Good morning and thank you for joining the Second Quarter 2014 Earnings Conference Call for Herbalife Limited. 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 Amy Greene the Company’s Senior Vice President, Government, Corporate and Investor Relations. I would now like to turn the call over to Amy Greene to read the Company's Safe Harbor language.

Good morning. 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 preparing 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 press release for this quarter, which contains a reconciliation of these measures. Additionally, when management makes reference to volume during this conference call, they are referring to volume points. I'll now turn the call over to Mike.

Thank you, Amy. Good morning and welcome to our second quarter 2014 earnings call. We have just concluded the highest overall sales quarter in Herbalife’s history. Our results announced yesterday demonstrate the fundamental strength and provide high quality nutritional products through a network of engaged members in a community based approach of health and wellness benefiting people around the world. This has been a cornerstone of our success since 1980 and we're just getting started. Let’s review some of the highlights from the second quarter. Net sales of 1.3 billion increased 7% in the quarter, and volume growth of 5% compared to the prior year period. Our adjusted second quarter EPS of $1.55 increased 10% compared to the prior year. Underlying sales growth was a 9% increase average active sales leaders and 5% increase in the new members. We generated $156.9 million in cash from operations and invested nearly $40 million in capital expenditures to support the growth in our business and expand our Seed to Feed program, the highlight of which is our Herbalife innovation and manufacturing facility in Winston-Salem, North Carolina, where we’ve already hired approximately 290 employees and we plan to hire more 200 more people at this facility as it ramps up production. Also last week our Board of Directors approved a new manufacturing facility in Nanjing, China. This new facility will support growth in the greater China region. We have raised our adjusted 2014 EPS guidance to the range of $6.17 to $6.32, reflecting our expectation of continued strong sales growth and profitability throughout the remainder of 2014. We repurchased more than 580 million or 9.8 million shares during the quarter under our share repurchase program to further our goal to accelerate returns to shareholders. We have had 19 straight quarters of record top and…

Thank you, Michael. By all measures we have demonstrated solid performance in the second quarter of 2014. Four of our six regions posted volume point growth and local net sales growth while average active sales leaders with volume points increased in every region over last year’s second quarter. This exceptional growth exemplifies the resilience and dedication of our sales leaders to provide their customers with these advice support and nutrition products they need to achieve their health and wellness goal. At Herbalife there is one constant change or perhaps more aptly put progression. Our members and those of us to support them are always looking at ways to advance business methods or DMOs that help extend Herbalife’s ability to reach more consumers in our 90 plus market. The entrepreneurial nature of our members is a driving force in the creation and implementation of ways to adopt business methods to service the needs of customers in different communities around world. For several years we have been talking about the benefits and expanded utilization of data consumption business methods, as well as have they have been acculturated throughout our markets. One adaptation that we're very excited about is the introduction of various active lifestyle components into daily consumption DMOs, such as fit camps, 5K run, or even something as simple as neighborhood walk. Our members understand and are increasingly coaching their customers from the usage of Herbalife products that’s coupled with exercise the result is a truly healthy and active lifestyle. Now, let me provide some regional highlights and color on our key region. Although the North American region and specifically the U.S. market came in below expectation in terms of volume point partially due to the very difficult comparison from prior year period. The region and the U.S. achieve their highest…

Thank you, Des. First, I'll review the company's second quarter 2014 reported and adjusted results. Then I'll provide updated information on the third quarter and full year 2014 guidance. Adjusted EPS for the quarter of $1.55 was at the high-end of our guidance, $0.14 or 10% higher in the adjusted second quarter results of last year. The comparison for last year was negatively impacted by $0.28 from the combined impact of foreign currency and a higher effective tax rate. The $0.28 has comprised of a negative $ 0.17 impact from currency and $0.11 impact by the tax rate. On a reported basis EPS was $1.31, includes the following four items that we consider to be outside the normal operations of the company or we believe it to be useful to investors when analyzed in period-to-period comparisons of our results. First $0.11 impact from $10.1 million of non-cash interest cost associated with the outstanding convertible bond offering. Second, $0.06 and $0.03 respectively towards expenses incurred in response to a tax on the company’s business model, and expenses incurred related to the FTC inquiry. And lastly, our adjusted results exclude a $0.03 impact in taxes relating to the first quarter Venezuelan devaluation. As noted during the last quarter’s conference call, while the devaluation occurred in the first quarter, the tax impact is spread throughout the year. For the second quarter, the company reported net sales of $1.3 billion representing an increase of 7.1% against the second quarter of 2013. Local currency net sales for the period increased 10.8% with an unfavorable FX impact of 3.7% as compared to the same period last year. Since Des has already provided significant regional detail around our volume point and net sales results, I'll now turn to margins. Our gross profit margin for the second quarter…

and:

(Operator Instructions) Your first question comes from the line of Meredith Adler with Barclays.

