Good morning and thank you for joining the Second Quarter 2007 Earnings Conference Call for Herbalife Limited. On the call today is Michael O. Johnson, the Company's Chairman and CEO; Greg Probert, the Company's President and COO; and Rich Goudis, the CFO. I would now like to turn the call over to Brett Chapman, the Company's General Counsel, to read the Company's Safe Harbor language.

Thank you. Before we begin, as a reminder during this conference call comments may be made that include some forward-looking statements. These statements involve risk and uncertainty, and as you know, actual sales and results may differ materially from those discussed and anticipated. We encourage you to refer to yesterday's earnings release and our SEC filings for a complete discussion of risks associated with these forward-looking statements and our business. In addition, during this call certain financial performance measures may be discussed that differ from comparable measures contained in our financial statements prepared in accordance with US generally accepted accounting principles, referred to by the Securities and Exchange Commission as non-GAAP financial measures. We believe these non-GAAP financial measures assist management and investors in evaluating and comparing period to period results of operations in a more meaningful and consistent manner. Please refer to the Investor Relations sections of our website, herbalife.com, to find the first quarter press release containing the reconciliation of these measures. I will now turn the call over to Michael.

Thanks, Brett. I feel like I'm in a much better legal environment because of you each and every day. Good morning everyone. Welcome to our second quarter earnings call. The quarter was a record breaker, and we had a very exciting month of July as well. And as you know, many of you who are with us, Greg and I are just back from three major distributor events, our North American, our Asian and our European extravaganzas. We began in Dallas on the weekend of July 13, and then to Singapore the next weekend, and then on to Cologne, Germany the following one. It has been a busy month. We met with our distributor leadership and presented to more than 40,000 distributors. Together our distributors and us continue to be excited, incredibly excited as a matter of fact, about the future of Herbalife. In addition to our extravaganzas in July, three weeks ago soccer legend David Beckham and his teammates put on our new Herbalife LA Galaxy jersey for the first time. And the entire world part saw our name Herbalife front and center. Let me give you if you facts. Every person on this planet, at least anyone who has access to some form of media, has seen an Herbalife branded jersey. We are still receiving publicity tracking reports, but we know we had over 900 million media impressions in the two-week period around the LA Galaxy, David Beckham news conference, and the Galaxy's first game with David Beckham. The Herbalife brand has never been more visible. Adidas produced more than 600,000 Galaxy jerseys in its initial run. And every one of those is a mobile Herbalife billboard. All of this will create more opportunity for our most important clients, our distributors. The most consistent form of marketing used…

Thank you, Michael. Before I start with my prepared remarks, I would also like to congratulate both our distributors and our employees for the records they collectively set during the second quarter, and more importantly for their unity and teamwork, which has created tremendous excitement and positive momentum in our business. Let me now provide you with an update on our four key markets, the US, Mexico, Brazil and China. We will field questions on other markets as necessary during the Q&A session. Our US business achieved record revenue levels of $108 million in the second quarter, up 31% versus a year ago. With volume of 167 million, up 32% versus last year, this is the fourth sequential quarter where volume point growth exceeded 24%. Sales in the top 25 metro markets increased 48% compared to 2006. In fact, each of the top 15 metro markets and 22 of the top 25 metro markets in the United States experienced double-digit growth. The Latino segment of the US business now represents 61% of the country's volume. And it grew 56% compared to last year. The non Spanish-speaking distributor segment increased 7% versus last year. And US momentum remains strong, with a 20% growth in total supervisors and a 24% growth in new supervisors versus last year. Much of this growth is coming from further adoption and expansion and Nutrition Club DMO, as well as the Internet lead sampling DMO, and the Wellness Coach DMO. The message we have reaffirmed with our distributors is that all of the DMOs can work. It is up to you to find the methods that work best for you and fit into your lifestyle. Dan Waldron, our newest Chairman's Club member, is a great example of a distributor working a business with multiple DMOs. He has…

