Good morning. My name is Thelma and I will be your conference operator today. At this time, I would like to welcome everyone to the Perrigo Fiscal Year 2009 Second Quarter Earnings 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 call over to Mr. Shannon, Vice President of Investor Relations. You may begin your conference.

Thank you very much Thelma. Welcome to Perrigo's second 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 www.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 one 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 and welcome everyone to Perrigo's second quarter fiscal 2009 earnings conference call. 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 and then I will elaborate on why we are confident of our growth potential, including a new product update and the specific action steps we're taking across the business to adjust the challenges we face for the second half of the year. This will be followed by an opportunity for question-and-answer period. Overall, let me get started; in the second quarter of fiscal year '09, we continued to demonstrate strong top-line growth in our core consumer healthcare OTC business, while we work to mitigate the challenges in our other business segment. We achieved record sales led by our over-the-counter business. There were three main drivers for OTC business success: first, new products; second, an increasing acceptance of store brand over-the-counter products; and finally, our recently-completed strategic acquisitions. Let's start with a quick review of our new product sales. New product sales were $84 million in the quarter as Omeprazole, Cetirizine and Famotidine continued to perform well. I am very pleased with the work our team has done to deliver an increasingly broad portfolio of quality, affordable product offering through our shelves. Our second top-line growth driver is store brand acceptance. As a perspective, the overall domestic OTC consumer market increased 4% in the quarter versus last year. However, nationally advertised brands are essentially flat year-over-year. During the same quarter, store brands gained nearly 17%. In Perrigo, sales gained 39% on the strength of new product launches and increased market share. New product launches contributed to our growth rate to be…

Thanks Joe and good morning everyone. The team has worked hard this quarter capitalizing on our strengths and adapting to changing market conditions in a dynamic economic environment. In the next few minutes, I'd like to provide you some quick highlights of the financial results for the quarter, and help provide you better detail to understand why we see that growth continuing, and the basis of our financial expectations for the remainder of the year. Year-over-year, we had a strong quarter. Consolidated net sales increased 29% to $561million, led by $84 million in new product sales across most of the businesses. Consolidated GAAP gross profit was $154 million, up $24 million or 18% from last year. Consolidated GAAP net income was $25 million, down $34 million from last year. Consistent with our historical practice of providing results on an adjusted operating basis, consolidated adjusted net income was $42 million, up $8 million or 25% from second fiscal quarter 2008. Before reviewing our operational results, I would like to highlight those items that have been excluded from our analysis of the quarterly financials on an adjusted operating basis, consistent with our historical treatment of similar items. Starting with the most material item this quarter, we incurred a charge of $15 million or $0.16 per share related to the write-down of auction rate securities purchased in Israel from Lehman Brothers. These assets were written down from a face value of $18 million and continue to be held as non-current assets. While we had discussed the fact that the market for these securities has been illiquid for over 12 months, the credit worthiness of the underlying issuers continue to deteriorate significantly in our fiscal second quarter as concluded in a formal valuation completed in January. As a result and in accordance with US…

Thanks, Judy. Now Judy has given you all the details for the first half of our year, I'd like to provide some additional information on the new product performance for a couple of our key launches and also some of the challenges and action plans we have for the second half of fiscal year '09. First and foremost our new products we continue to invest in and launch new products. During the second quarter, we added a record $84 million in new product sales. Cetirizine the store brand comparable to Zyrtec continues to perform well. Our data as of December 21st shows that Cetirizine store brand have averaged in the mid-40s in market share. Significantly higher than the traditional 20 to 25% store brand cough/cold category and market share. Also, we have named our 80% plus market share of the store brands Cetirizine market despite numerous competitors. Our store brand version of Omeprazole OTC have captured nearly 40% of the market as we projected to you over a year ago, we expect the Omeprazole to add 150 to $200 million in annual sales and recent sales data shows that we are on track to meet that goal. On December 29th, we announced that we received final approval from the FDA for OTC ibuprofen PM. We expect PM product shipments to retailers in the next few weeks. The product is comparable to Wyeth's Consumer Healthcare's Advil PM tablets indicated as pain reliever/nighttime sleep-aid. Our estimated brand sales for the product for the last 12 months ending December 21st were approximately $71 million. During the first quarter, we began shipping Famotidine Complete chewable tablets, the national brand equivalent to Pepcid Complete tablets to retailers. It is estimated that Pepcid Complete have the annual sales of approximately $100 million. Our launch is going…

(Operator Instructions). Our first question comes from the line of Daniel Rizzo with Sidoti & Company.

