Welcome everyone to the Perrigo fiscal year 2009 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 Mr. Art Shannon, Vice President of Investor Relations. Please go ahead, Sir.

Thank you very much. Welcome to Perrigo's fourth 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. Also we are webcasting this call with a slide presentation. You can either follow along with the web cast or access the presentation on perrigo.com in the Investor Presentation section. 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 27, 2009. I would now like to turn the call over to Perrigo's Chairman and CEO, Joe Papa.

Thank you, Art and welcome everyone to Perrigo's year end fiscal 2009 earnings conference call. Joining me today is Judy Brown, Executive Vice President and Chief Financial Officer for Perrigo. For our agenda today, I will provide a brief perspective on the quarter and the year. Then I will provide an update on strategic developments in our API business. Next, Judy Brown will walk through the detailed financials and our fiscal 2010 EPS guidance. Then I will give you an update on our successful new product launch plans plus an update on other business units. This will be followed by an opportunity for Q&A. First, I want to take the time to thank the team of Perrigo and all our employees for the tremendous effort in helping deliver the excellent results we have achieved this year. This is my third year at Perrigo and I have been honored to lead this dedicated team as we have achieved record results over the last three years. Again, I want to start with a thank you to everyone on the team. Now let’s discuss those results. My overall comment on the quarter is we continued to execute on our plan with a strong focus on quality, customer service, new product innovation and our cost structure. We had record fourth quarter sales of more than a half billion dollars plus record adjusted operating income from continuing operations up more than 26% from last year on a 7% sales growth. In addition, consolidated adjusted operating margin from continuing operations was over 13.8% on both gross margin expansion and SG&A management which generated $157 million in cash from operations in the fourth quarter. Our Rx business unit had a very strong quarter in what has been a highly competitive environment. We grew sales 27% while adjusted…

Thank you Joe. Good morning everyone. As you just heard, our strong fourth quarter performance helped us end our fiscal 2009 year on a very positive note. Even with challenging year-over-year comparables created by the strength of last year’s record Omeprazole and Cetirizine introductions we continue to grow the top line while delivering additional leverage on the bottom line as well. The team is now looking forward with similar optimism to fiscal 2010. During the next few minutes I would like to provide you a brief review of the fiscal fourth quarter results, recap our accomplishments for the full fiscal year and then I will spend a bit more time walking you through the details behind our fiscal 2010 earnings guidance. So first on to fourth quarter results. I would like to remind you that like last quarter these numbers are based on continuing operations only and do not include the results of our Israel Consumer Products business which were moved into a single line item, discontinued operations, on the face of the consolidated statement of income for all years presented pending the planned sale of that business unit. Year-over-year we had a strong quarter. As you can see on slide five, consolidated net sales from continuing operations increased 7% to $508 million while consolidated GAAP gross profit grew 21%. Please note we were able to translate those solid sales and gross profit improvements to a much higher growth rate on consolidated operating profit, up 38% from last year on better leverage of SG&A spending. After reviewing the figures we released this morning you will see there was one item in the fourth fiscal quarter of 2009 and there were four in 2008 which we have excluded from our analyses of the adjusted operating basis financials. As you can see…

Thanks Judy. Now that Judy has given you all the details from the quarter and the year I would like to talk a little bit about our guidance and the goals I have set for the team. First, let me start with 2010 guidance. What we are saying is Perrigo will grow earnings per share from continuing operations 7-13% this year. We clearly will need to execute on our strategy. Looking at slide 14, I have directed the team to focus on four goals this year. First, we need to execute on our operating plan. We continue to focus on what we call our five pillars of quality, customer service, innovation, low cost and people development. We plan to bring more than 20 new products to the market this fiscal year adding more than $120 million in new product sales. Just to be clear, this number reflects all new products launched in the last 12 months on a year-over-year basis. Just two years ago this was a record new product sales worth $77 million. Our new product pipeline for the year includes generic private label store brand form of MiraLax. Brand sales for this product are approximately $200 million and growing 20% per year. We expect to bring the store brand version to the market during our fiscal second quarter. We also expect the store brand version of Mucinex will potentially come to market during this fiscal year as well. Brand sales for this product are approximately $150 million. The store brand version of the Monistat-1 is also expected to come to the market during the fiscal year. That product currently has $80 million in annual branded sales. These are just some of the new products coming to the market this year. The Rx and API business segments also have…

