Good afternoon. My name is Frederica, and I will be your conference operator today. At this time, I would like to welcome everyone to the 2016 Year-End 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. Mr. Bradley Joseph, Vice President of Global Investor Relations. Sir, you may begin your conference.

Thank you very much. Good afternoon and welcome to Perrigo's calendar year 2016 preliminary unaudited earnings conference call. I hope you all have had a chance to review the press releases we issued early this morning. Copies of the releases are available on our website, as is the slide presentation for this call. Leading today's call are John Hendrickson, Perrigo's Chief Executive Officer, and Ron Winowiecki, Perrigo's acting Chief Financial Officer. I would like to remind everyone that during this call, participants will make certain forward-looking statements. Please refer to the important information for investors and shareholders and Safe Harbor language regarding these statements in our press releases issued this afternoon. In addition, in the appendix for today's presentation, we have provided reconciliations for all non-GAAP financial measures presented. Please note that today we'll be discussing certain preliminary unaudited calendar year 2016 financial results and initial calendar year 2017 guidance. However, we cannot assure you that our audited 2016 results or initial 2017 guidance will not be materially different. Now, I'd like to turn the call over to John Hendrickson.

Thank you, Brad and welcome everyone to Perrigo's calendar year 2016 preliminary earnings call. Before discussing our performance, I want to comment on the internal transition we announced in our press releases earlier today. Effective immediately, Ron Winowiecki Senior Vice President of Business Finance will assume the role of Acting Chief Financial Officer following the departure of Judy Brown, Executive Vice President of Business Operations and Chief Financial Officer. Judy is leaving Perrigo to take a position with another company in the pharmaceutical industry beginning on April 1, 2017. We thank her for her contributions, and wish her best in her future endeavors. As our acting CFO, Ron brings almost three decades of financial and accounting experience to his position. He has the industry knowledge and technical expertise to successfully lead our finance team. I worked closely with Ron during much of his tenure at Perrigo, and I can test to his leadership skills, financial expertise, and strategic acumen. I believe that he is the right person to take on this role, as we conduct a thorough search for a permanent CFO, which will include Ron as a key candidate. I have full confidence in Ron, and look forward to working with him as our CFO. As you've likely seen in our press release earlier today, we filed the Form 10b–25 notification of late filing with the SEC regarding our Annual Report on Form 10K for the period ended December 31, 2016. We currently expect to file our Form 10-K on or before March 16, 2017. Ron will provide you more detail regarding this matter shortly, but I would like to comment upfront that while this delay is unfortunate, we remain committed to providing timely, accurate and transparent communication to all of our stakeholders. Now I want to talk about…

You bet, thanks John, good afternoon everybody, I look forward to meeting you in the near future. I also look forward to continuing working with John, the rest of the Perrigo leadership team in the coming months as we continue to focus our previously stated action plan. I'd also like to take a moment and think Judy Brown for her support, guidance and leadership during our time together at Perrigo, as a friend and a colleague I certainly wish Judy the best in her new position. Moving now onto our results. I first want to discuss the notification that we filed with the STC to delay our 10-K filing. The scope of work that is still required the finalize Perrigo financial statements, included the final payment calculations related to the announced sales of Tysabri, and deferred tax assets and other related effects Omega Pharma NV. Let me provide some detail. As you saw on recent press release prepared a business development team finalized an agreement to announce the sale of the Tysabri royalty today. The accounting team taken this development and updated facts and circumstances that led to this announcement and is running a process to calculate the final impaired of value of the milestones associated with the Tysabri asset. Well, it may sound easy, the calculations are complicated and we need to have our calculations and procedures reviewed by our auditors. We provided our current estimated calculation in unaudited GAAP preliminary financial results reported today. In addition, certain deferred tax assets were identified that existed at the time of the acquisition of Omega, we are quantifying the result of these assets, which will be a non-cash re classification between goodwill and deferred taxes. Completing our procedures also require us to evaluate the related effects of this re classification. Further,…

Thanks Ron, appreciate that. In Closing on Slide 23; I would like to reiterate the strength of our unique business model. Pharmaceutical company coupled with a fast moving consumer goods organization, layered on a world class complex supply chain. We made significant headway in the finding a path to enhance the value, and strength our business going forward. Our 2016 review of transition, I anticipate 2017 will be the year of execution. There we build upon that foundation and strive toward consolidating growth in 2018. We have the right team and the action plan in place to able us to capitalize on our business model and focus on payroll strength and providing quality affordable healthcare products to consumers and patients around the globe. Thank you. Brad?

