, the U.K. and Canada. Turning to balance sheet and cash flow items, cash and cash equivalents including short and long-term marketable securities declined to $269 million at the end of the first quarter from $289 million at the end of last year. Accounts receivable increased to $239 million from $214 million at the end of 2007. As a result, DSO was less favorable at 38 days versus 35 days at the end of the year, but within our targeted range and flat compared to the first quarter of 2007. Free cash flow was a negative $9 million in the first quarter compared to a positive $1 million last year. CapEx was slightly higher than last year at nearly $40 million in the first quarter of 2008. Based on first quarter levels, we continue to expect CapEx for the year to be between $220 million and $240 million, and free cash flow to be in a range of $50 million to $75 million. Depreciation increased $2.7 million year-over-year to $14.8 million in the first quarter and we continue to expect it to be $65 million for the year due to new capacity coming online. Total amortization expense declined 300,000 year-over-year to $7.6 million in the first quarter, as a portion of the intangible assets from the Inveresk acquisition were amortized over a shorter three-year period, which ended in 2007. However, our full-year guidance for amortization expense increased to approximately $31 million or $0.30 per share as noted in the guidance table in the press release. The $0.02 increase versus the previous estimate was primarily driven by foreign exchange rates since our Inveresk related intangible assets are booked in Canada and the U.K. Many of you have asked about our exposure to auction rate securities given the recent turmoil in the credit markets. We hold only $21 million in these instruments which are classified as long-term marketable securities on balance sheet. These securities are AAA rated and backed by government student loans. As of March 29th, we recorded a fair value adjustment on these securities of approximately 600,000 due to the lack of liquidity in the current auction market. There was no P&L impact since this was booked as an adjustment to accumulated other comprehensive income within shareholders' equity. However, we believe we will get full value for these securities either through future successful auctions or by holding them until maturity. In the first quarter, we repurchased approximately 350,000 shares of our common stock at a cost of approximately $21 million. We had approximately $75 million remaining on our current buyback authorization at the end of the first quarter, which we expect to help offset share dilution from option exercises. As many of you know, we hold 350 million in convertible notes, which have become more of a focus in recent quarters due to incremental share account dilution and the proposed accounting change by the FASB. Dilution from the convertible was 1.4 million shares in the first quarter of 2008 based on an average share price of approximately $61. Because our diluted share count for the full-year will be contingent on the dilution from the convertible debt, we have chosen not to update our 2008 share count guidance. The dilution is directly correlated with our stock price and can vary from quarter-to-quarter making it difficult to forecast share count. As for the accounting change, FASB recently reaffirms staff proposal APB 14-a and directed the staff to draft a final FSP. The final FSP has not been approved or issued at this time, but we believe that it will require us to bifurcate our 350 million convertible note into debt and equity for book purposes and allocate a higher implied interest rate to the debt portion. Since this is only a book adjustment, it would have no cash or economic impact on us, only a P&L expense. Since the expected rule has not been approved and will not be effective until our 2009 fiscal year, we have chosen not to estimate the impact at this time or discuss any potential actions we might take to mitigate the effect. In April, our Board approved a plan to freeze our U.S. defined benefit pension plan, effective April 30th. At the same time, we also enhanced the 401-K plan benefits to all U.S. employees. As a result of the pension curtailment, we expect to incur an estimated one-time gain of approximately $0.04 per share in the second quarter of 2008, which we will exclude from non-GAAP results. While offsetting this gain, we expect to incur a charge of approximately $0.01 to $0.02 per share in 2008 related to the planned disposition of our legacy preclinical facility in Western Massachusetts. Although, we exited this facility at the end of 2007, we continue to hold the owned real estate and are evaluating our options to dispose the property. We recorded a charge of approximately $700,000 or $0.01 per share in the first quarter which was excluded from non-GAAP results. Should there be future charges associated with the disposal, they will also be excluded from non-GAAP results. Overall, our financial performance in the first quarter of 2008 marked a continuation of the strength we experienced throughout 2007. We are reiterating our 2008 guidance of sales growth in a range of 10% to 13%, GAAP earnings per share in a range of 259 to 269, and non-GAAP earnings per share in a range of 287 to 297. Our revenue guidance continues to be driven by underlying organic growth of 9% to 12%, as we originally discussed last December. Although the implied FX benefit of approximately 1% for the full year is lower than the 4% benefit generated in first quarter. We expect in aggressive with the significant weakening of the US dollar in the second half of the year and forecast rates to moderate in the current spot rate. Looking ahead to the second quarter, we expect to see a sequential improvement in PCS sales, which would be consistent with historical trends. We also expect increasing sales in Nevada will result in improved capacity utilization at the new facility, which will benefit the overall PCS operating margins sequentially. In summary, we are pleased with our first quarter results and continue to look forward to a strong performance to the remainder of 2008. That concludes our remarks. We will now take your questions.

