Operator: Good day, ladies and gentlemen and welcome to the Quarter Four and Full Year 2012 Bio-Rad Laboratories Inc. Earnings Conference Call. My name is Ian, I'll be your operator for today. As a reminder, the call is being recorded for replay purposes.
I'd like to turn the call over to Mr. Ron Hutton, he's the Treasurer. Please proceed, Sir.
Ronald Hutton - VP and Treasurer: Thank you, Ian. Before we begin the call, I would like to caution everyone that we will be making forward-looking statements about management's goals, plans and expectations. Because our actual results may differ materially from these plans and expectations, I encourage you to review our filings with the SEC, where we discuss in detail the risk factors in our business. The Company does not intend to update any forward-looking statements made during the call today.
With that, I'd like to turn the call over to Christine Tsingos, Executive Vice President and Chief Financial Officer.
Christine Tsingos - EVP and CFO: Thanks, Ron. Good afternoon, everyone, and thank you for joining us. Today, we will review the fourth quarter and full year financial results for 2012, as well as provide some insight into our thinking for 2013.
Let's start with a review of the quarterly results. We are pleased to report that net sales for the fourth quarter of fiscal 2012 were a record $573.8 million, an increase of 4.3% versus the year-ago period sales of $550.2 million.
On a currency-neutral basis, quarterly sales grew an impressive 6.1%. During the quarter, we experienced good currency-neutral sales growth in our diabetes monitoring, quality controls and BioPlex 2200 product lines, as well as many of our Life Science product line, most notably process chromatography, amplification consumables and sales of our QX100 Digital PCR system. The overall quarterly growth was tempered somewhat by continued sluggishness in Europe.
The consolidated gross margin for the quarter was in line with expectations at 55.9% and compared to last year’s gross margin of 56.5%, the decline in margin versus last year is primarily reflective of product mix, increased amortization costs and continued pricing pressure.
During the quarter, we recorded a total of approximately $6.9 million in cost of goods sold for the non-cash purchasing accounting expense related to prior acquisition, which compares to $6.2 million in the year ago period.
SG&A expense for the fourth quarter was $189.1 million, or 32.9% of sales compared to $175 million or 31.8% of sales last year. The increase in spend versus last year is partially related to our ERP projects, but also reflective of the one-time reversal of our incentive bonus accruals of approximately $9 million that occurred in the fourth quarter of last year.
Amortization of intangibles related to our acquisitions recorded in SG&A in the fourth quarter was approximately $2.4 million.
Research and development expense in Q4 was 10.4% of sales, or $59.8 million. This increase in spending both sequentially and year-over-year is reflective of our investments in Digital PCR and cell biology products, as well as focus on the development of new products for diagnostic market, such as diabetes monitoring and blood typing.
Interest and other for the quarter was the net expense of approximately $6.2 million compared to $12 million last year. This lower expense amount versus last year is related to a one-time gain of approximately $4.3 million for the sale of the building and land as well as increased investment income.
The effective tax rate used in the fourth quarter was 28% and in line with our guidance. Remember that last year's lower rate of 20% was primarily related to the finalization of foreign audit as well as decreases in tax reserves due to statute lapses.
Reported net income for the fourth quarter was $47.5 million or $1.65 per share on a fully diluted basis compared to $59.2 million last year or $2.08 per share. Excluding the one-time gain for the sale of real property, we estimate that fully diluted earnings per share would have been $1.57.
Our Life Science Group reported record sales for the fourth quarter of $204.2 million, a growth of 2.7% versus last year, which was also a very strong quarter for the Group.
On a currency neutral basis, sales increased 3.7% for the quarter. These quarterly results reflect strong sales of amplification reagents, process media and continued growth of our new digital PCR system.
On a geographic basis, sales in Latin America and the U.S. were especially robust.
Strength in the top line combined with good expense management, help to push segment profit for the Life Science group, significantly higher when compared to the first three individual quarters of 2012.
Our Clinical Diagnostic group also achieved record sales for the quarter of $365.9 million compared to $347.3 million last year, an increase of 5.3% on a reported basis or an impressive 7.5% currency neutral. These sales were led by continued strong performance in the quality control and diabetes product lines as well as solid growth for microbiology and BioPlex 2200 revenue.