(Operator Instructions) The first question comes from the line of David Buck – Buckingham Research. David Buck – Buckingham Research: First on Consumer Health can you talk about the level that you assumed in your guidance of price degradation if any and specifically on Omeprazole? Your competitor made a comment that pricing may not go down very much and expected a long-term free player market. I would just be interested in your comments there. Also in the guidance what are the assumptions for foreign currency and did the Rx numbers for the fourth quarter have any milestones included?

Just a clarification before I answer the question were you asking specifically about the Omeprazole pricing or the overall CHC pricing?

Both.

I will start first and then Judy can talk about the foreign exchange portion of the question. First of all on the CHC pricing we expect CHC pricing flat to up slightly. As we look at the overall CHC pricing it was previously coming down. We now expect to flatten out that pricing so essentially the pricing will be a flat environment. Potentially up slightly but flat is our expectation for where we are going on pricing for CHC. Specific to Omeprazole, it is clear we do expect to face pricing competition in incremental competition for Omeprazole from the competition. However, as we look at it we also want to be clear we think we will gain incremental market penetration of the private label, store brand Omeprazole product. So some pricing but also some incremental gains in market share penetration. As we netted those out we felt that as we looked at Omeprazole specifically our pricing environment we felt that it would be reasonably flat during the course of fiscal year 2010. Now clearly your point is that we do expect pricing erosion on Omeprazole is absolutely correct. The second part of the question Judy was a foreign exchange part of the question.

In terms of our assumption for the 2010 plan when we look at our planning process what we typically do is utilize an exchange rate assumption for the upcoming fiscal year in line with the current rate. As you know, rates have stabilized versus the volatility that was going on in the September through February period. Right now we are utilizing rates and expectations of translation rates and transaction rates in our plan as today’s rate. So if you go out and look at the U.K., Mexican and Shekel rate the only rate where we have seen any movement in the last two months during that planning process was the Israeli Shekel and it is moving against both the European and Dollar currencies. The Israeli government is in the process of trying to stabilize those rates. If that stabilization process does go through we would be right in line with the planning we have in our numbers today. Normally we do have a good natural hedge throughout all of our financial statements on exchange rates. If the rates stay fairly stable I would not expect to see a material change to our numbers through the course of the year because of foreign exchange.

The last part of the question I think was the question about the Rx business and what was in there from a milestone point of view. $2 million of milestones that were recognized in that Rx business. Approximately $2 million.

The next question comes from the line of Greg Gilbert – Bank of America. Greg Gilbert – Bank of America: Sticking with the Rx theme for a minute can you get a little bit more into what boosted the sales in the quarter and why should we not see this as a new run rate such that if we multiply that by four even without Nasacort milestones you should be growing that business at a much higher rate in fiscal 2010 than you are suggesting, even without launches?

I will start and Judy may want to add to it. As we looked at the business the fourth quarter was very strong, there is no question about that and as I said the run rate it really is reflecting some of the best we have had as some of our competitors have had some difficulties in the market. I cannot predict that those competitors will continue to have those problems throughout the entire course of the year. If indeed they do have problems then clearly I would agree with your assumption but at this point we really tried to reflect what we felt were some of the challenges that our competitors are having in the market place which allowed us to continue to have good momentum and a good tailwind behind us. I can’t really predict the longevity of that time period based on issues that the competition may or may not have during the entire fiscal year. That really is the basis for it.

