Good morning. My name is Cassandra, and I will be your conference operator today. At this time, I would like to welcome everyone to the Perrigo's Fiscal 2013 First Quarter Earnings Results. [Operator Instructions] And now, I would like to turn the call over to Art Shannon. You may begin.

Thank you very much, Cassandra. Welcome to Perrigo's first quarter 2013 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 on our website is a slide presentation for this call. 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 the 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 30, 2012. 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 first quarter fiscal 2013 earnings conference call. Also joining me today is Judy Brown, Executive Vice President and Chief Financial Officer. First, let me say on behalf of all of the approximately 9,000 employees of Perrigo that we wish everyone impacted by Hurricane Sandy well as you work through the recovery from the damage of the storm. We have numerous employees that were impacted by the storm so we do appreciate the difficulties of working through this challenging time. Our thoughts and prayers are with you. For our agenda today, I will provide a brief perspective on the quarter and the continued strength in store brand market share growth. Next, Judy will go through the details of the quarter and our increased fiscal 2013 earnings guidance. Then I'll provide an update on the transition to plastic containers in our Infant Formula business and our plans for new product launches, plus an overview of expectations for the coming year. And I will present an update regarding the ongoing integration of Sergeant’s Pet Care. Finally, this will be followed by an opportunity for Q&A. Now let's discuss the quarter. On Slide 4, you can see we had record first quarter sales of $770 million with record adjusted net income up 16% from last year on a 6% net sales growth. We're off to a great start as we have all-time high first quarter adjusted gross and operating margins. Consolidated adjusted operating margin was a 23% driven by adjusted gross margin expansion despite an 18% increase in our adjusted R&D investment compared to last year. To be candid, the top-line growth was not at the level we planned due to primarily, weakness in our Nutritionals segment, which I will explain further in a moment. Turn…

Thanks, Joe. Good morning, everyone. As you just heard from Joe, on a consolidated basis, we had a very solid start to the year. During the next few minutes, I'll provide some color commentary on our fiscal 2013 first quarter results by segment and then review our revised expectations for the fiscal year. So let's move directly into the business segments. On Slide 7, you'll note that Consumer Healthcare's first quarter net sales increased 9% year-over-year due to a combination of: an increase in sales of existing products of $36 million in the contract, cough/cold and smoking cessation category; new product sales of $13 million in the gastrointestinal, cough/cold and dermatological category; and $9 million attributable to the acquisition of CanAm. Specifically, sales in the GI category, which includes the store brand versions of Omeprazole and Lansoprazole among other products, were up 6% year-over-year. In total, this combined $58 million increase was partially offset by declines of $17 million in sales of existing products in the analgesics and fem hy categories and $4 million due to discontinued products versus last year. The 90 basis point increase in adjusted gross margin was driven by new products, product mix across the broad CHC portfolio as pricing during the first fiscal quarter was slightly better year-over-year and good cost control in our manufacturing plants. We invested more in CHC R&D projects versus the first quarter last year and DSG&A spend was controlled to a lower percentage of sales, even with the inclusion of CanAm expenses versus this time last year. As a result, adjusted operating margin increased 70 basis points year-over-year, slightly less than the adjusted gross margin expansion. On Slide 8, you can see that net sales within the Nutritionals segment declined 14% year-over-year due to several factors. First, as we noted…

Thank you, Judy. As Judy just outlined for you, we had a strong quarter despite the weakness in our Nutrition segment, but now, I want to focus on the future. This year, we are planning on launching over 60 new products that we expect to translate into approximately $190 million in annual Perrigo sales, as you can see on Slide 14. Essentially, we plan to launch more than 1 new product every week in fiscal 2013. In our Consumer Healthcare business, we are preparing for the launch of the store brand version of Mucinex 600 milligrams with annual branded sales of approximately $135 million. We are in the process of validating additional batches of Guaifenesin ER 600 milligrams and continue to expect the launch of this product during our current fiscal year. While it is too early in the cough/cold/flu season to make too many comments, it appears to be tracking along a normal trend. In our Nutritionals business, highlighted on Slide 15, we are excited about the upgrade of our infant formula national brand equivalent packaging. As you have seen in our other products, when we closely match the packaging of the national brand, we gain market share. Look for this new packaging on retailers' shelves in December. In the VMS Cap business, we've begun shipping to 1 of the 2 additional retailers, with the second retailer expected after the New Year. The Generic Rx business is growing. Our new product launches are performing well and we have fully integrated Paddock Laboratories into the Perrigo family. As highlighted on Slide 16, we are poised for a strong new product year with the launch of generic versions of Olux-E Foam and Luxiq Foam plus other undisclosed products with more than $500 million in branded sales. Add this to the continued…