Thanks, Greg. Let me briefly walk you through the financial results that were contained in yesterday's press release, along with the 10-Q, and then we will open up the call for your questions. Net sales of $530.1 million in the second quarter were up 13.8% versus the second quarter of last year, as we experienced strong growth in many of our top ten markets. In fact, our top 10 collectively were up 18% versus 2006, led by double-digit growth in countries like the US, up 30.7%; China up 187.9%; Taiwan up 43.1%; Venezuela up 320.1%; Italy up 14.9%; and Spain up 24%. As a whole our top 10 markets comprised 69% of our business, an increase from 67% in 2006. Reflecting the global nature of our business, changes in FX rates provided a benefit of 350 basis points in the reported growth rates. Organically, our growth was 10.2% in the quarter. Gross profit in the second quarter was $418.7 million or 79.0% of sales, reflecting an erosion of 110 basis points compared to 80.1% in the second quarter last year. The decrease from prior year was primarily the result of changes in country mix, which is 34 basis points; foreign currency fluctuations, 21 basis points; and inventory adjustments, 26 basis points. Royalty expense for the second quarter of $188.5 million or 35.6% of sales improved 35 basis points compared to 35.9% in the second quarter last year. The improvement over prior year was primarily due to the impact of China royalties, which are partially contained in SG&A due to the employee model we use in China, coupled with lower expense related to our Active World Team promotion. Normalizing for China royalties, the expense would have been 36.8%, or 30 basis points higher than the 36.5% in 2006. SG&A expense for…

[Operator Instructions] The first question is from Chris Ferrara from Merrill Lynch.

Hi, guys.

Hi, Chris.

I wanted to ask about the accretion from the buyback versus the tax friction associated with having the nondeductible interest expense. What is your view of whether it is accretive, dilutive? It looks like it is completely offset for the full year '07 so far, is that right?

Slightly, Chris. I still think it was about $0.01 accretive in the second quarter net-net. And we expect it to be accretive $0.01 each in the third and fourth quarter. I think what you're really seeing, the majority of the increase in the… sequentially in the effective tax rate was really reflecting country mix.

So you are saying that there is no tax friction associated with buying back the shares for 2007?

There was. I think we said last night it was probably 20 to 30 basis points of the sequential move.

Got it, okay. And just shifting over to the European business in general, I guess could you just refresh us on the plans in place to move more toward the developing side of Europe versus the developed side of Europe, given that we're still seeing sluggishness in the market?

Yeah, this is Greg. I think what you'll see is we're developing... currently developing plans to more strongly penetrate Russia and Central and Eastern Europe. Including we just hired a new General Manager for Poland and Central Europe. And she will also be assisting us on Russia. I think that is... part of the strategy is really to move a lot of our resources from, I think, Western Europe where we have... you know, we have some growing markets, but I think it is a stable and single digit growth business in countries like the UK, and Sweden is a very hot right now, and move a lot of our resources over into Eastern Europe, Central Europe, where a lot of other direct selling companies are very successful and experiencing double-digit growth. That was also part of the OFG process last year to really start the process of realigning those resources. I think you'll see additional realignment throughout 2009.

Would you have any kind of a time frame as to when growth in the region recovers?

Chris, I think excluding FX, we're looking probably at the back half of '08 to really start to see some of these initiatives unfold.

And that would be driven by the developing side of Europe as opposed to the developed side, or is that based on an assumption that some of your more sluggish developed markets recover?

I think three things, right? We talked about one is our sluggish markets that have been sluggish over the last couple years, like Germany and the Netherlands, we do expect those to improve with a lot of the initiatives our distributors are undertaking, primarily with the Nutrition Club. And also our sampling lead generation DMO seems to be... have some interest in those markets, as well as we believe that a lot of our plans for the developing markets in the Eastern will start to unfold in the first half of 2008.

