Reckitt Benckiser Group plc

Kirsten Chapman – IR Bruce Wood – President and CEO Joe Baty – EVP and CFO

Ian Corydon – B. Riley & Company Damian Witkowski – Gabelli & Company

Thank you, Erika. Thank you all for joining us this morning for the Schiff Nutrition International fiscal 2010 third quarter results conference call.

By now, you should have received a fax or an email of the press release. But if you have not, please contact us at Lippert/Heilshorn & Associates at 415-433-3777 and we will be happy to forward a copy to you immediately.

As a reminder, this call may contain forward-looking statements, the risks of which are the same as those described in the Safe Harbor language in the press release and those detailed in the company’s SEC filings. Actual results may differ materially from those described during the call.

With us from management today are Bruce Wood, President and Chief Executive Officer, and Joe Baty, Executive Vice President and Chief Financial Officer. It is now my pleasure to introduce to you Bruce Wood.

Please go ahead, sir.

Thank you, Kirsten, and good morning. Welcome to our third quarter call for fiscal ’10.

Our long-term goal remains to profitably grow our branded and private label businesses while exploring new organic and external growth opportunities. Our Q3 results reflected a continuation of the encouraging first half performance.

Overall net sales for the third quarter increased almost 7% versus the prior year period driven by a strong performance on our branded business, partially offset by a decline in private label sales. With respect to the key profit measures, we recorded significant improvement in our gross profit and operating margins versus the prior year period.

At the same time, we continued to generate solid positive cash flow in the quarter and added to our strong cash position. During Q3, the overall supplements category continued to achieve robust growth in the mass market, as measured by IRI.

With respect to our focus segments, joint care remained essentially flat, once again reflecting fierce pricing and promotion activity while fish oil continued to exhibit strong growth. Within the highly competitive joint care segment, our flagship Move Free joint care brand registered a modest net sales increase versus the prior year quarter.

In Q3, Move Free benefited from a mix of marketing support in the form of national TV advertising, FSI coupon support, and loyalty promotions, grassroots PR efforts to consumers and health professionals, and account-specific promotions. At the same time, Schiff MegaRed krill oil net sales grew significantly, reflecting increased consumer acceptance, stimulated by a comprehensive marketing support program of national TV and print advertising, FSI couponing, and customer-specific promotions.

We expect to have full retail distribution on MegaRed in all major mass market retailers by the end of the fiscal fourth quarter. With respect to branded organic growth initiatives, we are concluding the market test of our Move Free energy liquid concentrate new product with the original lead customer, having experienced reasonable sales, but insufficient to warrant permanent distribution in their limited SKU business model.

We will initiate a test of this product with another customer in our fiscal fourth quarter. At the same time, we have been active in developing and presenting other branded new product opportunities and expect to update you on the specifics of those initiatives in our fourth quarter call.

With respect to our private label business, we recently experienced a significant increase in competitive bidding activity, and we have participated aggressively. These bidding processes for the most part have not yet concluded.

So at this point, it is difficult to evaluate how customer decisions will impact our overall private label business going forward. Joe will have more to say in his comments, but it’s clear that the private label business will become much more competitive in the future.

We believe we can compete effectively in this new, more competitive environment based on our high quality standards, excellent customer service reputation, and our strong financial position. Finally, we remain committed to delivering value to our shareholders.

We are pleased to announce a $0.50 per share special dividend payable to shareholders of record as of close of business March 31st and payable on April 14th. The special dividend underscores our current strong cash position and our confidence that the company will continue to generate positive cash flows from operations.

We believe our cash position after the dividend payment provides us with the financial flexibility to invest in our business, fund organic growth initiatives, and continue to explore acquisition opportunities. And I’ll now turn the call over to Joe for his comments.

Thank you, Bruce. Good morning and Happy St.

Patrick’s Day to everyone. Earlier today, we announced our fiscal 2010 third quarter and nine-month year-to-date financial results.

Fiscal 2010 third quarter net sales overall increased 6.7% to $53.3 million from fiscal 2009 third quarter net sales of $49.9 million. Branded net sales increased 12% third-quarter-over-third-quarter, primarily due to incremental MegaRed volume.

Year-over-year growth in MegaRed sales includes the benefit of expanded key account distribution. Aggregate branded sales amounted to $38.8 million and $34.7 million respectively.

Private label sales were $14.5 million for the quarter compared to $15.2 million for the prior year quarter. Gross profit as a percentage of net sales was 41.6% for the fiscal 2010 third quarter compared to 34.7% for the fiscal 2009 third quarter, primarily reflecting an increased mix of branded sales and lower third-quarter-over-third-quarter raw material costs.

