Good morning, my name is Jodie, and I will be your conference operator today. At this time, I would like to welcome everyone to the Perrigo Fiscal Year 2009 First Quarter Earnings Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions]. Thank you. I would now like to turn the conference over to Art Shannon, Vice President, Investor Relations and Corporate Communications. Please go ahead, sir.

Thank you very much Jodie. Welcome to Perrigo's first quarter 2009 earnings conference call. I hope you all had a chance to review our press release, which we issued earlier this morning. A copy of the press release is available on our website at perrigo.com. Before we proceed with the call, I'd like to remind everyone that the Safe Harbor language contained in today's press release also pertains to this conference call. Certain statements in this call are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and are subject to the Safe Harbor created thereby. Please see the cautionary note regarding forward-looking statements on page 1 of the company's Form 10-K for the year ended June 28, 2008. I would now like to turn the call over to Perrigo's Chairman and CEO, Joe Papa. Joe?

Thank you, Art. Welcome everyone to Perrigo's first quarter fiscal 2009 earnings conference call. Also joining me today is Judy Brown, Executive Vice President and Chief Financial Officer. For our agenda today first, I will provide a brief perspective on the quarter, next Judy will walk through the detailed financials, then I will give an update on our recent acquisitions, new product launch for Famotidine Complete plus a status report for Omeprazole and Cetirizine as well as an update on our other business units. This will be followed by an opportunity for question and answer. My overall comment on quarter is we had a stronger quarter, and we continue to execute on our plans. We achieved both records sales and record earnings and this represents a strong start for our fiscal year. We had a record first quarter net sales of $480 million and net income was up 12% from last year to a first quarter record of $38 million. Our largest business unit, Consumer Healthcare, had all time record net sales for the first quarter increasing 37%, an increase of nearly $100 million. It was a great quarter for Consumer Healthcare. The team continue deliver our new products and the sell through is on track to meet our expectations. As we have previously commented, our Consumer Healthcare business is benefiting from the consumer trend towards store brands. As an example, the overall domestic OTC consumer market was up 3% in the quarter versus last year, but importantly, store brands gained nearly 17% while Perrigo sales gained over 40% on the strength of new products launches and increased market share. The overall OTC plus cold market in the quarter is up 7% from last year primarily due to the launch of Zyrtec and store brand Cetirizine. Store brands gained 17% while Perrigo's cough-cold sales were up 19% in this category. As you have... may have seen from major retailers' earnings, store brands are gaining market share in every major category. This shows that consumers are increasingly realizing the value of store brands in a challenging economy, and that Perrigo is uniquely positioned to deliver that value to consumers. First quarter's results show that we continue to maintain our focus on delivering quality, affordable healthcare to meet the world's growing needs for quality affordable healthcare products. I am sure we'll have plenty of questions about our increased guidance and our market share gains, so I'll get into detail on that shortly, but now let me turn the call over to Judy for a comprehensive review of our financials.

Thanks Joe and good morning everyone. In the next few minutes, I'd like to provide some quick highlights of the financial results for the quarter as well as update you on our expectations for the remainder of the year. Year-over-year, we had a very strong quarter and right in line with our expectations. On a GAAP basis, we had record sales and earnings. Consolidated net sales increased 25%. Consolidated net income was up 12% to a first quarter record of $38 million or $0.40 per share. After reviewing the figures we released this morning, you'll see that there was one small item in the quarter, which we have excluded from our analysis of the quarterly financials on an adjusted operating basis consistent with our historical treatment of similar items. This was a $600,000 loss on exchange change of real property in our consumer healthcare UK business as we continued our process there of optimizing and realigning the businesses. Please note that you can review this reconciliation from the reported GAAP numbers to our adjusted non-GAAP numbers in table two of the appendix to our press release, which we released this morning. With that behind us, I'll take you to the financial analysis of our fiscal first quarter based on adjusted results that is the reported figure excluding this one charge. Consolidated first quarter net sales were a record $480 million, an increase of $97 million or 25% from a year ago. The sales growth was driven by $71 million from new products including the mid-August launch of Famotidine Complete and strong sales in many of our Consumer Healthcare category, which offset lower sales in our Rx and API business units. Consolidated gross profit was $144 million, up $27 million from a year ago. Gross margin was 30% compared with 30.6%…