That summarizes nicely where I was going to add color but you did that for me. Greg Gilbert – Bank of America: What about the quarterly payments going forward? Can you quantify those? How many there are and the timing of them and how much do you layer on top of whatever your assumption is for the base business there?

We are not really at liberty to get into the very specific dollar amounts. Suffice it to say they are quarterly and therefore are recorded once a quarter. You can approximate low single digits. Again, we are not giving specifics. You saw what the quarterly payment or milestone payment had been near the end of fiscal 2009. If you wanted to use that as an approximation that would be reasonable. Greg Gilbert – Bank of America: A higher level question on consumer overall, I am assuming that Omeprazole and the nicotine products are higher than average margin products. Assuming those lines are going to be down or flattish, depending on your thoughts on that in the next fiscal year, how can you grow operating margin for that segment?

I think first of all I agree with your comment that nicotine and Omeprazole are higher margin products. First of all I will agree with that. I think the comment as to where we are going with those products specifically; I think there are a couple of things happening. Number one, as we looked at our forecast both on the revenue side as well as on the operating margin side, we clearly recognized up side and down side. The first point I want to make is we felt we had very strong momentum exiting fiscal year 2009 going into fiscal year 2010 based upon what is happening in terms of store brand penetration. We are already at 40% for example with Omeprazole and we have seen that continue to go up. Certainly with some of the larger chains that number is even higher than 40%. We are expecting to see that continue to go up. The second comment I want to make is Judy mentioned the $120 million of new product launches, those will be very important margin generators for us. Having that $120 million of incremental new products will be very helpful to us on improving the operating margins of the business. The addition of the triamcinolone opportunity you just referenced before also is going to be a good driver for us on our overall margins, albeit that is not on the healthcare side of the business. Those are certainly some of the things that I would say. The last one I do want to include because it is important from the previous year is our plans for the nutritional turnaround. That was a major issue for us this past fiscal year. As we stated previously, as we turn around that business it will be a contributor, albeit off of a low base admittedly but it will help on the margins for our overall business.

I was just going to highlight the nutrition piece again as well as some of the capital improvements we were making at the end of fiscal 2009 that are going to continue to the beginning of fiscal 2010. Also just continue to help efficiency and as I made the comment about squeezing operational efficiencies, one of the critical drivers for the Consumer Healthcare team and the global supply chain teams together is not only continuing to produce high quality products but also working very closely within the confines of the mix of products they have in front of them and making sure they can create those products ever more efficiently. Greg Gilbert – Bank of America: Are you considering on the M&A front mostly the bolt-on types of deals you have been doing or are you considering doing anything more transformational at this point?

Tough question. I think right now we are considering different types of arrangements. For us clearly our past history has been in the bolt-on, accretive, ROIC positive acquisitions. That is still our milestone. We do not feel we need to do any acquisitions this year to grow. We think our organic growth rate is okay. However, we will continue to evaluate that especially given the strong cash position that we have as a result of our current operating execution. So, we are open for both the bolt-on as well as other opportunities that would be ROIC positive. I probably should mention one other thing. We are being very specific about the type of opportunities we are going after. We are going to go after adjacent product categories in the CHC business. We are going after geographic expansion in the CHC business. In the Rx business those products that fall into the category of what I would call extended topical or niche type generic products that would allow us to play in markets where there is less competition. Those are the three areas that strategically we are pursuing in our business model for acquisitions.

The next question comes from the line of Randall Stanicky – Goldman Sachs. Randall Stanicky – Goldman Sachs: Is there anything built in terms of acquisitions into your revenue growth for the year?

No. Randall Stanicky – Goldman Sachs: Looking at your slide 12, one of the other components of guidance you gave us was Omeprazole revenue I think you said $150-200 million. Can you just give us a sense of how you ultimately did against that goal? Perhaps any color you can give us on how you are thinking about that dollar figure in fiscal 2010 on that product?

