Joshua Young - Director of IR Martin Madaus - Chairman, President and CEO; Charlie Wagner - CFO

Jon Wood - Bank of America Tycho Peterson - JPMorgan Marshall Urist - Morgan Stanley Derik DeBruin - UBS Jon Groberg - Macquarie Robert Hawkins - Stifel Nicolaus Isaac Ro - Leerink Swann Chris Pohl - Thomas Weisel Partners

Welcome to today's Millipore second quarter 2009 earnings conference call. As we know, all participants are in a listen-only mode and later we will conduct a question-and-answer session. (Operator Instructions). As a reminder, the call is being recorded. So with that we'll turn the call over to our host, Joshua Young. Please go ahead, sir.

Thank you very much, Bob. Good evening. I would like to welcome you to Millipore's second quarter 2009 earnings conference call. My name is Joshua Young and I am the Director of Investor Relations for Millipore. Joining me on today's call are Martin Madaus, Chairman, President and CEO; and Charlie Wagner, Chief Financial Officer. In addition to the earnings release we issued earlier today, we will also be referencing a slide presentation as part of today's call. This presentation can be viewed by clicking on the webcast link on millipore.com homepage, or by accessing Millipore's Investor Relations website. A PDF copy of the slides will be posted to our website after the call. We will also be highlighting non-GAAP information. A reconciliation of our GAAP financials to our non-GAAP financial measures is included in our earnings release and posted on our website. Before we begin, I would like to make the usual Safe Harbor statement that during the course of this conference call, we will make forward-looking statements regarding future events or the financial performance of the company that involves risks and uncertainties. The company's actual results may differ materially from the projections described in such statements. Factors that might cause such differences include but are not limited to those discussed in today's earnings release and in our Form 10-K, as well as other subsequent SEC filings. Also note the following information is related to current business conditions and our outlook as of today, August 6, 2009. Consistent with our prior practice, we do not intend to update our projections based on new information, future events or other reasons prior to the release of our third quarter financial results. Now, I would like to turn the call over to Martin Madaus.

