Good morning, and thank you for joining the Third Quarter 2012 Earnings Conference Call for Herbalife Ltd. On the call today is Michael Johnson, the company's Chairman and CEO; the company's President, Des Walsh; John DeSimone, the company's CFO; and Brett Chapman, the company's General Counsel. I would now like to turn the call over to Brett Chapman to read the company's Safe Harbor language.

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 results may differ materially from those discussed or 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 U.S. 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 section of our website, herbalife.com, to find our press release for this quarter, which contains a reconciliation of these measures. Additionally, when management makes reference to volume during this conference call, they're referring to volume points. I'll now turn the call over to Michael.

Thanks, Brett, and good morning, everyone, and welcome to our Third Quarter 2012 Earnings Conference Call. We have another record quarter with net sales up 14% to $1 billion. Volume points of 1.2 billion increased by 17% over the prior year's third quarter, and EPS is $1.04, a 20% increase. Our growth continues to be broad based. Each of our 6 regions experienced strong double-digit volume point growth in the quarter. Four of our regions, Asia, Mexico, China and South and Central America exceeded 15% volume point growth. North America had a 14% increase in volume points, and EMEA experienced a 10% volume point growth in the quarter. And our Average Active Sales Leaders increased 22% in the quarter. Des will provide more color around these regional results in just a minute. The consistency of our growth and financial results reflect the dedication and hard work of everyone on Team Herbalife. So thank you to our independent distributors and employees around the world for another record performance. For more than 32 years, Herbalife products' independent distributors and employees have been helping millions of people achieve their weight management and daily nutrition goals. This has always been the culture at Herbalife, and the need for good nutrition, it's never been more important than it is right now. The fundamental change in our business began 10 years ago with the development of Nutrition Clubs in Mexico. This increased our addressable audience by making our products more affordable to more consumers. Over the last several years, a substantial portion of our growth has come from our distributors around the world moving to daily consumption business methods, built on the creation of lifelong customers consuming Herbalife product everyday. We believe that these business methods now generate approximately 40% of our volume. With approximately 43,000…

Thank you, Michael. The third quarter is our fifth consecutive quarter of more than 1 billion volume points and was 17% higher than last year's third quarter results. As Michael mentioned, we continue to be very pleased with the momentum we see in the underlying trends in our business, as all 6 regions posted strong double-digit volume point growth. The main driver of our growth continues to be the consistent execution of the business methods that we have been discussing with you all for the past several years: The adoption and the expansion of daily consumption business methods, augmented with the expanded use of systemized training methods throughout our 6 geographical regions. In 2011, we began implementing a localized focus on the business growth with our regionalization initiative, working with the distributor leadership to implement a City by City strategy. We have been seeing meaningful increased per capita penetration in the cities where we now have unified distributor groups, focused on training and brand development on a local level. Out of the top 3,000 most populated cities in the world, 2,481 of them are located in Herbalife markets. By the end of 2012, we expect to have more than 500 cities with localized strategy and planning teams, with the opportunity to double this number over the next few years. As Michael mentioned, we estimated in the third quarter 2012 there were approximately 43,000 commercial or nonresidential Nutrition Clubs. We believe that approximately 40% of our overall volume is currently driven by daily consumption business methods. Distributor engagement continues to be strong, as evidenced by the Average Active Sales Leaders growth of 22% this quarter. This is our seventh consecutive period of greater than 20% growth in this metric, which we believe speaks to the sustained momentum in our business. Now…

Thank you, Des. I'll start my prepared comments with a review of the third quarter results, followed by commentary regarding our guidance. For the third quarter, we reported net sales of $1 billion, an increase of 13.6% compared to the third quarter of 2011. And as you all know, we faced a pretty big foreign currency headwind in the quarter, which had an approximate 700-basis-point drag on net sales. Some of the more significant currency headwinds include the Brazilian real, negative 25% versus the third quarter of last year; the Indian rupee, negative 20%; the Mexican peso, negative 7%; the Korean won, negative 4%; and FX rates in the EMEA region, collectively, were negative 11% versus the third quarter of last year. Looking to the fourth quarter, the headwind is behind us as currency is effectively neutral versus the fourth quarter last year. Gross profit margin in the quarter was slightly below last year. The approximately 20 basis point decline on a year-over-year basis was due mostly to the unfavorable impact of FX and country mix, which was partially offset by savings associated with our Seed to Feed initiatives and lower inventory write-downs. Third quarter operating margin of 15.8% represents approximately 100 basis point decline compared to the prior year. The decline in operating profit, as a percent of sales, is due to the negative impact of FX. On a constant currency basis, operating margin would have been slightly above the third quarter of last year. On a year-over-year basis, SG&A was negatively impacted by approximately $5 million from the timing of events. One of our larger events that occurred in the fourth quarter last year took place in the third quarter this year. Excluding this timing item, internal service provider payments, SG&A, as a percent of sales, improved slightly…

[Operator Instructions] Your first question comes from the line of John San Marco with Janney Montgomery Scott.

Did you say -- just double checking, you said there were 43,000 clubs at quarter end in total? And is that calculated the same way as the 36,000 number you gave us last quarter?

Yes, it's calculated the same way. And yes, it's just under 43,000.