(Operator Instructions). And our first question we got from the line of Douglas Tsao with Lehman Brothers. Please go ahead. Douglas Tsao - Lehman Brothers: Hi, good morning. I was just wondering, Tom or Jim if you could just walk through some of the mechanics to so we could understand why the margin impact this quarter for the moving to Reno with greater than what we saw last year. And I understand that Reno is obviously much bigger, and the business mix was little different. But did you have a change in how to staff up in Reno a little more in advance this time?

I don't think the staffing itself had a huge impact Doug, as Jim alluded. We learnt some things from Massachusetts, but I'd expect that would be favorable. Nevada is a much larger facility. I think as Jim remarked in his comments, we also got off to a slightly slower start in January in part due to what we would consider seasonal trends around the holidays at year end, where they can an interruption in staffs and stuff. It is a larger facility. We did begin our space utilization in December and then really ramped up progressively in January. Originally in Massachusetts, we really didn't get into that facility. As I remember correctly, until a little bit later in Q1 and more into Q2. So, I think the biggest impact in Massachusetts, as we move from the old facility to new facility, which really later on the first quarter and more towards the second quarter, but also as you said, it was a smaller facility as well. Douglas Tsao - Lehman Brothers: And then also I was just hoping you would provide some contest and hope for not getting a little ahead of ourselves, but thinking about next year with the new move into the Quebec facility. Should we anticipate comparable margin pressure or the fact that you anticipate that being filled with your dedicated space agreement mean that it will be much more profitable from day one?

You should think of the Nevada and Mass facilities as being unusual in the scale and scope. A lot of replacement space and an enormous amount of cost being brought on and some infrastructure actually in place for shelf space that has not even been finished yet. The Sherbrooke facility is much smaller; actually the first phase of what would be a larger facility as I think you commented on yourself, it's essentially spoken for by one or two global pharmaceutical companies. So, we expect the up-tick will be dramatic, not unlike even though it was a new facility, but not unlike, when we had space to an existing operations, so we wouldn't expect significant drag from that facility next year. Douglas Tsao - Lehman Brothers: And then also sticking to PCS, where there costs related to the opening of the Shanghai facility this quarter? Was that also a drag on the margin?

Yeah, you've got substantial cost in China that really didn't exist at all last year. We have a relatively modest amount of sales from the legacy company that we acquired and of course we're having staff, both corporate and scientific staff, and beginning to build out that facility. So, China is the small drag on our numbers, but fully anticipated and fully reflected in our guidance. Douglas Tsao - Lehman Brothers: And then finally turning to RMS that which was very strong, did you begin shipments from the new barrier rooms in California this quarter, and did that provide some of the margin list that we saw on a year-on-year basis? You sort of normalizing the non-human climate effect that we saw last year.

Yeah, it would be modest. We did shift from those first two rooms, there up to full production. There is some benefit from that part from the top line and the margin, and how we utilize the rest of our national infrastructure better. I don't think the dramatic factor is that we had broad based, very strong demand across the entire sector both with Research Models production In Vitro, GEM and other services. And that's a reflection of both the outsourcing trend, and the really increasingly intensified focus of our clients on generation new compounds as there are additional challenges on the fundamental business model, and their portfolios. Douglas Tsao - Lehman Brothers: Okay. Great. Thank you very much. I'll hop out for now. Thank you.