Thanks Judy. Now that Judy has given you all the details of our first quarter, I would like to talk to you about the few other items: acquisitions, business developments, and new product launches. First, we have recently executed two tuck-in acquisitions, the first added flexibility in OTC manufacturing capabilities while the second broadens our product offerings in Mexico. In September, we acquired JB Laboratories for approximately $44 million, which includes some debt that we assumed. Located very close to our Allegan Michigan Headquarters, JB laboratories is a contract manufacturer of OTC and nutritional products for leading healthcare suppliers. We have worked with this manufacture for over 25 years and know the quality of their operations and are absolutely delighted to welcome the JB Laboratory employees to the Perrigo business. The acquisition is expected to add more than $70 million of annual sales and give us greater manufacturing capabilities. Earlier Judy mentioned a small loss on the exchange of our UK business. We took the opportunity to exchange non-performing vitamin assets with another company's OTC business as we optimize our UK portfolio. This deal was a good example of the value of examining our assets with a focus on return on investment capital. UK vitamin business was not meeting our ROIC metrics and we were able to exchange those assets for a better return, solidifying our position as the number one store brand company in the UK. Right after the close of the first quarter, we acquired Laboratorios Diba for $26 million. Based in Guadalajara, Mexico, the store brand manufacturer of OTC and prescription pharmaceuticals including antibiotics, hormonals, and ophthalmics helps make us the leading store brand manufacture in Mexico. The acquisition is expected to add nearly $15 million of annual sales in the country with a rapidly growing OTC…

[Operator Instructions]. Your first question comes from the line of Greg Gilbert with Merrill Lynch.

I have a few. Firstly, on new products... some $67 million in new products in the quarter, which I think compared to $75 million last quarter and $92 million, the quarter before that, were there any significant products that rolled out of that number in the past couple of quarters? Do that make sense?

Most of the products that are in are similar products. It was in a major and there is couple of smaller products, classical products that have rolled out. But they were in a major contribution to some of the smaller cough-cold products that have been launched in prior years.

So, would you talk that step down two quarters in a row to sort of initial stocking of the two big products followed by some seasonality or any more context you can provide there?

Yes, the primary area is really the latter part of your comment, the seasonality issue, we expect obviously Cetirizine to continue to go up and especially as we reach additional allergy seasons et cetera. So, I think it's really more just seasonality with little bit of change in some of the products in the category, but that's really the primary areas. Obviously, we are still delighted, because this is a record for us on new products during the quarter.

And then on Omeprazole specifically, Joe, I know IRI doesn't capture everything. IRI suggest that the share growth has moderated a fair amount. Can you comment based on your more comprehensive data that you have at Perrigo on the trend for Omeprazole there?

Yes, I think it is... the data that we look at is IRI, plus we have some additional customer-specific data that we have. As we look at that combination of that data Greg, we still feel we are absolutely on track to hit the numbers that we talked about $150 million to $200 million. On balance, we clearly see moderations in that based on a weekly basis and a monthly basis. And it really depends on the number of promotions that occur in any of our individual customers. We see as we do more promotions with customer A that their share will go up in any given week or quarter or so. What we are looking to is continue to drive those promotions. We are happy with the results. We still believe we're on track to reach the $150 million to $200 million number that we talked about, really going on now almost a year now.

All right, thanks. And one more, I'll get back in line. Barr mentioned on its call just a bit ago that first time they mentioned that an official offer has been made to Sanofi to set a litigation relating to NASACORT as well as Allegra and Allegra-D, so hoping you could comment on that and perhaps discuss what's factored into guidance if anything. Thanks.

Yes, Greg, really the way I can probably best answer that is that Barr and Perrigo continue to work on the Triamcinolone product. We are going to share the value creation of that product. I really can't comment anymore specifically about the negotiations between Sanofi and Barr, because that's who is controlling this negotiations. Or I will simply say is that it's a very significant product for Barr and Perrigo. And at this time, we will share in the value creation of a product based on the agreement we have with Barr and Perrigo ago, really can't say much more on that.

All right thanks.

Your next question comes fro the line of Randall Stanicky with Goldman Sachs.