Okay. In that context, I was hoping you could address product mix. The Weight Management product line is growing a little slower than targeted nutrition and energy. Just surprising, given the -- all the data we have in daily consumption's growth, can you help what's driving the product mix here for me?

Yes, John, this is Des. So I think what you're seeing, John, is that through the Herbalife Fit Club concept, we obviously have increased adoption of other products beyond the core Nutrition Club products range. It also speaks to the fact that our Nutrition Club customers are, obviously, are coming every day to enjoy a shake, a tea, an aloe. But in addition, that they're purchasing other products. So I think what you see is that it's just a broader reflection of more consumer activity, but across a broader product range.

So it's different products going through the same clubs, or these new clubs that are opening up that are just focused on products outside of the...

It's probably both, John. But what we have, obviously, is that we've got a whole group of new distributors who are combining the Herbalife Fit Club concept with Nutrition Club concept. And so in those clubs, you actually have a broader product range. But also I think you have maturing of existing clubs with greater focus now on consumption of other products outside the clubs.

And John, this is John. Let me add that 51.4% of our volume this quarter came from Nutrition Club SKUs, which compares to 51.1% last year. So it is slightly up.

51.1% for that ELO Formula 1?

Right.

Okay, very helpful. And then last question, I was just hoping you could address Western Europe. It seems that of the few soft spots that you have globally, they tend to be in these markets where the economies are the weakest. Did this make you rethink the economic sensitivity of the business model? Is there something unique about 2012, or do I have it all wrong, and you don't view your businesses as economically insensitive?

Yes. So, no, John. What we see is this. Obviously, Western Europe continues to be a focus for us. But here's what we're really excited about in Western Europe. Our distributors are entrepreneurs, and so they follow success. If you look at Western Europe, and you look at what's happening in the U.K, what you see is that our distributor leadership there, 2 or 3 years ago, began to focus significantly on daily consumption business methods and specifically the Weight Loss Challenge concept. And that concept, obviously, combined with clubs, combined now with Herbalife Fit Club, has really resulted in tremendous growth in the U.K. You see that 56% increase in volume points in the third quarter, 70% increase in new distributors. So because of that, that concept is, obviously, now being looked at and adopted by leadership throughout Western Europe. So we believe that what's happening in the U.K. is a leading indicator of what can happen in the other countries in Western Europe. And so that's why we're confident that the model is just as productive as ever, and that we're on the right strategy as far as all of Western Europe is concerned.

[Operator Instructions] Your next question comes from line of Michael Swartz with SunTrust Robinson Humphrey.

I guess this question is directed to John. With regards to the 2013 guidance, I mean, if I kind of do the math, it looks like you're guiding for some margin pressure year-over-year. Could you maybe give us some more color on the moving parts there? Are there any onetime costs from the new manufacturing facility, et cetera?

The major impact to margins next year is FX, and the major FX contributor is Venezuela and the assumptions we are making with respect to that market, which is a 10 to 1 exchange rate. Once you get beyond FX, we have pretty close to margin neutral expectations for next year. There is -- I think you have a second question, which was some costs that may be in the model next year for the new manufacturing operation. There are some, it's not vary material, so I wouldn't be too concerned about that.

Okay, great. And then kind of longer term, I guess, with the whole Seed to Feed initiative and then this new facility that you're bringing online by 2014, I mean, is that facility included or the savings, potential savings from that facility included in that kind of 100 to 200 basis points outlook you gave, I think, in 2010 regarding Seed to Feed, or is this incremental?

No, no, it's included. That basis point benefit expectation included in the entire Seed to Feed strategy that was multiple years. At that point in time, we knew we needed additional facilities. We didn't know where. We have evolved that strategy to a 1 large facility on the East Coast. The primary objective of that facility is to stay in stock on high-quality products. We feel that the capacity is necessary given our growth profile. So that is still the primary objective of that facility. The secondary objective is the financial opportunity.

And I'm assuming that facility starts some time in mid-year 2014, when would you expect any kind of cost savings from vendor consolidation to show up?

Well, vendor consolidation is partially a result of manufacturing, self-manufacturing. But it was a part of an overall consolidation that took place regardless and independent of self-manufacturing. But to answer your first question, we're not going to see a benefit from that factory in -- until 2015. This is going to come up in mid-2014, and then you've got to ramp it up and then have one inventory turn before we see the benefit.

There are no further questions at this time, I would like to turn the conference over back to Michael Johnson for any closing remarks.

Thank you, all, very much. We realize for all of you, this is probably a pretty tough time, tough time for a call, of course. We hope you and your families are getting through the storm without too much disruption. Our thoughts, of course, are with all of you. And, of course, with our distributors who are in the Mid-west and the Eastern U.S., we're hoping that everybody is safe, dry and getting through this really unprecedented storm without too much harm. Our business is incredibly strong. Our momentum continues, our leaders are engaged, our management team has never been more motivated or focused than we are today. We know this is a tough time to have a call, but we want to thank you all for being on it. We're continuing our momentum, our progression forward. We're looking forward to seeing you next quarter to give you even a better report. So thank you very much. Have a great and dry day ahead.

This concludes today's conference. You may now disconnect.