Thanks, John. As I said on the out sit of this call covered certain preliminary unaudited calendar year 2016 financial results. Given that these are preliminary unaudited results, we limit your questions today to 2017 financial guidance, leadership changes and our business and strategies. Specifically we are not going to take questions regarding the 2016 preliminary unaudited financial results. Operator we now like to open the call for questions and I ask everyone please limit yourself to one question only, thank you.

[Operator Instructions] Your first question comes from the line of Marc Goodman from UBS.

Okay one question maybe you can focus on the U.S consumer business. And talk about the pricing pressure that you were talking about that was 2% to 4%, what - what categories are you seeing in that pricing pressure and just give us a sense of what that pricing was in 2016, thanks.

In the consumer Healthcare business, Marc, we have always seen certain pricing pressure in all launched new products, a number of competitors. I would say across the categories we compete in we have competitive pricing. We've done a good job of having costs, I mean cost savings, lying driving over these cost of goods, or operating strategies. So when we look at the growth of the business we expect the 2% to 4% to be after price - after pricing for solid growth. After the pricing challenges we expect off set a number of those with our cost initiative. Will say cough/cold, allergy some of those categories tend to be more hit by some of these pricing things, there are a lot of players within those categories.

But is it safe to say the cough/cold, allergy pricing. You're expecting to be a little worse in 2017 than 2016 or is it just a continuation of what we've seen.

I would say we continue to experience some price challenges it not a new phenomenon, we continue to always have pricing in the consumer space, we expected to continue in different segments of pricing we have seen. Again, given the growth in the new products and everything we expect to be able to overcome that pricing challenge.

But like in infant [ph] formula and smoking cessation, are we seeing pricing pressure there or is it really just in those other spaces you mentioned.

I would say we see it in all different segments comes differently across the board, but it certainly had so there's not just price compression from competitors, but making sure we are maximizing our promotion in those kinds in the market too. Retailers want to drive these brands and so we continue to help them try and drive profitability across the portfolio, which can impact some price compression and things that we get to drive that business.

I'm sorry just.

Thanks, Marc.

And your next question comes from the line of David Risinger.

Hi, good evening. My question relates to CHC Americas. I guess could you just tell us within your EPS guidance for 2017, are you forecasting CHC America's operating income flat or down the rising in 2017, thank you.

David, this is Ron, thanks for the question. In my prepared remarks I commented on CHC America's, we do expect topline growth in the segment as we talked about we did expect operating margins in the low 20s. Again because we have not published 2016 information it's difficult for me to give you a relative compared year-over-year margin number but again the modeling we're using for the segment in 3017 is in low 20s, low 20% margin.

And your next question comes from the line of Gregg Gilbert.

Yes, thanks. John can you comment on where the Rx review is what you know and what you don't know, when you my complete that and mature overall philosophy, will that you and the boards willingness to take an offer versus the right offer, thanks.

Yes, thanks Gregg, appreciate the question. So first of all the new board assembled a good robust discussion and I would say all the business segments understanding whether add profitability to strategy with them, as you can imagine all the board getting engaged, given the new many members and so not trying to make any ultimate decision, and try and understand how they all fit together and what they do. So they continued on the path we have not clearly sit a ultimate date of decision must be made by X. and looking at that, I will say the directed to meet the board to keep driving this business, we would like to profitability, we'd be investments in R&D, deliver good operating margin, keep driving up the long term growth and profitability. So we are operating the business for the long term, not for just short term profitability. So I like their direction and I think as a board they will continue to evaluate it and see what it may sounds.

And your next question comes from the line of Randall Stanicky from RBC capital.