Follow up on the last question and you may or may not answer, but are you involved with Barr at all in the center aspect of niche protocol [ph] in those discussions, or is that Barr driving that process and you're showing in economic that result from that?

Barris the leader in the discussion with Sanofi. We really are not involved with the discussion with Sanofi, but clearly any value creation from that product opportunity is something that is split between Perrigo and Barr. So the negotiations are being led by Barr.

And Perrigo and potentially Teva. That's a helpful. And then just a follow up on the seasonality; Judy, around the SG&A line, obviously down 12 million sequentially, how do we think about... I know you said 14%, I just think about that plus the distribution, but how do we think about the sequential progression there. Is there any seasonality types for the consumer health revenue on that line item?

There is a bit; good question Randall. Last quarter, the fourth quarter of '08, we ran about $81 million on a consolidate basis. And I commented on to that time that that was an unusually high quarter, there was some launch activities still going on, some administration costs that were happening that we're on of. And I guided you toward sort of a run rate of approximately $70 million of quarter this year. This quarter at $67 million on a consolidate basis, we had some administrative costs, but there was bit of promotional spending increase related to the launch of Famotidine Complete, and that will be linked. The promotional work will be linked over the course of the fiscal year to seasonal products, to specific promotions as we do to the Great American Smokeout. There are usually a couple of percentage points on a consolidated basis that are variable selling. So in terms of a pure dollar basis, I guided to $70 million a quarter. On average, there will be slight seasonality, but overall about 14% on to sales each quarter.

Great, that's helpful.

Justmaybe just one... one comment Judy, the answer was absolutely correct. The only comment I would add is just once again, late last year, we made decisions to increase SG&A really as a point of making investments and launching our products and the promotions that go with them. And we felt that that was absolutely more of the investment given the opportunity of Cetirizine and Omeprazole made. So, I think just to highlight the comment Judy made, we think that was an absolutely right investment for Perrigo as a company.

And Joe, that 14% of revenue guidance number captured that incremental spending at the time.

Yes, it does.

Okay.

When youlook again, year-over-year, the number there is a dollar increase.

Right.

The percent is lower and also it does include inorganic additional SG&A with the acquisition of Galpharm. So, on a pure run rate basis, we are coming down from the second half of last years spend.

That's great, and then I'll just finish it off here. Joe, you mentioned DT switch opportunities in your prepared comments; do you care to elaborate on, which opportunities you see over the near term there? Thanks.

I think you are referring with the Rx OTC switched opportunities, correct?

Right.

Yes, we continue to believe that over the longer term, we've talked about the Ibuprofen PM that's already switched of course, but we'll be launching, but the longer term Rx OTC switches. Our products that we are planning for and we believe that the rest of the Proton Pump Inhibitors are absolutely great candidates for switch, given the success of Prilosec OTC. So we believe Prilosec is clearly is a great switch candidate. We know Novartis is planning for that, obviously we will also plan accordingly. We believe the Protonix, the Aciphex, Prevacid and Nexium [ph] are all candidates for switch. On the area of nauseating antihistamines, Clarinex, [ph] we also believe is a great candidate for switch based on sharing capabilities in the OTC category. And we clearly will be prepared for that. Those are really the primary ones. Levocetirizine, of course, we've have already mentioned in my comments that we believe that's also a candidate for switch with our partnership with Synthon, a partner we believe we will be well positioned if that product switches. Or if it does not, we'll launch it through our generic product team. So those are the primary product area. I will say longer term, we also expect some of the potential corticosteroid topical products as candidates to submits hydrocortizone products that are out there today as possibilities. And obviously with our business in the topicals, we would be well prepared for that need that comes to fruition.

Okay, thanks a lot.

Your next question comes from the line of Scott Hirsch with Credit Suisse

Good morning. Just want a touch based on the base healthcare business again. I know you gave us some indicators as to the trade down that's going on, but can you give us any more insight as to what you are seeing in the market with the pick up in store brand, how things are going?