Thanks, Joshua. Good evening, everybody and thank you for joining us on this call today. I am very pleased to report that Q2 was another very strong quarter for the company and we're well positioned to report a solid year of financing performance. Although the macro-economic environment remains challenging, we all know that our business continues to be resilient and our markets remain fundamentally healthy. I would summarize the key takeaways from our Q2 performance as follows. First, our Bioprocess division continues to sustain the recovery again last quarter. The division's growth was driven by large biotechnology customers in North America and Asia. After two straight quarters of solid performance the challenges division faced last year is really now behind us. Bioprocess is back to growth trajectory and will report a tracked performance in 2009. Second, the market for our Bioscience division remains a little bit more difficult as large pharma is consolidating their curtailing spending on research tools, services and as they sort out research priorities and prepare to integrate acquisitions. Additionally, it's a very weak environment for selling laboratory instrumentation which is adversely impacting our Lab Water business. The good news is that we're being less impacted than many of all other peer in this space. Most of our products are consumables and then are funded through capital budgets. Third, we continue to show solid operating leverage in the business. For our second straight quarter, we showed a nice improvement of profit margin and we expect to report healthy margin expansion for the full year. Fourth, our cash flow performance continues to be excellent. We generate approximately $53 million in free cash flow in the quarter and in the first six months, we generated a record $121 million of free cash flow. We are using this cash flow to further pay down our debt and execute strategic acquisitions. We have an attractive business model. Our ability to generate strong cash flow is an important advantage in this market. Finally, we are continuing to improve our innovation capabilities throughout the company. We are investing in projects and then partnerships that will help us to develop innovative new products to deliver greater value for our customer and this level of commitment and investments reflect in a higher year-over-year R&D spending increasing number of partnerships. In Bioscience alone, we signed seven new partnerships in the quarter. We expect that these investments will lead to important technological breakthroughs that will enable us to drive profitable growth in the future. So with that brief summary, let me now move into more specific commentary about the second quarter. Second quarter revenues declined 1% to $409 million, excluding a 6% unfavorable effect from changes and foreign currency exchange rate, revenues in the quarter grew 5%. From a divisional perspective, if you exclude the effects of changes in foreign currency exchange rate, the Bioprocess grew 7% while the Bioscience Division grew 4%. From a profitability perspective, we increased our non-GAAP operating margin by 80 basis points in the quarter to 21.8%. On the bottomline, we reported $1 in non-GAAP earnings per share which represents 9% growth over Q2 of last year. Our free cash flow grew 18% totaling 53 million. Now given our difficult current environment is, this operational and pro-performance is very strong. I am pleased with our execution and the significant year-over-year improvement we are delivering. Now, let me move in some more of the details and give you an understanding what drove the results. I'll start with Bioprocess. Key driver for performance in Q was increased spending from large biotech companies in North America as well as Asia. This is a continuation of the trend we saw last quarter and these customers are consumer significant amount of our downstream processing products as they resume increased levels of production. Although we know Biotech is an industry that can have its ups and downs, the fundments of the market remain very attractive and actually continue to get stronger. I'm very excited about the emergence of our Bioprocess business in Asia. As multinational companies have expanded in Singapore and China, our growth in the region has been excellent. Large percentage of the Bioprocess growth we experienced in Q2 is coming from these companies bringing the operations online in the region. In Europe, our performance from large biotech account is still a bit of a mixed bag. Some accounts form very nicely and others remaining flat. Given how concentrated the biotech customer base is, the North America is ultimately large U.S. biotech companies that drive most of the growth in our business and the recent spending trend from these customers has been very good for us. Another positive development for the Bioprocess division in Q2 was that we begun to generate increasing sales from vaccine manufacturers as they ramp-up production in response to the need to develop vaccines for the H1N1 flu virus. Our products play a key role in the vaccines production and we saw our first large orders from customer's part of this effort. So H1N1 flu production has a positive result for our Q2 results and also likely for the full year, but it's only one of several items that helped to drive our performance. So, for example, there are several important biologics that have advanced in the pipeline, they are getting closer to approval. As usually very positive sign for Millipore and the overall industry, especially after years where we have few approvals of new biologic drugs, but there is always a but. I wan to repeat what I said last quarter about these approvals. As investors, you should not focus on one or even two biologic approvals when assessing Millipore's business. Overall, it's the industry's aggregate biotech drug volumes that matter most to our business. If we see a wave of new biotech drugs get approved, Millipore will see a significant benefit, but just an individual approval rarely has a material impact on our business. Looking outside of Biotech, we saw a reasonably healthy demand in our classical pharmaceutical business during Q2. Our classic pharma business includes customers that make injectable drugs that are not biologics. So, for example, antibiotics. Business held up pretty well in the current environment, but has slowed from the exception and strength that we saw in Q1 particularly in Europe. From a product perspective, strong perform in our downstream Bioprocessing business unit was driven by both in key areas, such as chromatography, tangential flow filtration, clarification and virus filtration. We are seeing strong levels of demand for our industry-leading virus safety solutions and that's a customer's support to reduce their risk of virus contamination. Another great area of strength in Q2 was our process monitoring tools business unit, which has over time been one of the most consistent performer in the entire Millipore portfolio over last two years and the process monitoring tools, such as our NovaSeptum product line. It continues to be one of our fastest growing products of the Bioprocess business. As drug companies collect and test more samples to identify and eliminate contamination, we expect this business unit will continue to benefit in the future. So to sum it up, our Q2 performance in Bioprocess division has fully recovered from last year's downturn and is generating strong performance due to the resumed demand on large US biotech customers and increased biotech investment in Asia. We are seeing several positive industry trends that will benefit division over long term and with 10% organic growth for the first six months of the year, the division is in excellent position to generate attractive performance in 2009. So let's turn to the Bioscience division. We saw some signs of weakness in our Bioscience division last quarter and our business is continually soft during Q2. Bioscience revenues were flat after adjusting for changes in foreign exchange rate and for our Guava acquisition, but the division also faced a difficult year-over-year comparison as it generated 9% organic revenue for the second quarter of '08. So although, we saw strength in certain life science consumable markets, our performance was significantly lower and there were robust growth we had grown accustomed to over the last four years. Two key market dynamics are driving the softness that we are experiencing. First, our large pharmaceutical customers are cutting back their spending as they rationalize their product pipelines, reassess research priorities and focus on integrated acquisitions. Second, we've also seen a slowdown of demand for laboratory instrumentation as a result of reductions in capital spending. Compared to other instrument businesses in the industry, our instrumentation business is actually holding up fairly well, but we're still feeling some adverse effect from this general pullback. Despite the difficult environment, the divisions overall performance has been resilient since most of our products are consumable and we don't have significant exposure to industrial market. This resilience is evidenced by our Lab Water business which continue to grow in Q2, despite the declines of our instrumentation products. 60% of our Lab Water business is consumables and services which is holding up very well in this environment. Geographically, Lab Water stayed in North America and Europe, but we are seeing pressure in Japan, while we have a significant Lab Water customer base and where the economy is definitely struggling. We are confident about the future of our Lab Water business given our strong market position and our track record of bringing innovative new products to the market will help drive growth. While we continue to see very good growth is from our academic and biotech customers and the overall research activity remains very healthy. Within our life science business unit, where we have most of our academic exposure, our growth is been driven by a Flow Cytometry offering which we expanded through our Guava technology acquisition. Also, seeing accelerating growth in (inaudible) categories within life science including stem cell research and multiplex amino acids. More importantly, we continue to accelerate our introduction of new products and these products are being well received by customers. So for example, we've done a good job launching new antibodies and kits as well as forming new collaborations where we can integrate technologies from other companies to bring greater value to our customers. Drug discovery services, the revenues declined in the quarter due to a difficult year-over-year comparison and cancellations and delays of large service contracts. Almost all of drug discovery revenues are derived from pharmaceutical companies as a result of impact of cutbacks by these customers are more pronounced in the business. Bright spot in the drug discoveries are a large molecule bioanalytical services business which is performing very well. Our bioanalytical services business provides a variety of services for customers as they move more of their portfolio into biologic drugs and vaccines. From a geographic perspective, excluding changes in foreign currency, division generate low single digit growth in all geographies. If we adjust for the decline in Japan, the division actually grew double digits in Asia during Q2 with China continuing to drive most of the growth. So summing up our Bioscience performance, our Q2 performance was somewhat soft, but the division is proven to be resilient, holding up well in this environment. We believe the division performance will improve in the second half of 2009 and we will report positive organic revenue for the full year. So before turning the call over to Charlie, I'd like to reiterate a few key points. We delivered another great quarter in a difficult environment underscoring the attractiveness and resiliency of our business model. We are continuing to invest during the recession to advance our leadership position, make investment in R&D and other strategic initiatives to drive long-term growth. Finally, 2009 will be a solid year for Millipore. We expect to deliver mid single-digit organic revenue growth through attractive operating margin expansion and report a record year of free cash flow. Now, I will turn it over to Charlie.