[Operator Instructions] Your first question comes from the line of Louise Chen from Guggenheim.

I have 3 questions. First one is could you please talk about the sustainability of your gross margin and operating margin expansion and what would drive this going forward? Secondly, what are your strategic objectives and growth expectations for your VMS business? And then lastly, with respect to store brand Nexium, are there any circumstances under which you may be able to launch earlier than the 2017 date?

Sure. So let me just start with the first part of the question, the sustainability of our gross margin, operating margin. We are very pleased with the results that we achieved in both operating margin and gross margin in the total company relative to the 23% operating margin that is an all-time record. If I go back to when I joined Perrigo in fiscal year 2007, I think that number was -- operating margin number was somewhere around 9%. So we've made great progress, to be clear. I don't want to get too much ahead of ourselves though, at this time. I think we continue to suggest the operating margins for the consolidated company as we've stated in our earnings, would be somewhere in that 21% to 24%. So I think we stick to that number. I obviously will continue to try to strive to get to the best number for our shareholders possible. But importantly, I think as you see from our numbers, we got to that 23% operating margin and still made significant investments in research and development during the quarter, which that was an important investment for us being up, I think it was 14% for the R&D. So we still made significant investments, increasing research and development as we look to just a very positive future. On the VMS category, I think the second part of your question, we are continuing to develop new products in the category. We are continuing to develop new relationships with retailers in the category. So we still see opportunities for the future. I will say, as we've said over the last year plus timeframe, it is a competitive marketplace, primarily from -- we have some competition from companies that are shipping product from overseas. We believe that's something that the…

Your next question comes from the line of Jami Rubin from Goldman Sachs.

I have more than one question but I will try to limit it to -- I'll make it 1 question. It's really challenging because it really covers several -- we'll talk after this call but let me ask you just a sort of a broad question related the your Rx business, which did perform very well this quarter. At the same time though, we are seeing the competitive landscape change, become more competitive with some of your key brands such as Aldara and I'm just wondering if that competitive landscape has been reflected in your guidance for the year? And specifically, the 58.4% gross margin is still about 1,000 basis points higher than your competition in the generic industry. I'm just wondering where you see that going and if competition is accelerating with some of your key brands because some of the competitors are now back on the market, putting pressure on price, how are you offsetting that kind of pressure?

Sure. It's a very good question, Jami. Let me start with really, is there some things happening in the competitive landscape for our Rx business? The answer is yes. We are seeing some players in the Aldara product that you mentioned, the generic Aldara, that is correct. However, I think one of the things that's very important about how we define our Rx business is we talk about it as being extended topical and by that definition, it is clearly the dermatology products that you are referencing. However, it is other products that our extended topicals, are absorbed topically such as the respiratory products, the nasal products, the ophthalmic products, the other categories we are going into. So as we do see more competition in dermatology, that is correct, no question, we are going to see some of the other extended topical areas with our business and I think that's the respiratory products with our products that we're looking at, the nasal products with Nasacort as an example, one the generics that we have. We've been out there with that product for, I think it's going on over 1 year, 1.5 years at this point and we still do not have any generic competition, nor are we aware of anyone who's even filed for a patent challenge on that product. There's other places that we are going into with the extended topical portfolio. So we do see some dermatology competition, yes, but we're going to some other areas. Judy, you may want to comment as well?