Great, thanks. I just had - I want to follow-up on the last question. John, can you talk about the hurdles, the specific hurdles in separating the Rx business out, both from a tax and cost perspective. And then the - attached from that question would be would you consider alternative ways of divesting this business, if you cannot find a buyer would you look at spinning it out or other creative structure to pursue that breakup? Thanks.

Yes, you got it Randall. So first of all, I just got to step back and - I've said this every time I know and everyone is probably getting tired of it. But this is a good, it's a good return business, high margin even with the pricing we were talking about, as Ron said still at a 40% kind of margin level. It's still a very good profitable business, good pipeline that we feel good about. All of those dynamics very favorable and I think the board themselves were liked what that looked like. When you think of all the potential possibilities from running it, keeping drive the profitability in [indiscernible] to separating. We are certainly not locked into any one option as far as what to do and how to do it. And again, keeping running it, keeping it integrated, keeping it as the core part of the business. There are as we look at cost of separation, there are tax issues related to separation. There are operating issues related to separation, that all come in the play in that strategy, but I would say everyone is in a fact gathering, understanding mode, at the board level to look at all the potential options.

And there is no timeline in terms of how long should you - to go into I know there are some new board members that came on who I assume are going to take an active role in that process?

Yes, correct. All the board members are taking up very active roles in all the segments, but certainly in this. There is no timeline set, that we've said that we must have a decision by here or else. Again the Board has directed to me as to keep running the business to grow it and drive the profitability of it and that's where we are taking it right now.

Okay. Thanks very much.

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

Thank you. I have to say I'm still very confused by this 2017 guidance related to Tysabri. So when you're saying that when you close the Tysabri deal in 20 days, we have to take out $2.12 to $2.18. So that really assumes no offset? So I guess a couple questions. Number one, what are you going to do with that $2.2 billion in cash? Is that already incorporated in your debt pay-down guidance for the year and maybe if you could just be more specific, how much debt do you plan to pay down this year?

Hi Jami, this is Ron. Thanks again for the question. So again our earnings guidance is $6.30 to $6.65 for the year. So you made a comment that our Tysabri affected $2.12 per share to $2.18 is not a clear offset. That's actually not true. Again, we have to take a look at what is the Tysabri Royalty Stream and again you have to work with your models and I certainly…

But we have a number that's higher than the $2.12 to $2.18 so maybe that's part of it. Can you - how did you get to $2.12 to $2.18?

So again, let me just walk you through this. So you got to take the effect of Tysabri. We are not, we cannot provide our guidance for Tysabri. So you got to take your model, look at what you have allotted for the Royalty Stream. You have to take that on an after effect basis. So as you know this is an Irish held asset, it's in an efficient tax jurisdiction. Then you have to say okay, let's step back look at the debt pay down. Again we're reflecting $2.2 million and again we have [indiscernible] from our Board to continue our investment-grade financial policy. You can assume we're pointed at paying down debt. So you have to go through now, okay here's a various range the debt, the senior notes, what is the average interest rate on those senior notes over the curb, we're going to be smart from a P&L and from a future liquidity standpoint. And then you calculate that effect after-tax, because then you'll have again tax has as a deductibility in various jurisdiction and that results in the $2.12 and $2.18. You probably have a higher number.

I do.

My explanation is, one; I can't guess your model for Tysabri. Number two, again this is a mid-year debt pay down so is assuming midyear. So you may have some other assumption for the debt pay down. I can't interpolate that and…

You can't tell me how much debt you are going to pay down this year?

Well so, for this item. Again you say pay down as a share. So let's take that in two parts. So the one part is I communicated with our operating cash flow, we do expect to pay down debt maturities this year. Let's keep it [indiscernible] decide that's our guidance model. Now let's talk about that $2.12 and $2.18. We received $2.2 million in cash, you can assume that that cash is focused on debt pay down.

Okay. So at the end of the year, how much cash will you have at the end of 2017, after you paid down debt, how much cash will you have?

So we are not providing guidance on cash on balance sheet. So I am not going to provide that number right now Jami, if that's fair.