I think you indicated and may be you already talked about this, but consumer or customers are lowering the inventories or lowered the inventories in the second quarter. Is that continuing right now?

Yeah. Yes, Dan the answer to that is in the over-the-counter area, customers our customers, retailers have lowered their inventory and we do see that as we sit here today. The profit number is approximately 8% reduction in inventory in the retailers versus the same time period one year ago.

Okay. And then again may be you talked about this but, you said that there was additional cost related to capacity constraints which you had to outsource some production capacities. Is that right?

That is correct.

Did you.... what products were that for?

It was we as I mentioned in the script. We experienced tremendous growth in our vitamin and nutritional supplement business,

Right.

As a result of the growth because of some of the issues that occurred in a competitor, we took on demand that was significantly beyond our past vitamin nutritional supplement business. As a result of that, we needed some help with areas that are within the critical path of manufacturing those products, when we took on that help and obviously we had to pay for that. Now while that certainly is something that affects the near term, we did feel that strategically it is in best interest of our shareholders to take on that incremental investment which is what I will call today knowing that the long-term gains in market share and the profitability from those products is wanted and that's why we feel it was the right thing for us to do at this time.

Okay. But that's still occurring to you still, I mean there you still add capacity in those products correct?

No, we actually because of some great activities by our team, we've been able to transition out of the external manufacturing into our facility at here, we have a facility in South Carolina as well as a facility that we recently acquired called JB Laboratories, the combination of the efforts in our South Carolina facility as well as JB Laboratories allowed us to take on the incremental demand required and allowed us to now... we're going forward from January, we no longer are seeking additional external support. There maybe a couple of products still coming in from past orders but no additional products will go forward as a requirement for external manufacturing help.

Okay. All right, thank you.

Thank you for your question.

Operator, by the way we're going to extend the after 11.00 O'clock as we allow and have enough time for few more questions.

Yes sir. Your next question comes from the line of Linda Bolton Weiser with Caris.

Thanks. Just on the vitamins, I mean can you give us some sense of how much the vitamin and nutritional sales increased year-over-year in the quarter?

Yeah Linda, probably the best way I would say is, we talked about our top line growth of the CHC business being approximately 39% growth, the vitamin and nutritional supplement business grew faster than that. I don't want to give specific numbers because we don't talk about specific categories, but I can tell you that VMS business grew faster than our overall CHC business.

That's helpful thanks. And just going forward in terms of how -- this impacts the mix of your business kind of on a permanent basis, because you are adding in certainly vitamins is lower margin then say zyrtec I would expect, right?

That is correct.

But can you give us some sense of how vitamins compares to say aspirin and Ibuprofen profitability was?

Let me differentiate my comments some for the quarter comments and then some going forward. For the quarter, Vitamin/Mineral Supplement business was obviously at a lower margin than some other products you mentioned like in Ibuprofen. Having said that, we believe that through efforts that we are taking on in those, that I outlined in my script, certainly the issues that we are taking on for alternate vendors that have raw materials additionally, the ability to move the manufacturing from external sources back internally, we think that is going to help us get those products to a higher gross margin than certainly they were in the quarter and back to the levels of products like in aspirin, like in Ibuprofen; not to the levels of Cetirizine but certainly back to those type of levels. But that's really what we are focused on. We have a laser focus on getting that profitability of the Vitamin and Mineral Supplement business back to the levels of... that I referred to before.

That's helpful. Thanks. And then just a question I mean the currency FX. Do you have like in FX, effects on just the sales growth in the quarter and then an effect on the bottom-line earnings growth and also, I mean maybe if you could just clarify more because I am confused, because you are manufacturing from API and Rx products in Israel which are being supplied somewhere in North America. So that's ... the shekel has devalued along with some of the other European currencies. So I'm confused about why this is a negative, wouldn't this be a positive FX?