Thanks, Martin. I will now provide some additional details on the Q2 and year-to-date results and update our full year 2009 outlook. Beginning with the discussion of our GAAP performance in the second quarter, total revenues declined 1% from last year's second quarter excluding 6% unfavorable impact from changes in foreign exchange rates, revenues increased 5% in the quarter. This performance includes a 1% impact from our acquisition of Guava Technologies which we completed in February. Our GAAP operating margin increased slightly to 16.9% from 16.8% in Q2 2008 and our earning per share were $0.72 compared to $0.69 in Q2 2008. Our gross profit margin increased 40 basis points on a year-over-year basis. A positive foreign currency impact and the favorable impact of increased volume was offset by higher manufacturing consolidation charges and an unfavorable business mix due to the relatively weaker performance of Bioscience during the quarter. Our SG&A costs declined 3% on a year-over-year basis due to the favorable effects of foreign currency translation somewhat offset by higher incentive compensation costs and the addition of costs through the Guava acquisition. R&D costs increased 11% year-over-year as we made a number of investments to advance our innovation strategy in both divisions. We also incurred a number of milestone payments related to third-party R&D collaboration and the year-over-year includes the impact of Guava acquisition. From a geographic perspective, excluding the effects of foreign currency translation, our revenue growth in the Americas was the exact opposite of what we saw a year ago. Our revenues grew 11% in Q2 compared to an 11% decline in last year's second quarter. This growth was driven by the strong performance of our Bioprocess division in U.S. biotech accounts. We also saw a positive contribution from sales of our Guava Flow Cytometry Systems and after a very strong Q1, revenues in Europe were flat in Q2 due to lower performance in our Lab Water business and mixed results from our Biotech customers in the region. We reported 8% growth in Asia during the quarter, despite very difficult conditions in Japan. A steep GDP declines in Japan are negatively affecting both of our divisions and led to a decline in the region during the quarter. Excluding Japan, Asia continued to grow in double digits with China and Singapore continuing to be very strong. We also saw a growth in India rebound after several tough quarters. On the next slide we show our Q2 2009 non-GAAP operating results. I will encourage you to review the non-GAAP reconciliation table in the press release for the detail of our adjustments. Our Q2 non-GAAP performance reflects strong operating leverage and an investment into R&D. Our Q2 2009 non-GAAP gross margin of 57.8% increased 120 basis points on a year-over-year basis, due primarily to a positive impact from changes in foreign currency, savings generated from our global supply chain initiatives and the favorable impact of higher business volumes. These benefits were somewhat offset by negative business mix. SG&A expenses represented 28.8% of sales compared to 29.2% in Q2 2008, a decrease of 40 basis points. The improvement in SG&A leverage reflects the efforts we took last year to better align our cost structure. We're seeing the results of these efforts in our Q2 results as year-over-year our headcount is approximately flat and our costs are growing at a rate below that of organic revenue. R&D spending increased 80 basis points from the second quarter, representing 7.1% of sales. R&D spending was higher in Q2 of 2009 due to the acquisition of Guava, acceleration of spending around several strategic R&D programs and increased milestone payments from R&D collaborations. The operating leverage I mentioned earlier resulted in a non-GAAP operating margin of 21.8% in Q2 an 80 basis point improvement from the previous year. Our non-GAAP tax rate in Q2 was 27.5% and our net interest expense was $10.7 million, approximately $4 million lower than last year due to lower debt balances and improved interest rate. We reported $1 in non-GAAP EPS, an increase of 9% over Q2, 2008. Changes in foreign currency added about $0.01 to EPS in Q2 as a result of the weaker dollar. Moving onto the GAAP results for the first six months of the year, total revenues increased 1% compared to the first six months of 2008. Excluding a 7% unfavorable impact from changes in foreign exchange rates, revenues increased 8% in the first half of the year. Our GAAP operating margin increased significantly to 17.2% from 15.7% and our earnings per share in the first half of 2009 were $1.67 compared to $1.24 in the first half of 2008 representing 35% growth. Our gross profit margin increased to 130 basis points on a year-over-year basis as a result of increased business volumes and a positive foreign currency impact. This was somewhat offset by $5 million, higher charges related to our manufacturing consolidation initiatives. Our SG&A cost declined 1% on a year-over-year basis as higher incentive compensation costs were offset by the favorable effects of foreign currency translation. Our R&D costs increased 6% on a year-over-year basis as we've reinvested some of our operating leverage to help fund our long-term growth. Our GAAP pre-tax income in the first half of 2009 also benefited from a $9 million gain on acquisition of Guava Technologies. On the next slide, I show our performance by geography for the first six months of the year. Excluding changes of foreign currency, our 12% growth in the Americas was very strong as a result of the exceptional first half performance of our Bioprocess division. In Europe, we had an unusually strong Q1 and weaker Q2 but when you average the two quarters together, our 5% year-to-date growth in Europe is respectable given some of the economic challenges in the region. Our 4% growth in Asia is tracking slightly below where we expect it to be for the full year. We expect Japan will continue to struggle throughout the year while our other Asian businesses will remain strong. On the next slide, we show our six-month non-GAAP operating results. Again, I encourage you to review the non-GAAP reconciliation table in the press release for the detail of our adjustments. We worked hard to improve our operational efficiency last year and we are clearly seeing the benefits of these expense reductions and our results as the topline has recovered this year. Our first half 2009 non-GAAP gross margin of 57% increased 180 basis points on a year-over-year basis due to business mix, higher business volumes and the positive impact from changes in foreign currency. As a reminder, most of our manufacturing costs are denominated in euros. So, with the euro down versus the dollar on a year-to-year basis, we're seeing a positive impact on a gross margin percentage. SG&A expenses represent 