I have a couple of questions. You spent a lot of time talking about the focus on fitness, and how that is spreading in certain markets. Is there the potential for it to move into markets that one might consider more mature? Mexico is still growing, but certainly nutrition clubs have been there a long time. South Korea -- can this bring new life to places that one would describe as mature? Barclays Capital: I have a couple of questions. You spent a lot of time talking about the focus on fitness, and how that is spreading in certain markets. Is there the potential for it to move into markets that one might consider more mature? Mexico is still growing, but certainly nutrition clubs have been there a long time. South Korea -- can this bring new life to places that one would describe as mature?

Meredith this is Des. The answer is absolutely yes. The history, Meredith, of course, is that it started in our most mature market of all the United States. And what we see in United States that it has been hugely beneficial in attracting a younger demographic people very much focused on a healthy active lifestyle. And in fact we have had distributor groups come from all over the world including Asia pacific including Korea to actually look at the fit camps and fit clubs here in the U.S. So this is something that we see really spreading all around the world.

And would you say that in the U.S. the younger group that's being attracted is not necessarily Latino? Is this broadening considerably into the non-Latino market? Barclays Capital: And would you say that in the U.S. the younger group that's being attracted is not necessarily Latino? Is this broadening considerably into the non-Latino market?

Yes, it's actually been effective in every demographic. And we're very excited to see it. Because obviously we see the opportunity ahead, these are young people they are bringing with them the sensibility and reaching to have communication with other younger people. We're seeing growth in relation to social media and they are using social media. You’ve seen that also transform the UK. Here's a market 30 years old experiencing this tremendous growth partially based on the fitness concept of healthy active lifestyle. So a universal appeal regardless of ethnic group.

John, I have just a quick question for you. Obviously the tax rate was a headwind this quarter and because of the Venezuela situation, will probably be a headwind, or will have an impact in the next couple of quarters. But when you look out further, is there any reason to believe that you're going to continue to have this elevated tax rate? Barclays Capital: John, I have just a quick question for you. Obviously the tax rate was a headwind this quarter and because of the Venezuela situation, will probably be a headwind, or will have an impact in the next couple of quarters. But when you look out further, is there any reason to believe that you're going to continue to have this elevated tax rate?

Meredith, I think last year the tax rate was low in both Q2 and Q3. So it’s a headwind this quarter that we just reported and will be a headwind next quarter by about the same amount of basis points, 400 plus basis points. But historically, if you look at 2012, the tax rate for the year was 28.7%. That’s pretty much what we’re expecting this year and I think that’s a good assumption to use out in future periods.

And then I just wanted -- you mentioned buybacks, and that you have the ability to do more. The stock for whatever reason is down a lot today. Are you willing, even this quickly after finishing so much in buybacks, are you willing to be opportunistic? Barclays Capital: And then I just wanted -- you mentioned buybacks, and that you have the ability to do more. The stock for whatever reason is down a lot today. Are you willing, even this quickly after finishing so much in buybacks, are you willing to be opportunistic?

We are certainly willing to be opportunistic, I think the point that was made earlier in the call was that we have a good amount of cash. We are still conservatively levered. Our EBITDA in the quarter, un-adjustable was 20 million, adjustable was 235. That annualizes to around 900 million of EBITDA which is about where our 12 month was. And on a gross debt basis we have 1.8 billion in debt, so it’s a two times levered ratio which is significantly lower than the covenant that we are having on a net debt ratio, it’s 1.2 times. We do think that this is an opportunity and without getting into specifics how we take advantage of that. But we will have to take advantage of opportunities in our buyback program.