Yes, absolutely Scott. We continue to look at every single major, categories, every customer that we deal with. I gave you the OTC categories, but candidly if I want to every... I can go through more categories. For example analgesics as a category is up only 1% as an overall OTC market. Yet the store brand analgesics of market is up 7.5% and they are in that same last quarter. Realizing that there is no real major launches in analgesics for store brand, it really reflects, I believe, consumer preference towards store brand at a shifting consumer preference toward store brand. I think that gives you a great example. Obviously there are number of retailers out there with programs to encourage the store brand usage. We believe that that's something is going to continue to move forward, because it really... the customers, the major retailers are looking at store brand is being away to help consumers by lowering their prices, but at the same time, obviously drives incremental profitability for the retail or retail customers. So, we think it's going to continue to move forward especially in the current economic climate.

So, are there products in the mix in seasonality wise like the liquids syrups? Are those different margin products for you?

Yes, liquid products do have different margin source. There is absolute... that is absolutely true. I am not sure about the mix question, what do you mean by that?

Seasonally going into, I'd say the December quarter, are you going to see a mix in the product shift that is a higher or lower margin piece from the seasonal perspective or no?

Well, okay. I understand the question now. Yes, there clearly is a mix difference. The mix of the liquid cough-cold products will increase as the percentage of the mix as we head into the quarter. We continue to track the cough-cold flu advisory networks. And right now everything is on track versus very comparable to last year. The only symptom that is ahead of last year is the cough symptom. And that is running well ahead of schedule. So... and I think if you can hear Judy's cough in the background, she's evidence of that fact. But that is only major category that is everything else is very consistent with last year. And clearly, we're preparing right now for the cough-cold category to increase during the next several months.

And just a bit color to that also, Scott, on top of what Joe said in the past, the mix of products as we moved into the cough-cold flu season would have had a much more dramatic impact in the gross margin line than it does today. Two, three years ago, that would have been 25% of our consolidated sales. That category is now about 12%. So if you just look at cough-cold cost call products, that has a lower impact. You are absolutely spot on at the mix of internal to that category of a different, but the product impact of the category is small.

Okay. With respect to the guidance now, it implies to the larger than $0.50 a quarter run rate moving forwards. Is NASACORT included in that and is there any timing guidance you would give us on that?

Yes, I think probably I'll start, but Judy may want to add to just... I'll start on the NASACORT portion of your questions. The way we do all new products and I apologize if I'm being repetitive from previous comments. But the way we always look at our new products is we put them in a probability waiting, reflecting the value that we believe that we can realize for them. So there is always a weighted average with across all of our products that are in the mix. Some real it will happen earlier than expected, some will happen later than expected. But we just simply try to take our full basket of new products for probability waiting on them to reflect what we think is our best or most likely cases, probably the way to say most likely case. So therefore, any given product obviously maybe a little bit different, but we expect that the probability waiting for the totality of the basket will be approximately correct. Judy, I don't know if you want to add anything else to the first part of his comment.

Sure, and that is... that's how we built the forecast, and that's how we built the plan to against which we are performing in line. So Joe's point, we risk weighted that specific item, and that was included in fact in the guidance that we just provided.

Okay. And then just for the last question kind of separate, but there's been a lot of insider selling by some of the older, sort of former executives. Is there any thought about doing these in the block or why are they kind of in the market at this point?

Yes, I will start, Judy, I don't know if you want to add anything further. But I... we clearly are aware of some decision of past individuals that have been members of the Perrigo management team, some of which... some of them have been obviously retired, but are still members of our Board of Directors. I think clearly the question you are asking it's question about an individual, and I think in many cases individuals are diversifying their positions post retirement. But to be clear many of the individuals are still holding very sizeable positions and are still acting on our Board, and they are still obviously if one particular individual still continues to consult with us beyond his Board membership. I don't anything...

That's great, thank you.

Your next question comes from the line of Derek Leckow with Barrington Research

Thank you, good morning. Just as I look at my model, everything checks out except for the gross margin line, and Judy it looks like it was down 50 basis points, you addressed that in your comments as related to some stocking of product. Can you tell me a little bit more about that, I didn't quite understand what you meant there?

I don't have your model in front of me, but let me make sure I understand the question correctly. Are you enquired that gross margins and consumer healthcare was not where you expected today.

Yes, I mean the gross margin percentage in total was about 30%; last year, it was 30.6%. So I am just trying to get around what that delta is.