28.3% of sales compared to 28.8% in the first half of 2008, a decrease of 50 basis points, due to our efforts to align our cost structure in 2008. Overall salaries and wages were down on a year-over-year basis reflecting the benefit of these actions. R&D spending increased 30 basis points to 6.6% of sales from the first half of 2008. We expect that we'll continue to report a healthy increase in our R&D spending throughout the rest of the year. Non-GAAP operating margin of 22% for the first six months of 2009 is a 190 basis point improvement from the previous year. I'm very pleased with the improvement, but we do not expect to sustain the pace of margin expansion during the remainder of the year and I'll elaborate on that further in the call. Our non-GAAP tax rate for the first half of 2000 was approximately 26.3% and our non-GAAP net interest expense was $21.5 million; about million lower than last year, again, due to lower debt balances and lower interest rates. For the first six months of 2009, we reported $2.06 in non-GAAP EPS, an increase of 20% over the first six months of 2008. Cash flow from operations during Q2 was $73 million and once you factor in capital spending of $20 million, we generated a net of $53 million in free cash flow during the quarter. Through the first six months of 2009, cash flow from operations totaled $157 million and with $35 million in capital spending, that results in $121 million of free cash flow halfway through the year. Our free cash flow performance is very strong and is being driven by our higher profitability and improvements in working capital utilization. On this slide I'll show our free cash flow performance over the past 12 months, compared to the previous 12-month period. We've grown our free cash flow by 23% during this time. The organization has done an excellent job focusing on improving our operational performance and executing our programs to increase the efficiency of working capital utilization. We've used the free cash flow to significantly reduce our debt and during this time, we have paid down 107 million of debt including 86 million of debt reduction during Q2. At this point, we have a little over a billion of debt that remains outstanding with approximately 125 million of debt left on our revolving credit facilities. We expect that our leverage ratios will continue to improve as we pay down debt during the remainder of the year. However, with prevailing low interest rates, we're not in a great hurry to pay down the reminder of the revolver if we can deploy our cash in higher return initiatives, such as strategic M&A opportunities. Moving on to working capital, at the end of the second quarter, net accounts receivable were $294 million, compared to $275 million at the end of 2008. Day sales outstanding were 66 days at the end of the second quarter compared to 66 days at the end of 2008 and 72 days at the end of the second quarter of last year. Our collections performance continues to be excellent. We've not seen any deterioration of our receivables due to the impact of the current economic environment on our customers. Inventory in the second quarter was $266 million, an increase of $7 million from the end of 2008 which was the result of our building inventory levels in connection with our manufacturing consolidation initiative. We ended the second quarter with 135 days of supply which is six days higher than the end of 2008, but 12 days lower than the second quarter of 2008. This improvement is a result of our increased focus on inventory management as part of our working capital initiative. Now, let me turn to our 2009 guidance. First half of 2009 has been excellent despite an economic environment remains difficult. Last quarter I mentioned anomaly in the fiscal calendar, it impacted the comparability of our financial results during the first quarter, during Q1 we benefited from having four extra selling days. I'd like to remind you that we'll lose those extra days in the fourth quarter when we have five fewer selling days. So, while we're very pleased with our strong first half performance, partial year results are not directly comparable to full year results. In addition, as we entered the second half of the year, we're making investments to drive long-term growth and strengthen our competitive position. For example, we expect R&D spending will increase in the second half by as much as $10 million compared to the second half of last year. As a management team, we prudently held back spending earlier this year in response to the risks we saw in the business. Now with a strong first half behind us, we're making investments that will help us capitalize on promising market opportunities. For 2009, we expect our reported revenues will grow between 2% and 3% compared to 2008. This estimate includes a 3% unfavorable impact from changes in foreign currency. Excluding the impact of currency, we expect to generate revenue growth between 5% and 6% in 2009, which is an increase of 1% to 2% from our previous revenue guidance. This growth includes a 1% contribution from our acquisition of Guava Technologies. We're also raising our full year non-GAAP EPS and free cash flow guidance. We now expect to generate non-GAAP earnings per share of approximately $3.85 to $3.95 per share, compared to our previous guidance of $3.75 to $3.90 per share. This EPS estimate is based on a projected non-GAAP tax rate of 25% to 27%. With the 20% increase in non-GAAP EPS during the first half of the year, our guidance clearly assumes lower earnings growth in the second half. There are three primary reasons for this dynamic. First, as I already mentioned, we have fewer selling days in the fourth quarter that will impact our performance. Second, we are accelerating investments in the strategic initiatives and R&D programs. Finally, we have a significantly higher tax rate in the second half of the year as compared to last year. Last year, our non-GAAP tax rate was 17% during the second half. This year as I mentioned our tax rate will be in the range of 25% to 27%, so second half tax rate could be as much as 8 to 10 percentage points higher than last year. Now turning to cash flow guidance, we are increasing our guidance for free cash flow in 2009 and expect free cash flow to total approximately $245 million compared to our previous guidance of $220 million. As a reminder, we define free cash flow as cash flow from operations less capital expenditures. So, to summarize the key takeaways from the second quarter, we started 2009 strong and our solid performance continued throughout the second quarter. We are increasing our guidance for the year as result of our outperformance. Overall, we expect 2009 will be a solid year financial performance for Millipore, despite an overall challenging environment. With that, let me turn the call back over to Joshua to begin the Q&A session.