Our next question comes from the line of Mike Swartz with SunTrust

I just wanted to touch on the U.S. business. I think that was the biggest, at least in my mind, negative in the quarter. Could you maybe just what through maybe what you saw there. I understand the comps were pretty tough, but I think you made some commentary about getting back to growth in the fourth quarter, and then just what goes into that thought process? Is it more that the comps get easier, or is it something you're seeing in terms of activity levels right now? SunTrust Robinson Humphrey: I just wanted to touch on the U.S. business. I think that was the biggest, at least in my mind, negative in the quarter. Could you maybe just what through maybe what you saw there. I understand the comps were pretty tough, but I think you made some commentary about getting back to growth in the fourth quarter, and then just what goes into that thought process? Is it more that the comps get easier, or is it something you're seeing in terms of activity levels right now?

Yes, Mike, a couple of things. So first of all Mike, we should see this in the context. This is something that you see happening regularly in our business. So we saw it in a specific region last year, fourth quarter down 4% first quarter down 6% and then it returns to growth in the second quarter this year. You’ve seen this happen in Brazil. You’ve seen that happen in Mexico. So we shouldn’t look at this as something that is terribly unusual. Clearly we want to see every number positive. But obviously net sales, up in the U.S., and that’s like when we look at our historical situation of the markets. We look at what’s happening in the U.S. That’s why we’re confident that we are going to have a good Q3 and emerge up in Q4. A couple of key factors behind that obviously. We shared those with you, 76,000 new members in the second quarter, the highest number in Herbalife’s history. Key indicator for us was the average active sales leaders increasing, because that’s the key metric reflecting engagement and success. And then obviously the extravaganza that we just were at where again a 24% increase in attendance from a year ago. All of those things combine to show us the fundamentals in the U.S. are strong. And that’s what gives us the confidence about our return to growth later in the year.

Okay, thanks Des. And switching over to Venezuela, another publicly traded direct marketer was talking about some pushback from a regulatory standpoint on pricing in Venezuela over the past month or two. Have you seen anything in terms of that? SunTrust Robinson Humphrey: Okay, thanks Des. And switching over to Venezuela, another publicly traded direct marketer was talking about some pushback from a regulatory standpoint on pricing in Venezuela over the past month or two. Have you seen anything in terms of that?

Sure. There is a price control in place, in Venezuela. We look to limit the amount of profit a company can make. We have taken price increases over the last 12 months, but generally, going forward price increase need to be effectively improved, or at least not disapproved by Venezuelan government, so that we're seeing some of that same activity.

But you're not seeing them coming and telling you to roll back prices? SunTrust Robinson Humphrey: But you're not seeing them coming and telling you to roll back prices?

Yes, they did in January, but we had not since.

Your next question comes from the line of Scott Van Winkle with Canaccord.

John, just to make sure I get this right, so the buyback that was delivered in June, is that completed now? The pre-purchased arranged buyback? Canaccord Genuity: John, just to make sure I get this right, so the buyback that was delivered in June, is that completed now? The pre-purchased arranged buyback?

That was completed. That was $266 million delivered by the end of June, yes.

Then did that have much of an impact on the average share count in Q2, or that's mostly a Q3 impact? Canaccord Genuity: Then did that have much of an impact on the average share count in Q2, or that's mostly a Q3 impact?

So bought in -- I will give you the total of buyback in Q2 and how it factored into the share base. We bought 9.8 million shares in total during the quarter. Some of that was done in April and some of it was done through the contract with Merrill Lynch in May and Jun that 9.8 million shares of buyback had about a 5.8 million reduction in the quarter which means 4 million and not get reflected in the quarter based on the averaging of the share base. So you can expect Q3 to have around 4 million less shares than Q2.

And then on Brazil, the comment one of the drivers you talked about was the World Cup. I'm assuming that you call that out because since the World Cup you've seen a pickup in business in Brazil? Canaccord Genuity: And then on Brazil, the comment one of the drivers you talked about was the World Cup. I'm assuming that you call that out because since the World Cup you've seen a pickup in business in Brazil?

We called it out Scott, because effectively the World Cup reduced the amount of sort of working days in Brazil by about 10 during the course of the World Cup. And we saw that having an impact not just in Brazil but particularly in some other markets that share the same time zone. So the other key factor in Brazil was we shifted from three extravaganzas to one extravaganza. And although the total attendance was up, we saw shipped with the geographic mix of those attending with lesser attending from the farther areas of Brazil where we had significant growth in recent quarters. So that’s really the combination of both of these two factors really were the key driver for that reduction. Looking forward the fact that we didn’t have that attendance from certain segments of Brazil may affect the -- may have an impact in terms of third quarter but we expect to get back to growth next year.