Thank you. We have a question from line of Eric Coldwell with Robert W. Baird. Please go ahead. Eric Coldwell - Robert W. Baird: Thanks. Good morning. I'm curious first up on Reno. It looks like if we exclude the year-to-year foreign currency drag and potentially the start up expenses and redundancies in Reno that your pre-clinical margins might have actually been flat to higher, excluding those events on a year-over-year basis. Could you offer any color on that and whether that assessment is correct?

Well, I mean there are a multitude of factors that play, Eric. We have a number of facilities. And, clearly, we delineated what you said. And as Jim said, we had strength in many of our businesses, so I think in the whole, PCS business continues to be very strong, and I think the two or three main factors impacting it, either sequentially or versus last year continue to be Nevada. The foreign exchanges in Canada and to a lesser extent some of the activities in our Phase I areas. China as Jim mentioned, but some of our other areas are particularly strong as well. Eric Coldwell - Robert W. Baird: Shifting gears to In Vitro, you mentioned that you've been kind of slowly acquiring some of your European distributors. However, at least through calendar '07, we didn't see much of an uptick in cash flow from investing activities on that line item, not a lot of acquisition payouts. Were more of these events happening in the first quarter of '08 that we haven't yet seen? And can you just quantify how many of these distributors are out there? What kind of acquisition cost you are experiencing?

They are very small. There are small distributors in multiple countries in Europe. We wanted to get the benefit of going directly to the client, obviously getting some benefit on margin, having control of our own destiny. I think we did a couple of those small deals last year. We hope to do a few more. And again, they are quite small. We don't know with certainty that we'll get them done, but we're certainly pursuing the same strategy and we've had very good response from the people that we've approached about that being also good business transaction for them. Many of the founders or the owners of these small businesses stay with us and continue to work with and for us. So, we've maintained the continuity with clients and get the enhanced benefit of the margins. So, they are small and settled, important strategically, and moving the dime a little bit particularly in the In Vitro business. Eric Coldwell - Robert W. Baird: Jim, is it safe to say that even if you are successful in closing a few more of these deals, that be acquisition proceeds from this specific activity would be less than $10 million this year or more than 10, can you give us some direction?

It's less. Eric Coldwell - Robert W. Baird: Less.

It's very small is what we're trying to tell you. And while we're getting a little bit of a benefit, if you put that all inside In Vitro business, which we are very fond of and believe in it's growth potential is performing extraordinarily well, I would say slightly better than our expectations. We are getting amazing uptick generally in the devices. And more importantly, because you'll recall, we've always articulated that this is a razorblade business. We are beginning to see some discernible results with numbers of cartridges used and frequency of use. So, fundamental strength of that business is really what's driving it. This is just a little bit of benefit on top of something already performing extremely well. Eric Coldwell - Robert W. Baird: That's great. Final question related to PCS segment. I think in the prepared commentary in slide deck, there is a discussion about sequential improvement in sales in PCS expected through the year. Are you referencing increases in dollars specifically or an increase in the reported growth rate?

The comment itself was directed at dollars quarter-over-quarter. Eric Coldwell - Robert W. Baird: Okay. Thanks very much.

Thank you, Eric.

Thank you. We have a question from the line of Randall Stanicky from Goldman Sachs. Please go ahead. Randall Stanicky - Goldman Sachs: Great. Thanks, guys very much for the question. Tom, I may have missed it. Did you talk about the full-year PCS margin? I think previously you've talked of similar level to '07, which would imply about 12.5%?

Correct. And we didn't make that comment on this call, but we did reaffirm that on our fourth quarter call. And really we don't expect anything different. So, obviously, if you look at the underlying trends and the other comments we've made in the call, we expect to see sales grow sequentially quarter-to-quarter, and we expect the margin to come and end up at or about the same place for the full-year as last year. Randall Stanicky - Goldman Sachs: That implies, what I would think some modest improvements next quarter, and then a stronger back half, just given the timing of some of the China facility and otherwise peaking I guess above 23.5 to 23, as we get later into the year. I guess the question we think about that, and we think about the mix of some of the higher margin studies space coming on with some of the space survey or not, is there a level of what we should be thinking about in terms of operating leverage, where this business can get too far profitably perspective?