Let me back up a little bit on the fact and remind everyone of the facts. When we originally planned to launch Omeprazole approximately 18 months ago we stated we felt it would do $150-200 million. We felt that we would achieve in the first 18 months somewhere close to a 40% market share. Indeed, as we presented the data we did achieve over a 40% market share the first 18 months. We checked off that box. In the $150-200 million forecast we actually exceeded that forecast. However, given the issues we face in our fiscal 2010 we are not going to give out a specific number but we do feel that we will see two things happen. Number one, we will gain increased market penetration of store brand private label Omeprazole but we will move from that 40% to some number higher. At the same time, though we will lose some market share to our competition and we will clearly face some pricing competition. As we factored that together we came up with a number that reflected some of the ups and some of the downs and the opportunities for Omeprazole but we are not going to give a specific number this year just based on the competitive threats we face. Randall Stanicky – Goldman Sachs: Can I just ask you to clarify the $120 million you talked about in terms of new products; are those new products for this fiscal year or does that include recently launched new products as well?

The $120 million reflects new products for this current fiscal year.

It is a mixture. That $120 million is across all of our business units but just given the size and scope of Consumer Healthcare as you can well imagine the bulk right now is coming from the Consumer Healthcare Group. It is a mixture. As Joe has frequently noted, a lot of singles and doubles so there are dozens of smaller products that are part of that make up. Then obviously some larger products of which you are well aware. Randall Stanicky – Goldman Sachs: So if we take that number that implies roughly 6% growth. Effectively are you just saying the rest of the business is flat to down or are you being conservative at this point in the year in terms of how you are thinking about the rest of the base business?

That is a good question and we anticipated that question. I think the issue we have with it, is what happens in our business is those new products will replace and/or take away share of some of the older products in our business. So there is some substitution that goes on. These are clearly new products but imagine that we are coming out, for example, with a fast dissolve acetaminophen as an example. That will take away some volume from the regular acetaminophen as an example and therefore there is cannibalization that goes on. You can’t really do an apples-to-apples comparison like you are suggesting because there is really some switching off and some cannibalization that goes on in the portfolio. Randall Stanicky – Goldman Sachs: Judy you and I have talked about this before on the margins and specifically on the raw material front the 29.4% margin in the consumer business, can you maybe give us a sense of where we are at with the improvement in some of those costs relative to overall cost removal and how to think about that margin? I think there is a previous question that was trying to get a sense of where we go from here in terms of what you put up this quarter.

Good question and also referencing Greg’s question as well. Obviously the point being is we are looking at the dynamic pressures in pricing or share with Omeprazole for example. How does that translate into margin potential for improvement in the real operational side? We have total cost improvement initiatives and targets that are set annually finding 5% net cost productivity as a target that is put out in front of the team each year. You are all well aware of the dynamic that we as well as many other companies were facing last summer with violent raw material inflation that was going on. While that has dissipated to some extent it is still a pretty dynamic commodities market. We are in a better position as we start out the beginning of this year but that is part of this cost productivity goal that is in front of the team. If it is not coming through raw material improvement then the team is out looking for labor or overhead or other efficiencies that they can find to try to get to that 5% cost number. Again, it is about a supply chain productivity factor that we built into these numbers. Randall Stanicky – Goldman Sachs: But the low hanging fruit and the recovery on that raw material pricing was largely reflected in this quarter’s numbers. Is that fair to say?

You have seen for the places where there was a lot of volatility you would see that starting to come through. We have talked in some detail also in the nutrition business we were sitting on some larger buying positions that had come through at the beginning of fiscal 2009. We will still be working down the remainder of that inventory in the first half of fiscal 2010.

The next question comes from the line of Linda Weiser – Caris & Company. Linda Weiser – Caris & Company: Can you just address the Consumer Healthcare operating profit margin and why it declined so much sequentially? I think it went from 14.9% to 13.8% or something like that and it was a little lower than I had expected. Specifically, did the nutritional operating margin actually improve versus the third quarter?