Thank you. Bob, please assemble the Q&A roster.

(Operator Instructions). Our first question is from the line of Jon Wood with Bank of America. Please go ahead. Jon Wood - Bank of America: Martin, you increased your currency revenue guidance by about a 1.5. Can you give us a sense of what proportion of that is related to the [flu-build]? Is the flu-build a meaningful component of that raise? Also, have you made any changes to your internal projections for Biosciences?

Yes, it's not whatever you call meaningful, it's a part of it, but there are some other dynamics in Bioprocess that also contribute to the improved performance overall for the year. So, flu production plays a role, but there are other parts that are also doing better overall. So, our revised revenue growth, excluding currency is 5% to 6% and we feel confident about that. Bioscience is suffering a bit more in the areas that I pointed out. We have a number of good trends too and we are counting also on a number of new products are coming up in the second half. So, Bioprocess actually (inaudible) little bit faster than bioscience. Jon Wood - Bank of America: Then any change or expected change in the process monitoring business given the manufacturing issues we have seen in the quarter? I mean do you expect that there will be any increased focus there going forward?

Manufacturing issues? Which ones are you referring to? Jon Wood - Bank of America: I'm talking about the Genzyme issue.

Yes, that's one drug, one company is really making any impact on that. That's actually happening quite a bit. Sometimes you hear about it. Sometimes you don't, but, no, it's not a significant impact. Jon Wood - Bank of America: Correct me if I'm wrong, you said that the Bioscience division was flat ex-Guava.

Yes, that's correct. Jon Wood - Bank of America: But it was only 1% to the total company revenue gross. Is it just a rounding issue?

Yes.

Yes. Rounding issue. Jon Wood - Bank of America: Then Charlie, any change the FX, I think you said negative $0.07 and negative $0.09 for the year. Any change to that?

For the year, foreign exchange will take less than $0.05 off of last year.

Our next question is from the line of Tycho Peterson with JPMorgan. Go ahead, please. Tycho Peterson - JPMorgan: Maybe just following up on some of the questions of Bioscience, I'm just trying to get a sense of pacing here. You talked a little bit about an improvement potentially in the second half, but I think you also said that pharma has some of the pressure in this quarter and obviously the pharma deals haven't closed yet. So, I'm lust wondering is your increased enthusiasm going to be a function of new product flow or are you taking in some academic uptick from stimulus? I'm just wondering also how you are thinking about the pace in the stimulus in the back half of the year.

So, when you dissect the different market segments and look at academia customers, those have continue to grow well and we think that will continue to support it also by some new products that we are bringing out. We also see continued very strong trends for the Bioscience division in China and some other markets in Asia, but that is all offset. At least in Q2, it was offset by pullback in pharma. So well in the second half what we see is continued strong performance in Academia, new products and geography will help us to deliver, I would say, a solid year for Bioscience for the full year. Stimulus, hard to say. There will be some impact, but I'm not in a position to say how exactly these moneys will be allocated. Where do they go? There is going to be some positive impact, but when and how is not necessarily something that we count on. Tycho Peterson - JPMorgan: Are you seeing any signs of maybe stabilization in Lab Water? I'm just wondering if that business could also pick up with some shared instrument grants and...

Absolutely, very possible. Even in times when you say it's really a difficult market environment, this business is still holding up very well. We have a range of products that are very well accepted. As soon as there is more money available, I'm sure we'll get some impact from that in Lab Water. Tycho Peterson - JPMorgan: On the flow business, Guava, you have had it under your belt a couple quarters. Are you starting to see revenue synergies there and has that business been on track with your expectations when you acquired the company or has it exceeded?