On a geographic view, diagnostic currency neutral sales for the quarter increased most notably in Asia Pacific and North America but were somewhat offset by a continued decline in Europe. Reported fourth quarter segment profit for diagnostic also remained strong at more than $51 million.
Looking at the full year results we are pleased to report annual revenue of $2.069 billion, about flat with last year on a reported basis. On a currency neutral basis, sales for the year grew 3.6%, which represents a currency headwind of more than $79 million. The organic currency neutral growth for the full year was 3.1%.
With a challenging global funding environment, our Life Science group posted annual sales of $688.4 million, a decrease of about 1% versus 2011 and a growth of 1.5% currency neutral. This sales growth was primarily fueled by OUR Digital PCR product line, which finished the year slightly lower than our original guidance. We also saw good annual growth in our process media, amplification consumables and electrophoresis product lines, as well as good growth in the Latin America and Asia Pacific regions.
During the year, we introduced several new platforms and consumables, which bode well for future growth. Moreover, the recent launches of the new S3 Cell Sorter and our next-generation chromatography system, coupled with the addition of the Serotec antibody business, should help to broaden our reach into the tools market around the world during 2013.
For the year, Clinical Diagnostic sales were $1.365 billion slightly higher than 2011 on a reported basis and an increase of 4.7% on a currency-neutral basis. This growth was fueled by continued momentum in quality controls and diabetes monitoring products. On a geographical view, Asia Pacific and the other emerging markets such as Latin America and Eastern Europe showed good growth for the year. This growth was partially offset by a decline in Europe, our largest market.
Total company gross margins for the full year were 56.1%, in line with our original guidance set at the beginning of the year and compares to 56.8% in 2011. The decrease in margin versus last year is primarily related to the addition of $10 million of acquisition-related amortization expense in our Life Science segment.
Total amortization of intangibles and purchase accounting reported in cost of goods sold in 2012 was $26.8 million. SG&A expense as a percent of sales was 33% for the year and better than we estimated at the beginning of 2012.
The two primary drivers of this better than expected margins, resulted from the accounting reversal recorded during the year for the $16 million reduction in the QuantaLife earn out valuation as sales were lower than expected as well as the bad debt allowance reduction of more than $6 million, following unexpected payment from the government of Spain.
Excluding these two non-cash items, the SG&A margins for the year was approximately 34%. SG&A expense for acquisition related amortization was $11.7 million for the full year.
Research and development expense in 2012 was substantially higher at $214 million or 10.3% of sales. This increase is a direct reflection of our investment in digital PCR and cell biology as well as new product development in the diagnostic segments.
Looking into 2013, R&D expenses as a percentage of sales will likely stay at that 10% level as we move a number of investments through the product development pipeline. Net income for the full year was $169.2 million versus last year’s net income of $178.2 million, a decrease of about 5%.
As we guided at the beginning of the year, the decline in net profit primarily relates to our investment in new IT systems and the addition of QuantaLife.
The effective tax rate for the full year was 27%. For 2013, we expect the effective tax rate excluding any discreet items that may occur will be in the 27% to 29% range. This estimated rate includes the impact of the retroactive reinstatement of the 2012 federal R&D credits which is estimated to benefit our effective rate by approximately 1% for the full 2013 year and around 5% in the first quarter.
For 2012 Bio-Rad's balance sheet also remained strong. As of December 31, total cash and short term investments were $921 million compared to 813 million at the end of last year. Net cash generated from operations during the fourth quarter was $98.7 million and $278.9 million for the full year 2012, year-over-year increase in cash flow as a result of higher collections and investment income as well as lower interest payment.
EBITDA grew to record levels for 2012 finishing the year at more than $411 million. Net capital expenditures were $34 million for the quarter and $146.1 million for the full year, slightly above the $130 million to $140 million range estimated at the beginning of 2012 and driven by better than expected instrument placement in our diagnostic market. The decrease in fourth quarter's net CapEx is primarily related to our one-time gain on the sale of real property.
Looking to 2013, we estimate that CapEx spending will continue into $140 million to $150 million range, primarily reflecting our continuing investment in new IT systems and technology.