Chris, let me jump in. It's Michael here. I think we need to be careful about Europe... mainland Europe, Western Europe. We would hope that we would see some 2008... I think Rich is right... at the balance at the end of 2008 some of these initiatives take hold. The place I get confidence is that the US is 27 years young. And we're having a vibrant growth rate in this marketplace because distributors has reengaged. They have aligned around DMOs, have been successful in Latin America. They have seen those work here. We presented those ideas and demonstrated the success of those through distributor voices, not through management voices, to distributors in Europe, in Cologne. We had 18,000 plus people at that event. It was our largest event in Europe's history. I think a lot of people came to see is there some magic that I can partake and participate in and take into my business? It is going to require people to work very hard to build their business. We saw that it took three years for Mexico to get on track with Nutrition Clubs, and then flattened because of infrastructure issues, and now responded well to some of our changes we made in the market in management and infrastructure opportunity. We're looking at Europe very carefully, very closely. Greg and I have taken a very personal interest. I know Wynne Roberts, who runs Europe for us, is looking at all the opportunities. Our advancement into Africa is an exciting one for us. It is a limited product rollout in Zambia. Only two products in there to support specific DMO to see if we can acculturate our Company to a growing opportunity in the African continent. We are also excited, as Greg said, about Eastern Europe and the Balkans and the Baltic states that offer promise for direct selling. We have had growth in Italy and in France and in Spain that has been... in Portugal... that has been very promising to us. As you move to the northern side of Europe, our growth has slowed. And we are looking at ways to operate into minority communities there to see if we can get some incentive invigorated business going through some of these DMOs that have been so successful. A lot of European distributor leadership have been here in the US looking at the Anglo success models. And so it takes time. It is definitely in a transition in mainland Europe. And I think Rich is right, the balance of... the end of '08 is probably the place to start looking for some upside for us. But we have some nice stories in Continental Europe right now in the Latin marketplaces there.

Great, thanks. And then just one more. Can you try and give an idea of where your upside was? You blew out your sales number obviously, the midpoint of your range in Q2. Can you give us an idea of where that upside came from, what regions relative to your own expectations?

I think sales were slightly above because of currency. I think we were expecting the leverage that you saw. This goes back to last year, really two things. One is Michael's commitment and promise to get 50 basis point of operating profit margin a year. So you're starting to see that leverage come through, reflecting the realignment for growth initiative we had and articulated at the back and of '06. I think it was very much in line with what we thought internally.

No, I'm just talking about the fact that your sales growth, and even you guys have been guiding I think 7% to 10% this quarter, and you did 13.8%, right? FX was only 3.5. So even if... you would have to assumed a currency drag, right?

Yeah. So if you're talking for the third quarter our guidance was 8 to 10% topline. Now again you've got to remember that the third quarter last year it becomes our most difficult comp for Mexico. Also last year was when the US started growing 24 plus percent, so we had a difficult comp with the US than last year we started to lap the benefit of some of the currency benefit that we have gotten. Once again, visibility for us on topline is the most difficult part of our model to predict, so we'll continue to remain cautious as we guide the topline.

Rich, I'm sorry, I was... right. I mean I was referring not to Q3, but to Q2.

Okay.

The fact that you... what was the delta in you doing 13.8% growth versus the midpoint of your range of 8.5% growth?

I think the short answer is the US was a little bit stronger than we thought, and Mexico didn't dip like we had thought.

Great. Thanks a lot.

Okay.

The next question is from Simon Goodman [ph] from Goldman Sachs.

Hi, guys. With regard to Mexico, the business is clearly stabilizing after peaking late last year. And given the saturation work you have done and the power of the Nutrition Club DMO, how do you envision that market playing out going forward? Is it more of a low single digit grower, or does it climb another peak?

I will let Rich talk about the guidance. I mean I will just talk generically about the market. I think we have done work with distributor leadership, and our TAB Team has done a fantastic job of stabilizing the business. As I mentioned in my prepared comments, they have gone out and visited 25,000 of their clubs, which is very high compliance rate compared to the... we think we have about 28,000 clubs. And they not only looked at what they were doing, but they spent a lot of time understanding the evolution of Nutrition Clubs and training their downlines, and really making sure that they are herbalized. They understand the products. They understand the DMO. And I think that has really stabilized the business and built a very, very strong foundation. If you look at our business from its peak, we think we lost about 10% of our Nutrition Clubs and about 10% of our business. I think that is not necessarily a bad thing in the long-term. I think we weeded out some of the clubs that were damaging our business methods and probably damaging our brand long-term. So I'm very positive that we have now reached a core business, somewhere around 50 million volume points a month. And I think what you'll see is that continue to be stabilized over the next quarter. And then I expect somewhere towards the end of the year that we will start seeing our distributors opening new clubs. And hopefully our supervisor count will go up. We're actually doing a promotion starting at the extravaganza later this year called a one gets one promotion, where we are asking every club to go out and open a new club. Again, I think we've feel very confident that Mexico will be restored to probably low single digit growth later this year, and hopefully even better next year.