It's roughly on track. It's very good on the academic side. It's a little bit more impacted by pharma, but overall it's on track and we just launched actually the new next-generation system which was one of the main investments that we continued and that system has launched on time and is on track. It's being sold now. So, we are seeing good result. So, we are happy with it overall. Tycho Peterson - JPMorgan: Just one last one on R&D, you talked about stepping up investments in the back half of the year. Just broadly speaking, can you give us a sense as to whether the emphasis here is going to be on the Bioscience business or Bioprocess? Or if you can give any color on general...

Yes, absolutely. This is very important part. I mean I strongly believe that we are in a position to invest in downturn which I think will help us in the long run. We are focusing in both divisions to drive innovation. So, examples would be disposable bioreactor, next-generation of flow cytometry, flow cytometry kits. chromatography, believe it or not is also a good field for us to expand. We are getting good feedback from our customers and then I don't know if you have seen it in our websites, we launched recently the [flex] ready system which is a new way to integrate disposal manufacturing and filters. Those are some examples. Did push in the Bioscience division with external partnerships and sourcing technology from other companies and that's also with some of the investment goals.

Our next question is from the line of Marshall Urist with Morgan Stanley. Go ahead, please. Marshall Urist - Morgan Stanley: So one question, just if you could help us to understand a little bit more in kind of sequential demand trends in Bioprocess, given a similar kind of comp base and the difference in organic revenue growth, Q1 to Q2. Just could you help us to ease out, how much was the effective days impacted sequentially? Maybe if there was any kind of inventory restocking in the first quarter that you didn't see this quarter.

You'll take that Charlie?

Yeah, Marshal, I understand why you want to look for sequential comparisons and appreciate the challenge. I would of all years, this is not a great year to draw conclusions from sequential comparisons. Obviously, we've seen quite a bit of fluctuation in demand in the Bioprocess business over the last six quarter with a decline last year, a strong performance in Q1, a very healthy performance in Q2. I just don't think it's all that fruitful to draw a sequential conclusions. What I can tell you, is that, the performance in Bioprocess is strong and is broad based. We certainly saw the rebound in the North American biotech that we talked about, but in general North America was very strong, in general Asia was very strong, Europe was definitely weaker in the second quarter. The other way to look at it, if you slice that across product lines, upstream, downstream, process monitoring, we saw healthy growth in all the product families as well. So what I think you should take away is that the growth in Bioprocess is pretty solid across the board and I think we're optimistic for a good second half as well. Marshall Urist - Morgan Stanley: Could you quantify what the impact of flu was in the quarter for Bioprocess?

Our policy is not to quantify the impact of an individual drug or an individual event, because frankly it's just not that meaningful. So, it was mildly positive in the second quarter, probably have a slightly bigger impact in the second half, but it's among several things that are driving the business. We don't feel it's big enough to call out that it affects the growth rate of the division. Marshall Urist - Morgan Stanley: On gross margin, again, if you could just help us a little bit more detail in terms of what drove pretty impressive gross margin in the quarter and if with some of the negative mix that you talked about, did that offset currency? So what we're seeing is basically volume and productivity or what's the right way to think about that?

If you are looking at gross margin percentages, currency was the single biggest driver of the improvement, absolutely. Then there was some volume impact in the benefit of the various initiatives we've had going on for awhile. What went against that was the mix obviously with the Bioscience division, Drug Discovery and Lab Water businesses, which have high margin struggling in the quarter, that had a negative mix impact that offsets some of the currency and volume benefit. Marshall Urist - Morgan Stanley: Then specifically within Bioprocess, because I know you guys had very favorable mix last quarter, did that moderate this quarter in terms of the actual mix within Bioprocess?

It did. Marshall Urist - Morgan Stanley: I appreciate the kind of more detail around your second half earnings expectations, but just one thing you didn't talk about was how you are thinking about gross margin for the second quarter, which would obviously be a pretty big swing factor. So how should we be thinking about that?

For the second half, you mean? Marshall Urist - Morgan Stanley: Yes, second half.

We don't guide that specifically, so we will be looking at margin expansion for the full year absolutely but I can't get any more specific than that.

(Operator Instructions). We do have a question here from the line of Derik DeBruin with UBS. Go ahead please. Derik DeBruin - UBS: Can you just refresh my memory on how big the percentage of sales are in the Drug Discovery business and Lab Water business?

For the total company, it's around 5% at Drug Discovery and Lab Water is about 19.

That's right. So, 5 and 19 there. Derik DeBruin - UBS: Just as you are kind of looking at stimulus money in that situation, are you peering or seeing anything in terms of like new lab construction. I mean are people putting some of that money is going to remodel it. Is it too early to know what they are going on it? Are you aware of anything, whether there has been major remodelings going on?

In the U.S? Derik DeBruin - UBS: Yeah in the U.S. I guess globally too, as people spending money on stimulus packages around the world.

Yes, China, absolutely. There's definitely a lot of investment activity going on that geography in some other Asian markets too except for Japan it goes the other way. Stimulus, where you see activities in preparing grants are getting ready to spend that grant money. There's certainly activity there, but that's about it. It's hard to time it. My guess would be there is some positive impact in '09, but if you can't time that, then you shouldn't quantify and count on it. Derik DeBruin - UBS: You've did a big introduction of the new business and the other disposable product line. Have you seen any significant wins since you put those on people that have done designs of those products?