Total operating expenses were $13.7 million or 25.7% of net sales for our fiscal 2010 third quarter compared to $12.1 million or 24.3% of net sales for our fiscal 2009 third quarter. As a percentage of net sales, as compared to the year-ago quarter, selling and marketing expenses decreased modestly to 15.8% for the fiscal 2010 third quarter.

The $1.4 million increase for other operating expenses in the fiscal 2010 third quarter as compared to the prior year period is primarily due to an increase in recognized management incentive costs resulting from significant improvement in year-to-date financial results and the full year forecast for fiscal 2010. Reported operating income was $8.5 million for the fiscal 2010 third quarter compared to operating income of $5.2 million for the fiscal 2009 third quarter.

The effective tax rate for the fiscal 2010 third quarter was 31.8% compared to 32.1% for the fiscal 2009 third quarter. Both quarters include certain true-up adjustments and favorable income tax credits.

As reported, diluted net income per share was $0.20 for fiscal 2010 third quarter compared to net income per share of $0.13 for our fiscal 2009 third quarter. Net sales were $155.6 million and $145.0 million respectively for the nine months ended February 28, 2010 and 2009.

Year-to-date branded net sales were $114.0 million and $101.3 million respectively. Diluted earnings per share were $0.55 and $0.34 respectively for the nine-month periods.

In regards to the balance sheet, working capital increased to $94.4 million at February 28, 2010 from $92.2 million at May 31, 2009. The increase includes a $1.9 million increase in cash and short-term investments.

Net cash flows from operations of approximately $20.1 million for the first nine months of fiscal 2010, more than offset the first quarter special dividend payment of $14.4 million and capital expenditures of $1.9 million. The increase in other long-term assets is primarily due to purchases of securities with maturities greater than 12 months.

Long-term liabilities consist primarily of accrued dividends and accrued management incentive costs. Stock-based compensation expense amounted to $0.4 million and $0.2 million respectively for the fiscal 2010 and 2009 third quarters and $1.3 million and $0.4 million for the respective nine-month periods.

Depreciation expense was $0.8 million and $0.7 million for the respective third quarters and $2.3 million for each of the respective nine-month periods. While our capital expenditures for fiscal 2010 may approximate $3.0 million to $3.5 million, we are currently evaluating certain initiatives that could result in a significant increase in capital expenditures for fiscal 2011.

The special dividend potentially aggregating almost $15 million will be funded from cash and cash equivalents. Approximately $14.4 million of the distribution will occur within the next month.

The remainder will be distributed subject to vesting of underlying stock awards and in certain cases, upon actual receipt of the deferred shares. In connection with dividends paid on outstanding shares, we believe substantially all the distribution will qualify as dividend income to the recipient.

Regarding our fiscal 2010 fourth quarter guidance, we believe overall net sales as compared to the fiscal 2009 fourth quarter will increase by single-digit percentage. We expect branded sales will reflect an increase, as we believe our MegaRed business will continue to benefit from expanded key account distribution.

However, as noted previously, increases in our branded business, including MegaRed, are subject to the impact of ongoing competitive pricing pressures, including from private label, as well as the effectiveness of our branded marketing initiatives. Private label sales for the first nine months of fiscal 2010, as compared to the first nine months of fiscal 2009, reflect an approximately 5% decrease .

We are currently forecasting private label business for the fiscal 2010 fourth quarter to also reflect a decrease, primarily due to the loss of certain business during the latter part of fiscal 2009. Furthermore, a very active and price competitive private label bidding process is currently taking place.

While it is premature to quantify the potential long-term impact to our private label and overall business, we will lose certain existing business in May 2010 as a result of the bidding process. As this process moves forward, we are pursuing opportunities to both replace lost business and assist in the long-term growth and success of our company.

Subject to my comments regarding both branded and private label sales, we are forecasting growth profit margin in the 40% to 42% range for fiscal 2010. The percentage increase as compared to the prior year is primarily due to an increase in branded sales, lower year-over-year raw material input costs, and the lower mix of private label sales.

In addition for fiscal 2010, we forecast selling and marketing cost to approximate 16% to 17% plus of net sales and other operating expenses to approximate $21 million to $22.5 million, a range which includes partial impact of the performance-based management incentive plans. Our overall operating margin forecast for fiscal 2010 is estimated at plus-13% to plus-14%.