And then, it looks like there is a lot of low hanging fruit in some of the cities that are under penetrated. But how much opportunity exists with the 20 volume point per capita?

Remember, that's only a small Federal District. I think it is about 8% of the population of the country, where we are about 20%... 20 volume points penetrated. So again, you can do the math and extrapolate that 20 volume points out across the entire country of 100 million people. Our goal is to get everyone... we are about 6 volume points per capita now, and we would certainly think that attaining half of that Federal penetration, you know, 10 volume points per capita in the outlying territories is what I consider low hanging fruit.

All right. And then just some follow-up on Europe and coming out of the Europe extravaganza. I mean did you see anything encouraging from distributor leadership there? And I understand that there might be maybe a growing focus towards developing countries. But given the size and the importance of some of the Western European markets are you seeing them getting reengaged, because I think a lot of it depends on their energy and focus in those markets?

Well, we… this is Michael. We met with our distributor leadership very closely over there. And they have checks, and they know exactly what the numbers are. The opportunity that they see is both with some of these DMOs in Latin America, but also the sampling program that they are seeing taking place in the US They feel in many of the Western European markets that they fit more seamlessly into their business models. What they don't want to do is they don't want to just switch one model to the other. That causes a pretty severe dip in the business. A little bit what we are seeing in Brazil, not a severe dip, but just is a switch from one method to another. They want to make sure they seamlessly add... it is adding to, not taking from the business models, showing new leadership opportunity. So as I said, a lot of those distributors have traveled here and met with some of the program operators here. We have brought the leaders of many of the business methods. We brought them into Cologne. We sensed quite a bit of excitement there. Again, as Rich said a minute ago, the visibility in the exact topline is a little... is difficult for us. It drives as all a little crazy. It drives you guys crazy; it drives us crazy that this sector, not just our Company, but this sector is not always as predictive in a model as to you on July 1 sales will kick at this rate from this experience. We saw a lot of energy, a lot of excitement, a lot of participation in meetings. We had one training there where we expected somewhere in the area of 2,000 people. 6,000 people showed up for that training. It surprised us. It was a gratifying surprise. So those are the kind of indices that we can take away to say... and we look at that, and we watch and we observe what is going on. We saw a more intense focus around product training. We saw a more intense focus around specific DMOs. We saw a more intense focus around understanding exactly how the leadership in Latin America is working to build its business. We saw a lot of things going on. I think, Greg, you had a comment in there.

Yeah, just to add a little color to that, Simon. Mike and I had all the extravaganzas this year bring back the top growing checks in the region, and we have a one-on-one, and this could be a MILL Team or it could be a PRES team. And in the case of Europe, we just had so many fantastic success stories. We had one guy from Portugal that is building his business the traditional way. He is a farmer during the day and he does meetings at night and on weekends. A circle of influence, a very traditional method. He has made GET team at about I think six months, and he is almost a MILL Team now. You hear stories about that. And like Michael said before in his comments, we had over 18,000 people at that extravaganza, which is the biggest extravaganza in Europe since Michael and I have been here, and in many, many years. And the level of excitement was... actually it is hard to match to the excitement in the US at Dallas and in Asia and Singapore, but it is certainly did match that. And I was very encouraged just by the... I think the willingness to work very hard by the Europeans, their desire to understand the products and the business opportunity. And the fact that 18,000 people showed up means that they are very bullish on our business. And to me and Michael that was very encouraging.

And the, lastly, for Rich, can you give any early thoughts on the 2008 tax rate?

Michael, WE haven't typically guided.

Well, yeah, I mean I think we can give them a little information, but let's be a little careful here.

Simon, we typically give this guidance with our third quarter earnings release, but given the tax plan that we have underway, especially the sale of our intellectual property to a Swiss subsidiary, we would expect next year's effective tax rate to be in the low 30s. Let's say that is a place to start.

Okay. Thanks.

The next question is from Michael Lasser with Lehman Brothers.

Good morning, everybody. Thanks for taking my question. In light of the deceleration in growth in the number of new supervisors across all regions, except for North America, should we view that as a cautious leading indicator for I guess... not necessarily in the next couple of quarters, but for 2008 and beyond? It looks like you are generating some nice growth from retaining more supervisors. But at the rate at which you're getting new supervisors is decelerating, could that be a caution signal?

