Good morning and thank you for joining the fourth quarter 2007 Earnings Call for Herbalife Ltd. 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 and as a reminder, during this conference call, comments maybe made that include some forward-looking statements. These statements involve risks and uncertainties and as you know, actual results may differ materially from those discussed or anticipated. We encourage to you refer to yesterday's earnings release and our SEC filings for a complete discussion of risks associated with these forward-looking statements in 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 SEC 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 section of our web site, herbalife.com to find our fourth quarter press release, containing a reconciliation of these measures. I would like now to turn the call over to Michael Johnson.

Good morning, everyone. Welcome, again to our fourth quarter and 2007 conference call. Let me start out with a few comments regarding our full year performance, followed by key highlights of our most recent quarter and lastly, touch upon some recent trends. Investors often ask me why our business is doing so well, especially during economically challenging times. And my response has always been, in the combination of our product, our highly entrepreneurial distributors and our management team, we are providing healthy solutions to global health issues, like obesity and providing a great business opportunity to people in search of supplemental or full time income. This works well in these times. Over the past three years, our distributors and management team have been leading a transformation in our company. With the emergence of the customer club model and its various cultural adaptations, distributors are now reaching more consumers than ever before. They are increasing access to our products. They are promoting daily consumption and this has been the significant catalyst for growth in many of our markets. 2007, as you know, is another record year for Herbalife. We experienced double digit topline growth, 13.8%. Our operating margins expanded 71 basis points and our EPS increased 31%. Throughout the year, we experienced broad strength and balance in our topline growth. Our top ten markets comprised 685 of our net sales and collectively they grew 17%. Our number one market, the United States grew 24%, and over 80% of our sales came from outside the US. Both our operating profit margins and EPS increased to record levels, reflecting the strength of our business model and our focus on increasing returns to you, our shareholders. We tapped into our balance sheet in 2007 to take advantage of what we believe was an inexpensive…

Thank you, Michael. Before I get started, I would to like to take a moment to say thank you to our distributors and our employees around the world and congratulate them on another record year. It is through their incredible efforts that we are able to achieve such impressive results in 2007. As you saw in our earnings release yesterday, at the end of 2007, we modified the regional structure from 7 regions to 5 regions. We did this for two reasons. First, to better align our resources to improve the support for our distributor leadership. For example, Peru opened in December 2006 and several of our distributor leaders from Brazil shifted their focus and time to develop Peru. The incremental $27 million in annual sales in Peru more than offset the $5 million decline in Brazil and these market expansion efforts extended our distributors downline organizations throughout the region. By incorporating Brazil in to the rest of the South American market, we can now better serve the breadth of our distributors downline organizations. Secondly, we saw this is an opportunity to enhance synergies within the region particularly in the area of sales and marketing. For example, the success of commercial clubs in Taiwan has led to adoption of clubs in Japan and Korea. So with a unified Asia Pacific structure, we can now integrate best practices more quickly across these neighboring countries. With regards to the specific changes, the regions of EMEA, North America, and Mexico, and Central America remain the same. The South America region now includes Brazil and is headed by Rob Levy. Asia Pacific includes Southeast Asia, North Asia, and the greater China countries and is now headed by Paul Noack. Until recently, Paul served as our Chief Strategic Officer and in that role was a…

Thanks Greg. Let me briefly walk you through the fourth quarter financial results that were contained in yesterdays press release and provide financial guidance for the first quarter of 2008 and revise guidance for the full year 2008. Then we will open it up for your questions. Net sales was $578 million in the quarter, up 18.6% versus the fourth quarter of 2006, driven by strong volume across many of our markets reflecting the highest quarterly growth rate in terms of new sales leaders for 2007. FX had 620 basis favorable impact during the quarter, the largest contribution for the year. The favorable FX contribution reflects the fact that 82% of our business is derived outside of the US. On a full year basis, net sales increased 13.8% to $2.1 billion and FX had 390 basis points favorable impact. On a reported basis, gross profit in the fourth quarter was $464.2 million or 80.3% of sales. However, excluding the one-time benefit resulting from an international tax settlement, gross margin was 79.9%, an increase of 23 basis points compared to the fourth quarter of 2006. The difference was primarily due to the sales increases in China, which has a favorable cost of goods structure reflected in our local manufacturing coupled with our pricing and commissioning structure. Royalty expense for the fourth quarter was $204.8 million or 35.4% of sales, reflecting an improvement of 30 basis points compared to last year. The difference is attributable to sales increases in China as commissions and bonuses are paid to our Chinese sales employees are recorded in SG&A. This was partially offset by year-to-date correction in one of our international markets. Including the China sales employee expenses in royalty, royalties as a percent of sales increased 59 basis points to 37% compared to 2006. Again,…

Hi guys. Just want to walk through the chronology, what happened in Mexico, because I know when you reported the third quarter in early November, you were thinking something in low single-digit range and if October was the slower building month. I guess the assumption was November and December were going to be better and it sounds like they were, but not as strong. I want to make sure I have that down correct and if they weren’t as strong, what were -- anything specific you can point to, anything geographic or its just a simple business, just taking a little longer to get going?