Well I'd just like to add to that, and this is both Jami and Louise's question, referencing gross margin specifically is another point of -- to keep in mind in all of this. I would talk about the three-legged stool of our business model. The supply chain work, I referenced in my prepared remarks, the global supply chain footprint and how the team has been working across all of our locations in order to site optimize, lower cost, be more efficient. All of that plays into the question of gross margin sustainability. I have more detail than I'd like to admit about the evolution of our gross margins and I can see that a lot of the leverage we've gotten over the years has come from the work that's gone on within supply chain. So obviously, you have visibility to new product launches. As an analyst, you have the insight to what new product competition might look like and how we can model the future going forward. I can also see that we get a lot of value by optimizing the large footprint we have globally and being very, very efficient and having gotten much more efficient over the course of the years and the team, with continuous improvement, does not plan to stop where they are. They plan to continue that momentum going forward.

I think that's a great add, Judy, especially when you think about products like the imiquimod Aldara where we're vertically integrated. So that by itself is just a great example of what Judy is illustrating.

Your next question comes from the line of David Buck from Buckingham Research.

I'll limit it to one question as well. If I look at the -- the question is really on revenue and it's a 2 parter. Just if you look at revenues for this quarter and the past few quarters, you're seeing some negative surprises versus consensus and you admit that you were surprised a little bit on some of the moving parts. So I guess first question is how -- what can you do to better improve your own revenue forecasting? Secondly, the change in revenue guidance was really due to Sergeant’s but you kept the other ranges, particularly for Nutritionals, unchanged. So why the confidence, particularly with the downside in Nutritionals and keeping the revenue guidance at still 8% to 12% and some of the other ranges as well?

Sure. Well first of all, David, we feel very good about our annual revenue guidance, that's what we provide and we've made no changes. However, to be clear, the Nutritionals business for the quarter is below what we would have expected. A part of that simply was as we bring on this plastic container line, the packaging line, there's always a time period it takes for certain things to happen. You just never can exactly predict in any product, especially one where quality so important, like an infant formula product that you just want to make sure you get everything properly done to the highest quality standards. And that's just something that takes some time. While that equipment is being installed and with what was happening with SAP, I guess there was just some part of the process that is not completely -- you go through a process, you make the changes, you make the improvements but there's some things that you just -- are going to be a variable, that you cannot go forward with until you get that to the appropriate quality standard. So for the Nutritionals part, it was really about our plastic container line as well as some of the orders that occurred in the previous quarter as a result of the SAP conversion. I think it was those 2 big issues for us. But as we look to the future, what are we excited about? We're excited about the fact that our plastic container today, that when we launch that product in the December timeframe, will look just like the national brand or national brand equivalent. Every time we've had national brand equivalent and moved to national brand equivalent, our market share goes up, at least based on the Consumer Healthcare model. So therefore, that's what gives us the excitement about the future for the plastic container.

Maybe before you move on, can you talk a little bit about international? You did reference, I'm not sure whether it was China, but some import restrictions in the quarter?

Yes. China, it wasn't so much import restrictions. What it was is they made some changes in the labeling process for our products that we needed to comply with those labeling change requirements. We have complied with those labeling change requirements but as a result of that, we had some delays in getting the product shipped. The product was made, it's fine from a quality point of view. It just simply was to amend label claims and amend the labeling specifications for the product. So that is behind us. We clearly still do need to get the product shipped and get it to them but the actual changes in the labeling requirement is completed.

[Operator Instructions] Your next question comes from the line of Greg Gilbert from Bank of America.

My one question is for Joe and Judy and that is, other than Nutritionals and putting aside acquisition, is everything tracking according to plan or better on the revenue front so far this year?

Sure. Greg, I'll start, Judy may want to add some comments. I would say that based on what we've done with our total consolidated Perrigo guidance, we are tracking on plan for our full year. Is there some ups and downs in that plan? The answer to that is clearly yes. Some products will be approved earlier than we expected, some products will be approved later than we expected but that's just a normal probability waiting process that we go through during our quarterly reviews of the business. There's going to be some things go forward faster, some things go slower but as we looked at our full-year guidance, continue to expect continued strong operational performance of the business. Judy, anything else you want to add to that?