I think if you take out Mexico, which was down double digits in new supervisors, you see a different picture for the world. Again, Michael, new supervisors you really need to look at a market by market ratio. And we had many, many markets in our portfolio that were... showed significant new supervisor growth, including, I think, the US which we disclosed. Rich will maybe give you some of the numbers by country. But I think really that is skewed a little by the decline in Mexico. And like I said in my comments, we expect that to stabilize over the next quarter, and then probably return to a positive number, either later this year or first quarter of next year.

Yeah, Michael, if you look at it, we had 56,000 new supervisors that came in in the quarter, which is up from 53,000 a year ago. And Mexico was down about 2,000. They had 9,400 new supervisors this year versus about 11,300 last year. So if Mexico had just held I think we would have been obviously in the higher single digits. And if Mexico, as Greg believes, later in the year they start to open up new clubs again, I think we will see new supervisor growth stimulated again in Mexico. And that will help our overall growth rate.

Okay. And then in light of the challenge in Mexico, and I know this is a subject that has been talked too much about, but where do you get confidence that things will get better by the fourth quarter? We know that this is a momentum driven business, as we have seen in Germany. And the penetration rate in Germany would seem to be not as high as it is in Mexico. But yet I guess there is some... you guys have some confidence that things will get better by the fourth quarter.

Let me start with the numbers and, Greg, answer the business side. But first of all, if you take the current runrate, we did about $151 million volume points in both 1Q and 2Q. So like as Greg said earlier, very stable. If you take that, our fourth quarter should be up about 4.5% just on that stable runrate on a pure volume basis. And obviously we get a little more boost with currency. So that is just at stable operations. Greg also reiterated in his prepared comments that right now our distributors are really focused on going deep and retraining their sales organizations and their club operators. We believe that as we start to end towards the third quarter that those distributors will come back and start opening new clubs. And that will stimulate new supervisors coming to the business and new growth.

Okay.

Michael, let me just add a couple of things. If you remember the three reasons we slowed down in Mexico, it was lack of infrastructure. We didn't keep up with the growth of the business. Compliance issues, we didn't have a level playing field. And that was very discouraging and killed the momentum. And three was really training. If you look at those, we have addressed all three of those. As I said in my prepared comments, we have increased our infrastructure. We now are attacking; I think 73% of the addressable population in the market. Compliance is significantly higher than it was in our distributor... our TAB Team had gone out and basically self-regulated their own clubs. And like I said, they visited 25,000 of the 28,000. So we know that we are in compliance. We have lost 10%, which is the 10% we didn't need anyway. I think because of that and the training that took place, while the TAB Team went out and audited, and more importantly trained the downlines, that we feel we stabilized the business at around 50 million volume points a month. And now our distributors are going to focus... our leaders are going to focus their downlines on going out and recruiting new supervisors, which basically means opening new clubs. So it was a conscious decision between us and the leadership to stop recruiting and opening clubs for a while to stabilize. We are through that now. And now we will ramp back up the recruiting machine.

Okay. And then the LA Galaxy sponsorship, how are you going to measure the return on that investment? And have you seen any initial indications that the investment has been successful? Perhaps you can... aside from the number of impressions, you can share any other metrics that will help us understand how that investment is going.

Well, my favorite quote about marketing is always, I waste 50% of my marketing money, but I just don't know which 50% I waste. That is actually in all of marketing no matter what company you're in, especially in my old company. But what we're doing is first of all, the jersey sales are a great indicator of potential impressions in the marketplace. And I know you said you wanted more impressions. We will look at obviously what our sales momentum, our growth momentum... a lot of this business as you know is emotionally driven and it is confidence driven. Our distributor confidence from just branding efforts has been incredible. The brand awareness that open stores and softens the ground for our distributors is one of the key and vital reasons that we purchased into this opportunity. It is an expansion of a relationship with AEG that puts our footprint out there wider. This gives our distributors what we promised them a long time ago is a recognizable brand throughout the world. And we expect that sales will... distributor recruiting, retailing, retention. This is a global opportunity for us. The MLS is not just about the US more. This team will play in Europe. It will play in Asia. It will play in Latin America. Soccer is the number one sport outside the US where we do about 75% of our business. So this opportunity offers for us, while you will say, what is the exact metric attached to the return? We will know that better over the next 12 to 16 to 18 months on the return value on this. This is the first two weeks, three weeks of this... the big coming out party. We have been on the jersey for the last three months, but really this is the big coming out party, and you need a little time to measure. Now on pure valuation, we have had... as we have said before, we have had over 900 million impressions in valuation and media out there. We have already had some rough work done on it. And I don't want to give you a specific number on that right now, but it is in the millions, the media value that we've gotten just from covers of magazines to media impressions on news networks throughout the world. The big factor for us is, one, just driving distributor confidence, brand awareness and ultimately sales.