You mean as in an ideal margin or? Randall Stanicky - Goldman Sachs: Yeah, exactly.

I think to go back to your first comments. We expect the margins to improve throughout the year. I wouldn't necessarily say at this time I expected to improve any more or less in one quarter versus the other, for instance your comment about some in Q2, but more in the back half. I think based on some of your other comments while I expected to improve given things like mix, pricing and some of the other factors. It's not always going to be exactly 50 basis points or 100 basis improvement quarter-to-quarter-to-quarter I think there is going to be some volatility, but directionally, I think it's continue to improve and go up. Our stated longer term goal is to be at 25% that's what we are working towards a number of our sites are higher than that. And we obviously, are struggling with the capacity expansion in terms of the level of costs through this period, as we bring on those large amounts of space. But again, it's a stated target, which we think we can achieve to really get to 25%, although that's going to take some time. Randall Stanicky - Goldman Sachs: Great and just one last follow-up on that or not on that specifically, but as you think, you made some comments in your initial release around strength of customer demand both specifically biotech and pharma. Have you seen any fluidity at all within biotech spaces you think about the different types of customers in that space, or are it stronger across the board?

It's been very strong across the board and it's been very strong internationally as well. So, we are seeing the continuation of the trend that we experienced last year. We really are not seeing, notwithstanding what you read in the press, some on the indications with the challenges of the clients we are facing and workforce reduction and some of the challenges, some of the drugs that have not been approved. Recently, rather than a pullback, we are seeing further intensification of demand, pretty much across the board; it's not really segmented by biotech or pharma. As we've always said, it tends to be a blurring of those two, in any event. And we are also getting some benefits, strictly on research models, business after years is not being very effective in that marketplace of some penetration into the government sector and into the academic sector as we pick up share, as result of our price point being compressed positively somewhat with the competition. Randall Stanicky - Goldman Sachs: Great, that's great. Thanks, guys.

Thank you. You have a question from the line of John Kreger with William Blair. Please go ahead. John Kreger - William Blair & Company: Thanks very much. Question for Tom. You did about 16% revenue growth this quarter, but reiterated expectations for 11% to 13%. In terms of the slowdown that's implied for the rest of the year, should we really think about that just as a foreign currency impact or there are other parts of the business, where you'd expect a slower growth throughout the rest of the year?

We are really not expecting any downturn per say in any of our broad based businesses. As I mentioned at the outset, foreign exchange has been significant in Q1. It's also been very volatile. So, as we look forward to where our numbers would be for the year, we are expecting a pullback in some of the strengths in the overseas currencies. In part because that's where we're weak, but also just to be a little conservative on a dollar that's historically at all time lows. So, we do expect to see some moderation. And the other comments that I made in the remarks was that while we have seen a lot of benefit from foreign exchange in the first quarter. We do get nice flow through in the RMS side, but unfortunately with the Canadian dollar, we didn't get a lot of flow through from PCS because of that in fact is negative. So, the impact of OI/EPS was really not that significant, even though the sales impact was very strong. So, I think all of those comments together really align us to pretty much reaffirm our guidance. It's still early in year and because of those factors in the range that we have, we're just reaffirming our guidance at this time. John Kreger - William Blair & Company: Great, thanks. And then Jim, question, you said earlier on the call that RMS is often viewed as a proxy for drug development. Can you expand on whether or not you are seeing anything interesting in RMS that might reflect out various customer segments are behaving. For example, are you seeing any signs of either increased or decreased flow of compounds out of the discovery labs? And also are you seeing any changes in the number of models being used per compounds that flow in?

We were really not. I would say that we continue to see a strengthening in the demand. We're definitely seeing more compounds getting into the early development process. The whole goal is of course clients, they have more than often get market, but slightly better, of course that invigorates our business as that space is stronger. The trend from model usage is relatively similar to the last couple of years. We've really huge growth in our immunocompromised mouse space given all the oncology work in particular. Of that rat sales are reflection of the strength in toxicology not just by Charles River, but by our competitors and also our clients who are still doing work internally. And we continue to have improvement in some of our disease models in areas like diabetes, which should continue as we have more models, that have been developed with specific disease types. And also large animal sales continue to be consistently strong as the number of biologics getting into the pipeline continues to increase. John Kreger - William Blair & Company: Great. Thanks. And then just one last question on the PCS side, as you have strategic discussions with your clients and as you've completed your major facility upgrade, what's really driving their decision to use one of your particular facilities over the other? Is that a discussion that you can influence or is that something that they are driving? And I am trying to get at your ability to do some little balancing going forward?