As I commented, operating margin wise quarter-over-quarter for Consumer Healthcare we did have a higher dollar spend in R&D in Consumer Healthcare which caused a bit of the operating margin. As well as, in looking in terms of quarter-over-quarter a few dollars more in SG&A with some specific initiatives that are happening there. The biggest component, you have a little bit more R&D and a little bit more SG&A quarter-over-quarter with a flat gross [audio break] and the blended rate for the full year at 28.4. Linda Weiser – Caris & Company: Can you talk a little bit more about the new products? Unless I missed it I hadn’t heard about the FDA approval that you received for the MiraLax and the Monistat. Do you have some expectation about the timing? Can you talk about the revenue growth for the Consumer Healthcare business like by quarter? Are we going to see a lower growth rate in the first part of the year and then bigger in the second part?

Let me start with the beginning part of the question. You are correct we do not have an approval for the store brand, private label MiraLax nor for the Monistat. However, we are working very closely with the FDA to gain approval and as I mentioned on MiraLax our expectation is that will be a second quarter fiscal year 2010 event and we believe we will be in a position at that point to launch that product as I said in the second quarter of fiscal 2010 based on our interactions with the FDA. That is our expectation. On the Monistat we are not improved but I remind you the other part of the hurdle for that was getting through the legal pathway on Monistat. We have indeed gotten through the legal pathway and are now free to come to the market as soon as we get the FDA approval. So we will proceed that way. I don’t know that I want to make too many comments specifically on the Consumer Healthcare quarterly sales guidance because I think what we really try to do in this economy based on what is happening and we don’t know when cough/cold/flu season is going to hit this year. We find it to be somewhat turbulent. A good economy relative to the utilization of store brands but certainly with the economy it has some ups and downs. Therefore we don’t really want to make any comments relative to quarterly projections.

Last year I provided specific guidance about how to think about modeling the year. If you look forward to 2010 it is a relatively balanced portfolio for the full year. Not talking top line only. Thinking in terms of bottom line expectation it is a relatively balanced year. Linda Weiser – Caris & Company: Can I ask about Rx? I think you had alluded to some behind the counter product initiatives in the Rx segment that helped sales growth. What are you specifically referring to there?

You are talking about the fourth quarter? Is that what you are asking about? Linda Weiser – Caris & Company: Yes. You talked about sales growth was robust partly because of some behind the counter initiatives.

What we have done, and I think this reflects the overall strategy of Perrigo being in both the over-the-counter business as well as in the generic Rx business. We have found there is still considerable demand for many of the products that have switched from prescription to over-the-counter and now we are selling products clearly as a store brand private label offering but also we are selling them to the pharmacist because the pharmacists still need product to dispense even though the product has switched from Rx to over-the-counter. So the pharmacist is still actually dispensing many products that are now over-the-counter. As long as there is an NDC number, pharmacists will continue to dispense those products. That meant there was a need for a good supply of quality, affordable Rx products and that is how we are utilizing our generic Rx team to also capture the value of the asset we have which is the product approval and ability to make the product. Therefore, selling that not just simply as a store brand private label but also selling it to the pharmacist because he or she needs the ability to have some of these products for dispensing. That really is what we have worked hard on with our team. That includes products that are both behind the counter in the case of loratadine-D as an example because of the ephedrine as well as products like our Omeprazole, as an example.

The next question comes from the line of Scott Hirsch – Credit Suisse. Scott Hirsch – Credit Suisse: Can you let us know how much of the current portfolio sources API from yourselves versus how much is outsourced? Then, what could that ratio get to in time with the India acquisition?

As a number of products it is a single digit percentage. The largest portion being the Cetirizine product which we are sourcing directly from Perrigo Israel. As an overall comment it is a single percentage of our API acquisition. How far can it get to? We believe many of the products, the proton pump inhibitor and other products of that sort can be products that we can source from our facility both starting in Israel but also getting to Perrigo India over time. So that will be one that we will look at for the vertical integration of our Rx OTC switch products that we expect in the next five years. Scott Hirsch – Credit Suisse: Can you give us, I don’t know if you know, but can you give us what the market share break down is now in the nicotine cessation between you and Wassen? Has it become sort of a shared market or do you still have the vast majority of it?