I am sorry. Can I just ask one more question? Did you guidance include - you did say OTC next, I think you said middle of the year. Is that right?

Right. Thank you.

And your next question comes from the line of Louise Chen from Guggenheim.

Hi. Thanks for taking my question. So just curious if you strategic review ever considered divestiture of Omega and why not? And then just any update on this Amazon opportunity, is it still something you are interested to pursue? Thanks.

Yes, thanks. Yes, I would say the strategic review included everything. So the good thing again is we kind of looked at every business and say why do we love, what don't we like about it, what things we change, where we not executing as well as can so it was a broad and is a broad strategic review. We certainly looked at the performance we've had in the Consumer Healthcare International. But when we looked at the market dynamics, when we looked at the home are executional plans and what we thought we could drive or continuing to try and drive that platform for growth both top and bottom. And we believe that being in Europe with the consumer business that includes brands, value brand, store brand as well as some specialty products is a great platform to have. We've got to execute with it and deliver that value. So we continue to look at all those segments and not just pick on Rx, but continue look at all and make sure they're good, fir for us. I'd like to go back to Ron, I believe he said in his comments which is when we look at next year we've got a lot of Rx headwinds and certainly Tysabri moving on from it. So when you look at our consumer facing businesses they have some good strength year-over-year.

And Amazon.

And Amazon, sorry about the Amazon. We continue to think Amazon is a good opportunity, certainly the products especially as they get more and more efficient and real-time delivery. When you have a headache and you want your product now, not necessarily tomorrow. So we'll get much more efficient, I think it starts taking off. We are working with them, working with other players or the retailers have online aspect to most of their businesses, we work with those in marketing and driving our online business as well as Amazon. And we think, going forwards over the next 2, 3, 4, 5 years I will continue to be a growth vehicle for us. Thank you.

And your next question comes from the line of David Maris with Wells Fargo Securities.

Hi. One question and one definition. So first on the question. When the teacher says that students are energetic, they usually mean that the students are troublemaker. So when you said that the Board Meeting, the first meeting was I forgot that are invigorating or something…

Engaging maybe.

Yes, engaging. So that everyone knows that's code for people have differences and we're debating it and they are new members. Can you just describe where there is agreement and where there may be differences of opinion of the direction of the company? And separately just as a definition you had mentioned that you're improving your go to market sales strategy. I just wanted to know what that means.

Sure. So first of all, I would not take anything I have said with the Board to in that way. We have had great board interactions, the Board members have worked well with each other trying to challenge management, think with each other, I would say very, again when I say invigorating, I mean very good breadths and depths of discussions. The new Board members bring different angles at things which has been very good for the whole Board. So I think it's been a good interaction clearly with Jeff Parker and Ted, who joined a little bit earlier. But then went with Jeff and Jeff Kindler as well as Brad just brings good angles to helping us think about things, helping us think about strategies. So it's been a very good productive engagement with the new board member so far and their cooperation with the existing board member. So very positive from my standpoint, can't speak highly enough for those interactions. On the second part of the question…

Go to market sales strategy.

Go to market sales strategy, and I believe we're talking about the Rx side of the business is one of those. We basically had a branded portfolio of products that we [indiscernible] with someone. So we had a whole detailed salesforce that were driving those brands. They were good brands, we own them. We like the products but we did not have the scale nor did we want to invest in a number of new branded product in the Rx space. We partnered with another company to be our go to market arm where we fill on the product manufacture them actually take the orders et cetera. But they do the detailing and selling and it was a good way to still leverage the product portfolio and not have the broader complexities, expenses et cetera with a sales force. They have a sales force and even more products in their basket. So it was a very good collaboration to drive, its showing good results so far.

Thank you very much.

Thanks.

Your next question come from the line of Dewey Steadman from Canaccord.

Hi guys, thanks for taking the question. Just a really quick one on CHCI. Following the strategy changes and sort of the return of revenues there and new good leadership for that division other opportunities to synergize between CHCA and CHCI going forward? Thanks.