Very important question, and the one that deal with constantly. So, I would say the primary decisions, our historical relationship with the sight, confidence in its management particularly it's scientific management and specifically with certain study directors and the mix of services at a particular site, so whether it's clinical or laboratory services or some sophisticated toxicological service like infusion or inhalation type. So it drawn to that and it's a level of comfort that comes through months or years of doing work with that site. Remember that looking at these sites is adjunctive and adjunctive to their own and they need to have total confidence. Proximity is somewhat of an issue. All things being equal, I think lots of clients particularly smaller biotech clients like it. One other things that we talk about a lot is clients that have a clinical relationship at comfort level with particular site, what's required to get comfortable with an alternative one and I think that if you look at the two big sites that we've now rehabilitated or reinvigorated or improved, it's just going to be time. It's going to be a comfortable level of doing studies there and having some knowledge base of the scientific staff, and feeling that it's comparable to someone else that they have done. So we talked historically about fungibility of sites, probably not literally likely that all sites will be created equal. But we would hope that our major clients would be comfortable with one or two sites assuring perhaps the third one. Obviously, the more sites they are comfortable with, the more flexibility we have in ensuring that our capacity is fully utilized throughout the globe. John Kreger - William Blair & Company: Thanks very much.

Thank you. We have a question from line of Sandy Draper with Raymond James. Please go ahead. Sandy Draper - Raymond James: Thanks. Just a couple of housekeeping questions as most of my bigger picture questions have been asked. One, can you give me a breakout between actual interest income versus interest expense, not just the net?

I don't have that in front of me, but we can get you that after the call. Sandy Draper - Raymond James: Okay. Great. And the second question is, in terms of, you gave some comments around the corporate expense, looking back at '07 and even little bit of '06, where you saw the higher first half and declining, is it best to look at corporate expense as sort of year-over-year and there is normal seasonal decline in that. I'm just trying to think the best way to think about modeling that corporate expense line.

Well, one of the items that's created some variability as we've historically had higher healthcare cost in the first half of the year and we think that's due to the new plan opening and people not doing things around the holiday. We saw that last year. We also tend to see payroll taxes and things like that be heavier in the first part of the year and then ease up, as an example when people get over the maximum requirements by their government. This year we saw the same trends but probably not as heavy in the first part of the year. But I really think you should look at it as an overall, and expect a little bit of volatility throughout the year. And we also had a couple of favorable adjustments in the fourth quarter that pushed it down a little bit, that were not really what you'd call one-time items, but more or less one-offs in addition to the other comments I made. Sandy Draper - Raymond James: But so you wouldn't expect necessarily to trend back down to that same fourth quarter levels you saw last year?

No. Definitely not. Sandy Draper - Raymond James: Okay. Thanks.

Thank you. And we have a question from the line of John Sullivan with Leerink Swann. Please go ahead. John Sullivan - Leerink Swann: Hey, guys. Good morning. Just a couple of quick ones. First of all, on the Endosafe PTS, it sounds like you're finding new customers well, including in some locations that maybe aren't traditional Charles River customers. Just wondering what's the long-term plan for the distribution channel for Endosafe PTS?

So John, I would say that, it's not that we're finding a new location to sell. We're continuing to sell in those countries. We just have made some modest acquisitions of some of our distributors so that we have direct relationships with the clients and also the benefits of the margins. So, that really hasn't changed. We are having very good results in acceptance of this technology and the validation and learning curves that the clients are going through on a pretty wholesale basis across a very large client base and an international client base. As you know, it's truly a global product where we're continually making innovations. So, our penetration is as good as or better than we anticipated. What was the second part of your question? John Sullivan - Leerink Swann: I was just wondering in clinical sites like dialysis centers in the like, you intend to continue to distribute to those types of sites.