We have a majority of the market share of the nicotine products. My knowledge of the coated gum market is that Wassen has shipped at this time to I believe it is one player at this time. I do know they have an additional player lined up but at this time I believe they are shipped to just one player. Scott Hirsch – Credit Suisse: In that light with obviously Wassen and Nicorette and seeing they filed with Mucinex with plan B with [ready] Omeprazole, is it your scale that will continue to provide the barrier to some of these other competitors?

I think certainly scale is important in that we do 35 billion tablets. The other important ingredient we have is what we refer to as mass customization. The ability to make the product, make sure we have the right product in the right bottle with the right label going into the right carton to the right customer. That ability to do that over 10,000 times every day and ensure we have that correct is an enormous systems requirement for us. I think we have developed that in over the 100 plus years we have been in this business. I don’t say other people cannot develop it but clearly knowing what I know about other pharmaceutical companies I know that no one is close to us in those capacity. Especially in the packaging capacity. I clearly think critical mass is part of it. I also think that our focus on mass customization and the fact that we have good quality, affordable healthcare products and we can get to the market first is really what is going to drive our success going into the future. Scott Hirsch – Credit Suisse: On gross margin you mentioned in the press release there was $140 million from the acquired companies, the JB Labs, Unico and Diba. Obviously you have four full quarters of them next year. Curious what the aggregate gross margin is for the acquired businesses?

We don’t really give out gross margin on acquired businesses. What we do is talk about their accretion and also as we look at those acquisitions that they are ROIC positive. That really is the way we reflect on them. For example, it is hard to use them as a standalone because once we acquired JB Labs, for example, we did not leave it as it currently is configured. We shifted some of our products that were made here in our Michigan operation to that facility to allow us greater flexibility to make more of ibuprofen and other products that we needed the capabilities here in the Michigan site. So it is really hard to hold them as a standalone business once they are acquired. We really integrate them really quickly and that we think is part of the success factor we have as a company is the ability to quickly integrate them into our business model.

It would absolutely be the same story for the international acquisitions. It happened in Mexico and the U.K. as well.

The next question comes from the line of Derek Leckow – Barrington Research Derek Leckow – Barrington Research: On the international expansion announcement you said you had teams assembled. What state are we in terms of that expansion process. Are those teams on the ground in various countries already signing deals? Are they still in the planning stages here?

I should have said team. I didn’t mean to say teams. If I said teams I apologize. We have a team that is evaluating the opportunities and really trying to give us some direction as to which specific country. Obviously as I mentioned Europe and South America are the leading candidates for us but there are other countries we are also looking at to really take our concept of store brand private label and move it around the globe. Really it reflects what we have said in the past where we feel we have great innovation technology. Other companies are taking products and making them global such as the Mucinex products and we want to make sure we follow the success of those products around the world and find a way to successfully commercialize our store brand equivalent like a Mucinex around the world. That requires us to have additional infrastructure around the world. We are evaluating that to look at the opportunities. We are early in that stage. I do want to make it clear we don’t have teams on the ground in all the countries at this time.

Just to add to the question of whether we are on the ground signing deals yet. You can be certain that at such time there is something to announce we will do so.

Thank you everyone for your interest in Perrigo. I would like to thank you for taking the time and appreciate your questions. If you have any other questions please call Art or Dan and they will be happy to assist you with your questions. I want to also let everyone know we will be hosting an Analyst Conference on the morning of September 29th in New York City at the NASDAQ market site. We will be sending out invitations shortly and we look forward to seeing you then. I hope everyone enjoys the rest of your summer. Thank you very much for your interest in Perrigo. Have a great day.

Thank you. This concludes today’s conference call. You may now disconnect.