Do you feel like it is had an early impact in perhaps July sales?

Not in July sales yet. We ran a promotion around a certain... a vehicle was the Sports Illustrated cover. And it may have given us a little pop at the end of the month, but I don't think it has been huge, by any means. I think it is just sinking in. We had a lot of distributors out of the marketplace in July through a variety of our extravaganzas globally. I think it is starting to set in. I think more people are seeing people walk around with Herbalife on their chest, and approaching them. And people are now asking us, and that is what I talked about the paradigm shift, what is Herbalife? And that is a new paradigm for our distributors, where someone walks up to them and says, you know, what is Herbalife? Who are you? We have become in a way a cool company like almost every night, which is very gratifying, very emotionally gratifying and confidence building for our distributors. When they see that name Herbalife everywhere all the time, they get excited about that, and they get less... what should I say... less cautious about saying who we are, what we are. Not that they were ever very cautious, but they jump out there.

And can you provide a little more context about Percy's departure? Did he go to a competitor or is it something different than that?

We're -- Greg and I sat with Percy for a good half-day after Singapore. And we sat down and went through all the things in China. There is a famous saying, horses for courses. Percy is a great builder. And we're moving into a new phase in China, and we're still working out arrangement, and he may end up being a consultant for us into the future. We're just not sure. But there is just... there is time to make changes, and we believe that this was the right time. It is very amicable. We just sat down with him and discussed a lot of things. And we all came to the conclusion that it was time to make a change. We've got a great management team there. We've got a great fundamental startup program. This is I think shifting from kind of an entrepreneurial environment to a very organized environment. We've got great government relations, a great head in Gerry Lai in sales there. We've got a great woman running Taiwan. And it really is a very... he should be very proud of the good management team that he has built there. You know, there is time to make changes, and we just decided amongst the three of us that this was the time to do it.

And just a couple of more quick questions. How much of the growth in China during the period was from the Jiangsu Province?

You know, Michael, we haven't disclosed that, but safe to say that obviously the catalyst for ongoing growth has been the license.

Okay. And then the SG&A leverage that you experienced during the second quarter, how much of that was due to a shift in timing of expenses, and how much is actual genuine leverage in the business?

I would say the majority was leverage. From a dollar standpoint we had one event last year in the second quarter, which is our Asia-Pacific event. So assume there was $2 million to $2.5 million of costs that was in the second quarter last year that now flows into the third quarter. So even taking that out, I think you still see 100 plus basis points of leverage in the business.

Okay. Last question. I apologize for taking so much time. But the share repurchase program, there is $160 million left on the current authorization. How are you thinking about whether to increase that or perhaps a future dividend increase?

Everybody is going to faint on this answer around this table, but as I am staring at our stock price right now, and watching all this, I'm going to go to the Board and ask for as much money as I can possibly get. I think buying our shares is a very, very smart decision for us.

Sounds like a very good answer. Thank you very much.

The next question is from Rommel Dionisio from Wedbush.

Yeah, good morning. One of your competitors mentioned in their call that they are seeing some regulatory changes in China to speed up the approval process for provinces. I wonder if you can just share with us is that an optimism that you guys share for getting additional approvals?

Yeah, this is Greg. As well we say China is a little bit tough to predict what is going to happen. We were I guess pleasantly surprised that we received our initial license for two cities in March, and then a few months later received approval for the entire province. I think that was faster than we anticipated. And we're optimistic that we will get several more provinces by the end of the year.

And Greg, just a quick follow-up. Can you share with us any numerics or just even anecdotally how recruiting has gone in these first few months in Jiangsu since you got the approval?