We do and have done and also places like nuclear pharmacies, so we're getting very big and substantial up-tick from those locations. John Sullivan - Leerink Swann: Okay. And lastly switching gears on can you just comment on -- are there any changes in professional turnover at the company specifically at the study director level?

No, we've been having very wonderful response in attracting senior talent from primarily former clients, large pharma and biotech companies there is some people marking in really great reputation in the field. I think people are coming as we said in prior calls because it's becoming a collaborative society here in a place that very small scientist want to stay and work. I think the career opportunities from a longevity and from the long-term factor is stronger at a company like ours there maybe some of the alternative, side of the contrary it's relatively easy and when I say relative, it is relative historically to attract the senior talent and now we're not loosing them at all. John Sullivan - Leerink Swann: Thank you.

Thank you. We have a question from line of Doug Schenkel with Cowen and Company. Please go ahead. Doug Schenkel - Cowen and Company: Alright good morning and thanks for taking my questions. I apologize if I missed it, but could you reiterate the guidance you provided back in February for full year RMS and PCS growth. I think you had talked about high single-digit growth for RMS and low to mid-teens growth for PCS?

We didn't, but we're happy to. Doug Schenkel - Cowen and Company: Okay. Thank you for that. Let me take another try and getting some more detail on PCS margins. Keeping in mind that one PCS margin was down 310 basis points year-over-year and that Canadian FX accounted for about 175 basis points of that. And then I guess, thirdly, based on prior commentary, I think that you've made, that the elimination of the redundancies in Massachusetts provided probably about a 100 basis points year-over-year benefit. Is there any good reason to assume that the delta, which I calculated about 200 to 250 basis points is largely attributable to Nevada and would it be right to assume if that goes away next year?

Well, I think the largest portion of that would be Nevada for sure. And to going away next year, I don't think it would completely go away. So, when you think about Nevada, we are obviously filling up new space. This is really the biggest impact that we will have in Q1. We had a smaller impact in Q4 as we moved some people to the facilities. We'll actually bring on some additional space to Q2, but we don't anticipate that having the same kind of impact in the margins, because we anticipate having more utilization as we move through Q2. But we wouldn't be fully utilized by yearend as an example. So, I think as we move into next year, we'll still be in an underutilized position just not as dramatic as it is today. Doug Schenkel - Cowen and Company: Okay. Any chance you will plus that calculation 200 and 250 basis points?

When you say, you mean eliminate that just at Nevada though or -- Doug Schenkel - Cowen and Company: Yeah. Is that in the ballpark what the year-over-year impact was from the redundancy in Nevada?

I have to look at a little more closely and get back to you. Doug Schenkel - Cowen and Company: Okay.

But that is definitely the biggest impact and I think that -- other things that play as we said before. Doug Schenkel - Cowen and Company: Yes.

Was definitely not all of Nevada, we saw some other foreign exchange impact that was less de minimis, but nonetheless was a little bit negative in certain parts. Doug Schenkel - Cowen and Company: Okay. And then large models, clearly you are up against the tough comp year-over-year, but could you clarify if there was a bullet of large models in this quarter that may have contributed to the strength in sales and margins, and if that were the case is the supply and demand there to continue that strength moving forward?

We didn't say that. We had kind of a typical strong quarter it was much stronger last year, and that makes our performance in RMS to Q1 even more extraordinary actually. Doug Schenkel - Cowen & Company: Okay. So there nothing abnormal this quarter?

Nothing abnormal, we have a relatively constant supply source than we anticipate continuing to sell them throughout the year. It's always been a little bit difficult to color on a quarter-by-quarter basis. But there was nothing unusual in Q1. Doug Schenkel - Cowen & Company: Okay. And one last question, you talked about the dynamics that are driving strong demand for RMS models and biopharma. What about an academia, I mean where it does look like, and I think you actually mentioned that you maybe picking up share, are there dynamics that have developed that are driving greater academic demand in terms of maybe areas of focus or are there other reasons you might be gaining share?