Yeah, I am going to ask Judy to address most of the questions. Let me just make a couple of comments at the onset. I think first and foremost that we have in the past historically, had a little bit of, what I call, a natural hedge. Something's have gone up, something's have gone down. I think what is changed in this particular quarter is the magnitude of some of the change that occurred and maybe, Judy, you want to talk a little bit about some of the magnitude or some of the changes to address Linda's question.

Absolutely. Thanks, Joe. So it was a multiple part question there and we highlight normally every quarter what the impact of foreign currency is on the top line absolutely, so that you can roll forward your expectations of growth inorganic, organic as well as impacts like this from foreign currency. As Joe just said, we are in normal environment, naturally hedged. So if we get down to the operating income line and the net effect of all of the ins and outs of our multiple currencies and the natural impact that happens when you produce themselves (ph) in the same currency, we normally net down close to zero. In second quarter, in particular, because of the more than two standard deviation move on the pound and the Mexican peso, and the continued movement in the Israeli shekel in that quarter, we did see some net effects drop through operating income. And on a high level just to give you an order of magnitude, as I stated in my earlier comments, the effects of foreign currency on the top line, on a consolidated basis versus last year was still ... it netted out... sorry, second quarter only versus last year was about $9 million, year-over-year. Year-to-date though that netted out to almost zero, just in terms of, on the full year six months impact. But if you look at the full year year-to-date over last year variance on operating income, there still was a net impact. While the natural hedge activity in the Israeli-only consumer products and pharma businesses, and the Mexican and UK businesses basically netted themselves out versus last year, there still is a net impact within API. And that is because the API business, while the vast majority of the production is happening in Israeli shekel, they do transact their business in U.S. dollars, in the euro, in Japanese yen as well as shekel. So that is one where the flows were not able to be naturally hedged. We're obviously looking at our expectations going forward, particularly, how it will affect that business and looking at ways to mitigate that. But in general, we do not have a complex hedging strategy for all of the global cash flows again, because even with these standard deviation movements, most of... rest of the world does net down to zero. This was a very unusual quarter with a volatility in the market movements around the world.

Okay, thanks.

Does it help (Multiple Speakers).

Yeah. Thank you.

Sure.

I am sorry. Your next question comes from the Derek Leckow with Barrington Research.

Hello?

Hi, Derek.

Good morning, Derek.

Hi. So your operating income in the second quarter in your core business is up 45% and the other businesses are down 44% and your... so your total impact, here you talked a lot about this post-employment issue in the quarter and I guess you are continuing that out to Q3 and Q4. Can you quantify that and separate that out for us, so we can see what that impact was?

For the full year-to-date, P&L impact of the Israeli post-employment benefit, the net impact for the company's first half of the year was about $3 million. And just to give you a sense of what this is just to put in context, it's similar in structure to the way a U.S. pension plan or the setup is required by law. As employers we make contributions into the fund every pay period for our employees and those assets then are held by financial institutions, after there has been the control of the... ultimately, the employee; like an employee might make a decision about their 401(k) assets. And as those funds then dropped dramatically in value as you all saw with the stock market declines in the fourth calendar quarter, that required us by law to take a charge for the decrease in those assets. The $3 million in the first half of the year that's across those Israeli businesses. We can not predict what will happen in the second half of the year, so at this point we assume that that $3 million is a permanent charge to the P&L for the full year. If in fact the assets recover, we will be able to recover some of that loss. We would call that out obviously for the rest of the year. But right now, within our guidance for the second half of the year, we don't have any better position than to assume that that loss as it stands right now will stand for the remainder of the year.

So that we don't project that 3 million across the next two quarters as well or...

No...

Have you already captured it...

No. Right now we do not project a further loss. We assume right now that that loss stands and we breakeven for the second half of the year.

Okay.

We have baked into our own numbers, in the normal run rate, in operating expenses that you would have in your SG&A as a percent of sales ratio. We already put the normal contributions that we make for our employees just as a part of normal payroll costs.

That's exactly right. I think going I'd add to what Judy said, as we look at any forecast for the remainder of the year, it's always looking at sometimes that are going to be some of the positives sometimes it's going to be the negatives. I think as Judy said, we at this point think, we just look at this as being an expense that occurred in and one that's going to stay as such and we'll continue to look towards the pluses and minus for the rest of the year.