Finally, depreciation and amortization for the quarter was $35.5 million and $130 million for the full year. We are pleased with our 2012 operating results, especially in light of some challenging economic headwinds for both Tools and Diagnostic in many parts of the world. We anticipate that this challenging economic environment will likely continue into 2013, especially in Europe as well as potentially in the U.S. with the ongoing uncertainty surrounding sequestration.
However, a strong product lineup should help to offset some of these challenges. We have begun shipping our new benchmark sales order and will soon launch a next generation chromatography system used for protein purification in the academic and biopharma markets.
On the Diagnostic side of the business, we are looking forward to new products and opportunities in the blood typing, diabetes monitoring and quality controls market. Given this combination of both headwinds and drivers, we are estimating currency-neutral sales growth to be in the 3% to 3.5% range for 2013.
With regard to margins, we are hoping to (hold) the full year gross margin basically flat around 56% despite adding $5 million to $10 million of estimated medical device tax and incremental amortization associated with the new cell biology technology.
Looking to the operating margin outlook, we view 2013 as another year of investments and thus are estimating an increase in spend during the year, including an incremental $15 million to $20 million related to our ERP project.
The net result of these internal investments and the medical device tax will likely produce an operating margin in the 11% to 11.5% range for the full year.
Keep in mind that our 2012 operating margin excluding the $22 million of accounting reversals I spoke of earlier was 11.7%.
Also as I mentioned earlier, we anticipate a full year effective tax rate of 27% to 29% and CapEx spend of $140 million to $150 million for 2013.
Finally, we would emphasize that this outlook for 2013 does not include our recent acquisition of AbD Serotec.
We are currently in the process of analyzing the operations and purchase price valuations. Our best estimate at this time is that the antibody business will add about $20 million to $25 million of incremental sales for the top line in 2013 and be a headwind operating income in the $7 million to $10 million range including amortization expense.
We will be able to give you a finalized 2013 outlook, including Serotec business on our first quarter earnings call.
Now I’ll turn the call over to Norman for a few comments.
Norman Schwartz - Chairman, President and CEO: Okay. So I guess, I would say that while our fourth quarter sales were encouraging, as Christine says though, we do expect the economic malaise to continue in 2013.
In the U.S. it looks like we may bump up against the sequestration, and Europe continues to be in the doldrums. As a counterbalance to that, we have growing economies in Asia, Latin America, Eastern Europe, again as a counterbalance.
Christine also mentioned some of the new platforms we have, especially in Life Science, which expand our reach into some e-markets, and in some cases, open up new avenues for us. So what some of these investments we're making in new technologies and systems are having kind of a dampening effect on the bottom line. We, obviously, feel that they are valuable for the future, and certainly we appreciate your patience that we make these investments to either add a new market, and on the system side to give us the tool to help us get greater operating leverage as we grow for the future. So that's about it.
With that I think we'll open it up to questions. Ian?
Operator: Daniel Leonard, Leerink Swann.
Daniel Leonard - Leerink Swann: Just a couple of questions about the top line guidance and then one on ERP. So on the top line guidance, is it fair to say that your 3%, to 3.5% currency neutral expectation includes the impact in the sequester in the U.S.?
Christine Tsingos - EVP and CFO: That's a good question Dan. I think that if there is some sort of full sequestration, then no it does not include that and that would be downside to that guidance. I think as Brad has been saying all along, he has seen behavior in the market of people anticipating some sort of slowdown and kind of holding tight to their grant dollars. So from that respect, we’re a little cautious, but if there is a full-on sequestration, then that’s probably not anticipated in our 3% to 3.5% outlook.
Daniel Leonard - Leerink Swann: Then on the diagnostic side, how are you thinking about the potential for new screening recommendations in the U.S.? Can you remind – HIV screening recommendations. Can you remind us how big your HIV testing business is?
Christine Tsingos - EVP and CFO: Maybe John will comment a little bit on the changes in the screening environment, but as you know, we don’t disclose our sales to the level of detail on our product line or even a division basis.
Operator: Paul Knight, CLSA.