The only thing I'd add to that is we maintain the base guidance and then obviously, as you know, added Sergeant’s into that within the Consumer Healthcare segment. And just to remind everyone and we said before and I'll reiterate it again, this is another year where we have a heavier weight to the second half of the year because of new product timing.

Our next question comes from the line of Ami Fadia from UBS.

Yes, since you've closed the pet care deal, has there been any shift in your thinking with respect to the growth potential or the margin for that business? And if you could give us any more detail around the Frontline opportunity, that'll be great.

Sure. I'll start and Judy, please feel free to join in. I think we believe everything that we've said when we acquired the Sergeant’s business to be comparable to where we are today, the revenue base $140 million. We expect high single-digit growth rate of that business. We expect once we have the opportunity to launch a store brand equivalent of the Frontline product, the Flea & Tick type products, we expect to accelerate that growth rate into a double-digit growth rate, is really the expectation of what we said. Relative to Frontline, specifically, it's a great product. It is a product that we feel fits exactly with the desires of our retailers where you can offer a quality product, a fit for mill store brand product, the same quality as the national brand with a much better value equation, make it more affordable for the retailers and the consumers and that's really the excitement of what we see. As I stated during my comment, we look at that as being a $500 million store brand -- I'm sorry, national brand product with a store brand opportunity that we can go after. So we're really excited about that kind of opportunity. Judy, anything else you want to add?

The only thing I'd add, I wouldn't say any of our estimations changed at all. I mean, the only thing I'd highlight as we now own the business and are rolling up our sleeves and get into the detail of the ebbs and flows of the season, as I commented, unlike cough/cold/flu for humans is a winter activity, this a business that's more heavily spring and summer. And I commented that it's a busier business in our fiscal first and fourth quarters. They came off a year that just ended September 30 with approximately $140 million in revenue and we plan to grow off of that base or in excess $140 million revenue for a full year. So making sure that you pick up the full season of both our fiscal first and fourth quarters.

Your next question comes from the line of Randall Stanicky from Canaccord Genuity.

I don't want to harp on Nutritionals but I'll ask another question here. If we just take the midpoint of your guidance and obviously, adjust that for what you reported this quarter, it implies something in the range of around $150 million a quarter or 15% to 20% growth and so, that looks like a really big number. Judy, can you just help us quantify specifically, what we should be looking for, for the remainder of the year that can get us comfortable there? And maybe quantify the amount of revenue that you got delayed internationally, that would be helpful.

Sure. It's a great question because obviously, as we looked at the rollout for the quarter in Nutritionals, we realized it's a challenge, there's no question. You've got the dynamic of the fourth quarter to first quarter shift and then the VMS weakness without the flow of the new product to the new retailers, et cetera. So it's a challenge and it's a great question. So as we look forward, what are the biggest components? It's new products, it's getting the plastic container out and they are going to be moving in this fiscal second quarter. So that starts to trickle in now in Q2 with the volume going out the door really in Q3 and 4. You have the sales to new retailers in VMS with the expectation of stabilizing of the remaining base in VMS. You have additionally, the movement of the international product flow that Joe was talking about just a moment ago with respect to the regulatory question. And in answer to your question, when I roll forward sales quarter-over-quarter or year-over-year, the international blips cause about a percentage of that 14 percentage point decline year-over-year. So it wasn't a huge number but it was a percentage or 2 of the total decline, 14% year-over-year in this segment. And then getting that international flow back out the door are going to be the key drivers. So to your point, given the view in Q1 but given then, our full-year perspective on the full year, year-over-year growth, we have to execute on stabilize the base, move new products, resume shipment of international.

I mean, Judy, are those numbers right? I mean, should be we looking for that much of an uptick? I'm just trying to get comfortable with the guidance range. And so is $140 million to $150 million sort of a run rate in that business realistic?

Yes, I think the only other thing I was going to add to what Judy said, Randall, is that clearly, Judy outlined the commentaries on the infant formula and those are absolutely clear but it is also the incremental VMS opportunity. So really, what it comes down to -- comes back to restoring the growth into the international market. Most importantly, it is the plastic container as well and the acceptance that we expect of the plastic container when we get a national brand equivalent. And then it is that incremental VMS, Vitamin/Mineral Supplements business into the additional retailers is really the 3 parts of the story that I would say are going to be the key.