Does this comparable profitability for the second half then look more flattish compared to last year? Is that fair to say for those businesses?

You're asking for... well obviously, the CHC profitability is really going to be factored by the sales growth. Sales growth numbers are significant with what we've been able to grow both from the acquisitions as well as what we've been able to grow from the new product introduction. So we clearly going to see top-line revenue growth and as we projected for the full year, we're expecting top-line revenue growth being at 13 to 18% range and the EPS in the 11 to 20% earnings per share growth versus the rest of the year.

I'm sorry I was just talking about... sorry Joe, I was just talking about profitability in the other businesses besides your consumer healthcare business. Would those return to a normal level of profitability in the second half or are we still expecting some erosion there?

Oh, I misunderstood your question. Judy?

Sure and later when you referenced back to the formal finance comments, trying to laying that out for you. For API for the full year, we are expecting the second half of the year sales in API, top-line to resemble last year's second half.

Okay.

So for the full year, we are expecting API top line to be flattish to last year in total. So we will not fully compensate for the GAAP in the first half, but will get to a better run rate in the second half of the year. And we also expect that the profitability in the second half of the year will improve overall with cost containment activities and timing of some of the new products, as Joe referenced in his comments. So second half of the year, definitely expected to be driving more value through operating income dollars in the second half of the year. In the other business, our top-line remains fairly consistent with this first half of the year run-rate and overall gross margins there also looking to improve a basis point or two year-over-year. So, similar to the earlier guidance we gave in that business unit.

Okay. And then just shifting over now to the CHC business; in the vitamin-nutritional category, this momentum here where you're talking about faster than 40% growth, I guess that's going to carry through and that's why, just to make sure I understood this correctly, that's why the 50 to 100 basis point decline in CHC, you said gross margin, that's going to about... between 100 and 200 now versus prior expectations and that because... it's all because of that vitamin business, correct?

It clearly is a product mix issue, but also the issue is simply as how we are approaching the improvement in the Vitamin Mineral Supplement business. So its really a couple of factors that are really driving Judy's comments.

And just to clarify, so and you can see this as you go through the prepared comments also. What we were expecting in consumer healthcare is that the adjusted gross margins will decline 50 to 100 basis points from last year. And we had originally thought that for the full year that the consumer healthcare gross margin would stay flat. So that new products would be offset by certain things that we would say flat year-over-year and now we're talking about of 50 to 100 basis points decline year-over-year. The 100 to 200 basis point decline that you just referenced in change to adjusted gross margin is specific to the consolidated company. And that, just wrapping it up again, is the impact both of the change I just mentioned in consumer healthcare, coupled with the expectations for the contributions of the API business in the remainder of the year. So, I want to keep those two numbers target ranges separate.

Thank you for clarifying.

50 to 100 change.

In CHC.

In CHC fund and have in all of that translates rolled up into a 100 to 200 basis point change for the consolidated company versus being flat year-over-year.

Okay. Thanks for clarifying that, Judy. I appreciate it.

Certainly.

Your next question comes from the line of Greg Gilbert with Bank of America.

Good morning.

Quick ones. Does the $15 million in based business growth excluding Nutritionals? Can you talk about that... definitional Judy, to what's in that and what's not in that?

Sure. May be the easiest way to just conceptually roll forward consumer healthcare growth. If I break it down a little more granularity than I did in the prepared comments and our focus on year-to-date, we can breakout Q2 if you like as well. In total, consumer healthcare grew 38%. As I commented earlier, new products were 23% of that growth. We did some acquisition in total, international and domestic about 12% of that growth. Where you'd say Judy, was it 35% what else is going on? We'd also divested some business. We divested new case VMS business as outlined in some more detail in 10-Q which is going to be filed. We exited some product categories in the domestic CHC business, as we talk about always streamlining SKUs and we also had some FX impact within CHC because of the UK and Mexico. Those three items were 8%; negative 3% from divestitures, negative 3% from exit and negative 2% from FX, which gets us to 27%. The volume and base business expansion year-to-date in consumer healthcare then is 9% growth. So even excluding the new products and excluding the effective acquisitions and divestitures, the base business of consumer healthcare was 9% growth. Similar roll forward for the second quarter where we saw 8% base growth excluding the effects of divestitures, FX and exit.