You referring to the disposable, what we refer to as Mobius? Derik DeBruin - UBS: I mean, yes.

Yes. We've seen the first wins of the new system, which is amazing, given that we just launched in the summer, usually of selling cycles longer and tremendous number of leads. We did a very strong promotional tour in U.S. and Europe. So we have a very large number of fleets. So we are in the process of following up on those and quantifying those. Off to a strong start, definitely. Derik DeBruin - UBS: Do you see SG&A trending higher in the second half of the year as well?

Yes, a little bit. Derik DeBruin - UBS: Little bit, okay. I think, I was really going to focus on the gross margin question, but Marshall beat me to that, so I will get back in the queue, thanks.

Our next question is from the line of Jon Groberg with Macquarie. Go ahead please. Jon Groberg - Macquarie: I mean it's going to focus a little bit more on the gross margin sequentially here. So, if you go from the first quarter to the second quarter and you look at currencies and kind of the impact, it was kind of comparable. Obviously, a lot of currencies moving in a lot of direction, but was this just more a function of kind of inventory accounting and how things kind of came out that caused this particular move in this quarter, because you mentioned some things were unfavorable like mix. So, maybe you can just tease out a little bit more of the sequential improvement?

Yes, it's Q1 versus Q2. Again, sequential comparisons of gross margin are really not that meaningful, honestly. There is so many factors that effected beyond currency. If you look at last year, Q2 has proven to be a pretty strong gross margin quarter for us the last year or two. So we saw the same pattern last year. Again, a variety of factors, but in this quarter as I mentioned the strength was driven first and foremost by currency. Somewhat by volume and operating improvements offset by mix. Jon Groberg - Macquarie: If I just looked at the numbers, right, Bioscience and Bioprocess were almost identical in terms of revenues in 1Q versus 2Q. The actual revenue number was about actually the same as well. So, I'm just trying to parse it out a little bit more. I guess you would expect, obviously, the impact of currency to wear-off in the second half of the year, you'd probably expect some of those margins to revert back to maybe some improvement, but not the kind of improvement you have seen here for the first half.

Right. Yeah. Exactly, right. Jon Groberg - Macquarie: I know you are not giving very detailed guidance, so if you can just help seeing Q3 versus Q4? Can you just talk maybe on the days missed? On the Bioscience division, you kind of understand how people are using these things on a daily basis and how that could impact that business? In the Bioprocess, do people order like that on a daily basis as well or are these orders are bit more lumpy, and so it's not as clear...

Exactly. Jon Groberg - Macquarie: …fewer days will do.

Yes, so it's not a daily replenishment sort of business, it's more lumpy as you descried and orders tend to be larger. They could be $1 million orders. So if those happen to fall in the days that are gone, it's much harder to estimate into our process the impact of a few more days or a few less days. Jon Groberg - Macquarie: So, you think of that and you think about your sentiment that Bioprocess is going to be strong after what you've seen in the first half even though your comps start to get more difficult. Can you maybe describe what some of other things are? So, you mentioned flu, but then you keep saying there are some other things as well that are giving you that confidence. Can you maybe just talk about what those are?

It's the business of monoclonal antibodies production, the majority of it is doing quite well and it's fueled by our adoption of the new products that we launched in the last two years. These products are getting spectrum used in routine, used in scrub and pat dry, so lot of the additional growth certainly not coming from classical pharma. [Gains is] on top and then geography, I did not know if you recall that we talked about investment in Singapore and with that new center we have, we have really a new capability to go after business and build a quite a meaningful Asia growth engine, which is good? Jon Groberg - Macquarie: So I guess going beyond that question, Martin, as you know, we've been asking for a long time, is there anything you've done or anything you're doing to give you more visibility for that business? You sound like you're more confident, but obviously on the days issues you don't how things may or may not fall, but has that changed or there is nothing you have really done with your customers that gives you more comfort in terms of your ability to forecast. It's just more general trends that you are seeing.

I think I have higher visibility and higher confidence in forecasting a year given that 2008 was really difficult, but I think we have much more information for an annual period. Quarterly period will remain challenging because one example would be, you get a big order and you can count on that order, but then it will be delivered at certain dates in the future and that depends on what the customer needs and how they run their production. So that inherently, it's not in your control. So, we go back to the molecules. How many molecules are being launched? How many of those can we cover? What's the percentage of those molecules that we can win? So based on these fundamental trends, we're pretty confident about this year and the outlook also in that business. We tightened this up as much as we can to buffer the quarterly fluctuations, but believe me, this is a good business for us and we have a very strong position.

Our next question is from Rob Hawkins with Stifel Nicolaus. Go ahead, please. Robert Hawkins - Stifel Nicolaus: Can we speak maybe a little bit about the stem cells and where you are seeing the opportunity there, I know you guys have been signing a few more partnerships this quarter along those lines. It seems to be a bit of a departure from (inaudible) antibody side of things and so can you kind of maybe spend a little bit time talking about the opportunity?