The next question comes from the line of Elliot Wilbur from Needham. Elliot Wilbur - Needham & Company, LLC, Research Division: Big picture question for you, Joe. Over the past couple of quarters, some of the drug majors and the PBMs and most recently, Express Scripts have talked about sort of unexpected declines in overall drug utilization which they're attributing to consumer hesitancy. I guess, blaming it on the certainty in the economy and you're certainly seeing it in the RX side. And if you look at volume growth trends in the store brand or the OTC market, seen pretty pronounced deceleration in national brands, of course, which is sort of an ongoing, I guess, secular dynamic. But even over the last 4 to 5 quarters, you've seen a fair degree of deceleration in terms of the overall rate of growth in store brand product as well, roughly a 300, 400 basis point decline. I'm just sort of wondering, obviously, you continue to gain share. I know you've been relatively conservative in your assumptions this year but are you starting to see sort of an unexpected deceleration in overall utilization rates?

I think the – it's a fair question on the category growth in the OTC market. It's absolutely -- it's a fair question there in terms of the total category growth, it was just up the 0.7% over the last 52 weeks. So that is slowing down. I think what we are seeing though, is the continued acceleration of store brand as being the reason why we're seeing the growth in our OTC category. For us to have a 9.4% growth in our OTC category, we think is a strong indication. I do think though, that if I go back to the branded prescription segment of the business, I think part of that is just generally related to the economy. I can't predict what's going to happen in the economy but we still believe we are in the favorable spot in the environment relative to the movement of store brand as a general comment on the marketplace. Longer term, every data point I've seen is that the utilization of pharmaceuticals goes up the older you are. So as people -- the baby boomers get older, as the people live longer, I still believe pharmaceutical utilization will continue to go up. I do accept, though, that there's going to be some variation in any given year. But I think over the long term, we still expect pharmaceutical, both prescription and OTC utilization to go up over the long term just based on the demographics which people are living longer and the older you are, the more pharmaceuticals you consume. So in general, I guess in kind of a review of what my comments would be, we still see the market growing, albeit only 0.7% over the last 52 weeks. The important growth is really being driven by store brand, being up 8.5%. But over the long term, our expectation is we'll still see increased demand for pharmaceuticals based on the demographics of people living longer and knowing that people -- older people take more pharmaceuticals and just based on all the data we've seen.

The next question comes from the line of David Risinger from Morgan Stanley.

So with respect to my question, it's on Mucinex. Could you just offer some more clarity on the timing of Mucinex 600 milligrams? And can you also update us on the timing of launches of the D and DM formulations for which Watson may have exclusivity?

Sure. So I guess I'd go back to the statements we made in the comments at the beginning. We are continuing to work on the Mucinex 600 milligram single-entity product. We are in the process of validating additional batches of the Mucinex 600 milligram or Guaifenesin 600 milligram Extended-Release product. Our expectations are we will launch that during our current fiscal year and really, that's probably as much as I can say on that. I will say in addition, in the question about the additional members of the family, as we stated last quarter, we do expect to launch additional members of the family. We just have not gone into the specific products additionally that we will launch of those products. But we do expect to launch additional members of the Mucinex family of products during our fiscal year.

The next question comes from the line of Linda Bolton-Weiser from Caris. Linda Bolton-Weiser - Caris & Company, Inc., Research Division: So in the Consumer Healthcare segment, I guess the new product sales that you said, I guess was $13 million. That was quite a bit lower than my estimate of $24 million. And I'm just wondering how the new store brand Prevacid is doing because we saw price declines at the shelves at Walmart in the range of 11% to 16% on the various SKUs. And in the store we look at, it's actually supplied by Dr. Reddy's in that store. So it seems to me that if Dr. Reddy's wants to gain more share and get more of Walmart on Prevacid, that they would cut price. And we saw that price decrease at the shelves and we see lower-than-expected new product sales. I mean store brand Prevacid and Delsym, I believe, would be the 2 main things in your new product sales, correct me if I'm wrong. So just kind of wondering what's going on and what you think the competitive stance of Dr. Reddy's will be going forward. And it just seems to me that if they want to continue to gain share in your area, in your industry, they're just going to keep cutting price and trying to get more -- it just seems to me there's going to be more examples of the products being shared, supplying part of Walmart for one of you and part for the other. So can you just kind of comment on the general competitive landscape there?