Sure, on a consolidated basis, part of the dynamic in our gross margin this quarter was without a doubt the change in the mix with the non-product revenue decline in Rx. If you look at the gross margins on a standalone with Rx and API year-over-year, they were weakening because of that mix change. And we talked about the fact that both of those businesses were going to get off to a slower start in the first quarter and ramp up over the course of the year. So that was part of our guidance. The consumer healthcare margins on the other hand were very strong. Gross margins year-over-year expanded. Operating margins expanded, so that business unit compensated for the decline in the very high gross margin and operating margins contributions from non-product revenue in Rx. So in the model, again not commenting on your specific numbers, but if we look at it, you have a compensating factor happening there between the portfolio.

Okay. And then just to clarify on the Consumer Healthcare business; did you say that there was some issue with raw materials that should lead to some upside of that as we move through the year?

Raw materials comment, the focus was there was really on the inventory build. So from a gross margin perspective, we didn't really see any issues, price variances because of the raw materials. Rather you see the build in the dollar terms in inventory. And our inventory turns slowed a bit this quarter because of a proactive decision we made to go ahead and make sure that we had supplies of critical raw materials that were coming from China in advances that, and we wanted to make sure that we didn't have delays again. Knowing that, volume thrust, the pull on store brand products in the OTC and nutrition areas has been phenomenal, and we wanted to be sure that we would be able to provide our customers with the product they need this quarter. So it's really more of a cash flow line rather than a gross margin impact.

And is there any particular product categories that have a backlog right now as you go into the heavier cold and flu season?

Backlog on the inventory?

On yourorders going into retailers?

Sure. I mean as we go into the cough-cold season, clearly the liquid products, there is, I don't know if I can call backlog, but there are heavy demand for consumer liquid OTC products as a result of giving ready for cough-cold season. The other thing that you may know is there were some changes in pediatric labeling that occurred over the most recent time period and we obviously have to amend our labeling to reflect that change in pediatric labeling. We have taken those steps and are working every closed with our customers to get that products out in the marketplace very quickly. And those are things that will result in significant demand. The second thing clearly is as Judy mentioned the increase in utilization of nicotine-containing products really in the months of November, December, January as a result of quitting smoking time periods that really high of very high during the November, December, January timeframe. Finally clearly nutrition growth has been real strong for us and didn't one area, which we have focused on and we'll continue to see increasing growth in nutrition. One of... as we've mentioned in the past, one of our competitors that added some difficulties in the OTC category has also run into some issues on the nutritional side, and we've been able to pick up some incremental business on the nutritional side albeit not at the same margin as the OTC gains that we have in the past.

Okay. What's the magnitude of that pediatric labeling issue?

It's... in terms of the change, there was a change in the labeling of the product, but there is no significant change in our expectation for our sales. It was just simply a delay to get the changed label into the car... onto the car... on to the packaging that allows us to get the new product out as quickly as possible. There is no significant change in the timing of just a second maybe a changed in the total demand; it was really just the timing question as we're seeing more of that product go out now... out the door now.

Okay, great. And then just one final one on the API business, get about $7 million delta there and operating income and is that that, Judy, is expected to wind up the... ramping up throughout the balance of the year? Can you give me any help at all on quarterly progression of operating income from API?

Specific quarter-by-quarter is more difficult, but in the guidance that I walked you through in August, our expectation in looking at the API business this year as we said on many occasions, API is classically lumpier than products that are sold on shelves because of the requirements of customers in ordering kilograms or tons of products at different times. But we talked about the second half of the year being a stronger portion of the year. In fact, I think I quoted 30% to 70% split first half, second half. So, I didn't quote operating margin percentages per se, but just to give you a sense that the weight is clearly a second half weighted model for us for API.

Okay, that's it for me thanks a lot. I appreciate it.

Thank you

Thank you, Derek.

Your next question comes from the line of Linda Bolton Weiser with Caris. Linda Weiser - Caris & Company: Hi. Judy, I didn't hear you say if you had still maintained your expectation for a flattish gross margin in the consumer healthcare segment. And if that's the case being that it was up so much in the first quarter and probably will be up in the second quarter, what I assume then that the gross margin will be down in the second half of the fiscal year in Consumer Healthcare?