Actual results for the fiscal 2010 fourth quarter and fiscal 2010 overall may vary from our current forecast and are subject to, among other considerations, competitive conditions and factors previously noted and disclosed in our public filings. While our intent is to provide certain fiscal 2011 forecast data during our fiscal 2010 year-end call, we believe it is important to make note of a couple of items.

First, as referenced earlier, an active private label bidding process is currently taking place. As a result, at a minimum, we believe overall private label margins may decline potentially significantly in fiscal 2011.

If we are unable to maintain our current level of private label sales dollars, our top line results would also be impacted. Finally, as what may have happened previously, an active private label bidding process may be a factor in driving up the cost of raw materials.

Again, thank you for your participation, and now I will turn the time back to our President, Bruce Wood.

Thank you, Joe. To summarize then, we continue to remain confident about our future prospects and expect to strengthen our financial and competitive position going forward.

We are especially pleased to announce the special dividend of $0.50 per share, reinforcing our ongoing commitment and that of our Board to building shareholder value. And on that note, Joe and I are now ready for your questions.

Thank you. On the private label side, is the price competition in any particular category or is that kind of across the board?

It’s as near as we can tell in at this point that if not now, eventually it will be across the board for supplements.

Okay. And the 2011 CapEx initiatives you are looking at, are those manufacturing or IT based?

Can you give any kind of color there?

Well, without getting too much into the specifics, let me just say it’s primarily consideration for becoming more vertically integrated from a manufacturing standpoint. Does that help?

Yes, that helps. And then I guess the last question on the new branded products you’re working on, can you give any update there or do we have to wait until the fourth quarter results?

Good morning, Ian. This is Bruce.

In the interest of comparative sensitivity and otherwise, we will have, I think, a good set of specifics to share with you on the fourth quarter call, but you will have to wait till then.

Okay. Thanks a lot.

Hi, good morning. Just going back to the CapEx initiative for 2010, becoming more vertically integrated, is the driver behind that goal should just have to be incremental margin or is there something in the industry now where you’re not satisfied with the manufacturing part of it?

Well, I mean, certainly to compete effectively long-term, we do believe we need to continue to look at our cost structure and see whether we can gain certain efficiencies from a manufacturing standpoint and if there are certain functions there that we can bring in-house to pick up the margin. And we are going to look at that and the overall return on that.

In addition, I would say just for supplements across the board, there are various delivery forms. And we do believe that certain delivery forms are being more and more received by the consumers such that maybe we need to take a look at becoming more vertically integrated to certain needs of our consumers.

Okay. Would that – and again, you obviously have done the buy-versus-build analysis, and this is where you’re coming out.

Well, it’s where we may come out. I mean, you are correct in your assumption that we are looking at buy-versus-build, which is going to show you we are, but we thought it’s important to still communicate that our CapEx could go up dramatically in the event that we opt to build, say, versus buy.

Okay. And on private label, what do you think is driving the competitive nature of the business?

I mean, the sales are growing, the raw material costs have declined (inaudible). But is it just that people are simply – utilization rates are below where they need to be in, so they don’t mind lowering the price on the incremental sales?

Well, for starters, I think we’re talking the bigger retailers here that are being pretty active on this front. And given the economic situation the country has been in and so forth and to some degree certainly the big retailers’ efforts to deliver lower priced products to their consumers, especially in little bit more difficult financial times for a lot of people, there are certainly pressures to lower the prices and provide the consumer a better alternative.

In addition, it’s the categories – certain categories can be very price competitive, which just lend themselves to more price competition in the private label world.

Yes. And just one more if I could on MegaRed.

You obviously had a program with Wal-Mart and now it sounds like you are going to expand to all of their locations. Is that what you said?

And if so, how many incremental locations are there versus the original program?

Well, Damian, good morning. This is Bruce.

You are correct. We will have full distribution in all of the major mass market retailers, including Wal-Mart, by the end of the fourth quarter.

And –

Are they (inaudible) in the US?

Correct.

Okay. Well, congratulations.

Great quarter.

Thank you.

Thank you.

Thank you, Erika. And thank you all for your interest in Schiff.

Tomorrow, Joe and I will actually be presenting at the CL King Conference in San Francisco. So we may catch up with some of you there if you are attending yourselves.

Our schedule is tight, but do contact Kirsten Chapman at Lippert if you are interested in any kind of face-to-face or teleconference and she will certainly attempt to adjust our schedule. And in any event, we do look forward to reviewing our fourth quarter and full year results with you in late July or early August.

Good day.