Great question. So we do have a fair amount of synergies on quality, cost of goods and operating side. So I'll start there, we put a team in place early on. And then we got to figure out what we can do, they had a lot of outsourced products and number of plants as we do. And our team there, we put people on the ground headed under Ron Winowiecki whole Irish operating supply team and they have been delivering great synergies between the businesses. Doing in forcing across our plants, making sure we deliver a high value across the products that part has been going well and we continue to try and expand what we can do there to help their cost of goods as well as their operating costs. The other side is we have a platform in Ireland and we continue to combine our Irish platform there with the platform of the operations in Nazareth, Belgium and continue to get the benefit out of doing that. On the sales side, there are some synergies not as much or as quick as we had originally expected. We originally expected to be able to launch more products. We are launching some products that tie into their value chain there. We are launching products here eventually that we think we can launch as good brands or control brand. But it's not as much early on as we expected, we continue to want to drive more value there. One of our good wins has been we had developed in the States with our partner in Denmark a nicotine gum, that was sort of best in class and with the purchase of the nicotine products that we did in our international CHC business, we're able to bring that innovation to them and actually launch that product here over the last month and a half or two months and are seeing good results. So we feel that franchise as smoking cessation and those kind of things continue to grow in Europe that can be a good franchise force there. As a global player we have a good supply chain to back that up. So that's a good example where working together has proven to be a beneficial thing.

Thanks.

Thanks.

Your next question comes from the line of Chris Schott with JP Morgan.

Great. Thanks very much. Can you just come back to the US CHC business, I think you used to talk about that as a mid to high single-digit growth business. Obviously different environment now, but when we compare the 2% to 4% versus the prior guidance is this all price or is there an assumption you're making about new launches in there as well that might have changed? I'd just like a little bit more color on bridging between the old and the new. And then just a very quick follow-up on this issue of just debt pay down from here. Just might be helpful is there a target leverage ratio you need to get to post the Tysabri divestiture in order to keep investment grade rating? I think this might help us a little bit better under capital allocation priorities we just knew and where do you need to go on leverage at least in the near term? Thanks very much.

No, thank you. So I'll take the first part, and then Ron I think I'll pass the second part over to you if that's fair.

Yes.

So the first part. On the business side, I would say when we look at the markets today the switch products the categories all of that we feel are very optimistic on our CHC business and feel good about that. But when we look at all the components that we try to lay out with store brand growing favorable consumer dynamics, new products. You can see pretty strong volume growth across the segment and that's close to 5% to 6%. So good volume growth. The plants are running well and those kind of things, we do expect when we put in year pricing headwinds and so we build into our model we expect pricing and make sure that we have the costs and other initiatives to do that for net growth 2% to 4%. So rather than bridging back there were certainly switching and that was also an old models in the past from big switches, as well as general growth dynamic depending on the time period that we were in, but as we look forward for the next few years we are looking to be able to grow, which I think in general will be out above the pace of the normal U.S consumer business within the pharmaceutical and healthcare we know that we operate.

Yes, I think I will take the question. I think you phrase that as the target kind a leverage metric, so you look - 2016 information but if you look at the LTM metrics as the you know 9-30 you can see the company's running somewhere called the high tree support range relative to debt-to-EBITDA. So you can sit back and say what are the companies policies, priorities, we talked about those, so again if you look at next year, we are looking at $560 million, I think the exact number is 557 million of maturity, again we talk about how we're using operating cash flow is our intense to pay that debt down, so to your question is to take up the balance sheet. So we're looking at close Tysabri by $2.2 billion in 20 days that we mentioned at our remarks. Now again, at the [indiscernible] this in structure as we always look at the tax effect of the of the sale, look at what is the cost to pay debt down, you can run the models based on what debt is trading on today, do your own estimates but assume again for sake of discussion they're somewhere in the $2 billion to $2.1 billion there right, just to you kind of range. So what does that mean again I don't want to say every nickel and dime, goes the debt paid unless they were continuing to commit investment grade, we're continuing to work with agencies on our credit profile to ensure we continue marching down that path. If you take those numbers we are talking some more in the range of $2.6 billion to $2.7 billion of debt that would be paid out over the course of the year, you can run the leverage metrics, I don't think I need to do the math for you, so you can take the guidance, run off an EBITDA model, and then start saying what that metric come out to.