I am clear, you are talking top line growth, right? Linda Weiser - Caris & Company: No, I'm talking about the gross margin.

The gross margin. Linda Weiser - Caris & Company: That you originally said flattish for the year.

Correct. And to be flattish for the whole year... as I think about the full year gross margin in Consumer Healthcare, it's up slightly... flattish for the full year is still reasonable. We said approximating the 30% down, which is where we exited fiscal '08; that is still the intention. The real dynamic that drives the gross here in consumer healthcare year-over-year remember, is that the first half year-over-year comps will be very large because of the inclusion this year of Cetirizine, Omeprazole whereas the second half of year, the comps will be more in line, because of the existence of those new products. In terms of gross margins, still flattish. If I look at the first quarter, gross margin around 30%... 29.8% that would still be our expectation for the remainder of the year. Linda Weiser - Caris & Company: Okay. And than just on the generic Rx, it seems like the difference in our new product revenue between total company and Consumer Healthcare is $4 million. So that would be their product, I would guess. It seems a little smaller than the... if I was running at may be double that rate on a quarterly for sales?

Yes, well, obviously, we don't comment on any individual product sales from... on a quarterly basis or at all, Linda. I understand your question, it's not an unreasonable comment, but I think what the reality is the situation is right now, we are very pleased with performance of our Clobetasol Foam product, and we are going to continue to execute out in the marketplace. And we expect that it will be a major contributor to us. I mean I am really sorry, I can't say much than that. Because we don't comment individual product sales. But once again, we are very pleased with the performance of the product. Linda Weiser - Caris & Company: Okay. And then, you commented on the whole category and how store brand was outperforming the whole category. Is that being driven by the Wal-Mart $4 drug program or like is there any difference that you can tell in the data between Wal-Mart and store brand and just a whole overall channels in store brands?

Yes, I think probably the best comment I can make is that it's the entire; all customers are seeing that increased utilization of store brands. Clearly Wal-Mart has a specific program out there that appears to be doing quite well, but you really have to check with them on that. But we from our information, we certainly are very pleased with the growth of store brands across all of our customers. Every major customer is seeing. And I think it just really reflects the current economic climate, because right now it's a tough economic climate, and consumers are looking at ways to try to reduce their expenses. And we clearly believe that people still are going to have headaches, they are still going to get sick, that store brand represents an excellent value equation for the consumers. And it really is why we always continue to talk about quality affordable healthcare, really is that we believe the important point. May be we have time just for one more question, operator, if there one more question?

Yes sir. Your last question comes from the line of Daniel Rizzo with Sidoti & Company. Daniel Rizzo - Sidoti & Company: Hi just a couple of quick ones. You mentioned that you are looking for acquisitions to spend, I guess, globally; is there a particularly geographic area that's more attractive like Europe versus Asia or anything like that?

Good question. We are looking at opportunities to bring the store brand concept around the globe. We are very excited with our opportunities in the U.S. as well as in what we have executed in England and also Mexico. Really, at this point, we are just continuing to looking at our ROIC-driven acquisitions that will help us to take a leadership position in store brand on a global basis. Having said that, I must be very clear to think that we are very happy with our organic growth; so this is not a question of just growing at all cost. It's growing strategically by looking at for acquisitions that will help us to continue to be the number one store brand player in the world and look for growing geographies, in which we can also look for bringing this store brand value equation around the world. Daniel Rizzo - Sidoti & Company: Okay, and one question, I might have missed something. But I noticed in a... one of your last press releases, you said you have tentative FDA approval to sell the generic Advil PM. I was just wondering what the word tentative meant?

The process for FDA approval in such a tentative approval inserts a tentative approval when you met requirements for products to be launched, but you are still awaiting the final expiration of the exclusivity period for the brand. So in case of the Advil PM, they have an exclusivity period, a three year exclusivity period and that exclusivity period expires at the end of the current calendar 2008. After that exclusivity expires, we will be able to move forward with a final approval. Daniel Rizzo - Sidoti & Company: Thank you very much.

Thank you all for your questions. Thank you for very much for your interest and have a great day.

Thank you. That concludes today's conference call. You may now disconnect. .