Okay, thanks for that. On Rx, what drove the sequential bump in sales given that the scripts were relatively flattish from 1Q to 2Q? And are there any other launches that you expect for the fiscal year for Rx?

Yeah, good question. In the business for our Rx generic business, what has happened is one of the synergies that we have seen within Perrigo is the concept of ORx. And that stands for prescription products, I should say, as only said they're different. Over-the-counter products that are still dispensed by our pharmacists and ORx business that happened with this business. We have capitalized on that as a separate opportunity within our business led by the generic Rx team and they have found new market essentially for our products and they have capitalized on that and launched those products. That has been the biggest driver for us in that new product side, with these obviously other new product such as the generic ORx but other then that the ORx has really driven that business.

And launches about to be there in Rx?

Yes, we still expect some launches for the remaining portion of the year. There is obviously as in all our new product launches is some of that or ORx going to be -- really for the probability factor on any new products some will happen, so there are clearly those new product launches we are expecting for the remainder part of the year. The other part of this is very favorable to us that obviously we've talked about is trends still (ph) there is opportunity there to monetize that, and that will also be an important driver for the remaining portion of the year.

And lastly, Joe, its sounds like you have some near term actions plans for the API and other segments, but can you talk about to what extent those segments are core to Perrigo and whether you are exploring options for either or both? Thanks.

Let me start at API. API business still at this point we believe is a core business for us. It allows us to do the vertical integration. It also allows us to be smarter about our procurement of factor ingredients across both the Rx businesses as well as consumer healthcare business. So, API business we feel are very favorable to us. I will say that with the other business, the Israeli business what we have said in the past and which we will continue to say is that we base all of our acquisitions and divestments on an ROIC model and return invest capital and we will continue to look at that. There is value in our consumer products Israel business as an example because it helps us to introduce store brand cosmetics into United States. Having said that, we can look at multiple ways to do that and we will continue to assess our strategic alternatives with the Israeli consumer products business as we go forward.

Thank you.

The next question comes from the line of Randall Stanicky with Goldman Sachs.

Couple of questions. Just a follow up on the generic question, what percent of -- I guess both your pipeline and your current portfolio of products is vertically integrated to with your API products?

I would say that currently it's in the single-digits as a percentage as we go forward, we will look to expand down single-digits and that's both on the generic ORx as well as our consumer healthcare products. So, a single-digits today is the best answer.

So the vast majority are sold to third parties?

Absolutely.

Okay. Is there any contribution for Nasacort for the settlement that you have factored in to your back half outlook?

Yes.

Do you will be willing to quantify it?

We don't give out individual product deal details. But there clearly is a amount that we have acknowledged. So for example in the 10-Q you'll see a number at $2.5 million in the second quarter.

Is that linked to approval?

That was in the second part of that, which I refer to this time.

Okay, but there is contribution factored in to back fiscal half?

That is correct.

Okay. And then did you give us an FX impact for your consumer business for the top line?

For the top-line? I did, I commented on that in the script. I believe that the impact year-over-year FX was approximately $10 million.

And that's just in the consumer business at 10 million?

That's in consumer healthcare. Yeah.

Okay. And than I may have missed this, but just in terms of widening the EPS range, can you help us understand what the bigger swing factors are?

Yeah, I Randall this is Joe. The issue and the widening of the guidance is really reflecting the global economy that we're in and some of the ups and downs and positives and negatives that we're trying to assess with the total market that we competed. I mean if you look for example at the API business, we haven't lost any customers having said that the customers have pulled in their orders or reduced their orders. There is just more volatility in the markets than we have seen in the past. As a result of that, as we looked at all the positives all the negatives in our forecast, we just felt that a wider expansion of the range was wanted at this time. We clearly still feel very strongly about we're doing in the consumer healthcare side, the new product side and what we've done in vitamin and mineral supplements. So there is still a less positive, but we did felt the economy was one that wanted an expansion in a range at this time.