Brian Kepp - CLSA: This is actually (Brian Kepp) on behalf of Paul. Question for you, you guys allude to this 3% to 3.5% organic growth in 2013. Touching on that similar economic environment as you saw in 2012, are you going to see – do you think you do expect an acceleration in sales like you did or kind of a similar trend as you did in 2012? Or you think it’s going to – basically are you worried about it coming out of the gate in the first quarter and accelerating into the fourth quarter?
Christine Tsingos - EVP and CFO: When we build our forecast, we try and do it on a currency neutral basis and look at what the rates were last year and setting aside the comments that we just made on sequestration, which could affect the Q1 rate, I think that if currency doesn't change much from where it's been and where it was in the average year, then I think the growth will be fairly ratable with the exception of Q4 of 2013 -- I'm not sure. We've just boasted a pretty strong quarter and it'd end up being a tough compare for us when we're all sitting here a year from now, so we'll see.
Brian Kepp - CLSA: I guess just one follow-up. You alluded some strength in the U.S. and some strengths in Asia and some softness in Europe. Can you provide any more color on that numbers, any segments that did a little bit stronger or weaker than others?
John Goetz - EVP and President, Clinical Diagnostics: It's John Goetz from the diagnostic side of the business. Yes, we had a good strong quarter particularly in a couple of product lines, diabetes being kind of the primary one. We had some exceptional shipments in the fourth quarter, particularly early into the Asia Pacific market. And we also finished the year nicely up in the United States. So a combination of those two things puts us in a pretty good position.
Brad Crutchfield - EVP and President, Life Science: is Brad Crutchfield. As far as the Life Science business, in the U.S., certainly it'd be the Digital PCR and process chromatography. Process chromatography were particularly strong. It helped kind of offset the slowness of the sort of traditional (repurchase throughout) the academic sector and again, we continue to see some strength -- continued strength in Asia Pacific.
Brian Kepp - CLSA: Is there any way you could give like if it was the low-single digit growth in the regions or a mid-single, or is that as steep as you guys can go?
Christine Tsingos - EVP and CFO: Historically, we really haven’t gone into the level of details I was talking about growth rate by region or product line.
Operator: Jon Wood, Jefferies & Company.
Jon Wood - Jefferies & Company: I guess, following up on the last one, still for John, it sounds like it was pretty broad based on your business, I understand the diabetes call, was there any tender related business or was it just actual execution more of an execution dynamic than an actual lumpiness dynamic in the fourth quarter. I guess the same question for Brad on the process business. I know that business moves around a lot. So I'd be curious to hear if he's going to call out, hey, that was 1%, 2% non-recurring benefit or it's not possible to do that from an order perspective?
John Goetz - EVP and President, Clinical Diagnostics: On the Diagnostic side, we are fulfilling tenders all the time so there is no special fourth quarter phenomenon associated with exceptional tender fulfillment. Having said that, driving that sales in the fourth quarter was pretty broad across almost every product line that we have. So there was a lot of good execution around the world I have to say.
Brad Crutchfield - EVP and President, Life Science: Jon, this is Brad. Concerning the process business, you are correct, it was particularly strong in the fourth quarter, but overall, a pretty strong year. As you know, a lot of this relates to clinical trials (within) Stage III FDA approval. So overall, I would say that we raise the base for this business in 2012 with the results of a number of processes that we're in. But again, this business will be – continue to be lumpy quarter-to-quarter, but the growth that we saw was generally strengthening of the (bases).
Jon Wood - Jefferies & Company: Brad, so can you – I don't think – I think Christine kind of alluded to it, but can you give the QuantaLife number in the fourth quarter and anything you're willing to offer? I know that was a particularly strong number, kind of how do you see that shaking out in 2013?
Christine Tsingos - EVP and CFO: So, Jon, now that we've kind of rounded our one-year anniversary on QuantaLife being part of our result, but fourth quarter we consider it organic to our business, so it's not a specific number that we are going to be disposing.
Jon Wood - Jefferies & Company: So you – there was no – I think you gave a number down 1.2% organically for the Life Science business, is that right for the year?
Christine Tsingos - EVP and CFO: I don't know, I'll look it up.