Sure. Well, I think the comment that you make, let me just start with the first -- each part. The other -- there are products that we have launched, Loratadine-D 12, is another example, Minoxidil Foam are other examples that are in addition to the ones that you've stated. So are there some other new products that are still new in our categorization, that just to add to that. But otherwise, Lansoprazole is clearly an important one and Delsym or the Dextromethorphan Extended-Release Suspension is very important to us, yes. On the question of competition, we do have competition on the Lansoprazole, that is clear. We do not have competition on Minoxidil Foam. We do not do have competition on the Dextromethorphan Suspension and we have limited competition on the Loratadine-D 12. So you happen to pick one that there is competition on, that is correct. Relative to the environment that we face on the marketplace of our store brand products, I would say that there's really been no major change in the market environment. Dr. Reddy's has a product, that is correct. However, it hasn't really been a major change and it's not a marketplace where we expect 10 or 20 players to show up and I think that's what really differentiates it from -- the over-the-counter product categories from the generic Rx where you may have 10 or 20 players. So really, it's a limited number of players. So I think, for the most part, I can never predict what any of my competitors will do but I think that they have business, they have something at risk if they go ahead and have a significant pricing decline in the business. They will, obviously, have an impact on their own sales. So I think the normal capitalism effects of supply and demand work here and our expectation is the market will be relatively stable for the Lansoprazole product very much for the future. I can't say that in any individual customer, there won't be some ups and downs but the marketplace is really relatively stable at this time. The only other comment I'd add, Linda, just to give you a sense of the total perspective on pricing at the company. Our pricing environment as a company from a total perspective, the pricing environment is, at this point, flat to up slightly as a company across our total portfolio, which is very consistent with where it's been over the, at least the last 4, 5 years, the pricing environment is relatively similar for us as a company.

Your next question comes from the line of Annabel Samimy from Stifel, Nicolaus. Annabel Samimy - Stifel, Nicolaus & Co., Inc., Research Division: Didn't really want to really harp too much on the growth rates this quarter relative to the guidance but it's clear that the growth rates for each of the different segments are a little bit inconsistent with the average that you've laid out for the fiscal year. So can you help us understand where the big pushes are going to be? So I mean, I guess for consumer health, we can kind of understand that cough and cold is going to help the growth rates come back up into the range and obviously, you have the Pet Care added on. And then with generics, should we assume that growth attenuates for the rest of the year? I mean, is there -- is it just 20% this quarter and then it just attenuates? So can you just help us understand how we should think about the rest of the year and what some of the pushes and pulls might be?

Sure. Well, first and foremost, I think if you think about what we talked about when we gave original guidance in August, one of the things we said was we're making an assumption of a normal cough/cold/flu season. That obviously, would be an assumption that last year certainly, was a lower cough/cold/flu season. So that means, by definition, you would expect a bigger increase in our -- effectively, Perrigo's fiscal quarter 2 and fiscal quarter 3 versus last year. So that certainly is part of the kind of the assumptions we laid out at the beginning of the year. And at this point, that's certainly something we continue to expect a normal cough/cold/flu season. But that would have an influence on the projections for the remaining part of the year. I think the only other thing, comment I'd say, as I stated before, we don't give out quarterly guidance, we give out annual guidance. And as we looked at the roll up of our opportunities, we can feel that we have the opportunity to, as we stated before, to grow the guidance of 12% to 16% when you add the effects of putting in Sergeant's products into our portfolio. I think the other question you asked was Rx, if I recall that? Annabel Samimy - Stifel, Nicolaus & Co., Inc., Research Division: Yes, the Rx businesses, yes.