And then on the Venezuela, obviously talked about the cumulative price increase over the last year being over 100%, what's the sensitivity to price in that market, and obviously there is lots of challenges in Venezuela. I'm wondering maybe specifically on the price increases what it does to volume? Canaccord Genuity: And then on the Venezuela, obviously talked about the cumulative price increase over the last year being over 100%, what's the sensitivity to price in that market, and obviously there is lots of challenges in Venezuela. I'm wondering maybe specifically on the price increases what it does to volume?

Well it’s a highly inflationary market by the way. So what you see happening to urbanized prices is not in consistent with what’s happening on the ground with all consumer products, companies and -- there is an element of price control that’s not put in place. But overall many big decrease in volume in Venezuela is down 40%, that’s not different than what we expected coming into the year. Some of that is because of the economics that are taking place on the ground and some of it is because of supply chain issues with getting product imported into Venezuela from currency controls and importation controls. So it’s a little bit of combination which is why you see the decline in Venezuela.

And then Des, in China if you look at the metrics, revenue growth, volume growth, activity on the service provider side, but the sales number which I guess is equivalent to the members or salesperson number which I guess is equivalent to members elsewhere, that number has been down like the last six or seven quarters. Is this because there's a transfer to the service provider model? I'm just trying to put the numbers between those metrics. Canaccord Genuity: And then Des, in China if you look at the metrics, revenue growth, volume growth, activity on the service provider side, but the sales number which I guess is equivalent to the members or salesperson number which I guess is equivalent to members elsewhere, that number has been down like the last six or seven quarters. Is this because there's a transfer to the service provider model? I'm just trying to put the numbers between those metrics.

I think it’s a number of factors Scott, that’s one of them. And another factor is the fact that we launched to preferred customer program in China which has been very successful. And I think it’s also reflection of our service provider model focusing more on sustainability and long-term potential. So a number of factors all of which we see is being very positive for the future. One thing, as reflection of our confidence and commitment to stable growth in the future is that we’re just about to move forward with a new manufacturing facility in Nanjing. And we believe this is critical in order to sustain the growth that we see in the China market in the years ahead.

And then a couple questions, additional questions, if I could. What percentage of your markets maybe in terms of percentage of sales, now have a first-order limitation in place? Canaccord Genuity: And then a couple questions, additional questions, if I could. What percentage of your markets maybe in terms of percentage of sales, now have a first-order limitation in place?

So speaking from memory it’s probably about a dozen today. And what we’re doing now is of course based on the success of that, Scott we’re looking to expand that into significant markets. Actually I am being corrected to 18 now Scott which is an indication of the success of that. What we see is that it helps people along that road to sales leader and similar to the 5K, what it does is it ensures different people achieve that level of sales leader that they have a stronger more stable business which contributes to long-term retentions. So a lot of positives and that’s why we actually see ourselves rolling this out more and more later on during the course of this year.

And then lastly the new hire on the government affairs side, should we expect any change in strategy or kind of real obvious impact, or I'm wondering what to expect from that hire? Canaccord Genuity: And then lastly the new hire on the government affairs side, should we expect any change in strategy or kind of real obvious impact, or I'm wondering what to expect from that hire?

It’s Michael, Alan Hoffman is a great talent and great fit, Barb Henderson as you know has been just a tremendous executive for us for over a decade. And Barb came to me at the beginning of the year and said I want to work seamless transition and we looked at this opportunity to say, you know something eventually we’re going to be a Fortune 100 Company and we have to look at the future of this Company and how we position ourselves in government affairs, in public affairs and press and communications. And we want to go out and find the best person we possibly could. Barb worked with me very closely on this, worked with our headhunters and worked with the opportunity to combine these two areas and find a significant person to fit this. Alan Hoffman is a terrific fit for us, we’ve all interviewed him, spent a lot of time with him, we’re very thrilled in bringing this gentleman aboard Herbalife, and we're excited and proud. It won't change anything in a strategic sense but it will coordinate all of our external factors together in terms of communications, public relations in government affairs which we think is part of the way more modern companies are setting up their global infrastructure to deal with all of the elements that our external to us in terms of getting our story out both to government officials and making them understand who we are as well as press and making the consumers in the larger marketplace understanding who Herbalife is? What we do to impact people’s lives on a positive level and making sure people understand that we’re one of the top global nutrition companies down the face of the earth. So, sorry for that long answer there Scott, but and just this is an important hire for us, and we are very sad to see Barb go, and we're excited to welcome Alan.