Thank you.

And your next question comes from a line of Douglas with Barclays.

Hi, good morning - good afternoon, thanks for taking my question. It feels like morning maybe, but I'm - just you know maybe going back to Chris's question then again you know I think in that sort of megatrends waymarked [ph] you used to put out he's got sort of highlights of the like population demographics, as well as the store brand penetration growth of 2% to 3%, which now seems to be you know 1%. You know again to sort of curious in terms of expectations in terms of store brand conversion, what it's sort of like to that change - I mean it is sort of new product introduction or it is just simply a reflection of where we are and cycle in terms of the economy and that perhaps consumers are feeling better there perhaps looking for to more or sort of more biased toward purchasing national brands.

Yes, I think again I'm trying to not down hold - downplay 2% to 4%, I realize we're going on the 5%, but 2% to 4% means with all of that volume going 5% to 6%, Store brand gaining certainly volume share, profitability being offset somewhere, just pricing go on what happened there but still good volume growth could share growth when you look overall at what we're doing. There are some consumer dynamic, we believe continue to go that way, those mega trends you talk about in my mind are still very much at work. You know we're all getting older healthcare costs are doing nothing but go up no matter what we want to talk about, having a value proposition for consumers when they go to get it, is a great thing, we believe all those work in our favor. At this point when we look at all of those balance together and say organically again organically with a portfolio of the R&D that we're doing, what we see we believe a thing that realm, that does not mean that there are other inorganic opportunities there to rise additional growth but we're talking about here just base organic growth would be portfolio and R&D, more cost per segment that we're operating in.

Okay. I guess John, in particularly focused on just why the OTC Store brand growth can be a little bit slower than what you had spoken about in the past, the company spoken about in the past.

Yes, so I think you know it all going back a couple years ago and saying here's what those dynamic were, I do good in laying out here is the dynamics today and got a lot organic growth I see and again there's still a fair amount of volume share, I do think be all the dynamics of growth, products switches all of those things lead us with this guidance, which again I feel is a very strong growing faster than segment, driving shares, doing those things performance. You can add on that [indiscernible], had some very good strong business.

Okay, great. Thank you.

Thanks, Doug. Last question, please.

And your final question comes from the line of Elliot Wilbur from Raymond James.

Thanks, good afternoon, appreciate your squeezing me in. Just want to come back to the Tysabri announcement, specifically question for Ron, is there anything you can say about the additional sales levels that would trigger the - The incremental step up in sales value there in terms of you know what those levels are. And then just a follow up to that in thinking about or try to model the company on a go forward basis new co obviously without the savage could have much higher effective tax rate, and looking at so the metrics you provided today coming up with an adjusted effective tax rate, excluding Tysabri royalty stream somewhere around 19% to 20% and just kind of a rough ballpark number one throughout out there and get some feedback on that, thanks.

Yes, you sure, you bet. So first the service - the effective tax rate; Elliot, you're in a stalling throw, I'm not going to say it right or wrong but take you in the window of acceptability, a relative to tax rate, we are not providing guidance on that today, we will certainly update our models to get that more details once we do close the transactions. So again within a stone's throw, listen we work with a partner were not disclosed in those terms and conditions, and we are not obligated to until we close, we like with all that that count until we get to that point, I think we will find is that a natural curve relative to Tysabri sales, it is always a bit outspread as you always know relative to any organic street model, so I don't want to predispose what's street numbers verses another, so it doesn't provide guidance so for me to go out there and start providing estimated revenues for the milestone now I don't this it is appropriate. So again we look at those, we understand what the metrics are, we worked our partner kind of what is the appropriate milestone for those sales thresholds, and again once that agreement becomes public we will provide more discussion at that point.

And again that's $250 million 2018, and $400 million in 2020, so as we discussed, so when they're due it's just the terms we will get once closed. Thank you everyone, I really appreciate your time and consideration, I appreciate it, thank you.

This concludes this conference call, you may now disconnect.