Well, it is really directly proportional to the sales growth, so the new reps coming in the business are really driving the growth.

Okay. Fair enough. Thanks a lot.

Okay.

The next question is from Andy Speller with AG Edwards.

Good morning, guys. Just a couple here, most of mine have been answered. You guys referenced the 50 basis points of margin enhancement, Michael, that you have kind of committed to. Well, I know you're going to give guidance next quarter. Is that a good, rough guideline that we should look at longer-term?

Yes, it is. As you guys know, I am top line, bottom line crazy. And I still think we have efficiencies in this Company to take advantage of. We're looking at things I don't want to divulge, but we're looking at things left, right and center that could be exciting marginal opportunities for us. So we continue to do that. We just went through and recalibrated, and this may seem small potatoes, our HR department. We looked at it. We had hired a head of HR a couple of years ago. We probably overbuilt that organization a bit. I have cut it back. I decided for the type of employee base that we have here it is a better... it is more sensible to downsize that a bit, and look at the technical side of it to make sure that we're providing comprehensive benefit programs and compensation programs. But looking at being very, very competitive, very thoughtful in those areas. It is now reporting to Rich from the day-to-day operations. And the executive compensation, which is a big Board level area, reporting to Brett. We expect to pull some money out of the operational side of that in the next year. And we're doing that in every piece, in every place in our Company right now. We're toying with some ideas that we think can offer us over the years some significant margin improvement. I think your guidance is good. And we're just looking at things, whether it is vertical manufacturing opportunities, vertical incorporation and some other areas that are going to be margin improvements. We have not gotten off that horse, nor will we get off of it.

Thanks. And then, I guess, secondly, I know it is early since the new products have been introduced, but are you seeing any cannibalization, especially on the kids line from that, or even on the H3O?

Yeah. I mean there is certainly going to be some cannibalization. I think more on the Formula 1 shake for kids. But we really look at it, not only from a product standpoint, but I look at it from an opportunity to bring new distributors into the business and to penetrate new segments. We have always talked about, for instance, the stay at home mom. So there is tens of millions of stay at home moms in the US who have opted out of the workforce and are home with their children. We think there is a great opportunity to not only sell products to them, but also to bring them into the business opportunity side of the business. Again, we will look at not only product sales, but how does it affect our recruiting, and ultimately our retention of new distributors, and penetrating new market segments.

Greg, do you expect then a little cannibalization as this gets rolled out or --?

Yes, there's always cannibalization to a certain extent.

Okay. Then lastly, just with regard to the US market, I want to confirm the 20% growth expectation is a back half growth expectation for '07 or is that for the full year?

Each quarter for the back half.

Thanks a lot.

Okay. Let me take one more question.

[Operator Instructions] There are no --.

Why don't we just go ahead and close with Michael?

I have these prepared remarks, but... and then I'm going to make everybody jumpy again. Last night I was going over my prepared speech for you. And my wife, who is my partner in life, said to me, so how is it going to go tomorrow? And I said, well, let's see. Our top line sales are up. Our bottom line is up. We've got a buyback that we just completed that we're going to get more aggressive on. Our dividend is up. Our guidance is up. We've got more distributors signing up, more distributors moving up. Everything is up, except for that stock of ours. So I said to her, look honey, we have got a tremendous second quarter, numerous financial distributor records. We have had tremendous excitement over the past three weeks as we traveled around the world. 40,000 distributors we have seen. We have re-enforced our core values, gearing up for our new game. All the press surrounding the arrival of Beckham and Galaxy. Our brand is more powerful, more recognized then anytime in our Company's history. Our distributors are more excited. And our new challenge is for the distributors answer to the question everyone is asking, what is Herbalife? And what could be a better environment for us than people coming to us, asking us what is Herbalife? I told her I'm excited. I think... I know our distributors are excited. And I want to say thank you to them. I know some of them are on the call. And I know they are out there telling the world exactly who we are. My job now is to work with you to get our stock up, so your investment value in this Company continues to shine and move forward. So thanks for being on the call. We appreciate it. We appreciate your support, your trust, your confidence, and we're going to live up to it. Thank you.

Ladies and gentlemen, thank you for participating in today's conference. This concludes the program. You may now disconnect.