I think its more just a lag Simeon, October we comp negative, but both November and December we comp positive. So just like we talked on the last earnings call, where we fell a little bit short in September, we also fell short in October, but we saw very positive momentum building in November and December. And as Greg mentioned, I think we were up sequentially 4.2% from Q3 to Q4, while previous year, I think we were down sequentially Q3 to Q4. As Michael mentioned, we built a strong foundation. We had some really significant promotions that are kicking in the second quarter. So, we think we built the strong foundation, we've cleaned up the ethical issues from a year ago and strengthened our training programs and now with this incentive program that will kick off in the second quarter that really creates stimulus for people to start recruiting and building more clubs and therefore building revenue.

And the club of clubs promotion, it definitely sounds like a terrific recruiting tool, and I know the nutrition club, hits on all the three Rs. But it sounds like doubling the number the number of nutrition clubs, how does that play into the retention part and then are you also measuring some type of productivity from the clubs as opposed to just the pure sake of opening them?

All right. This Greg Simeon. I think those are great questions. We are looking not only opening clubs, but making sure that as the clubs open they are solid and based on a strong foundation. If you remember, working on one of the reasons that our retention is down in Mexico is that we are cleaning out some of the clubs that were noncompliant. And we did that though our audits and through our EBP. And we think now that those clubs are gone, there is a very stable base upon which to grow and we want to make sure that we incentivize our distributors who open clubs and I think we a key learning of both management and our distributor leadership was that, those clubs have to be opened the right way, in the right locations and we now have the infrastructure to support that. As I said in my prepared comments, in areas where we have opened the new distribution centers, our sales are increasing. They are decreasing in Mexico City where most of the noncompliant clubs were. So we are seeing -- I think we have done all the right things and I think this promotion will be the stimulus to get our distributors back to opening new clubs.

Okay. And then on the branding side of things, in '07, I had argued that you had only started to lay the groundwork for some of the higher profile things and then in early '08 here with AYSO and then last year with Galaxy. Is there anything at high level that you have seen. Anything shifting, any key distributors really taking to some of the sponsorships and exploiting it. Anything in activation, is there anything momentum-wise, in that region that you are already benefiting from it?

Well, it's Michael, Simeon. Yes. We have had distributors, actually the AYSO program that we did, it is something that we have had on our mind for a while. But our distributor actually beat us to the punch on this with -- in Florida we had a distributor down there who sponsored the local AYSO program and he sponsored it in a large way and we watched and saw what he did down there and if he can become the blueprint for distributors throughout the United States and throughout the world to get involved with other teams, not only soccer but other sports teams and get them to sponsor with Herbalife and get it on the jerseys, it's a relatively small investment. They can buy the uniforms; they can take the product, we'll give you tents to set up. We're working with local management; everywhere we've got tents, banners, sampling size. In Philippines, the Subic Bay triathlon was sponsored by a distributor down there. We have distributors going here, which is a huge deal, so you've got a ton of leads down there. We just came of the promotions of the tour of California where distributors managed all of the goods there, the distributors who were at the closing event in Pasadena in pouring rain, on Sunday walked away with somewhere around 1500 leads out of that event, that is a significant day for them for two to three hours worth of work to have 1500 leads and generate customers, retail customers, potential new distributors. So these are the kind of things that are taking place. We have -- there are too many to mention here. There was a bicycle racing team meet sponsored by one our distributors there. There are local sports teams, throughout Europe, we have triathletes who were sponsored not only by the company but by individuals. We have a gentleman who is going to climb Mount Kilimanjaro, who has got cerebral palsy, who is being sponsored by a distributor and taking our products and will be climbing Kilimanjaro at the end of the summer. These are branding, creating great awareness, working with distributors on a local basis and having distributors actually activated. And as soon as the stories get out, of why these meetings as so good and I am sorry to be so long winded here, but these meetings are so good. As distributors come they are proud of this, they share their photographs, they share their results and that entices and enlightens another distributors mind to say, hey I can do this too. So that’s where the success starts to build.

And let me just a little color to the AYSO. As Michael said, something we’ve eyeing now for over a year and find that we're able to conclude the deal. But if you remember one thing is we talked about over the past year was really going after the stay-at-home moms, we launched the children's line, which is a great product line to go after that segment. And now, we have access to -- our distributors have access to well over million soccer moms and soccer dads. And it really a great example of grass root distributor activation. So again, I think in terms of access to our brand and access to our product it’s a wonder setting agreement in terms of the US. And this is great to have the children line to go with that.