Jon Wood - Jefferies & Company: Christine, can you talk about just how much that business kind of dragged our OP or at least in '12 and you don't have to give a '13 number, I just – I'd like to hear ultimately did that business come in with that initial $20 million burn rate?
Christine Tsingos - EVP and CFO: In fact, I think we were talking about as much as $25 million between the amortization and the operating results and that's about where it came in.
Jon Wood - Jefferies & Company: Anything Brad can offer on Propel? Can you call that – I would assume that's in your 3% to 3.5% number. You're all willing to qualify what that contributes in 2013?
Brad Crutchfield - EVP and President, Life Science: So, certainly we won't be able to quantify specifically, but other than to say that the product is launched and we are taking orders and making deliveries on products so far that customers seems to get a really nice (indiscernible) cell sorting market.
Jon Wood - Jefferies & Company: Last one. So Christine, you talked about the ERP spending being up $15 million to $20 million, that's a P&L number, correct, in 2013?
Christine Tsingos - EVP and CFO: It is a P&L number and what's behind that numbers, John, are several things. Some are – obviously we need to start depreciating. We plan to go live with first deployment early in the first half of 2013, and that will have to start taking on some depreciation associated with that. There's also a fair amount of related support and other expense associated with the go live that we'll be taking on and then maybe a small increment in the project itself, but a lot of it have to do with going live with our first deployment.
Jon Wood - Jefferies & Company: Did you call out the amount of capital in that $140 million to $150 million related to the capitalization?
Christine Tsingos - EVP and CFO: We did not.
Jon Wood - Jefferies & Company: Can you?
Christine Tsingos - EVP and CFO: You're talking about how much of it relates to the ERP?
Jon Wood - Jefferies & Company: Yes, Ma'am.
Christine Tsingos - EVP and CFO: It's $35 million to $40 million.
Operator: Jeffrey Matthews, RAM Partners.
Jeffrey Matthews - RAM Partners: First you called out Latin America and I don't recall you're calling that out before. How significant is that as a markets for you down the road do you think?
Norman Schwartz - Chairman, President and CEO: We have actually called it out before that is becoming a more significant market for us as it grows, it seem to be getting that the Latin America seems to be more stable today than it was many years ago, and we've been investing in that market. So it is becoming a more significant market for us. It still relative to the rest of the world, it’s small but it’s measurable.
Christine Tsingos - EVP and CFO: Yeah, I think that's right. It's still single-digit in terms of percent overall sales, but certainly one of our fastest growing markets.
Jeffrey Matthews - RAM Partners: Then Norman talked about new platforms in Life Science that opened up new avenues for you. Could you talk a little bit about what those avenues are and how important you might get to down the road?
Norman Schwartz - Chairman, President and CEO: Actually Brad, Brad might be able to talk about this than me better, but I think especially in this, i.e., this is the area of cell biology, if you look at pass-through is concentrated on researcher studying genes and proteins and this is kind of the third segment people studying cells. So the idea of this kind of platform and intro into the cell biology market or the cell (assay) market is really a new avenue for us. Brad, anything to add.
Brad Crutchfield - EVP and President, Life Science: Yeah, I think we’d be looking at the platforms, you can look at cell biology as a frontend to our workflow, it is really the way customers are looking at single-cell biology or sorting their cells before they begin their research. Certainly, the Qs 100 and then followed on into our protein characterization platform, so traditional Western blot platforms, now all this will benefit by having content and this is biologically relevant content. The last year we introduced the complete human genome, we have the mouse genome coming very soon this year. Then the acquisition of AbD Serotec gives us the antibody content to go on cell sorter as well as to go on our Western blot platforms. So really for us it is kind of a vertical integration strategy, not just the platform and some of the reagents plus the biologically relevant content is kind of our strategy going forward.
Jeffrey Matthews - RAM Partners: Is there something about what's going on now that makes the time to have done it rather than years passed or going on?
Norman Schwartz - Chairman, President and CEO: Well I think part of it is there's a lot of the data around next-gen sequencing. It has opened up a lot of information that ultimately has to be validated by per gene expression, and the only way to do per gene expression of course is in some cases you’re looking at very rate events. So you have to do single cell biology. So that's certainly (indiscernible) cell sorter. Then on the other side is traditional tools for looking at very slight nuances and per gene expression ultimately to validate what is genomic information.