And then the pressure or the economic pressure, are you seeing this primarily through unit pressure or is it more on the pricing side as you think about selling to your customer base?

Yeah, I think it's really... I have to segment my answer on that. In the API side, in the generic Rx side, I think there is some unit issue questions relative to how much customers are ordering. And I think if you look at the overall Rx market, you're seeing some declines in Rx. We can -- declines in the growth rates of expected growth rate I should say that way a little differently. Having said that, we think that the inventories have been reduced in API significantly. On a go-forward basis, we will see the numbers that Judy talked about for the full year API. On the consumer healthcare side, candidly, we are seeing the situation actually accelerating the utilization of store brands. So in fact, it's a favorable factor for us on store brands where people are more as they go the shelves, they are looking at, here's the national brand, here is the store brands. We are seeing acceleration in utilization of store brands. So, really, what we're trying to do in looking at any forecasters trying to weigh the positives and negatives and just, I guess, I would call the volatility of the total forecasts and that was really why the effects (ph), why the range and why we see some different factors and different weightings on some of the things that we see in API versus some of the things we are seeing in our core consumer healthcare store brand business.

You talked historically or recently about seeing pricing stabilize or even improve in consumer. Is that still the case?

That is true. That is the case. I think historically the way I would say is that our consumer healthcare business had declined in pricing on the 1 to 2% per range. Now I think it's fair to say that we've stabilized that pricing decline and in fact, we have a slight upturn in some of our pricing in consumer healthcare. And I think that's something that we expect is going to continue as that.

Okay, I'll stop here. Thank you, guys.

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

Hi there. A quick question regarding the new products. Can you guys give us ... I know you guys indicating, but are acquisitions or the three new tuck-in acquisitions, are they factored into the guidance range now?

The acquisitions are factored in but not within our new products, if that's what you're asking me.

So they are not part of new products?

They are not part of new products as we define new products.

Okay. But they are now included in your annual expectations, I know previously they might not have been.

Yes.

Yeah, the answer to that question is yea. Judy?

So. If you want to just think very high level of about our top-line guidance, when we came out in November, our original guidance said that we will grow as a consolidated company 13 to 18% top line. We are confirming that guidance and that includes our acquisitions. So excluding our acquisitions, we are still looking at a strong 10 to 11% top-line growth and so you say to me why are you confirming your guidance range of 13 to 18%. We have acquisitions concentrating in our global portfolio for some of the sales weakness, Joe just talked about in some detail with regards to particularly the API and the other businesses year-over-year. So as we look at our full back... at our full guidance for the year, we can confirm that top-line range with the inclusions now of those acquisitions.

And just following up and I might be wrong in this, but I believe you said that JB Labs can do in roughly 70 and Unico annualized numbers are 50, and Laboratories give us a 15. Are they in for second quarter, are they in just for second half of this year? How much did they impact this year, getting a sense of how much they could annualize for next year?

Sure. Go ahead Judy.

You can assume that all of the acquisitions are in for the second half of the year. We talked about those annualized rates. JB Labs was fully reflected in the second fiscal quarter. Unico was just basically December, so you only have about a month. Diba, you pick up about a month. Galpharm was fully in for the first half of the year, and Brunel was fully in for the first half of the year. So, in order for you to do your math, you can use that as a guideline to start annualizing our numbers.

Okay. And then, just lastly, what are you thoughts on ... was Nicorette a very high gross margin product for you and your thoughts that last time coming in here, will be a big impact. You have done really good on competing with Cetirizine; do you think you can do the same with Nicorette?

Yes. First question was Nicotine is a polacrilex nicotine (ph) coated gum to be clear. So, it is a good product for us and has good gross margins. So our expectation is that we can compete with this. We expected Watson in. As I mentioned our ... we believe that we have the progress in place that will allow us to continue to have a good strong coated nicotine gum franchise and our expectation is that we will be able do that. Clearly, Watson will gain share but we expect to still hold a majority position in share with a good gross margin product.

Okay.

Go ahead.

And just lastly ... what was some of the motivation around settling both the NASACORT and Clarinex in the outer years. Is this just a function of what was the best decision at the time or was there other factors involved?