I think our improvement in the academic market obviously has nothing to do with NIH spending and maybe some time in the future we'll see that. It has to do with our prices being more comparable to our competitors, so we're able to get share. And also it has to do a little bit with the fact that some of the early discovery work is being done at the academic institutions and funded by the pharmaceutical companies. So, there is more funding there. Generally they would be more prone to come to us particularly is the pharmaceutical companies sort of guided in that way. Doug Schenkel - Cowen & Company: Okay. Thanks for taking my questions.

Thank you. We have a question from line of Jon Wood with Banc of America Securities. Please go ahead. Jon Wood - Banc of America Securities: Hey, thanks. Tom, if you strip out the year-over-year impact, the accelerated primate shipments in 1Q'07, is it possible to estimate what the operating margin expansion in RMS would have been ex that impact?

Well, I mean, we could do that. But we really haven't provided that level of detail. And I mean, I think we'd probably prefer not to. Jon Wood - Banc of America Securities: Understood. Besides that primate impact, was there any other remarkable mix shifts in RMS in the quarter, year-over-year?

No, I would say, as Jim said, I mean the bellwether has historically been the US research model market and that was strong as Jim mentioned. That does drive a lot of profitability, but models, pretty much across the globe was strong. It was strong in Europe and better than it has been historically in Japan and really models can really drive the profitability of the business. So as Jim referred to our proximate base, we're seeing good strong demand across almost all fronts of our customer base.

That international strength is really a strong reflection of what's going on in the research community because we've seen strength primarily in the US for last few years, and we've really seen Europe invigorate in the last year or two and Japan is beginning to come around. So it's a global expenditure, and of course, it's a global pharma companies who are located in all three geographic locale. Jon Wood - Banc of America Securities: And Jim, is the competitive landscape abroad different than it is in domestic one?

On the research model side, a little bit, I'd say in the aggregate, we have a larger share of the European market than we have in the US markets. Jon Wood - Banc of America Securities: Okay. And then, lastly, Tom, any update to the guidance for a net interest expense or for 2008?

I mean the first quarter was less than $1 million on net base. What I would say directionally is that as we generate cash globally and spend most of our capital in US, what's going to happen is our interest income is going to decline sequentially. And we'll actually do some borrowing in the US. So, our interest expense will increase. So what I would say directionally is that on a sequentially basis, the number should deteriorate slightly quarter-to-quarter. So it would be higher than the current run rate. Jon Wood - Banc of America Securities: Understood. Thank you.

Thank you. We have a question from the line of Soo Jin Nam with JPMorgan. Please go ahead. Soo Jin Nam - JPMorgan: Hi. I am sitting in for Tycho Peterson today. Just one quick question. Could you comment on the pricing trend particularly on the preclinical side given continued facility expansion across the industry?

We are continuing to get 3%, 4 % across all of our geographic segments. Obviously, some of the specialty work, we get higher pricing, but on average we have been able to get that with pretty solid acceptance by our client base. Soo Jin Nam - JPMorgan: Thank you.

Thank you and we have time for one more question. We will go to line of Douglas Tsao with Lehman Brothers. Please go ahead. Douglas Tsao - Lehman Brothers: Hi, good morning. Jim, I was just wondering, if you could provide some context for the strength that you saw in the Transgenic business or GEM business as you are calling it now?

Yeah, that's definitely a continuation and we've spent a lot of time with scientific community really trying to get to the bottom of what's driving the trend. The answer is consistent across the folks we speak to whether it is in academia or in the pharmaceutical sector and that's continued hope and focus on more complex, genetically altered animal being more important discovery tools providing greater translational information. Clearly, we are seeing an up-tick in investment and the creation of these models and corresponding needs for us to perform greater services as we have historically. So, I think the pharmaceutical community needs these models and we are obviously delighted to performing services than we would expect it to continue. Douglas Tsao - Lehman Brothers: And was there any particular regional strength or geographic strength relative to US, Japan and Europe?

We were pleased with the strength pretty much across the board and ended up with double-digit growth. Douglas Tsao - Lehman Brothers: Okay, thank you. Thanks for taking all the questions.

Speakers, I will turn it back to you for closing comments.

Thank you for joining us this morning. We look forward to speaking with you soon and to seeing many of you at the Robert W. Baird and Banc of America conference in next week. This concludes the conference call. Have a good day.

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