Jeffrey Matthews - RAM Partners: Then finally on the ERP implementation. What inning are you in on the implementation and what surprises if any are you experiencing? Has there been any change in the timetable so when it begins to switch from being a cost item strictly to being a benefit to working capital and margins?
Christine Tsingos - EVP and CFO: Well, I think we’re still somewhat early in the game here. Early I mean in terms of the overall project. Remember, when we started down this journey, we talked about it being four to five-year project for us wanting to take a fair amount of time upfront to work on a good global design that we could truly replicate around the world and try and get to a single platform, a single system. Then also talked about that we want to be pretty deliberate in how we roll this out and (indiscernible) is really having a stomach for a big bang approach. So moving into our first deployment which is a small part of the U.S. as a proof of concept, if you will, and try and take it from there. So, that’s where we are now. Lot of the design is behind us and we’re getting close to going live with that first deployment. In terms of what we know now that maybe we didn’t know before, I mean we kind of knew this it was going to be hard and it truly is hard. At the same time, we expect that there are a fair amount of benefits and I think we’re going to find that there are. As we move forward through this, we need to start making some decisions about what is the most effective way to get to the finish line and vis-a-vis how we move geographically around the world in terms of further implementation in our geographic business or a line of business aspect, and we're looking at that now. Clearly, for us to take that system abroad is a very complex path that will take a fair amount of planning. So that actually may push the timeline out a little bit for the international location, but at the same time, I think there is plenty that we can continue to achieve here at the U.S.
Operator: Matthew Goetzinger, Fiduciary.
Matthew Goetzinger - Fiduciary: Just a broader question. We've been around as shareholders for a little bit of time, and there always seems like there is an interesting slate of business opportunities, whether it's the BioPlex or the IH 1000 or otherwise, and really earnings just (indiscernible) for a couple of years here and so I guess my question is, what's the level of management's commitment to really drive earnings back to the $6 to $7 range?
Norman Schwartz - Chairman, President and CEO: If we're pretty committed to doing that – I mean, we're not making these investments just for fun. We want the return on those investments and we have taken our margins down in order to do these things, again because we feel that they'll give us the right kind of leverage for the future and so I think we are pretty well committed. That's kind of our internal goal, is to get back to the mid to high-teens in terms of operating margin.
Christine Tsingos - EVP and CFO: Yes. I would agree with that. I think sometimes it's hard for us, this sounds like maybe for you from time to time as we look at this and the short-term impact on our P&L, especially when we made such progress in growing our margins from the single-digit comes to that high 14%, but in the end we keep coming back to it, if we don't make this investment we’re not going to have the strong foundation that we need to be scalable moving forward, but more importantly the technology that will help us take some of the redundancy out of our business that we have on a global basis. So each time we look at what this is, we become very committed to continuing down this path so that we can build that foundation and therefore, fulfill our commitment to actually expand our earnings power in the future.
Matthew Goetzinger - Fiduciary: Yes, I think that's helpful and intuitive. I think the time line or a commitment to a time line seems to be kind of slipping, and then there always seems to be something technologically interesting like a Serotec or otherwise that comes along that for whatever reason sounds like is operating at a meaningful loss position from the get go. It just seems like that does back here another year or two. So I guess I'm just struggling with the patience factor in the time line here.
Christine Tsingos - EVP and CFO: Fair enough.
Operator: Jeffrey Warshauer, Sidoti & Company.
Jeffrey Warshauer - Sidoti & Company: So, did I hear you accurately before? Did you mention beyond the 3% to 3.5% sales growth, you threw out the number of $20 million to $25 million of incremental sales from acquisitions?
Christine Tsingos - EVP and CFO: That’s correct.
Jeffrey Warshauer - Sidoti & Company: How much of that do you think you could see in the first quarter, due to the closing of the recent acquisition in the first quarter?