Okay. And just have two more, I’ll ask them together. The first maybe for Greg, on Eastern European, on the European markets what is the strategy and how is that evolving? And then second for Rich, is there any free cash flow usage assumed in your '08 guidance?

I will do the Eastern Europe, I think the results as we reported, in Russia were up 15% which was I think encouraging. We've always felt there is a untapped potential in that market. As we announced last quarter, we just hired a new Vice President to run Central and Eastern Europe for us, who came from one of our major competitors in that region. And so, I am going to do a tour of that region with Wynne Roberts, who runs EMEA for us. In April to really go and visit Poland and Russia and a few other countries to really formulate, I think a more aggressive plan for getting deeper penetration in those markets. A lot of our competitors have tremendous double-digit growth throughout Central, Eastern Europe, Russia, CIS and so I think its certainly on our radar and like I said I will be going there in a couple of weeks to work with our European management team on a more aggressive plan to penetrate those markets.

And then, Simeon, obviously, we remain conservative in our guidance to what our expectations are - there are no further share repurchases. We will use our excess free cash to pay down the debt. So again if we were to potentially go back in the market that would only provide more accretion above our current guidance.

Right. But it still doesn’t mean, even assume you complete the authorization in that number. Correct?

That’s correct, I think we have about 65 million outstanding and again our guidance is typically very conservative and the conservative thing to do is pay down debt.

Okay. Thanks.

Okay.

Our next question comes from Olivia Tong.

Hi. Good morning. I just want a one quick one first. Can you explain what the correction was in the royalty override?

Yeah, the year-to-date catch up in Mexico.

Can you provide any further detail? Why the need for a catch up?

I don’t know the specific reason other than I think it was just a calculation error that was made throughout the year. So it was just cumulative catch up.

Okay. As sales grew beyond expectations, relative to your expectations. Are there particular regions where you saw much more sales at upside than others?

Can you just repeat the question, please?

Sure. Sales obviously beat your own internal expectations, so I am just wondering what particular, were there any particular regions where you saw results that were well above expectations? Or was it more, just a little bit more in each region?

No. I think net-net the only market in local currency terms where we thought we saw a shortage was Mexico as Mike and Greg mentioned. And then where the upside really came currency. Currency was 620 basis points of benefit in the quarter. It was our largest contribution. Then we had some upside in the South America region and a little bit in China, it was a little bit stronger but net-net I think it was really competitive, it saw us come through.

Okay Thanks a lot.

Our next question comes from Karen Howland.

Thanks. I'm curious about your sales forecast. I know you'd indicated that it was up about 20% in January. I recognized the desire to be conservative but that 12% to 14% for the first quarter seems particularly low, if January was 20% last score something. Are you seeing something in the February month that would believe you to think that it is going to decrease that much?

No, there is nothing that we're seeing that's negative, I think it's just, you're seeing this management team being cautious, number one, again in January we saw tremendous currency benefit. Our guidance for you is more cautious now, I mean the dollar fell again to, I think the Euro was $1.50 today, that's clearly what -- that's clearly a little bit different than what is contained in our guidance.

Okay, and how much for currency in January of that 20%?

We didn't disclose that.

Okay. And then I was wondering, I know you've been working to decrease the overall tax rate. I was wondering if you have any assumptions, anything for that for 2008?

I think the last year we're kind of suggested that would be in the low 30s. So I think most analysts have got about 32% Karen and I would say that anything below 32%, you'll probably see potentially further increase in our guidance.

Okay, great. Thanks very much.

You're welcome.

(Operator Instructions).

Okay. It looks like, we've reached the point, where the questions have been answered. And the quarter is done and its time to get back to work here. So, I am going to conclude it with a few comments. First of all I want to thank everybody for being on call and thank you for you support of our company. We are very proud of Herbalife. We know we head into 2008 with tremendous momentum, which we've have already seen. Challenges and opportunities in our health and nutrition in this opportunity platform, puts us in a very unique place. We have an opportunity for people to add real income to their life, either supplemental or fulltime. We are taking the global health issue head on, which is [B3 and have heart health], two areas that we think are very, very important. As I watch and listen to all the candidates who are running for office, I hear about all the different healthcare platforms, but I don’t hear enough about health. I hear a lot about disease and I am very proud of Herbalife. And in fact, if we are taking on issues straight on. Strong top-line growth, enhanced profitability, accelerating new sales leaders trend, getting Mexico turned around, built basically on the strong foundation. Our Spanish speaking South American has incredible momentum. Brazil gaining traction behind its transition to be more balanced mix of the three Rs. Our US marketplace which many people told us when we went public, was going to be just kind of a forgotten market, [200 of millions] and its growing and despite of economic softness. We are seeing turnarounds in parts of Europe and we’ve got a tremendous eye on Eastern Europe for expansion. Greg, will be going on a trip there very soon. We…

Ladies and gentlemen, this concludes today’s presentation. You may now disconnect.