(Operator Instructions) Your next question is from the line of Rommel Dionisio with Wedbush Securities.

Thanks, good morning. I continue to notice the strong growth you're posting in Russia and India, and those are two, coincidentally, markets where you’re addressing and all you have those direct access initiatives to get product to some of the more far-flung markets. I'm wondering if you can give us an update on that, and potentially other countries where it might be relevant in the future. Wedbush Securities: Thanks, good morning. I continue to notice the strong growth you're posting in Russia and India, and those are two, coincidentally, markets where you’re addressing and all you have those direct access initiatives to get product to some of the more far-flung markets. I'm wondering if you can give us an update on that, and potentially other countries where it might be relevant in the future.

Yes. Rommel, I guess the importance to address that is it is very significant. You’ve seen us talk about this now in Mexico for many years, you saw as on this report make reference to another store chain that has recently joined our family there, and so clearly this is an initiative for us a worldwide basis. It had been a factor in Russia and we believe there huge potential in India also where if they clear goal to increase access points, but it does obviously creates better fulfillment to lower economic access for distributors. We are working with different partners. We have a couple of task currently in progress, probably too early, yes, to really talk in great detail other than to say the results of very promising, and I think in future calls we will give you more detailed update as we see it progress.

Your next question comes from the line of Meredith Adler with Barclays.

I would just like to clarify a little bit about the guidance. The volume points, the reduction in the midpoint of the volume point growth, is most of that tied to the U.S., and is a lot of that a result of what you saw in the second quarter? I think you're saying the third quarter is still going to be a bit soft. But is there anything else, how do you explain that change? Barclays Capital: I would just like to clarify a little bit about the guidance. The volume points, the reduction in the midpoint of the volume point growth, is most of that tied to the U.S., and is a lot of that a result of what you saw in the second quarter? I think you're saying the third quarter is still going to be a bit soft. But is there anything else, how do you explain that change?

Meredith, we just want to be conservative. So we have this quarter where obviously we believe that it is a great quarter. We understand that there is some concern about the apparent weakness in the U.S., but we want to be conservative. In U.S. we have planned an 18 city to with our top distributor leaders. And so we have got a whole bunch of different initiatives, but as we look forward we always want to be conservative and guide appropriately.

Is it realistic to describe the business as becoming more mature? Are you at a new stage of maturity? Barclays Capital: Is it realistic to describe the business as becoming more mature? Are you at a new stage of maturity?

I don’t believe so, Meredith, because when you look at the macro trends, the opportunity for Herbalife has never been greater, so we continue to see higher levels of obesity, we see trends that frankly are very negative from a health and wellness perspective, but at the same time that represent opportunity for Herbalife and for our message of good nutrition and healthy active lifestyle. Also when you look at our most recent Extravaganza in Chicago, a 24% increase in terms of the attendees and so all of the things that we look at, see not a maturing market, but actually and expanding market, and with huge runway for growth ahead.

Do you think there is some variation of opinion on the topic within the Company? Barclays Capital: Do you think there is some variation of opinion on the topic within the Company?

Not informed opinion, certainly not inside the company. And again Meredith, look at the UK, here is a market been in 30 years and market that was flat for many years, and along come initially the weight loss challenges, then the fit clubs, driven partially by Herbalife 24. So whether it's the U.S. of 34 years old or you look at the UK 30 years old. You know what you see is the level of energy and confidence and excitement. And the other thing I think to put in context, Meredith, this is it. Obviously I know people are focused on the U.S. business, but if you look at Q2 2012, our numbers this quarter volume points are 10% from where we were in Q2 2012. So I think you should sort of put that into the equation and factor that in because I think that’s the true reflection of the growth that we’re having in our business today.

As there are no further questions, I will turn the call back over to Michael Johnson.

Thank you very much and thanks everyone for being on the phone. We know there has been some interesting reaction to these numbers, but I think we should put this quarter in context. We had record top and bottom line in Herbalife. We may have condition to market to big Bs but we met our high end of our EPS guidance and our EPS is 40% higher this quarter than it was before all this other stuff started, the short seller noise started. We are incredibly confident that the megatrends of obesity, coupled with the success of our products and now the opportunity to build our business with a younger Herbalife distributor communion to a healthy active lifestyle program will continue to drive record growth for 2014. We are looking forward to build it better every single day to return the shareholders value in this Company and we’re excited to talk to you again in three months. Thank you very much.

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