Yeah, I think both of this two separate diverse pair of effects here (ph). I mean, on the Nasacort that was a partnership product. We brought certainty to it, we brought some monetization to it in the near term. We felt it was... working with our partner Barr, it was good for. For Barr it was good, for Perrigo it was good for just going forward in terms of reducing uncertainty. On the Clarinex opportunity, that potentially is a crowded market depending on whether or not it gives, stays Rx or whether it goes over-the-counter. We saw the clarity of this direction, reducing our expenses having clear decision. If it goes over-the-counter, we will have an opportunity to enter the market earlier and we will be well positioned if it stays in the Rx side. We've minimized the expense for that particular issue to fight that legal case and we find ourselves in a good position. So I think different fact patterns, but just certainly in both cases a chance to do the best things for the Perrigo shareholders. Operator, I think I have time for just one last question. I know we've gone over but we note there has been a lot of questions than we wanted to try to give you as much detail an information as possible. But operator is there any more questions.

Yes. Your last question comes from the line of Louise Chen with Collins Stewart.

Hi, just a few quick questions. Firstly on the raw material pricing; I guess in general it seems like raw material pricing is coming down. So can you explain a little bit more, why the vitamin business, the raw material costs were high and how long is it going to take to flow through in terms of the inventory? And, secondly just on your end markets it looks like those are definitely still intact. You get very strong on the consumer business and can you talk a little bit about your relationship with Medco and then also, just what retailers are doing to promote store brands since you said that store brand has been increasingly favored by consumers.

Okay, there good questions. First, Louise on the Vitamin/Mineral Supplement, the raw materials that we acquired go back to some of issues that from a sourcing point of view that occurred during the time period of the late December to August-September, somewhat associated with the Olympics. Second issue is there... I think you may have seen in newspaper, there is some Vitamin C pricing, I don't know somewhat of collusion but there is certainly some activities that have recurred in Vitamin C pricing that are causing some difficulties. I think that has sorted itself out and ultimately, because we've been able to go alternate venders of Vitamin C, we do believe that we can get the Vitamin C price of the raw materials under control and back to what, I would call a more normal pricing environment for product such as Vitamin C. On the second question, so I think that just really reflects what happened. It will work through our system. We will get additional vendors on board, but it just takes some time and that's the activities that I outlined in our action plan. On the question of Medco; we have very good relations with Medco predominantly in the generic Rx area, but we have had discussions with Medco on a variety of different issues. But good strong relationships with Medco and once again primarily on generic Rx area. Finally the question on the retailer side; the retailer is looking to store brands as being an important driver for their growth and profitability. They have put additional promotional programs together. I think one of the best ones, the most visible one has been the Wal-Mart $4 program, where they have taken a $4-approach to their over-the-counter products and bundled that with other products to try to continue to increase the store brand utilization. I think it goes beyond. Wal-Mart is clearly and the other retailers are doing similar program to drive utilization of store brand, because it's clearly good for the consumer, the ultimate end consumer. It's good for the retailer and obviously its good for Perrigo.

That really concludes I think, your question Louise. Thank you everyone for your questions. Maybe just a couple of points; I know this has cleared some questions in your mind. We'll be happy to try to answer any questions anyone has. But, basically as I look at it, I think we had a good quarter with record sales. We are still projecting top-line growth of 13 to 18% for the year. We are still projecting growth in our earnings per share of 11 to 20% EPS share. And importantly, in a volatile economic environment, I think we've taken a lot of steps to ensure for the long-term period of the shareholders that we're doing the right things. We clearly are working on making the business better off by looking at our cost structures. Number two, we are clearly continue our investment in research and development which we think is very important for the long-term success of our business. Number three, we're clearly taking market share especially in our consumer healthcare core business and the Vitamin/Nutritional Supplement, which I mentioned which we think is also very important over the long-term. And fourth, we are continuing, as evidenced by the three acquisitions that have occurred in the last four months, going after acquisitions to continue to acquire related businesses that will help us to grow our total consumer healthcare franchise and we think that's the good part of what makes Perrigo uniquely positioned to take advantage of the opportunities we find ourselves in the future. Thank you very much for your attention today and we look forward to having further dialog in the future. Have a great day.

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