Christine Tsingos - EVP and CFO: It’s a good question, probably if I – the history of any judge is we've done other – brining other acquisitions into the fold, my guess would be at this point that it would be more backend loaded, because history shows in the first few months of bringing something in, there is always a big focus on integration and getting to know the business and we tend to see growth in the later quarters. So I'm not sure that the increment in Q1 is the potential, but again we are just trying to get our arms around that business coming recently close to it.
Jeffrey Warshauer - Sidoti & Company: Relative to going live in the ERP and your expectations in the U.S., may you could give better timeline if you could on how you think you'll proceed throughout this year and when do you think you could go live in Europe.
Christine Tsingos - EVP and CFO: So, right now we are hoping that sometime in the second quarter this first deployment in the U.S. and again it’s one of our smaller divisions based in the U.S. so it’s not – we can characterize it as all the U.S. hoping to go live in the second quarter and then the remainder of this year, the balance of this year will be spent planning and finalizing design and actually developing our second deployment. I think as far as timing for Europe, given the complexity of Europe and the number of legal entities and manufacturing sites, distribution sites, et cetera, that we have were probably still – oh my gosh, 18 to 24 months away from really getting into Europe and starting to bring those various entities into the fold.
Jeffrey Warshauer - Sidoti & Company: You think that's from going live in Europe, 18 to 24 months?
Christine Tsingos - EVP and CFO: Well, I think, I'm not sure from what direction you are asking your question. If your question is, when do we start going live with all of this multiple operations that we have, it's not one big bang in Europe either. So, could we start to go live in the 24 months window with smaller operations? Sure. But if you're question is, when do you really have Europe into the fold and therefore when do you start to see the benefits, because we've spoken in the past how Europe holds the key is the largest benefits of this project. If that's where your question is coming from then is at least 24 months away and most likely longer than that before we have all of Europe in the fold and producing the benefit.
Jeffrey Warshauer - Sidoti & Company: Lastly, regarding your passive investment in Sartorius, Is there any way to potentially generate additional value from that investments through collaboration or unlocking value through monetization?
Norman Schwartz - Chairman, President and CEO: There are always those options. Yes.
Jeffrey Warshauer - Sidoti & Company: Can you provide any insight into what you might be looking at?
Norman Schwartz - Chairman, President and CEO: No.
Operator: Jon Wood, Jefferies.
Jon Wood - Jefferies & Company: So you've got some extremely high coupon debt coming this year, you can kind call in September. Can we assume that you guys do that, so I think it’s the 15th of September? Should we assume you can call that and maybe read – put it out into some longer-term more favorably finance paper?
Christine Tsingos - EVP and CFO: So good question, Jon. I think we're looking for to September as much as you are, so that we can refinance or take out, we'll make that decision as we get closer to it that 8% debt, and I should say that that's not factored into the discussion that we had today on our outlook.
Jon Wood - Jefferies & Company: Christine, we haven't talked about this I don’t think publicly, but you guys have obviously a lot of cash on the balance sheet, I would assume a fair amount of that is overseas. Can you just talk about, how much you can access on your balance sheet without having a go through some prior tax consequences. Just so we understand about what's immediately deployable and what is perhaps earmarked for more of an M&A or longer term tax planning situation.
Christine Tsingos - EVP and CFO: Sure. So as I mentioned in the prepared remarks, it's about $921 million on the balance sheet. The vast majority is actually here in the U.S., Jon. I think maybe up to $200 million is sitting outside the United States of the $921 million and of course, we have operations all over the U.S., and a lot of those require continued investments and we've been making some acquisitions outside the United States, for example, the most recent, the AbD Serotec one, where we can use some of that cash, but in terms of tax planning, we do consider permanent reinvestment and are continuing to do it to invest and expand internationally, not just via acquisitions, but through organic investment in manufacturing, etcetera, but the majority of the cash (does sit) here and gives us the flexibility to invest internally and externally in acquisitions and things like that. So does that answer your question or are you heading somewhere else with it?
Operator: Thank you. We have no further questions in the queue.
Christine Tsingos - EVP and CFO: Thank you, everyone for taking the time to join us today, and hopefully, we'll be seeing you soon. Bye-bye.
Operator: Thank you. Ladies and gentlemen, that concludes your conference call, and you may now disconnect. Thank you very much for joining us today. Do enjoy the rest of your day.