Yes. Rx business, strong, continue to expect strong growth in that business. I would say that one of the factors for the growth in the current quarter for RX was we did pick up one incremental month of Paddock that was not in the previous year. So in other words, there was that 1 month effect of Paddock that we got this year that was not in last year for the quarter. So that this one part of it. But on balance, we still are expecting, as we look at our Rx business, we're still expecting that 15% to 19% growth year-over-year growth for our Rx business and we haven't made any changes in that. But that obviously, we outperformed that during the first quarter.

The next question comes from the line of David Steinberg from Deutsche Bank

My question relates to your Consumer Healthcare business. You've noted that it grew 9% year-over-year. But in the press release, it mentions that this is partially offset by a decline in existing products, namely analgesics and feminine hygiene. So with respect analgesics, I was just curious whether this decline had anything to do with Johnson & Johnson's re-entry into the market? And secondly, speaking of that, any update -- I may have missed it, but any updated thoughts on how much business you may retain and how much you may lose when J&J fully gets back into the market with Tylenol and related products?

Sure. David, couple comments. I guess first, let me start with the last part, the J&J. We have not made any changes in our J&J assumption. Our J&J assumption still expects that they would be returning to the market early 2013, so calendar year 2013. So our expectation is that's when they will return. We feel the right way for us to look at J&J is we'll take it a quarter by a quarter relative to their return to the marketplace. They've had some challenges, to be clear. So for us, we think the right way to do it is look at it one quarter at a time. Relative to the assumption, the operating assumption that we have in our business, it is continue to expect that as they return to the business, that instead of our normal 90%, 91% retention rate, when the customer or consumer makes a decision to move from national brand to store brand, we were operating that we would not retain 91%, that we would retain approximately 50% of the consumers that have moved from the national brand to the store brand because they could not -- there was no access to a national brand product. And the other part of his question...

The existing product. Maybe I'll grab that, David. In our über-granularity of our description of the ups and downs business unit by business unit, we always go through and help give color. Here are the categories where sales net went up, here the categories where they net went down and then new products and FX on top of that. It just so happened that relative to this point in time last year, the analgesic category as a whole and fem hy as a whole were down. Fem hy volume changed because of supply flow. But that's just a relative point in time that last year versus this year. Any relative analgesic change was not specifically driven by branded competition dynamics.

We have a follow-up question from the line of David Buck.

Just wanted to just talk a little bit about the timing of the product launches and revenues. I think, Judy, you mentioned more weighting to the third and fourth quarters. How does that jive I guess with the cough/cold season and what looks like pretty easy comps for cough/cold relative to last year? Are you seeing any changes in ordering patterns or are you seeing any changes in terms of what inventories are being kept on the shelves in Consumer Health in particular?

There's no anomaly, I'd say, at this point in the year where we are in the season. Right now, where we sit here at the beginning of November it's, I'll call it, normal order flow. As we've said every year since I've been here at least, you don't start to see order patterns shifting until you get deep into the season, more Christmastime, January timeframe is when you start getting an indication of where the reorder patters may be. The only exception to that, at least in my tenure was the year we had the H1N1. But as we all know, that was an extraordinary year with an extraordinary health event. So right now, no unusual order patterns. My comment on new products of course, being heavily or more heavily-weighted to the second half of the year is not exclusive to the Consumer Healthcare business; that's across entire portfolio. When we talk about new product expectations in any year, we talk about a number for the whole Perrigo portfolio and that stands as such. But the Consumer Healthcare new products expectations for the year are also more second half of the year, also because you're counting products that launch each quarter, "piling up" over the course of the year. So you get the volume effect of as those products launches, that you get the volume in the second half of the year.

Ladies and gentlemen, we've reached the allotted time for questions. I would now like to turn the call over to Joe Papa.

Thank you, operator. Thank you, everyone, for your interest in Perrigo. I think we have a good start to the year. We have record operating margins but clearly, we are focused on restoring our Nutritionals growth with the plastic container and the VMS product opportunities that we see for the future. Thank you very much for your interest in Perrigo. We'll continue to work towards the execution of that for our shareholders. Have a great day.

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