Stem cells for us is today in research that's where a lot of the additional effort is being done in many labs around the world and we are developing better tools, better reagents, better media, better devices that work in this field. That's our business today. There is quite a high need to develop better tools that standardize the whole field of stem cell research. Further out, there are some companies that are starting very early small scale clinical trials for therapeutic stem cells and obviously company like us is extremely well positioned to take advantage of that more long-term trend as we also need new tools, new products to develop therapeutic stem cells, but that's more of 5 or 6 years on. Robert Hawkins - Stifel Nicolaus: Along the disposable lines, the new Mobius, do you have issues with like the FDA and standard operating procedures being kind of tied to old technologies and is that much of the barrier for you? Then I guess maybe along with stem cell lines by going into newer lines and maybe FDA hasn't seen before, I mean is that where the opportunity becomes for stuff like Mobius or maybe other processes or tied order technologies.

Within Mobius, you have [sets] of products that are ready, are being used today in production. So the adoption barrier is not as high, but you are right...

The question was around the adoption of Mobius. Mobius is initially targeted at the process development lab, where with customers need a simpler way to scale that production and that's where the market is today. As they scale up, the product will also over time move up into smaller scale production. At this point, it's not designed for full scale production. At that scale you still need other products, but of course we are thinking the future and will develop product for that large scale as well.

Thank you so much. Next question from Isaac Ro from Leerink Swann. Go ahead please. Isaac Ro - Leerink Swann: Just wondering first of on M&A, I'm wondering which side of the business would have maybe a bigger pipeline of potential candidates, is it Bioscience or Bioproduction?

It in Bioscience. We target a larger market with more diverse technologies and more company, so, clearly Bioscience. Isaac Ro - Leerink Swann: With that sort of also imply, kind of where you think you'll make more investments in the near term? Or do you see better opportunities to capture some growth in Bioprocess?

Well, we look in both areas, but the universe of opportunity is much large in Bioscience. So the chances that we do something in Bioscience is much higher. Isaac Ro - Leerink Swann: On the pharmaceutical end market, it's obviously a difficult environment but there have been a couple of companies that have cited stable growth sequentially in the second quarter. So, I'm wondering beyond sort of the capital budgets being tighter, was there something maybe specific to some of the other customers you serve or thoughts along those lines that might have made the end market a little more difficult for you this quarter?

I would point out Drug Discovery where we had in Q2 2008 very good result and good growth and as projects are being delayed or canceled, that's where you see a lot of the short-term impact. We do believe that they will come back eventually. Pharmaceuticals companies live and die by the quality of their pharmaceutical development pipeline. We have a range of good services that will be needed, but we are going through an adjustment phase there. Isaac Ro - Leerink Swann: Just last one on the Japan end market, specifically, you know I've heard that there is some actually pretty considerable stimulus funds emerging that are pretty short-term in nature this year and next year. So, I'm wondering if you expect some of the weakness that you see in this year that is persistent in next year or could you see some improvement in 2010?

Well, we think the worse is behind us in Japan and that's a hopeful statement, but there are some signs that this may help in Q3 and Q4. It's been very brutal when you look at GDP growth in Japan and the impact it had on the electronic and the industrial business. So I think it was the worst we've seen. So there is some glimmer of hope that this will improve in Q3 and Q4, but we have to see it.

(Operator Instructions). We do have a question here from the line of Chris Pohl with Thomas Weisel Partners. Go ahead please. Chris Pohl - Thomas Weisel Partners: I was wondering if you could talk about any trends that you are seeing as far as academic researchers, potentially holding back until they get their grants funded or at least until they see what their break points are in the grant scores that they have received.

I don't see any trends along those lines. I wouldn't know. Haven't heard that. Chris Pohl - Thomas Weisel Partners: Anything that you saw in any markets as far as consumables being de-stocked or have you moved passed that or was that ever an issue for you guys?

That's not so much an issue for us. I heard one of these distribution companies commenting on that. Not really an impact for us. Our inventories are small and a lot of our business is still predominantly direct so a very little impact. Chris Pohl - Thomas Weisel Partners: Just one last question. Sorry to come back to the flu topic, but just as far as trends go for (inaudible) manufacturers buy from your company or from any company. Do they buy in large quantities in the beginning when they're kind of develop the vaccine or do they incrementally add as the vaccine kind of progresses into the clinical trial and then the full commercial launch?

Well, usually they would give you a large order and then you would work on a plan, how you execute the order. So in terms of revenue impact, it's more gradual because you recognize the revenue as we ship the product. So, it's a gradual increase that hopefully we will have a pandemic but if that happens, it could be quite substantial.

Thank you. Ladies and gentlemen, that's all the time we have allotted for today's call. So, we will turn that conference back over to Martin Madaus. Please go ahead.

So, thank you for joining us this evening. I'm happy to report our second straight strong quarter and I'm confident that Millipore is back on track towards accelerating revenue growth and profitability. We will be attending four investor conference during the third quarter and hope that we have a chance to interact with many of you at these venues presenting at the Thomas Weisel, Morgan Stanley and UBS conference in United States and at the Bank of America-Merrill Lynch conference in London. If you are interested in meeting with us, please contact Joshua. Thank you for your attention this evening and good night.

Thank you so much. Ladies and gentlemen, that does conclude your conference for today. Thanks for your participation and you can now disconnect.